Category: Cryptocurrencies

The cryptocurrencies section covers articles about the basics of cryptocurrencies, how wallets work, the different classes of wallets, how to send or receive digital currencies, basic security, the basics of crypto exchanges, anonymity and regulation.

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Crypto Daily Topic Cryptocurrencies

What Is Rootstock (RSK): Understanding The Most Popular Bitcoin Blockchain

Bitcoin technology has played a phenomenal role in revolutionizing the global finance industry. Finance industry players, retail companies, and individuals understand this, hence its massive adoption across all industries. But Rootstock (RSK) sidechain developers believe that Bitcoin blockchain could be doing more. And that limitations in scalability, transaction processing, and lack of support for smart contracts the dominant cryptocoin is facing today are its biggest hindrances.

Bitcoin technology has played a phenomenal role in revolutionizing the global finance industry. Finance industry players, retail companies, and individuals understand this, hence its massive adoption across all industries. But Rootstock (RSK) sidechain developers believe that Bitcoin blockchain could be doing more. And that limitations in scalability, transaction processing, and lack of support for smart contracts the dominant cryptocoin is facing today are its biggest hindrances.

Bitcoin technology has played a phenomenal role in revolutionizing the global finance industry. Finance industry players, retail companies, and individuals understand this, hence its massive adoption across all industries. But Rootstock (RSK) sidechain developers believe that Bitcoin blockchain could be doing more. And that limitations in scalability, transaction processing, and lack of support for smart contracts the dominant cryptocoin is facing today are its biggest hindrances.

RSK developers also believe that the pioneer blockchain is money-dominated, implying that people concentrate more on Bitcoin Value than the technological revolution it promises the finance sector. And to address these issues, RSK labs sought to create a Bitcoin sidechain – Rootstock, also known as the ‘SMARTER BITCOIN.’ According to the company, the Sidechain will help Bitcoin overcome these limitations and boost its functionality and interoperability.

But what is RSK, and what progress has it made in making these feasible?

What Is RSK?

RSK is a Bitcoin sidechain connected to the BTC blockchain by a two-way peg. It can also be said to be an innovative virtual machine (RVM), tethered to the root of bitcoin blockchain with the aim of introducing the smart contract concept to the pioneer blockchain while effectively boosting its scalability. Plus, its through RSK sidechain that the crypto community will be able to create and run Bitcoin blockchain-backed smart contracts.

How does RSK hope to achieve these?

Ideally, the RSK sidechain seeks to marry the functionalities of the Ethereum blockchain with the security and efficiency of the bitcoin blockchain. To make this possible, the smart contract sidechain is tethered to the main blockchain by a two-way peg. This ensures that the side chain runs parallel to the main blockchain and that there is interchangeability of assets between both parent and side chain. It also has the backing of a semi-trusted third party that oversees the reliability of all transactions between RSK sidechain and Bitcoin blockchain in the execution of these smart contracts.

Hybrid federation to actualize smart contracts:

The semi-trusted-third-party (STTP) comprises of 25 highly accredited crypto community members of proven crypto knowledge and unquestionable integrity. And they serve as an interlink between RSK sidechain and Bitcoin blockchain, where they determine when to lock or release smart contract funds.

Why does the execution of smart contracts need a third party, you might ask? Well, because Bitcoin blockchain does not support the creation of smart contracts on its platform, RSK platform users needed an assurance that the Sidechain was operating in their best interests. And who to better provide such oversight and regularly audit the transactions carried out on the platform than the crème del crème of the crypto industry.

The 25 STTPs effectively form the hybrid federation that, in turn, operates the multi-signature wallet used to authorize the locking and release of funds. Each multi-sig wallet member has one vote, and it takes a simple majority to authorize the execution of a smart contract.

Two-way peg to actualize scalability and transaction speeds

The RSK Labs has been involved in the audit and analysis of both Bitcoin and Ethereum blockchains. In RSK sidechain, they have come up with a highly scalable platform that seeks to boost on-chain transaction processing speeds to 2000 in the long-run from the 3 TPS recorded by bitcoin blockchain today. They also intend to increase block confirmation speeds from 10 minutes per block to less than 10 seconds per block. To achieve this, RSK Labs developers utilized the GHOST protocol used on the Ethereum blockchain to speed up transaction processing speeds, and the DÉCOR+ block reward sharing protocol.

Note that RSK is a sidechain and will not be modifying the bitcoin blockchain code. How then does its scalability and transaction speeds impact Bitcoin? Well, the 2-way peg ensures the two blockchains run parallel to each other, and share assets like the blockchain database. This implies that if a transaction is recorded on the sidechain block, it automatically records on the main bitcoin blockchain, effectively eliminating chances of duplication. The tokens are also interchangeable, where 1 BTC = 1 SBTC (the token used on the RSK sidechain network).

RSK key features and components

Virtual machine:

RSK is to bitcoin, what EVM is Ethereum. A virtual machine through which bitcoin smart contracts can be executed. RSK, however, goes a notch higher to provide a platform on which the crypto community can create Bitcoin-based decentralized apps. And this effectively earns it the title –SmartBitcoin.

No commercializing tokens:

The fact that RSK is a sidechain that complements the Bitcoin blockchain means that its tokens won’t be commercially available. They will be restricted within the RSK to boost network operations like DApps creation. And to allow for easier interchangeability, 1 SBTC will always hold the same value as 1BTC. Let’s say you had 5 BTC and that you wanted to transact but want to leverage the speed and efficiency of the RSK sidechain. You simply exchange them for an equivalent amount of SBTC, and once done, convert your SBTC balance back to BTC.

Transactions not fully trustless:

The fact that Bitcoin’s blockchain does not support the creation of smart contracts on its native network necessitates the use of the Hybrid Federation interlink. When you exchange your BTC for SBTC or vice versa, your coins are locked in a multi-signature wallet within the 2-way peg. The federation, consisting of 25 highly accredited crypto community members, holds the keys to the multi-sig wallet. And locking and releasing funds held in the wallet only requires the authorization of a simple majority.  It provides a semi-trustless oversight over the funds as opposed to the fully independent, trustless, and automated oversight needed in a smart contract.

Merge-mining security:

 Bitcoin miners don’t need special applications or hardware to mine SBTC tokens. The RSK token mining applications are completely compatible with the bitcoin mining infrastructure. And as Bitcoin mining halves and block confirmation become harder, SBTC mining is a well-timed incentive.

The bridge between bitcoin and Ethereum:

RSK also supports the Turing Complete Programming language used by Ethereum Virtual Machine (EVM) and Ethereum DAPPs. This makes it possible for Ethereum blockchain users to easily migrate their systems to the RSK network. It is a viable option for Ethereum users, uncertain about the efficiency and reliability of the upcoming shift by Ethreum from proof of work to proof of stake.

What is the future of RSK?

Federation transitions to a drivechain/sidechain model?

Currently, RSK transactions over the 2-way peg are audited by the semi-trustless federation. Moving forward, however, and as the Sidechain gains traction and usage, RSK hopes to shift the custody of the locked coins on the 2-way peg to the merge-miners. A significant move aimed at reducing the need for trust.

RSK Educate:

RSK also looks forward to educating the crypto community on the effectiveness of its innovative Sidechain. To this end, RSK has published all the whitepapers related to this project and even created a blog where they share tips and educate the masses on how to interact with the Sidechain.

Why hasn’t RSK picked?

When RSK made public their intention to create and actualize the implementation of smart contracts, every crypto community member expected a flawless process. In its stead, RSK Labs, the developers of RSK sidechain, decided to include the semi-trustless federation of signees to maintain custody of the coins exchanged between Bitcoin main net and Sidechain.

The inherent risk associated with such an arrangement, especially considering their small and compromisable size of just 25 participants,  have seen the crypto community shy off the platform. Most of these lie in wait of the proposed upgrade to the 2-way link that elbows out the federation in favor of BTC and SBTC merge miners. 

Bottom line

It is about time Bitcoin blockchain took advantage of its massive industry support and incorporated smart contract features. And the Rootstock sidechain is here to give the blockchain its much-needed push towards execution of smart contracts. By adopting RSK, users of the already dominant legacy coin stand to benefit from such features only available with the newer blockchain models as faster transaction processing speeds, a DApps building platform, and the ability to execute bitcoin blockchain-backed smart contracts. Looking at the Bitcoin community, however, one can’t help but notice the pockets of resistance and doubts forming around the effectiveness and reliability of the Sidechain. And these are majorly attributable to its reliance on the federation of signees as custodians of the locked coins. Only time will tell if this will change once RSK migrates to verification by merge-miners.

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Crypto Daily Topic Cryptocurrencies

Your Complete Guide to Using Cryptocurrency Trading Bots

While trading cryptocurrency is fairly straightforward, it can be quite a draining task trying to keep tabs on market trends, considering that the crypto market never closes. On top of it all, the unpredictable market’s volatility doesn’t make things easier for both new and experienced crypto traders. This is where trading bots come into play. 

While trading cryptocurrency is fairly straightforward, it can be quite a draining task trying to keep tabs on market trends, considering that the crypto market never closes. On top of it all, the unpredictable market’s volatility doesn’t make things easier for both new and experienced crypto traders. This is where trading bots come into play. 

While trading cryptocurrency is fairly straightforward, it can be quite a draining task trying to keep tabs on market trends, considering that the crypto market never closes. On top of it all, the unpredictable market’s volatility doesn’t make things easier for both new and experienced crypto traders. This is where trading bots come into play. 

Generally, a trading bot is a special algorithm designed to read different market indicators and to mark trade entry and exit points, as well as complete trading transactions on behalf of the user. 

The biggest advantage of trading bots, besides deeply analyzing intricate trading data, is the accuracy and high speed at which they execute trading processes. Such a high degree of efficiency is appreciated by traders whose strategies involve time-sensitive processes such as limit order and stop-loss order. 

It’s easy to create your own trading bot, especially if you have a good grasp of coding and programming languages. But this doesn’t mean the less tech-savvy traders are locked out from trading using bots. 

There are a good number of pre-programmed trading bots that cryptocurrency traders can utilize and even customize to fit their trading strategies. 

But before you pick the first trading bot that shows up from your search, there are a few things you should consider to ensure you make the right decision. 

Factors to Consider When Choosing a Trading Bot

☑️Ease of Use

The idea of leveraging the efficiency of bots is to automate your trading process. However, it doesn’t mean that you will entirely leave the bot to handle everything. You need a trading bot that you can easily manipulate its functionalities and tweak it in line with your trading objectives. 

So, ensure your trading bot of choice has an intuitive interface, allowing you to control it without the need for any technical knowledge. 

☑️Security

Cryptocurrency, much like anything else on the cyber-space, is prone to hacking among other cybersecurity threats. Besides, using a trading bot means that you are giving the bot access to your funds. This can be risky, especially if the bot’s security is questionable. 

The true test of a bot’s security is examining the company behind the bot. Ideally, the bot should be built by reputable developers who stand behind their work. You can also check users’ reviews on the bot’s security. 

☑️Reliability 

Even with its efficiency, a trading bot isn’t helpful if it frequently experiences downtime or goes offline for whatever reason. An unreliable bot means that you’ll miss out on a trading opportunity. 

Again, users’ reviews can help you know whether a particular bot is reliable or not. 

☑️Profitability

The main reason for using a trading bot in the first place is to maximize profits by utilizing the bot’s efficiency. 

One way to know if a bot is profitable is by checking whether it allows for the customization of trading strategies. Also, look out for handy trading features that give you an edge when trading. 

☑️Compatibility with Exchanges

Although most crypto trading bots are compatible with major exchanges, it’s always good to ensure that your bot of choice is compatible with the exchange you want to trade on. 

Best cryptocurrency trading bots in the market:

1. Cryptohopper 

The definition of a reliable bot, as we know it, is changing thanks to this cloud-based cryptocurrency trading bot. The bot continues to trade even when your computer is switched off, ensuring you don’t miss any trading opportunity. Additionally, since the bot doesn’t run on local storage, your computer is able to maintain its peak performance, which isn’t the case when using typical bots.

Being cloud-based, you might be tempted to think that the bot is reserved for the tech-savvy traders. Well, that isn’t the case! In fact, Cryptohopper is among the first trading bots to integrate external trading signaller that allows novice traders to run the bot on autopilot. Experienced traders also have the freedom to configure their own trading signals based on multiple technical indicators. 

One of the most unique features of this trading bot is its backtesting capabilities that allow you to reconstruct trades that could have occurred in the past, using historical data and rules of a given trading strategy. The results allows you to determine the effectiveness of the strategy, saving you potential losses. Other handy features include trailing stops, intuitive templates, and technical analysis. The bot can also be configured to only sell with profit.

In addition to its features, Cryptohopper is compatible with major exchanges such as Coinbase, Bitfinex, Kraken, Bittrex, and even less popular ones like KuCoin, Poloniex, and Cryptopia. 

Cryptohopper charges a relatively affordable fee for using the bot. But first, you’re offered a 7-day free trial, so you can familiarize yourself with the features as you test out its profitability.  Once you are ready to use it, you can subscribe to the basic monthly plan dubbed “Explorer’ for just $16.58/month or upgrade to the “Adventurer” package for $41.58/month. The premium plan goes for $83.25 and comes with more functionalities compared to the other subscription plans. 

2. 3Commas

3Commas is a web-based trading bot that’s compatible with numerous exchanges. Recently, the company behind this bot collaborated with Binance exchange, a partnership aimed at ensuring convenient trading conditions. 

The bot has a user-friendly interface that allows you to replicate the trading strategies of other successful traders, as well as customize your own. Its best capabilities are the stop loss and take profit targets, which can be set simultaneously. You can also trade various cryptocurrencies at the same time to maximize your profits. 

To guarantee reliability, 3Commas can run both on Android and iOS devices, allowing you to monitor your trading progress on the go. The best part is that the bot runs 24/7 regardless of the device you are using. You can access all your trades across various exchanges conveniently from the trader’s diary that comes with the bot. This comes in handy in tracking your profits and other transactions. 

The bot’s monthly plan will set you back $29/month, the ‘Advanced Package’ gives you access to long and short algorithms as well as view and copy functionalities, for $49/month. The ‘Pro Package’ gives you access to all premium features such as margin trading bot, composite bots, and ability to use Bitmex, Binance Futures, and Bybit bots.

3. Gunbot 

Gunbot has been around for quite some time and not even once in its long history had the bot fallen victim to hacks or security breaches of users’ wallets. Professional and beginner traders will certainly have it easy using the bot due to its simple layout. If you encounter any problem when using the bot, you can seek help from the vast community of Gunbot users on their social media platforms. 

Nonetheless, even with its basic interface, the bot houses configuration abilities based on technical indicators used that are used by manual traders.

The unique selling point of this bot is that it charges a one-time, flat rate for using it. The fee is paid in terms of Bitcoins, usually 0.1BTC or 0.3 BTC, depending on the features you would like in your bot. Upon purchase, you’ll be offered the company’s digital coin known as Gunthy coin. With this coin, you can easily sell your bot, should there come a time you want to quit trading. 

Its only downside is that the bot cannot efficiently stop losses on a highly volatile market.

4. Gekko

Although it is user-friendly to traders regardless of their skill level, traders with advanced tech knowledge will get the most out of this free trading bot.

To start with, Gekko can be downloaded for free on GitHub – a platform designed for tech gurus. You don’t need any technical knowledge to navigate the platform and download the bot. However, being open-source software, a great deal of configurations and improvements require a good grasp of coding. 

Nonetheless, even without any tech skills, you can still use the bot to perform basic trading functions such as backtesting and set it on autopilot.  

The bot is designed to run on virtually all operating systems, including Linux, MacOS, and Windows, in addition to being compatible with major exchanges such as Bitfinex, Kraken, and Bitstamp. 

Conclusion

Trading bots offer the much-needed efficiency to stay on top of the dynamic cryptocurrency market trends. Compared to brick and mortar type of trading, trading bots make more rational trading decisions since they aren’t subject to emotional waves that come with the market fluctuations. 

To an extent, the lack of emotions can be a flaw since they aren’t attached to the money, and so, the bots can continue trading even when making losses. It’s for this reason that bots require periodic monitoring just to ensure they are trading in accordance with your overall trading goals. Most importantly, ensure you are familiar with all the trading basics before using any trading bot. 

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Cryptocurrencies

What are Bitcoin Futures? 

Futures markets have, for long, been in existence in more established asset classes such as securities and bonds. However, it was not until late December of 2017 that Bitcoin futures were introduced on regulated trading avenues. Although it is the only one of their kind in the digital currency space, Bitcoin Futures is regarded as a significant milestone in bringing cryptocurrencies closer to mainstream investing. 

Futures markets have, for long, been in existence in more established asset classes such as securities and bonds. However, it was not until late December of 2017 that Bitcoin futures were introduced on regulated trading avenues. Although it is the only one of their kind in the digital currency space, Bitcoin Futures is regarded as a significant milestone in bringing cryptocurrencies closer to mainstream investing. 

Futures markets have, for long, been in existence in more established asset classes such as securities and bonds. However, it was not until late December of 2017 that Bitcoin futures were introduced on regulated trading avenues. Although it is the only one of their kind in the digital currency space, Bitcoin Futures is regarded as a significant milestone in bringing cryptocurrencies closer to mainstream investing. 

Similar to any commodity/asset futures, Bitcoin futures are not necessarily for maximizing profits but rather serve as a risk management tool to hedge against the risk of the volatile crypto market.  

To understand what exactly are Bitcoin futures, it demands we explore how typical futures contracts work in the first place. 

What are Futures Contracts?

Futures contracts are basically an agreement between two parties to buy or sell an underlying asset at a predetermined price on a precise future date. Once the contract expires, both parties are obligated to fulfill the terms of the contract at the agreed price, regardless of the actual price at the time of contract execution.

The parties involved usually take one of the two positions of a futures contract; long or short. If you take the long position, it means that you agree to buy the underlying asset/commodity at a specific price in the future, while the short position means the other party agrees to sell the asset at a specific price once the contract expires. 

The idea here is to hedge risks associated with adverse price movements of the commodity. If, for instance, you expect the price of a commodity to rise, you can take the long position in a futures contract at the current market price. Upon the expiration of the contract, if the price rose, you’ll have saved some money since the contract will be executed at the lower market price as agreed.   

In the same vein, futures can also be used to speculate price movements to realize profits. For instance, if the buying party anticipates that the price of the asset will rise leading up to the expiration date of the contract. They can profit off the price difference, if indeed the price rises, by selling the contract at a higher price to another party, before the expiration date. 

How do bitcoin futures contracts work?

Bitcoin futures are similar to traditional financial futures, in that they allow you to speculate the Bitcoin’s price without having to own any Bitcoin. 

Investors can either take the long position on Bitcoin futures contract, if expecting prices to increase or short position if they own Bitcoins and want to mitigate potential losses from the anticipated drop in BTC prices. 

For instance, say, you own 10 Bitcoins at a market value of $5,000 for each coin, and you anticipate the price will drop to $4,000 in two months. You can take a short position, and agree to sell your Bitcoins at the prevailing market price. Close to the expiration date of the contract, you can decide to buy back (long position) the futures at the now low BTC price, thus earning you $10,000 while saving you the losses caused by the drop in price. 

Bitcoin futures unique advantages

I. Regulation

The crypto universe is torn between two major groups; those that want the coin to remain unregulated and those that believe regulation of BTC is an essential step towards mass adoption. 

Bitcoin futures are regulated by the Commodity Futures Trading Commission (CFTC). This places BTC on a path to mass adoption. It should be noted that CFTC is not as strict as its alternative, Security Exchange Commission (SEC). So, Bitcoin maintains a good deal of its liberal nature. 

II. Enhanced Liquidity

Thanks to the regulatory rules imposed by CFTC, Bitcoin futures are becoming more appealing to professional traders and big money Wall Street investors. With their more dollar volume input, BTC futures may become even more liquid than Bitcoin itself. 

III. Price Transparency

Bitcoin futures contracts are settled each trading day using a transparent reference price, which is written into all Bitcoin contracts in other markets. This will make it easy to use Bitcoin as a payment method since transparency creates a unified price that is essential in mitigating the volatility of spot prices. 

Getting started with Bitcoin futures trading

Now that you understand how to place and execute a Bitcoin futures contract, there are a few crucial things you need to know for profitable trading. 

Get Familiar with the Trading Rules

Trading Bitcoin futures is a bit different from trading typical equities and bond futures. This is due to the fact that they have a significantly higher margin requirement compared to a regular futures contract. 

Chicago Mercantile Exchange (CME) and Chicago Board of Exchange (Cboe), the main Bitcoin futures trading avenues, requires one to put up a 35% and 44% margin, respectively, of the futures contract value. Although this margin can be achieved by trading other financial products on the exchange, the products aren’t offered to new traders. 

Margin is basically the amount of money a trader must pay first as collateral when taking a futures position. Usually, for most traded assets, the margin is under 10%. 

So, this is to say that if a contract was trading at $10,000 on CME, a trader wishing to take a long or short position, will have to pay $3,500. The trader can also be subjected to additional margin calls if the account falls below a certain level. 

Understanding Price Limits

Price limits are the maximum price ranges allowed for a futures contract in a trading session. Bitcoin futures are subject to limits on how far the price can move before triggering a temporary or permanent halt. 

In the case of Cboe, a contract will be halted for two minutes if the best bid, leading to the contract expiration date, moves 10% up or down the previous day’s prices. 

Build a Trading Strategy

Developing a trading strategy is fundamental when trading any type of financing product, including Bitcoin futures. 

Your trading strategy should revolve around what you want to achieve – prevent loss or make a profit- while paying attention to your risk appetite. For this reason, consulting an experienced futures broker is recommended, so as to design a personalized strategy that is aligned to your objectives. 

Besides, trading directly on CME is almost out of reach due to the high cost a trader is required to pay before they can trade on the platform. As an individual investor, you, therefore, need to find a broker who trades on CME. 

Takeaways

One of the best things about Bitcoin futures is that you don’t need a wallet nor BTC coins to participate in the trade. Bitcoin futures, like most futures contracts, are settled in cash equivalents, so no tangible coins are exchanged between parties, saving you the hassle of owning or storing digital coins. Traders collect their gains once the other party honors their contract obligation. Also, you can conveniently place a short without necessarily borrowing the underlying asset ( Bitcoins), meaning you don’t have to own any coins. 

As lucrative as it may sound, it is important to keep in mind that Bitcoin futures are a highly risky investment instrument. As such, it is advised to only invest that amount you can afford to lose, should the contract go opposite of what you initially speculated. However, there is always the option to close out a position before the expiration date, in an effort to minimize or entirely avoid losses. 

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Cryptocurrencies

How to Choose and Accept Cryptocurrency for Your Business

As with any other technology, the digital currencies have revolutionized not just the tech world but also the health, finance, and manufacturing industries. 

As with any other technology, the digital currencies have revolutionized not just the tech world but also the health, finance, and manufacturing industries. 

As with any other technology, the digital currencies have revolutionized not just the tech world but also the health, finance, and manufacturing industries. 

Their disruptive aspect can be linked to the underlying protocol, blockchain, which most cryptos run on. 

This technology delivers faster and more secure transactions compared to using fiat currencies. Moreover, there are no central authorities such as banks or government, involved in the transaction. As a result, this lowers the transaction fees saving you money in the long haul.

But, ever since the Bitcoin craze back in 2017, there has been an influx of cryptos in the market. For any business owner, the overwhelming number of cryptocurrency choices can be daunting, especially with reports that some coins are a Ponzi scheme. 

Criteria used to choose the right crypto for your business

So, which criteria should business owners use to choose the right cryptocurrency for their enterprise?

☑️Value of the Coin

Choosing a coin that has high value shields your business from losses caused by the volatile nature of cryptocurrencies. This is especially true since highly valued coins tend to be more stable, meaning their prices don’t change radically. 

The value of a crypto is directly related to its demand. The higher the demand, the higher the value of the coin. 

☑️Usability

The usability of a coin can be viewed in different spectrums, but it all boils down to how users interact with a coin. 

The most basic usability aspect of a coin is in terms of the number of people using the coin. A popular digital coin certainly has a more significant number of users compared to a less popular coin. The idea here is to choose a digital coin that has a good number of users. This way, you can be assured that most of your customers have access to the coin of your choice. 

Also, usability entails the user-friendliness of a cryptocurrency. A coin with a complex interface can be intimidating to a particular demographic of your customer base, thus limiting your products or services to the tech-savvy clientele. 

A coin with an intuitive interface should be easy to perform simple functions such as opening and funding the wallet as well as sending and receiving funds. 

☑️Transfers

One of the primary reasons behind businesses accepting payments in cryptocurrencies is due to the fast transaction associated with the payment process. 

It’s common for business owners to wait for days or even weeks for payments made using a debit card, to reflect in their bank accounts. This can be frustrating, especially if you have urgent bills to pay or need to make a payroll.

While cryptocurrencies offer faster transactions than conventional currency, some aren’t as fast as you would wish. Take bitcoin, for instance. The network on which it operates has a scalability problem, which translates to slower transactions due to its limited blockchain size and frequency. 

Of course, there are altcoins such as Monero, and Litecoin that offer faster transactions and even charge less than bitcoin for sending and receiving funds. These coins take less time to confirm a block, amping up the transaction process. 

How to Accept Cryptocurrency for your Business

There are three main ways of accepting cryptocurrency as a form of tender for products and services. 

Direct Deposit

If you only have a small number of customers using cryptocurrency, direct deposit works best. All you need is to create a wallet and share its address with your customers. 

Ideally, you should partner with an exchange platform to help you create a wallet. This way, it will be easy for you to link your wallet to your bank account, so as to withdraw funds in fiat currency. 

Besides crypto exchanges, you may consider creating a versatile digital wallet with popular providers such as Exodus and Jaxx. With one of these wallets, you can accept any type of cryptocurrency for efficient conversion to conventional currency. 

To make the transactions easier for your customers, you should present your wallet in the form of a QR-code. Customers will just scan the code with their phones, and transfer the agreed amount directly to your wallet. You can request a wallet QR-code from the exchange site you’ve partnered with or use an independent app dedicated to creating one for streamlined cryptocurrency payments. 

Point of Sale (PoS) Equipment

A cryptocurrency PoS equipment is accompanied by a piece of software that automatically links your wallet to your bank account, for a seamless payment experience. The equipment also supports cryptocurrency-based debit cards and even offers withdrawal services in the form of fiat currency. 

Alternatively, instead of buying a cryptocurrency  PoS terminal, you can create a merchant digital wallet and link it to your existing PoS system. Unlike the traditional digital wallet, a merchant wallet comes with unique functionalities that make it compatible with your accounting systems for easy bookkeeping. 

Once you’ve created a merchant digital wallet with your preferred provider, you’ll then receive a public address, private key, and a QR-code. Now, using the instructional manual, integrate these details to your existing PoS system, invoices, and shopping cart. 

Plug-ins and Cash Out

Exchanges such as Binance and Coinbase offer plug-ins that are installed into your online store. It becomes easier to integrate these plug-ins if your store is on popular platforms such as Shopify, WordPress, or eBay. 

Customers can, therefore, shop from your store and check out using crypto, which is then deposited to your wallet address or bank account. 

Boost Your Business by Accepting Cryptocurrency Payments

Accepting cryptocurrency payments gives your business a competitive edge, as technology becomes more integrated into all business operations. Being an international currency, cryptos are also a gateway to broadening your market outreach. 

Of course, there are a few drawbacks with this payment method. Volatility remains the biggest downside to cryptocurrency payment for business services. With such unprecedented price swings, the most viable solution is to convert any cryptos to fiat currency, immediately upon receipt to protect yourself from loss of value. 

In addition to volatility, you should also maintain compliance with regulatory tax schemes that are subject to your jurisdiction. 

Nonetheless, business owners are advised to keep an eye out for cryptocurrency trends and consult experts in the field, to understand every aspect of digital currencies before integrating them into payment systems. 

Categories
Cryptocurrencies

What is Token Burning and How Does it Work?

Token burning, a concept unique to the cryptocurrency market, is gradually becoming an intrinsic feature of newer and future cryptocurrency projects. Even more recently, well-established altcoins such as Binance have adopted this concept making it worth the attention of any cryptocurrency investor. 

Token burning, a concept unique to the cryptocurrency market, is gradually becoming an intrinsic feature of newer and future cryptocurrency projects. Even more recently, well-established altcoins such as Binance have adopted this concept making it worth the attention of any cryptocurrency investor. 

Token burning, a concept unique to the cryptocurrency market, is gradually becoming an intrinsic feature of newer and future cryptocurrency projects. Even more recently, well-established altcoins such as Binance have adopted this concept making it worth the attention of any cryptocurrency investor. 

As the name suggests, coin/token burning is the process of ‘burning’ coins, or rather, the irreversible destruction of coins/tokens in an effort to eliminate them from circulation. 

To understand this concept better, let’s delve into how the whole ‘burning’ process works. 

How Does Token Burning Work?

Despite the extreme image the phrase paints, token burning doesn’t involve any kind of token disintegration. In fact, it’s impossible to disintegrate coins since blockchain – the underlying cryptocurrency protocol – is immutable, meaning the protocol’s history and data cannot be altered in any way. 

What actually happens is that the coins/tokens are algorithmically taken out of circulation by sending their signatures to a public address known as an ‘eater address.’ The keys to this public address are private and cannot be obtained by anyone. In essence, it means that once the tokens are sent to this address, they are unrecoverable and can never be used. Ever!

All burnt coins/tokens are then recorded on the blockchain transparent ledger system for all nodes to see and confirm that the coins have been indeed destroyed. 

While token burning serves the same purpose, which is the elimination of coins from distribution, it differs in the scope of execution. For instance, some projects will execute a one-time burn after their Initial Coin Offering (ICO), to help eliminate any unsold tokens. Other projects favor periodic burning of tokens based on the token’s utility and size, among other variables. Binance coin (BNB), for example, burns its tokens quarterly, with an aim to reach a threshold of 100 million BNB burned tokens. Alternatively, project developers can buy back their tokens from exchanges and take them out of circulation by sending them to the ‘eater address.’ 

A few other coins, such as Ripple, burn token progressively with each transaction. When parties transact using the coin, they must incur a transaction fee, pretty much like sending Bitcoin to another BTC wallet. However, in the case of Ripple, the transaction fees aren’t awarded to miners. Instead, these fees are automatically burned. 

Why do we need to burn tokens?

It’s quite startling to understand why crypto projects burn their precious tokens. But the process comes with its own benefits, favoring not only the developers but also the coin users. Here are the main motives behind token burning;

☑️Increase the Value of Coins 

The most common reason behind token burning is to boost and encourage the growth of a coin’s value. Going by the economic laws of demand and supply, reducing the supply of a commodity in the market fuels the demand for that particular project. As such, by burning a token, the supply of a coin reduces in equal measure, prompting a demand of the coin since there is a lesser amount of coins to satisfy the people’s demand. Consequently, the price of the coin appreciates, stabilizing its value. 

To the investors, the growth in value encourages them to hold the coins for longer in anticipation of even better prices as the demand increases. Also, holding the coins for longer helps maintain a sound network bandwidth, which is beneficial to the developers.

☑️Provision of Dividends

The provision of dividends is closely tied to the resultant increase in coin value after burning. However, this benefit works best in security tokens rather than in their utility counterparts. 

A security token is classed as an asset, and thus those holding it are regarded as investors. This is not the case with utility tokens. 

Nonetheless, with the increase in a coin’s price after burning some of them, the developers indirectly reward the coin holders, since the value of the asset has appreciated. This move plays out perfectly in countries such as the USA, where cryptos are discouraged from handing out dividends directly to their token holders. 

☑️Protection Against Spam

All cryptocurrencies are under the computing realm, which makes them vulnerable to cybersecurity threats. Having this in mind, it’s easy to understand why tokens can fall victim to Distributed Denial-of-service attack (DDOS), especially with the growing number of cryptocurrency users. 

Basically, DDOS is a cyber-attack in which the perpetrator seeks to flood a system with an influx of requests, so as to prevent the execution of some or all legitimate requests.

In the same vein, a DDOS attack on token targets at clogging the network, preventing the execution of transactions. By burning tokens, the developers end up reducing the overall transactions to a manageable number, thus safeguarding the network from DDOS attacks and spam transactions. 

Ripple is a perfect demonstration of how coin burning prevents spamming. By automatically burning a portion of the transacted amount, Ripple discourages the need to overload the network to gain a quick profit.

☑️Correct Errors

Although in rare cases, sometimes project developers make serious mistakes that can only be corrected by token burning. 

For instance, a project may issue an excess amount of coins or experience an increase in the number of tokens as a result of technical errors. In other cases, tokens unfit for trading. For example, those meant to support a transaction may end up into public circulation. Theoretically, an increased supply translates to lower demands, plummeting the coin prices. 

As a corrective measure, the excess tokens are burnt to avoid some of the consequences brought by the errors incurred. 

☑️Build Trust and Loyalty

Gaining trust from coin holders is the ultimate goal of any cryptocurrency, particularly one that is new in the market. 

After the Initial Coin Offering (ICO) of new crypto, its price is bound to increase. The project developers may decide to make more profits by selling excess coins to exchanges, at the prevailing spiked prices, which is unfair.  More so, by selling the excess coins, it would lead to allegations that the developers are only committed to gaining profits and that their coin has no real value. 

However, burning the excess coins shows that the developers are committed to the long-term growth of the coin. As such, the funds raised from the ICO will be used for business operations. But most importantly, burning excess coins help decentralize the project. 

Conclusion

As hardcore as it may sound, token/coin burning is proving to be an effective method of maintaining a balanced crypto-ecosystem. With time, future cryptocurrencies will certainly adopt this mechanism giving its numerous benefits, especially in a coin’s infancy stage. 

Also, with the hope that cryptocurrency space will stand the test of time, coin burning is arguably the best bet to maintaining the long-term value of a crypto. 

 

Categories
Crypto Daily Topic Cryptocurrencies

Privacy Coins: Here Is Your Complete Guide

Public blockchain cryptocurrencies such as Bitcoin and Ethereum utilizes cryptography technology to disguise users’ identity. To an extent, this protects users’ privacy, making the cryptos ideal for pseudonymous transactions. However, the transparent nature of these cryptocurrencies’ ledger system compromises users’ complete anonymity. As such, it’s easy for malicious third parties to trace all your transactions […]

Public blockchain cryptocurrencies such as Bitcoin and Ethereum utilizes cryptography technology to disguise users’ identity. To an extent, this protects users’ privacy, making the cryptos ideal for pseudonymous transactions. However, the transparent nature of these cryptocurrencies’ ledger system compromises users’ complete anonymity. As such, it’s easy for malicious third parties to trace all your transactions […]

Public blockchain cryptocurrencies such as Bitcoin and Ethereum utilizes cryptography technology to disguise users’ identity. To an extent, this protects users’ privacy, making the cryptos ideal for pseudonymous transactions.

However, the transparent nature of these cryptocurrencies’ ledger system compromises users’ complete anonymity. As such, it’s easy for malicious third parties to trace all your transactions and exploit this information to jeopardize your privacy. Now, this is where privacy coins come into play. 

What Exactly are Privacy Coins?

Unlike public digital currencies, privacy coins offer robust anonymity that works by obfuscating your transaction history and amount, making it impossible for third parties to piece together your identity. To achieve it, privacy coins leverage various innovative technologies, giving them a competitive advantage, as far as users’ privacy is concerned. 

While there are a good number of privacy coins in the market, we’ll be taking a comprehensive look into the best five coins, based on their technology, adoption, and market capitalization. 

Monero – XMR

Started in 2014, Monero has grown to become one of the most popular privacy coins backed by a stable market cap. The coin gives its users complete control of their data and anonymity, allowing them to keep their transaction information away from privy eyes.

In addition to its default private key cryptography, the Monero employs CryptoNote proof-of-work protocol, to obscure all details related to a transaction, including the source of funds. To further enhance users’  privacy, the protocol is complemented by unique technologies such as Ring Signatures, Ring Confidential Transactions (RingCT), and Stealth Address. 

As the name suggests, Ring Signature technology works by bringing a group of signers to sign a single transaction. This forms a ring where only the sender can generate and send a one-time-key, while the actual recipient will be the only one who can detect and spend the funds linked to the key. With the technology in place, it becomes difficult for any transaction to be traced back to any user, which in turn secures users’ privacy. 

To guarantee that the coins have not been fraudulently fabricated in the transaction, RingCT creates a cryptographic proof which verifies that the sum of the input and output amounts is equal. The technology does this without disclosing the actual transaction numbers, thereby masking the amount the two parties transacted. 

Stealth Address, on the other hand, is designed to make all transactions untraceable. Basically, a one-time-key is created for each transaction, giving the sender and recipient the freedom to disconnect themselves from a transaction. What’s even better is that the key isn’t linked to the recipient’s wallet address, making it harder for an outside observer to trace the amount sent. 

Dash – DASH

Dash coin is an open-source peer-peer cryptocurrency that was launched after Bitcoin forked in 2014. In fact, the coin borrows heavily from its parent, BTC, in terms of privacy protection. It utilizes a concept known as PrivateSend, which is an improved version of Bitcoin’s CoinJoin, designed to anonymize transactions.

Essentially, the concept works by allowing multiple parties, usually three users, to pre-mix their coins into a single transaction, and then send these coins to new addresses, randomly. The transactions are further taken through a series of such operations, which makes the amount, the sender and destination unknown to third-parties. 

The instant-send feature of the coin facilitates faster transactions, by channeling inputs and outputs along the second tier of the Dash blockchain. 

Although not related to privacy protection, Dash coin also features a management mechanism that oversees future funding and network development through a self-governing community know as Decentralised Governance by Blockchain (DGBB). 

ZCash – ZEC

Being an iteration of Zerocash, ZCash implements it’s predecessor’s protocol that is based on zero-knowledge cryptography known as ZK-SNARKs. As intricate as it may sound, the technology’s functionality is pretty straightforward.

Basically, ZK-SNARKs encrypts all transactional details that are stored on the network, which include information about the sender, the recipient, and the amount transacted. In the process, the technology also verifies that the data being exchanged is authentic, without necessarily broadcasting the said information, besides the fact that it is true.

Keep in mind that using this privacy feature is optional, and thus users can opt to have their transaction recorded publicly. But it’s believed that users who choose the transparent option end up compromising the security of the entire network. 

PIVX – PIVX

Private Instant Verified Transaction (PIVX), which also goes by the same tickle symbol as its acronym, is an open privacy coin with a growing popularity. It was launched as a Dash coin fork but runs on the Proof-of-Stake algorithm rather than Proof-of-Work used by Dash coin. This means that PIVX doesn’t rely on miners to verify transactions and, as such, rewards the coin holders, who are also responsible for validating transactions.

However, to be among the users who are rewarded with coins as well as approve transactions, you must have a stake of at least 10,000 tokens. After achieving the threshold token, you are allowed to own a master node, which gives you the power to on how the development budget will be used and even submit developmental suggestions. 

PIVX also has a near-instant transaction verification feature and can be trusted in safeguarding users’ privacy. 

Verge – XVG

Much of Verge’s popularity can be attributed to the endorsement it received from John McAfee, a reputable businessman in the cyber-space. Although it is quite unstable, the coin has succeeded in providing a fast and decentralized way of making transactions, while maintaining users’ privacy.

By default, Verge integrates the Tor network into its wallet, encrypting your IP address, such that your online transactions can be linked to you. 

Its most privacy protection arsenal is the Wraith protocol that allows users to switch between public and private ledger systems. 

As with Bitcoin, the public ledger system displays your account balance, wallet address, and that of the recipient, in addition to the actual amount you are sending. Choosing the private ledger option keeps these details under wraps, protecting you from third parties who may be trying to trace your transactions. 

Other noteworthy features include 5 Proof-of-work algorithms, which have a limited target block time, improving protection against attacks. 

Takeaway

With the increasing cybersecurity threats, protecting your online privacy becomes a priority, especially when transacting cryptocurrencies. Sure, there is no problem in displaying your transactions history for all to see, since you don’t have anything to hide in the first place. But the idea that third-parties can use your transactions to trace activities should prompt you to keep your cyber-footprints untraceable. 

As such, you may consider investing in some of the digital currencies mentioned above in an effort to protect your personal privacy. 

Categories
Cryptocurrencies

Exciting Use Cases of Decentralized Finance

Today’s finance landscape is inherently unequal – with millions locked out of opportunities due to their location, being undocumented, or having low economic means.  Few would have foreseen that the technology that brought us Bitcoin could potentially solve this enduring problem.  Decentralized finance (DeFi) is all of these things: an idea, a belief system, a […]

Today’s finance landscape is inherently unequal – with millions locked out of opportunities due to their location, being undocumented, or having low economic means.  Few would have foreseen that the technology that brought us Bitcoin could potentially solve this enduring problem.  Decentralized finance (DeFi) is all of these things: an idea, a belief system, a […]

Today’s finance landscape is inherently unequal – with millions locked out of opportunities due to their location, being undocumented, or having low economic means. 

Few would have foreseen that the technology that brought us Bitcoin could potentially solve this enduring problem. 

Decentralized finance (DeFi) is all of these things: an idea, a belief system, a movement, and a blockchain-based technology that promises to eradicate the aforementioned barriers to financial access, or to put it another way, to democratize finance. Already, decentralized finance is making waves as DeFi platforms and products increase by the day. 

In this guide, we explore some uses cases of this new and exciting technology, as well as some of the real-life applications that are making brave inroads into the space. 

But before we do that, let’s kick off with a primer on what exactly DeFi is, plus why we need it. 

What is Decentralized Finance? 

Decentralized finance is an emerging, blockchain-based ecosystem of finance that seeks to expand finance.  

It aims to make financial services more accessible and inclusive for everyone by making financial markets and products open-source, transparent, and under no particular authority. 

In DeFi world, everyone would have absolute control over their assets and interact with other participants through peer-to-peer (P2P), decentralized applications (DApps). 

What Problems Does DeFi Solve? 

DeFi’s chief goal is to decentralize financial services and make them available to all – an aspect that today’s centralized financial system is sorely lacking. As such, DeFi solves two main problems which we’ll look at in greater detail below: 

Inequality in Finance. Today, millions of people are locked out of access to loans, mortgages, a bank account, savings, insurance, and so on. DeFi aims to eradicate or alleviate this problem by creating a finance system that has no systemic or institutional barriers. All one would need is a smartphone and internet connectivity to access services.  

Financial Censorship. Today’s centralized finance system means that governments, banks, or intermediaries can restrict or prevent an individual’s or a company’s access to their assets. For example, the government could freeze the assets of a company that openly defies it, or an individual that it perceives to be rogue. By contrast, with DeFi, financial products are under no one’s control. Hence no one can arbitrarily restrict an individual’s or company’s assets. 

What Are the Advantages of DeFi?

Why should you care about DeFi? What difference does it propose to the current financial system? These are some of the advantages of DeFi: 

Autonomy: DeFi applications do not need a go-between party in transactions or an arbitrator in case of disputes. All terms are set in the code, and users have complete autonomy over their funds at any time. This eliminates the costs that would go into providing such intermediary services.   

Security: Since DeFi services are set up on decentralized blockchains, single points of failure are eliminated. Data is recorded on the blockchain and distributed across computers all over the world, reducing the chances of services being compromised.

Tradability: Thanks to DeFi, the tokenization of assets is now possible. Tokenization means one can quickly sell an asset that was previously illiquid (not fast-moving), as well as divide an asset into parts that enable many market participants to buy just the portion they can afford, instead of losing out on a whole investment.

Accessibility. The world’s unbanked can access financial services that they previously couldn’t, thanks to DeFi. 

What Are The Use Cases For DeFi? 

The following are some of the potential use cases for DeFi: 

i. Payments

DeFi platforms or applications can be used to create blockchain-based protocols that allow individuals to have wallets via which they can make instant and cheaper payments. 

ii. Borrowing and Lending

DeFi enables open lending structures that have numerous advantages over the traditional borrowing and lending system, including: 

  • Ultrafast transaction settlements 
  • Ability to back up digital assets with real-life assets 
  • Credit checks are not necessary; hence more people can get access to loans
  • Potential standardization and interoperability of financial services, making them frictionless across various providers 
  • Democratizes the borrowing and lending process by providing borrowers with a wider pool of potential lenders.    

iii. Stablecoins

A stablecoin is an asset that attempts to circumvent the price swings in cryptocurrencies, making them suitable as mediums of exchange and stores of value. Stable coins thus provide the stability associated with fiat currencies while maintaining the benefits of cryptocurrency such as security, fast processing speeds, and overall efficiency. 

iv. Tokenization

This is the process of digitizing a real-world asset to increase its liquidity in the marketplace. Tokenization creates asset-backed tokens – which are digital tokens backed by real-world assets. Through tokenization, assets that traditionally have low liquidity, e.g., jewelry, real estate, and art, can quickly move their position in the marketplace. Also, thanks to the ability to divide assets into portions through tokenization, non-high income earners can get a piece of a product or investment that they previously couldn’t afford.  

v. Decentralized Exchanges (DExes)

Decentralized exchanges are platforms where users can exchange digital assets without relying on a third party, as in a centralized exchange. Instead, trades occur between parties in a P2P, automated process. Examples of DExes include Binance DEX, Radar Relay, and EtherDelta. 

vi. Issuance Platforms

An issuance platform is a service that allows people to tokenize their assets by providing them with the tools to create digital tokens. An issuance platform provides the necessary technical and legal infrastructure to ensure a seamless tokenizing process for users.   

Thanks to these platforms, individuals and companies can raise funds without the costs associated with intermediaries such as banks, credit unions, lawyers, etc. They also open up investment opportunities for investors of all net worth levels, origin, or geographical location. 

vii. Open Marketplaces

With open marketplaces, DeFi reimagines the age-old idea of a marketplace by turning it into a decentralized platform where people can exchange things of value. 

People can buy and sell non-fungible tokens (ones that are unique and thus not interchangeable, as opposed to fungible tokens such as Bitcoins that are interchangeable) such as trading cards, collectibles, domain names, game items, and so on. All transactions take place via blockchain-based smart contracts, removing the need for a central authority who would normally dictate the rules of the marketplace.  

viii. Prediction Markets

A prediction market is a group of participants who speculate on the outcome of future events – from elections to games to weather to natural disasters to commodity prices to major political events. 

DeFi provides a decentralized take on traditional betting markets such as casinos. Decentralized prediction markets are censorship-resistant, thus democratizing the betting space. For instance, individuals can participate in betting on their favorite sports events even if they live in jurisdictions where betting is restricted. It also means that anyone can create a bet without the approval of a central authority like, for instance, the administrator of a betting platform.

ix. Decentralized Autonomous Organizations (DAOs)

These are organizations that allow individuals to create organizations whose rules and bylaws are encoded on the blockchain. DAOs represent the highest degree of organizational transparency, with every process automated and with minimal to no human input needed. They solve the problems of centralized, hierarchical setups such as corruption, arbitrary decision making, delayed decision making, and so on. 

Real-Life Applications of DeFi

The DeFi world is up and running with applications that are already making their impact felt. The following are some of the most popular DeFi use cases out there today:

☑️MakerDAO. This is a decentralized autonomous organization running atop Ethereum’s blockchain. It has a dual coin system that aims to mitigate the volatility of cryptocurrency. The MakerDao platform has two tokens: Maker – which is volatile and fluctuates like any other crypto and is used to govern the Maker platform, and DAI, a decentralized stablecoin whose value is fixed in a 1DAI = 1USD formula. Makercoin utilizes external market economics to allow DAI to be a stablecoin.  

☑️Dharma Protocol. This is a finance application based on the Ethereum blockchain that democratizes borrowing and lending. As a lending platform, Dharma has all the works of a traditional lending platform – except that it expands finance in that anyone, anywhere, can access the Dharma platform as long as they have an internet connection. 

☑️Uniswap. Uniswap is an Ethereum blockchain-based decentralized exchange that allows individuals to trade ether and ERC-20 tokens. Thanks to its decentralized protocol, there is no need for middlemen – which saves costs, and users have complete autonomy over their crypto holdings.

☑️Bloom. Also, Ethereum-based, Bloom is a credit scoring and identity verification platform that aims to reduce credit fees, increase credit access, make credit histories shareable across countries, and make credit risk assessment fairer. Through Bloom, individuals with little to no credit stand a better chance to get access to loans. 

☑️dYdX This is a DEx that allows traders to exchange cryptocurrency derivatives. Derivatives are financial instruments that derive value from an underlying asset, e.g., Bitcoin futures. Via dYdX, traders can exchange their crypto derivatives of choice in a censorship-free, peer-to-peer, and fairly priced environment. 

Final Thoughts

By creating a financial system that’s open to all, accessible, affordable, and transparent, DeFi promises to wrestle economic power from those at the top and give it back to the people. And it proposes a powerful use of blockchain technology – decentralized financial services ranging from lending to asset issuance, to open marketplaces, to prediction markets, to censorship-free crypto exchanges, and more.

Categories
Cryptocurrencies

Your Complete Guide to Tether

The idea behind cryptocurrency was that it would be used side by side, or better, outmatch fiat currency in everything.

The idea behind cryptocurrency was that it would be used side by side, or better, outmatch fiat currency in everything.

The idea behind cryptocurrencies was that they would be used side by side, or better, outmatch fiat currency in everything. cryptocurrencies would be quicker, more secure, more efficient, and so on. But as it grew popular, it soon became apparent that cryptocurrencies were extremely volatile. This volatility renders them untenable for use in daily transactions – necessitating the advent of stablecoins. Today, Tether is the poster child of stablecoins, or so to speak.

This guide walks you through everything you need to know about Tether, this thing called stablecoin and the seemingly endless controversy that Tether finds itself embroiled in.

What is Tether?

Tether is a cryptocurrency whose tokens are pegged to an equivalent amount of fiat currencies like the US dollar, the Chinese Yuan, the Euro, and so on. The Tether network’s native tokens are called Tether, and they trade by the name USDT.

Launched in July 2014 and opened for trading in February 2015, Tether was first called RealCoin, later rebranded as Tether by Tether LTD,  the company behind the project.

Tether belongs to an emerging type of cryptocurrency called ‘stablecoins.’ Stablecoins operate under the premise that cryptocurrency valuations do not have to be as unpredictable as the traditional cryptocurrency.  As such, stablecoins are backed by a reserve of fiat currencies or other cryptocurrencies that rely on external market economics (e.g., MakerDao) to create stable coins.

More on Stablecoins

In today’s crypto scene, the vast majority of cryptocurrencies are used purely as speculative trade instruments without much ‘’real-world” use. But this is not what cryptocurrency was invented for. The idea behind stablecoins is to provide stability for cryptocurrencies, which would make them suitable for use as mediums of exchange and stores of value.

Since cryptocurrencies are characterized by wild price swings, stablecoins attempt to provide price stability and offer fast processing power (for massive use ) and, at the same time, the privacy and security of cryptocurrencies. Also, investors can bet on stablecoins because they won’t experience the same volatility associated with cryptocurrencies.

In short, the original cryptocurrency vision was for it to compete with fiat currencies in purchasing power, be deflationary, and suitable for payments — Stablecoins attempt to model this ideal behavior.

How Does Tether Work?

Tether is based on different blockchain platforms. One version uses the Bitcoin blockchain-based Omni platform, with the other utilizing Ethereum’s blockchain.

The Bitcoin blockchain’s version inherits the stability and security of the world’s first blockchain.

Tether coins are collateralized by one US dollar, meaning a Tether coin is backed by and can be redeemed at any time for a US dollar.

Previously, Tether supported only the US dollar as a redeemable currency but has since added the Euro and the Chinese Yuan to its repertoire. 

What’s the Point of Tether? 

As we previously stated, cryptocurrencies are known for their incredibly wild volatilities. Yet that is partly why they are so popular – because traders and investors can purchase a cryptocurrency and sell it when prices shoot up – making significant profits.

Tether, being predicated on a stable, fixed price offers no thrill sufficient enough for crypto investors.  The cacophony associated with the crypto market – the pumps, dumps, bubbles is absent when it comes to Tether. Owning the crypto is similar to having a bank account that gives you zero returns.

So what’s the point of Tether?

Let’s explore the reason why Tether is useful, after all:

Transaction times. Money deposits and withdrawals on foreign exchanges are notoriously time-consuming processes that can even take up to a week to complete. Also, banks are closed after 5 pm, during the weekends and holidays. Thus, the traditional way is no guarantee for fast, quick, and reliable transactions. On the other hand, Tether transactions take just minutes. Traders can take advantage of this to quickly shift funds and grab arbitrage opportunities in the crypto market.

Transaction fees. The traditional money transfer system is characterized by expensive costs. On top of that, if you’re using another currency not supported by a particular exchange, you’ll be charged an extra conversion fee. By contrast, Tether charges very minimal to zero fees for transactions within its wallets.

Price Stability.  While cryptocurrencies’ volatility is a good thing for trading, the reality is not as rosy when you’re at risk of losing money. Countless people have invested in crypto waiting for it to spike – with no avail. Trading cryptos, while exhilarating and potentially lucrative, comes with a great deal of risk. That’s where a stablecoin like Tether comes in useful.

For example, imagine you’re trading Bitcoin for Litecoin. You convert BTC to buy LTC. Litecoin rises by 20%. You wish to make a profit and sell your LTC for BTC. While your trade is undergoing, Bitcoin suddenly falls by 30%. While you were right about LTC’s direction, you suffer a loss as a result of BTC taking a dip. 

Tokenomics of Tether

As of 3rd January 2020, Tether ranks at an impressive #6 position in terms of market capitalization, with the number standing at $4, 639, 755, 545. Its 24-hour volume is $39, 402, 491, 795, with a circulating supply of 4, 642, 367, 414. Tether’s total supply is 4, 776, 930, 644 USDT. Its all-time high was $1.21 in May 217, 2017.

Where to Buy and Store Tether

The most common way to acquire Tether is to exchange another cryptocurrency for it. There are hundreds of cryptocurrencies that are paired with the crypto.

You’ll find Tether at some of the most popular exchanges, including Binance, Bitfinex, Kraken, Bittrex, Coinut, Poloniex, Exmo, and so on.

The ERC20 version of Tether can be stored in any Ethereum-compatible wallet, including MyEtherWallet, Trust Wallet, MetaMask, Atomic Wallet, Mist, and so on.

It is also highly recommended you store your coins in hardware wallets – which are immune from online vulnerabilities such as hacking, phishing, etc. Some reputable options include Ledger Nano, Trezor, Coinomi, Exodus, etc.

There’s also the option of storing your crypto on the dedicated Tether wallet web interface. However, you might rethink this option not only because it supports just Tether, but because its security history is less than satisfactory.

The Myriad Controversies of Tether

This guide would be remiss if we didn’t mention the litany of controversies that have beset Tether since its launch. 

Let’s look at some of the controversies below:

In May 2016, the International Consortium of Investigative Journalists leaked documents that pointed to Tether Ltd and Bitfinex as having the same CFO, CEO, and CSO. In what is called the Paradise Papers, it was revealed that both companies are operated by the same group of people and were not separate entities as the cryptoverse had been led to believe.

  • In April of 2017, Wells Fargo withdrew as the correspondent bank between US customers and Tether/Bitfinex. The two companies filed a lawsuit against the bank, only to withdraw it later.
  • Tether inexplicably terminated its relationship with a third-party audit firm that was to conduct an independent audit on its reserves. The audit was meant to establish if indeed Tether tokens in circulation were collateralized by real reserves.  Since then, no audit has ever been conducted to this day. 
  • In November 2017, a hacker made away with $31 million worth of USDT. The company quietly created a temporary hard fork to blacklist the address that had the funds – drawing criticism for that move.
  • In December 2017, the Commodity Futures Trading Commission issued a subpoena to Tether and Bitfinex on the grounds of lack of audit and what seemed to be its manipulation of Bitcoin’s price.
  • In June 2018, Bloomberg published a report titled “Crypto Coin Tether Defies Logic on Kraken’s Market, Raising Red Flags.” The report was published in response to what seemed as an unchanging price of Tether regardless of changes in the volume of buy and sell orders.
  • In April 2019, the New York Attorney General’s office accused Tether and Bitfinex of engaging in a collaborative cover-up of the loss of $850 million of co-mingled client and investor funds. The sum was previously held by a Panamian entity called Crypto Capital Corp. Per the court filings, authorities seized the money in various countries. Bitfinex had allegedly received $700 million from Tether’s reserves to hide the loss.

What’s the Future for Tether?

To date, Tether is yet to release any evidence that all Tether coins in circulation are backed by real reserves, but it insists so. In June 2019, the law firm Freeh, Sporkin, and Sullivan composed “The Tether Transparency” report – which indicated that Tether had real reserves backing the token. However, crypto experts were not satisfied with the report, which they insisted was no audit, but mere data obtained from Tether’s bank accounts.

As well, many of the controversies surrounding Tether have been debunked as FUD (Fear, Uncertainty, and Doubt) that’s so rife in cryptoverse.

Tether appears to be going steady despite all the storms. This can be attributed to the crypto community’s support for it as the most popular stablecoin, and the crypto project’s fighting back, sometimes with proof, against all allegations.

Summing it all, any external threats that would bring Tether down result mostly to naught, as it remains a favorite within the community.

Categories
Cryptocurrencies

What is QTUM? Demystifying the First-Ever Proof-of-Stake Blockchain

Even the most casual blockchain fan has most likely heard of Bitcoin and Ethereum. The two blockchains are the most popular in the blockchain and crypto space – thanks to their pioneering technologies. Bitcoin’s security and Ethereum’s smart contracts’ capability are peerless, a decade and six years after they were launched, respectively.

Even the most casual blockchain fan has most likely heard of Bitcoin and Ethereum. The two blockchains are the most popular in the blockchain and crypto space – thanks to their pioneering technologies. Bitcoin’s security and Ethereum’s smart contracts’ capability are peerless, a decade and six years after they were launched, respectively.

Even the most casual blockchain fan has most likely heard of Bitcoin and Ethereum. The two blockchains are the most popular in the blockchain and crypto space – thanks to their pioneering technologies. Bitcoin’s security and Ethereum’s smart contracts’ capability are peerless, a decade and six years after they were launched, respectively.

Now imagine if the two chains’ capabilities could be harnessed and offered on a single platform. That would be huge. And it’s precisely what Singapore-based crypto and blockchain project, Qtum has done.

In this guide, we’ll delve into the Qtum ecosystem and explore all the exciting details you need to know. 

But first, let’s get the basics out of the way.

What is Qtum?

Qtum,  – pronounced as ‘Quantum,’ is a cryptocurrency and blockchain project that combines Ethereum’s smart contract technology with Bitcoin’s security and stability to support decentralized applications (DApps) and smart contracts platform. The project’s white paper states that Qtum is the first “UTXO-based smart contract systems with a proof-of-stake (PoS) consensus model.”(UTXO stands for ‘unspent transaction output.’ It’s a blockchain model first developed by Satoshi to solve the double-spending problem of digital currencies.)

Bitcoin and Ethereum are the two most valuable cryptocurrencies both in market cap and by being trailblazers in the space. By bridging the functionalities of both chains, Qtum hopes to have the best of both worlds.

The Best of Both Worlds

As we’ve noted above, Bitcoin and Ethereum are the two blockchains that broke the ground for other crypto projects, each in its own way. Bitcoin, while being the oldest, remains the securest of blockchains.

Ethereum, for its part, is the first reliable platform for developers to create smart contracts and decentralized applications.

Qtum has created an “Account Abstraction Layer (AAL)” to facilitate Ethereum’s Virtual Machine integration on Qtum’s UTXO blockchain. Abstraction is a concept in computing that means hiding the complexity of the software to allow for its smooth implementation and use. With abstraction, anyone can use a technology without having to master the technicalities underlying it.

For example, to use a smartphone, you don’t need to be a programmer or developer. If you need to call someone, you don’t need to know how pressing the call icon activates the circuit inside the phone, and so on. In short, abstraction makes complex technologies accessible to the average person.

This simple innovation has enabled it to offer a secure smart contract platform that combines Bitcoin’s and Ethereum’s best, and one that’s interoperable with both chains. For the Qtum community, this is big because scalability technologies on both blockchains e.g., Raiden, Lightning Network, Segwit, and so on, will be operable on QTUM.

Who Is The Team Behind Qtum?

The Qtum project draws its talent from multiple sources. The team comprises members from both the Bitcoin and Ethereum communities as well as outfits like Baidu, Alibaba, Tencent, NASDAQ, and more. The forefront members of the team include Patrick Dai, Jordan Earls, Yungi Ouyang, Baiqiang Dong, Neil Mahi, and Xiaolong Xu. This group combines experience from blockchain, theoretical mechanics, software development, web development, and so on.

Qtum, the First Proof-of-Stake Blockchain

Another remarkable feature of Qtum is its use of a Proof-of-Stake (PoS) consensus protocol. The platform’s implementation of PoS was the first in the blockchain space. PoS is seen as superior to the Proof-of-Work consensus protocol first introduced by Bitcoin. In PoW, miners compete to solve computational puzzles, upon which the first miner to solve a puzzle receives block rewards.

PoW, however, has various challenges, including:

  • It gobbles up excessive amounts of energy – which is too expensive and bad for the environment
  • People or entities that have access to resources have an unfair advantage over those who don’t because they can afford the massive amount of power required as well as powerful specialized mining computers. This goes against the decentralization that cryptocurrency is supposed to embody.
  • It uses real-world resources

Qtum and Mobile

The vast majority of blockchains focus on computer-based applications. Qtum changed this by allowing for mobile users – both individuals and businesses, to be able to run smart contracts and decentralized apps from their mobile phones.

Co-founder Patrick Dai explained QTUM’s ‘Go-Mobile’ strategy to Bitcoin Magazine, saying: “We want Qtum to be the easiest blockchain network to use…Today, everyone and everything is moving, that’s why we can’t have a network that is run by stationary objects.”

How does Qtum achieve this?

Existing DApps and smart contract platforms require you to have a full copy of the blockchain. People that have smaller devices or have no access to high-speed internet cannot hack this. Qtum circumvents this via the Simple Payment Verification (SPV) protocol, which has default access from Qtum thanks to EVM and UTXO integration. This SPV protocol allows for access to EVM with mobile-customized lite wallets and removes the need to download the whole blockchain.

Decentralized Governance Protocol

Another exciting feature of Qtum is its Decentralized Governance Protocol (DGP) that allows for modification of blockchain features like block size, block processing time, gas amounts, and so on without the need for a hard fork and ecosystem disruption. DGP, for instance, can increase block capacity up to 32 MB. Any change to blockchain parameters is done on-chain – without third party software or any contribution from network participants. 

Tokenomics of Qtum

QTUM’s ICO lasted from March 2016 to April 2017. A hundred million coins were distributed, with 51% going to the public. The remainder was split up as follows: 20% for the development team, early supporters, and founders, another 20% reserved for business development, with the remaining 9% going to research, growth strategy, and education.

As of Jan 31, 2020, QTUM ranks at #35 in terms of market cap, Its market cap is $202, 194, 252, with a 24-hour volume of $202, 194, 252 and a circulating supply of 96, 349, 532 QTUM. It has a total supply of 102, 099, 552, while its maximum supply is 107, 822, 406 QTUM. The token has an All-Time High of $99.87 (Jan 07, 2018) and an All-Time Low of $1.47 (Sept 24, 2019).

Last Thoughts

Qtum’s abstraction layer that enables users to use Ethereum’s smart contracts via the Bitcoin blockchain and its DGP platform that facilitates seamless blockchain modification are blockchain firsts. Thanks to these technologies, enterprises and even individuals can take advantage of blockchain technology more straightforwardly than was ever possible. The project has the right tools in its arsenal to make it successful, as long as it continues with the same innovative spirit in an ever-evolving blockchain world.

Categories
Cryptocurrencies

The Three Generations of Blockchain

Subtly introduced to the world a decade ago by the mysterious Satoshi Nakamoto, blockchain is the technology at the core of cryptocurrencies. In its early days, it was the subject of admiration and fervor – thanks to its groundbreaking immutability (irreversibility), utter transparency, and enhanced security attributes.

Subtly introduced to the world a decade ago by the mysterious Satoshi Nakamoto, blockchain is the technology at the core of cryptocurrencies. In its early days, it was the subject of admiration and fervor – thanks to its groundbreaking immutability (irreversibility), utter transparency, and enhanced security attributes.

Subtly introduced to the world a decade ago by the mysterious Satoshi Nakamoto, blockchain is the technology at the core of cryptocurrencies. In its early days, it was the subject of admiration and fervor – thanks to its groundbreaking immutability (irreversibility), utter transparency, and enhanced security attributes.

Today, blockchain is still a young technology. But that doesn’t mean it doesn’t keep changing or improving, just like any other technology.

Consider the internet. The internet we know wasn’t like that in the beginning. When we look back, we can point to milestones that were achieved to culminate into the one we’ve got today.

In the sixties, we witnessed the first wide-area computer networks, followed by the electronic mail cash system and the ethernet in the seventies. The nineties brought with them more advanced developments like the World Wide Web, the first browsers, and so on. Each of these developments made the internet more reliable than it had been prior and contributed to the internet that we know today.

Just like with the internet, we can look back and say blockchain has evolved in certain ways since its inception. Each stage brought with it novel inventions that were limited or nonexistent in its forerunner. Based on this, we can classify blockchain’s existence into three generations.

Before we dive into each, it’s worth pointing out that blockchain’s development is interesting in that each succeeding generation is not necessarily more successful than its predecessor. This was always blockchain’s nature – breaking the mold in every trait. Every generation has carved out its space in the industry, and each is known for its unique contribution to the world of blockchain. With that, let’s dive in and see how the blockchain baby has grown to date.

The First Generation: Bitcoin and Cryptocurrencies

Blockchain, as we know it today, was first proposed by Bitcoin’s developer Satoshi Nakamoto in the cryptocurrency’s white paper. At the heart of the blockchain is a publicly distributed ledger that utilizes cryptography for the security of the network.

A blockchain comprises blocks that are linked together by cryptography. A ‘block’ here is a spreadsheet or a ledger containing information about a certain number of transactions.  The chain is a cryptographic passcode of sorts that must be ‘solved’ before accessing the next block of transactions.

Blockchain enables peer-to-peer transactions between network participants. This means there’s no central party authorizing or overseeing transactions – as a bank does for its customers, for example. For this reason, blockchain has been branded as “the greatest invention of the internet” and the “internet of money.”

In the same way that the internet decentralized information, blockchain might be the herald of decentralized finance.

While Bitcoin, the first application of blockchain, has broken the ground for all manner of blockchain-based applications, it’s hard to gloss over its inefficiencies like its inability to support smart contracts or its rather slow throughput (handling a mere seven transactions per second). As well, Bitcoin utilizes a ‘Proof-of-Work’ (PoW) consensus mechanism that requires computing complex mathematical problems. Due to the complexity involved, PoW is time-consuming and uses colossal amounts of energy comparable to the annual output of an entire country. There’s also the issue of compromised security in the event of a 51% attack.

These inefficiencies raise questions about its long-term sustainability, and its ability to support Bitcoin as a global currency leave alone compete with traditional money systems.

The Second Generation: Ethereum and Smart Contracts

In a way, we could say that we’re currently living in the second generation of blockchain. The second generation was instigated by developers who believed the blockchain was capable of so much more than being a platform for digital money.

The Ethereum blockchain is the embodiment of the technology’s second generation. Its developers, with Vitalik Buterin at the forefront, actualized the idea of smart contracts. Smart contracts are ‘smart’ in the sense that they are self-executing, do not need third parties, and are highly accurate (by virtue of being immutable).

As well, participants in a smart contract can log in at any time to view the terms of the agreement. Smart contracts eliminate any possibility for fraud, thanks to the immutability of the records. In the future, we could very well see agreements like marriages, bonds, trustees, and the like being enforced via smart contracts. And since these types of contracts are self-enforcing, the need for parties like lawyers, middlemen, regulators, etc. is removed.

It’s also on Ethereum’s blockchain that developers can build exciting decentralized applications (DApps). To understand DApps, think of Facebook and Google. These are two centralized applications that wield the power that they do because they are centralized. By contrast, decentralized applications have no central authority that regulates what users do on the platform. At the same time, user data is solely in the hands of who it belongs to – users.

Ethereum’s world of possibilities does not end there. Today, aspiring cryptocurrency and blockchain projects can raise capital via the blockchain using smart contracts. Ethereum also empowers new crypto projects to build their platform atop it. Today, over 200 000 crypto tokens that provide value to users everywhere benefit from Ethereum’s technology.

While Ethereum showed everyone that blockchain was capable of more, it is not without limitations. The network also faces the same scaling challenges as Bitcoin, making it difficult to provide reliable services to millions of users from around the globe. It also uses the same PoW mechanism as Bitcoin, consuming colossal amounts of power in the process.

The Third Generation, and the Future

Currently, the inability to scale is the bane of blockchain’s existence. Many blockchain and cryptocurrency solutions after Bitcoin and Ethereum have attempted to solve this, but with varying results. Going forward, it’s abundantly clear that scalability is the most important development that will emerge out of the third generation of blockchain. Whether that will require shaking the current blockchain setup or the use of ‘second-layer’ technologies, scalability is the main priority for future blockchain.

Newer kids on the block are also trying to improve interoperability across chains. The PoW mechanism is being replaced by the Proof-of-Stake mechanism and other novel consensus protocols that are faster, do not gobble up excessive power, and are generally more effective. Beyond this, new ideas to improve blockchain are always being proposed and implemented.

The Bottom Line

‘Change is the only constant thing’ definitely applies to blockchain too. We can expect developers to keep rolling out innovative ideas for the technology, although it’s difficult to say exactly where any new developments will take us. As usual, blockchain enthusiasts are uber keen to see what the next exciting thing is.

Categories
Cryptocurrencies

Your Complete Guide to Cardano

Launched in 2015, Cardano has defied expectations to rise to the top ten in market capitalization. For those not privy to the inner workings of the Cardano project, it can be hard to pin down what has catapulted its rise to the highest sanctums of cryptocurrency, despite being less than popular on the price side.

Launched in 2015, Cardano has defied expectations to rise to the top ten in market capitalization. For those not privy to the inner workings of the Cardano project, it can be hard to pin down what has catapulted its rise to the highest sanctums of cryptocurrency, despite being less than popular on the price side.

Launched in 2015, Cardano has defied expectations to rise to the top ten in market capitalization. For those not privy to the inner workings of the Cardano project, it can be hard to pin down what has catapulted its rise to the highest sanctums of cryptocurrency, despite being less than popular on the price side.

Nicknamed the “Ethereum Killer,” Cardano has an intriguing approach and pretty remarkable technology.

So, what is it about Cardano that makes it worthy of the “Ethereum Killer” tag? In this guide, we’ll find the answer to that query, as well as explore some of the exciting innovations of this project.

What is Cardano?

Cardano is a cryptocurrency project and blockchain-based smart contracts platform. Cardano believes digital cash is the future of money and aims to create a platform in which people from all over the world can send and receive money in a fast, direct, and secure manner.

Cardano was conceptualized by Charles Hoskinson, an Ethereum cofounder. He calls it a third-generation cryptocurrency – meaning it exists to improve on the scaling problems and other weaknesses of the first generation (Bitcoin) and second-generation (Ethereum) blockchains.

Cardano uses the new Haskell programming language, a ‘functional language’ that enables mathematical proofing of the code’s future behavior.

The Cardano platform has a native cryptocurrency known as ADA, with which users can send digital funds. It also houses two layers: the Cardano Settlement Layer (CSL) and the Control Layer. CSL is used to settle transactions that are conducted with ADA, while the Control Layer will be used to host smart contracts.

Who is Behind Cardano?

Three distinct organizations have pooled resources together to create Cardano. There’s the Cardano Foundation, a Switzerland-based standards body whose job is to support the Cardano community and fulfill regulatory and compliance requirements. The other is Input Output Hong Kong (IOHK), a well-known organization in the cryptosphere. And then there is Emurgo, a startups investor tasked with assisting businesses to build on the Cardano blockchain.

What’s Special with Cardano?

Unlike its contemporaries, Cardano is a peer-reviewed blockchain. Before protocols are greenlit for release, they’re first reviewed by a network of academics and researchers from various universities. While other blockchain projects present just a white paper, the Cardano team goes the extra mile and crafts several academic papers for researchers, investors, and so on.

The rationale behind this? The team wants to ensure that the platform is secure, scalable, and fit for mass usage once it goes mainstream. As such, there’s much scientific rigor involved as there would for a mission-critical system.

How Does Cardano Work?

As previously mentioned, the Cardano comprises a Cardano Settlement Layer and a Control Layer. In the long term, Cardano hopes to be used as a medium of exchange and a smart contract platform that can be interoperable with the traditional banking system.

At the very heart of Cardano is Ouroboros. Ouroboros is an algorithm-based Proof of Stake Protocol through which miners can mine ADA. The protocol is also custom-built in a manner that saves as much energy and time as possible.

What does Ouroboros entail, you wonder? Let’s find out below.

What is Ouroboros?

Ouroboros works based on ‘slot leaders’ who are akin to miners in the Proof of Work protocol. Slot leaders are the ones who determine which blocks will be added on the blockchain, with a maximum of only one block per slot leader at any time. Time is divided into ‘epochs,’ and every epoch has a slot leader. Also, immediately after one epoch ends, another one begins.

In case a slot leader misses their chance to choose a block leader for one reason or another, they have to wait until the next time they’re eligible to become block leaders. In every epoch, at least more than 50% of blocks has to be generated. 

To be eligible for a slot leader position, a participant has to own at least a two percent stake in Cardano.  Slot leaders are also electors. When an epoch is in progress, electors choose the slot leaders for the next epoch. Also, the more stake you own in Cardano, the bigger your chance of being selected as a slot leader.

Now, slot leaders wield a considerable amount of power. For this reason, extra caution must be exercised to ensure as much fairness as possible. Cardano achieves this by implementing a ‘multiparty computation’ (MPC). In an MPC, each elector conducts a random action known as “coin tossing,” after which they share their results with the rest of the electors. In short, the end result is randomly generated, but the final value is collectively arrived at.

Statistics of Cardano (ADA)

As of 28th January 2020, Cardano is trading at $0.051903, with a 10th place market capitalization of $1, 345, 697, 885. Also, its 24-hour trading volume is $179, 384, 436. Its all-time high was $1.33 on Jan 04, 2018, while its all-time low was $0.017354.

ADA’s circulating supply is 27, 927, 070, 538, while its total supply is 31, 112, 483, 745. The coin has a limited supply of 45 billion.

Is Cardano an Ethereum Killer?

Cardano has been dubbed the “Ethereum Killer” since it offers the same functionalities as Ethereum, but better.

Also, it is the first blockchain platform that utilizes peer-reviewed research, giving it an edge over other cryptos, at least in terms of rigorousness.

As well, Cardano has an impressive speed of 257 transactions per second (TPS), which stacks strongly against Ethereum’s current meager 15. Its Ouroboros proof of stake is superior over the typical proof of stake by being the first consensus mechanism to be mathematically proven as secure.

These features, and more, make Cardano an impressive blockchain. But that doesn’t mean it’s about to dethrone Ethereum, not yet.

First of all, Ethereum is a project under continuous improvement. Its developers are always working to improve its scalability and other functions. For instance, Ethereum plans to migrate from the current Proof Of Work to a Proof of Stake mechanism, which provides better room for scalability, is quicker, and is not as power-hungry as the former.

Moreover, being the first reliable smart contracts platform, Ethereum has somewhat of a loyal following – from the developer community to the crypto market to users.

For these reasons and more, it is unlikely that Ethereum will be unseated anytime soon, whether by Cardano or any other cryptocurrency.

The Coinbase Effect

As of January 2020, Cardano is yet to be listed on Coinbase, despite the exchange signaling it was considering the addition way back in July 2018. Cardano fans are still waiting with bated breath for this to happen.

Coinbase is big, not just in market volume but also in name. So, many wonder what this would mean for the Cardano price if it were to be listed.

First, it’s important to know a coin getting listed on the exchange does not herald its bullish rally for all the time to come. Many coins have been listed, surged in price thereafter, and went on to fizzle out.

It’s likely that ADA will shoot up in price as the exchange’s user rush in to get a piece of the Cardano action at an affordable price. From then on, the coin experienced up and down swings like any other crypto, depending on the improvements its developers will continually integrate on its blockchain. 

Also, Coinbase’s massive user base means massive interaction with the coin, and hence more liquidity. More liquidity means more investors, and more investors mean more support. Support often leads to an increase in value.

Conclusion

Cardano has distinguished itself from other crypto projects by being the first to be built on peer-reviewed protocols and pure mathematics. That fact alone gives it an edge over other similar projects. Also, the people leading it – heavyweights in the crypto scene, add massive credibility to the project. Cardano fans expect only great things from the project.

Categories
Cryptocurrencies

A Complete Guide to Asset-Backed Tokens 

Blockchain technology heralded a new era of transparency, fairness, and democratization of finance. Currently, there are numerous applications of blockchain that are helping make the world a better place while reducing financial barriers. One of these is tokenization, a process that enables asset owners to sell a portion or the whole asset and get compensated fairly. Also, assets that could only be afforded by the high net worth individuals can now be afforded by the average investor, thanks to asset-based tokenization. 

Blockchain technology heralded a new era of transparency, fairness, and democratization of finance. Currently, there are numerous applications of blockchain that are helping make the world a better place while reducing financial barriers. One of these is tokenization, a process that enables asset owners to sell a portion or the whole asset and get compensated fairly. Also, assets that could only be afforded by the high net worth individuals can now be afforded by the average investor, thanks to asset-based tokenization. 

Blockchain technology heralded a new era of transparency, fairness, and democratization of finance. Currently, there are numerous applications of blockchain that are helping make the world a better place while reducing financial barriers. One of these is tokenization, a process that enables asset owners to sell a portion or the whole asset and get compensated fairly. Also, assets that could only be afforded by the high net worth individuals can now be afforded by the average investor, thanks to asset-based tokenization. 

In this article, we break down asset-based tokens, the rationale behind tokenizing assets, and take a look at assets with great potential for successful tokenization. 

What Are Asset-Based Tokens? 

Asset-based tokens are tokens whose value is backed by a real-world, tangible asset. Essentially, they are crypto coins whose value is pegged against an existing asset value. People tokenize real-world holdings so as to increase their liquidity (the real-world assets) in a market place. 

Asset-backed tokens are offered during a Security Token Offering (STO). 

An STO is a process where an investor exchanges money for tokens representing an investment. As such, we can describe security token offerings as events that distribute securities. And since tokens represent real-world property, STOs represent a secure investment option. 

Why Tokenize an Asset? 

Asset owners or managers tokenize assets to increase liquidity for the underlying asset. Liquidity is the degree to which an asset can be quickly and easily purchased or sold at a price reflecting its true value. Securities like stocks and bonds have high liquidity as opposed to assets like cars, real estate, jewelry, and so on. Liquidity commonly affects an asset’s trading volume. Good liquidity can also enhance an asset’s value since it’s easier to convert such an asset to cash.

Examples of Tokenization Use Cases

Tokenization is mainly used to back assets that generally have limited liquidity. Some of these assets include derivatives, real estate, art, company shares, commodities, and other assets that usually take long to find a buyer. 

Below are examples of asset tokenization use cases: 

☑️Tokenization of company equity.

☑️Tokenization of real estate investment trusts (REITs) for investors who want to venture into real estate. REITs can be customized to suit client needs or characteristics, such as risk tolerance 

☑️Tokenization of real estate or rental returns. Today’s real estate is prohibitively expensive to scores of people who would otherwise be interested in a smaller percentage of the property. Tokenization allows such property to be “fractionalized,” allowing more people to invest in a property. 

☑️Tokenization of intellectual property such as film licensing, royalty payments, etc. This allows fair distribution to every party that has a claim to such a movie, song, album, or book. 

☑️Tokenization of accounts payable and receivable, potentially replacing factoring and other models of supply chain finance. This substitution would allow data to flow seamlessly between accounts payable and accounts receivable in Enterprise Resource Planning (ERP) systems. 

Tokenizing an asset increases its value by opening up previously unattainable markets. Since asset tokenization is based on smart contracts, it also eliminates third parties and intermediaries – saving up money in the process. Moreover, investors who can’t afford these third parties are afforded the opportunity to take part in asset ownership. Not to mention, the automated tokenization process is faster, saving everybody’s time. 

Categories of Asset-Backed Tokens

There are four main categories of potential tokenization of assets; these are:

  • Tokenization of equity and debt
  • Tokenization of commodities
  • Tokenization of non-fungible hard assets
  • Tokenization of non-fungible soft assets

I. Tokenization of Equity and Debt 

Tokenizing equity and debt is a method of fundraising for startup companies. This process removes the need for intermediaries, such as banks and stock exchanges. 

Fractionalization of equity ownership is by no means a new concept – stock certificates, timeshares, mutual funds, etc. have existed for a long time. But asset-backed equity and debt tokens now offer something much more – an immutable, transparent, and liquid digital representation of a company’s debt or equity. Any shareholder can access the blockchain platform and verify ownership and its authority to trade. 

As such, although debt and equity are assets that anyone can purchase and sell today, blockchain technology radically improves the process. Private equity funds are traditionally low liquidity assets that require investors to hold their stake for at least one year. Hedge funds are another type of asset that is moderately liquid – requiring investors to hold for several months. 

Increasing liquidity via tokenization would dramatically increase the value of these asset classes, enabling investors to better adapt to market fluctuations.  

II. Tokenization of Commodities

Commodities that are normally traded on exchanges can also be converted into security tokens. Whether it’s oil, gas, grain, sugar, tea – any commodity that’s already traded through intermediaries can be tokenized. 

Cross-border trading of more fringe commodities such as hydro, wind, or solar power can also be done via a blockchain-based exchange. Governments, utility companies, and consumers can all participate and interact on a single trustless and open platform. 

As for tokens that are backed by real-world assets, physical verification is needed to establish the accuracy of the token value. Already, there are third-party auditors that exist for this end. These auditors can now combine real-life verification with blockchain-based tracking to increase confidence in the marketplace. 

For gold, which commonly trades through exchange-traded funds, tokenizing it completely changes the game. Each token represents part or the whole gold bar that’s stored and audited by a third party “oracle.” The oracle verifies the gold’s weight, purity, authenticity, etc. 

Bitcoin, the ‘digital gold,’ could be even replaced by tokenized gold in the future. The advantage Bitcoin holds over real gold is its ability to be easily divided and transferred. It’s easy, for instance, for a token exchange to take Bitcoin worth $3,000 and send 1% of that to another crypto holder. It’s, however, challenging to do the same with a bar of gold. But once you tokenize it, it becomes much easier to sell and transmit a fraction of that gold, and the same is true for other commodities.

III. Tokenization of Non-fungible Hard Assets

Hard assets are tangible and physical assets. Hard assets also present many opportunities for tokenization. In this category, we will look at two hard assets: real estate and collectibles. 

  • Real Estate Tokenization

Tokenizing real estate could make it a borderless investment, more profitable, and more affordable for all types of investors. Real estate here means things such as rentals, hotel chains, motel chains, care homes, etc. 

  • Collectibles Tokenization 

Traditionally, collectibles such as rare art pieces have been a preserve of the rich. With tokenization, anyone anywhere can hold a percentage of a collectible. 

Also, tokenizing an asset helps it achieve more value in the long term. An art piece, for instance, can be tokenized and distributed on the blockchain with each ‘shareholder’ holding a tradable share of the piece. 

IV. Tokenization of Non-fungible Assets

Soft assets are assets that are intangible and which are usually hard to quantify and establish their value. We’ll look into two types of soft assets: intellectual property and digital asset collectibles. 

  • Intellectual Property (IP) Tokenization

IP assets such as copyrights, royalties, patents, and trademarks have traditionally had low liquidity and have never had a secondary market place on which investors can buy. Tokenizing IP ownership would not only enhance its liquidity but also increase its value.  

  • Digital Asset Collectibles Tokenization

Usually, it’s difficult to prove ownership of digital collectibles – with the only proof being a contract between the provider and the user. However, tokenization could create a market place for these virtual goods, even increasing their liquidity and hence value. 

Challenges and Opportunities for Asset-Backed Assets

Asset-backed tokens go toe to toe with Bitcoin in terms of being fungible, transferable, scarce, and durable. As such, asset owners can find a market place for their assets easier than ever. 

Tokenization could face a hostile environment depending on territory. For instance, China, Qatar, and South Korea have banned STOs outright, while countries like the US, Singapore, Germany, and the EU allow it, albeit with strict regulations. Other countries like India are yet to take a definitive stand on STOs. Some jurisdictions like Malta have granted STOs free rein – placing no limitations or regulations on them whatsoever. 

Tokenization might also be prone to user error, and it’s easy to lose your tokens if you’re not careful with your wallet private key address. 

Asset-backed tokens are immune from the volatility swings experienced by utility tokens and cryptocurrencies. Asset-tokens can trade 24/7 if listed in crypto exchanges. This exposes them to market liquidity from investors all over the world. Also, asset-rich companies may soon adopt tokenization, increasing its visibility. This would popularize the idea of asset-backed tokens, pushing it into the mainstream. 

Conclusion 

Asset tokenization enables a physical asset to be divided into smaller parts, making it easier to convert into cash. Thanks to asset-based tokens, times may be gone when people had to wait for months or years to finally get a move in market position for their assets. And anyone, regardless of geographical location or the capital they possess, can get a share of attractive assets that they previously couldn’t. Tokenization will help create more inclusive, fair, and effective marketplaces.

Categories
Cryptocurrencies

Bitcoin will never be the same: Taproot Upgrade Proposal ‘Nearing Completion’ 

It has been a while since the Bitcoin platform received a major upgrade. There is, however, a major upgrade proposal in the works that is nearing public launch. The proposed bitcoin soft-fork designed to improve the platform security and boost user privacy is already moving through the developer feedback phase and maybe getting ready for public launch soon.

It has been a while since the Bitcoin platform received a major upgrade. There is, however, a major upgrade proposal in the works that is nearing public launch. The proposed bitcoin soft-fork designed to improve the platform security and boost user privacy is already moving through the developer feedback phase and maybe getting ready for public launch soon.

It has been a while since the Bitcoin platform received a major upgrade. There is, however, a major upgrade proposal in the works that is nearing public launch. The proposed bitcoin soft-fork designed to improve the platform security and boost user privacy is already moving through the developer feedback phase and maybe getting ready for public launch soon.

The Bitcoin Taproot/Schnoor upgrade proposal, originally revealed in 2018 by Greg Maxwell, one of the core developers of Bitcoin, is a long-anticipated technical upgrade. It is touted to improve not only the security of the network and the privacy of the users but also the scalability, fungibility, and script innovation in the blockchain platform.

What is the Bitcoin Taproot proposal?

Taproot and Schnorr updates, or simply Taproot, is Bitcoin’s next greatest technological breakthrough that promises ‘a new world of possibilities’ for the digital asset. The proposal remains highly sensational and has been subject to extensive deliberation in the Bitcoin community because it is a major platform upgrade with great implications on transaction architecture and performance.

It is designed to improve Bitcoin’s privacy and boosts platform scalability by making all the transactions on the platform appear the same to an outside observer, regardless of the complexity of the transaction details. The Schnoor update, on the other hand, is a code modification that aggregates transaction signatures to make it possible to implement Taproot.

Here is how Taproot works; in the Bitcoin network, transactions are validated using public-key cryptography. Currently, transactions are validated using an Elliptic Curve Digital Signature Algorithm. This algorithm has a number of glaring shortcomings, especially when it comes to transaction privacy and platform fungibility. Taproot is designed to fix these shortcomings by concealing specific types of transaction details from outside observers, in a way, standardizing and simplifying the details that are visible to outsiders.

For instance, when a transaction has a hot wallet, a cold wallet, and details of a trusted third party wallet key, all these are aggregated into a single Schnoor signature rather than being bundled as separate codes into a transaction. The single Schnoor signature can then singly be used to validate a Taproot output key.

The Taproot output key will be a single code that represents all the complex codes that would otherwise present a transaction as a collection of different keys. An outside observer will only see the single output and would not need to bother with finding out which two keys were used to generate it.

Aside from improving the privacy of the platform, this upgrade would also significantly reduce the size of the transaction file. This goes a long way to reduce the Bitcoin transaction fees as well as making the Bitcoin network more scalable. If you are familiar with the limitations of the Bitcoin platform, you will appreciate that any upgrades implemented to make it more scalable are crucial, especially if it does not involve hard-forking the platform.

Will the Taproot upgrade bring forth a BTC revolution?

When it was first proposed two years ago, the Taproot proposal triggered heated discussions among Bitcoin developers and in the general Bitcoin community. Throughout the time the upgrade was in development, the proposal moved through the Bitcoin ecosystem feedback phase as developers made their recommendations and reviewed possible changes to the proposal draft.

On December 17th, during the final scheduled meeting of the Taproot review group, an update on the project was made public. Bitcoin Core developer Pieter Wuille revealed that the upgrade proposal was ‘nearing completion’ and that developers were already putting the final touches that addressed all the comments and suggestions collected by the review group.

This upgrade could be a major turning point for Bitcoin – despite it not requiring a hard fork – because of the improvements, it makes to the system. When implemented, the Taproot/Schnoor upgrade could accelerate the process of block validation by as much as 250% and cut transaction fees by as much as 30% to 75%, according to Square Crypto product manager Steve Lee. Lee made this prediction in a presentation in the summer of 2019, and it is consistent with what other experts have had to say about the subject.

There is a good chance that the Taproot update could be the upgrade that revolutionizes the Bitcoin platform considering the limitations that are currently holding it back. On top of the list of problems plaguing BTC is scalability, which can be attributed to the Proof-of-Work (PoW) consensus it uses. PoW is so power-hungry and so slow that it limits BTC to between 3.3 and 7 transactions per second (TPS).

Visa, for comparison, processes around 1,700 transactions per second and may be capable of processing as many as 24,000 transactions per second. If Bitcoin is to ever scale globally and match this transaction processing speed, then a major change has to be made. However, there is little that can be done to improve from the current TPS without hard-forking the platform. The Taproot upgrade goes a long way to boost the platform TPS without the need to switch to a different consensus such as Proof-of-Stake (PoS).

How Taproot improves Bitcoin fungibility

Fungibility is an economics term that refers to the property of an asset whose individual units are standardized or essentially interchangeable. It means that each part that makes the whole is indistinguishable from another. In this case, Taproot improves Bitcoin’s fungibility by making all the outputs for spending look identical.

According to Kento U of Coinmonks, Taproot is Bitcoin’s next big update largely for the fungibility benefits it brings to the platform. Being a scheme for signing transaction scripts, Taproot’s most functional role is to homogenize the transaction output from a content perspective. When Bitcoin transactions are made to look exactly similar from the blockchain explorer, it guarantees that the Bitcoin network will be more secure since it will not be easy to tell one transaction from another at a glance.

There is also another great benefit to rolling out the Taproot update on the Bitcoin network; it opens up the possibilities for inscription innovation by allowing for complicated arrangements of keys and signatures in a transaction. This will effectively eliminate the limitation of the number of scripts that can be used to spend Bitcoins.

Why is Taproot update a big deal to the community?

A very small percentage of Bitcoin users pay close attention to system updates on the Bitcoin network, yet they often turn out to be the most bullish indicators for the Bitcoin currency. Most people still mistakenly look at institutional investors, Bakkt futures, and bankster instruments for indicators, yet all these and many other common events rarely ever affect the platform on which Bitcoin runs. The Taproot upgrade has a direct impact on the scalability, decentralization features, and fungibility of Bitcoin, which influence its long-term value.

It is commendable, however, that the interest the community has on this latest update proposal is gaining momentum and attracting wide interest. Developers working on the update and members of the Taproot review group have expressed optimism that the new development has generated impressive interest in the network as it moves to the next step of development.

When the draft is formally proposed as a Bitcoin Improvement Proposal, and a pull request to the Bitcoin Core pulled, the Taproot implementation is expected to undergo another round of reviews and suggestions before it is finally merged with the main branch if all goes well.

Members of the Bitcoin community still have the opportunity to analyze and suggest improvements to the upgrade while the proposal is still in the review phase.

Categories
Cryptocurrencies

Where does Bitcoin gets it’s value?

Ten years after it was introduced, Bitcoin is stronger than ever. Reporting its fastest hash rate ever at the beginning of this year, and leading a rally of other cryptocurrencies to outclass other assets, the idea that Bitcoin is not going anywhere has never held less water.

Ten years after it was introduced, Bitcoin is stronger than ever. Reporting its fastest hash rate ever at the beginning of this year, and leading a rally of other cryptocurrencies to outclass other assets, the idea that Bitcoin is not going anywhere has never held less water.

Ten years after it was introduced, Bitcoin is stronger than ever. Reporting its fastest hash rate ever at the beginning of this year, and leading a rally of other cryptocurrencies to outclass other assets, the idea that Bitcoin is not going anywhere has never held less water.

But Bitcoin’s success alone has not silenced the critics. Every conversation about it inevitably always leads to wrangles over what makes it valuable.

Skeptics say it has no value and that it’s a fraud and a bubble, and something that shouldn’t be called a currency. But believers see it as digital gold and the future of money. Who’s right and who’s wrong?

To answer this question, we need to dig a little into the history of money and the attitudes that have surrounded it over time. We’ll also see if Bitcoin possesses the “holy grail” of what’s considered a currency, and how it stacks against traditional money in this regard.

A Brief History of Money

Before we look at how Bitcoin gets its value, it helps to take a brief look into the history of money. When Bitcoin skeptics question its intrinsic value, arguing only fiat currency has intrinsic value. After all, fiat money wasn’t there at the inception of civilization.

As you may already know, bartering is one of the most significant ways that people transacted with each other. Bartering goes as far back as 6000 BCE when the Phoenicians traded goods across cities across the Mediterranean.

It was also the method of transaction in the Far East, Middle East, and Europe, with people exchanging spices, silks, perfumes, furs, food, silks, salt, and various more desired things among each other.

The Swiss are credited with being the first country in Europe to print banknotes – in 1661, and somewhat responsible for the note revolution. China had experimented with paper money for 500 years – centuries before Europe could catch onto the idea. Before then, the Chinese transacted with copper coins, which were not ideal due to their weight and insecurity, especially when traveling.

Countries then entered the “Gold Standard” era, during which coins representing various values were minted out of gold and silver. But this proved ineffectual as well because the coins were susceptible to tampering. Thus, the coins paved the way for gold certificates – which were paper documents representing a certain worth of gold.

Soon, the Bretton Woods system took over, which dictated that forty-four countries would peg their currencies against the US dollar, which was backed by gold reserves. This meant the US dollar was “strong” and safe because it could be converted to an equivalent of gold at any time.

But the US dollar soon crumbled under the pressure of public debt, inflation, and a negative balance of payments. In 1971, the US administration closed the gold window owing to too many US dollars in the hands of other countries and gold reserves being too low. A new economic plan was hatched – one who could better mitigate inflation and reduce unemployment. This plan gave birth to fiat currency as we know it today.

What Gives Bitcoin Its Value?

The legitimacy of Bitcoin has been questioned along the lines of what makes it valuable? Fiat currency has been “earned” through trial and error, culminating in the stable system of today. Bitcoin entered into existence as purely digital money, commanding attention. Not only has it gone on to eclipse all fiat currencies in value, but it also leads other cryptocurrencies to outperform other asset classes like precious metals, commodities, and so on. The coin has even hit an all-time high of $20,089.

Aside from the question of whether it is a store of value, a successful currency must also meet qualifications related to scarcity, divisibility, utility and transferability, fungibility, and durability. Let’s look at these qualities one at a time.

Scarcity. To maintain its value, a currency must be scarce just enough. It shouldn’t be too scarce, as this would make it ineffective. It shouldn’t be too readily available either, as this would cause massive inflation resulting in economic collapse.

Divisibility. A valuable currency should be able to be divided into smaller incremental units. This divisibility makes it flexible in a way that reflects the true value of every good and service in an economy.

Utility. Utility means a currency is reliable. People should be able to use it to obtain goods and services reliably.

Transferability. A currency should be easy to be transferred between participants in an economy. This applies not only within a country’s borders but also between nations.

Fungibility. A successful currency must have each unit being interchangeable and indistinguishable from the next. For example, an ounce of silver is the same as another ounce of silver.

Durability. As a currency is passed between participants in an economy, it must be able to survive the test of time and not deteriorate too easily.

How it holds its own when compared against fiat currency.

To assess the value of Bitcoin as a currency, we need to see if it meets the above stipulations, and how it holds its own when compared against fiat currency.

Scarcity. Bitcoin’s supply is capped at 21 million coins. On top of that, the rate at which new coins are released is reduced after every four years. The last Bitcoin will be mined around the year 2140. On the other hand, fiat currency can be manipulated by the government or central bank so that its supply increases.

Divisibility. While Bitcoin’s supply of 21 million pales in comparison to most fiat currencies, it is divisible up to the 100 millionths. As such, the smallest unit, a Satoshi, is equal to 0.00000001 BTC. This divisibility is programmed into the currency’s original code. This means quadrillions of Satoshis can be distributed for use in a global economy.

Utility. Bitcoin’s blockchain technology is a public ledger system that’s not regulated by anyone, and it doesn’t need trust to participate in. This is enabled by a reliable system of checks and balances that ensure the efficient running of transactions.

Transferability. Bitcoin is transferable from one party to another thanks to tools such as cryptocurrency exchanges and wallets.

Fungibility. Every Bitcoin has the same exact value as the next Bitcoin, no matter who holds it and how they have acquired it.

Durability. Thanks to a highly secure, immutable, decentralized public ledger, Bitcoin is durable than most – if not all fiat currencies. Also, being a digital currency, a BTC can be used innumerably without wear and tear, theft, or loss – if its owner takes the requisite precautions.

So Where Does Bitcoin Derive Its Value?

To determine what gives Bitcoin its value, we need to look at what drives its price. Bitcoin’s price is driven by good old supply and demand, its monetary policy, and public sentiment.

Since it’s capped at 21 million coins, Bitcoin has a finite supply, and the coins released diminish after every four years, investors may be keen to acquire a share of it, fueling demand.

As well, just like people would back mediums of exchange in past centuries and thus making them universally accepted, such is the case with Bitcoin. The Bitcoin community “backs” up the currency, granting it acceptance and hence value. And as more people accept it, the more it’s distributed, raising its value.

Challenges Plaguing Bitcoin

As you can see, Bitcoin holds up fairly well against fiat currency. But still, what ascribes value to it is a hot point of debate.

One of the biggest challenges is its status as a store of value. Its ability to be a store of value is dependent on it being a medium of exchange. Thanks to its volatility swings, Bitcoin is more used as an investment than a medium through which individuals can transact with on a normal day.

As well, its utility and transferability are not exactly clear cut, as at this stage. Cryptocurrency exchange and storage spaces are vulnerable to hacks, loss of keys, thefts, frauds, and so on. And while fiat money is also susceptible to theft, there are regulations in place that are better suited to pursue redress.

Much also comes down to perception. A large chunk of the population still views Bitcoin as a bubble whose bursting is a matter of when. And governments and regulators across the world approach it in strikingly different ways – from outright hostility to absolute acceptance.

What Is the Deal with Intrinsic Value?

Bitcoin skeptics have always argued Bitcoin has no “intrinsic value,” hence not really a viable currency. The idea of intrinsic value means that a currency should derive value from being inherently useful. In other words, intrinsic value is the perception of a currency’s true value. But Bitcoin proponents argue that its lack of “intrinsic value” is a weak argument.

In truth, “intrinsic value” is not a thing, they say. In the world of money, intrinsic value is only that which we ascribe to an item. For instance, glass beads were used as money in Africa and parts of North America. Limestone coins were used for the same purposes by the Yap people of the Pacific. And paper money itself was treated with misgivings earlier on because it was considered ephemeral and shaky as compared to tangible things of value such as land, gold, sizes of armies, and so on.

As such, intrinsic value is merely a construct. Just because Bitcoin exists purely digitally, is under no one’s control and generally breaks the rules doesn’t mean it’s less a valuable currency.

Final Thoughts

Bitcoin’s path is far from certain. It started as shaky currency, yet today it has attained spell-bounding success and spawned off other successful cryptocurrencies. The question of its value will be around for a long time to come. Its utility, transferability, and other currency attributes are still not surefire. But from the look of things, it’s the world that will adjust to accommodate Bitcoin, not the reverse. And whether or not Bitcoin becomes the world’s currency, as envisioned by its creator, the world of money will not emerge unscathed by the Bitcoin wave.

Categories
Cryptocurrencies

What is the Basic Attention Token?

Advertising is the lifeline for most businesses. However, the current digital advertising space is, to put it mildly, broken. The three players in the advertising model: the user, publisher, and advertiser all get shortchanged. Users’ data is harvested without their consent, publishers (owners of the ad) don’t effectively monetize content, and advertisers (creators of the ad) are perennially subjected to fraud.

Advertising is the lifeline for most businesses. However, the current digital advertising space is, to put it mildly, broken. The three players in the advertising model: the user, publisher, and advertiser all get shortchanged. Users’ data is harvested without their consent, publishers (owners of the ad) don’t effectively monetize content, and advertisers (creators of the ad) are perennially subjected to fraud.

Advertising is the lifeline for most businesses. However, the current digital advertising space is, to put it mildly, broken. The three players in the advertising model: the user, publisher, and advertiser all get shortchanged. Users’ data is harvested without their consent, publishers (owners of the ad) don’t effectively monetize content, and advertisers (creators of the ad) are perennially subjected to fraud.

Those are not the only problems with the current advertising model. For instance, who’s to say a user, for example, on YouTube, will click on that pop-up ad? Chances are they will skip it as soon as the five seconds are up.

And let’s not even get into dishonest platforms. Everyone still remembers Facebook’s infamous debacle when they sold users’ private data to the shady Cambridge Analytica, which the latter used to sway elections in several countries.

As you can see, modern digital advertising needs an overhaul. The Basic Attention Token (BAT) is an ingenious attempt at this – by seeking to have every participant in the advertising chain get what’s due to them.

This article delves deeper into this proposition, explores the BAT token and how to acquire it, and demystifies the game-changing browser technology behind the BAT system.

What is BAT?

BAT stands for Basic Attention Token – a digital advertising token built atop the Ethereum blockchain. The token is used to facilitate a decentralized ad exchange marketplace between users, advertisers, and publishers. It is based on a novel concept – that user attention is critically important for advertising end goals. So the key is to monetize what really matters: user attention and to eliminate the needless expenditure that’s associated with the current model.

BAT is still young – only launched in 2017. It was created by Brenda Eich, the brains behind JavaScript, and who is also Mozilla Firefox co-founder. Eich envisaged that the BAT token would accomplish the following:

☑️ Eradicate the middlemen in the current advertising model

☑️ Reward users, advertisers, and publishers with what is rightfully theirs

☑️ Provide an incentive for users to view ads (give ads attention)

☑️ Reward advertises with better ROI for their content

☑️ Give publishers a share of ads revenue

How Does the Basic Attention Work?

The BAT token can currently only be utilized on the Brave Browser. Using smart contracts, advertisers pay BATs to publishers to run their ads. When a user views the ad, his attention is measured in real-time on the browser – taking into account the visibility of the ad, time spent viewing the ad, and their actual engagement with the ad. The user is then rewarded with a portion of the token payment, and the remainder is paid to the publisher hosting the statement. 

Users can then spend the BAT on several offerings on the browser – from premium products to high-resolution photos to data services.

This system works for everyone involved in the following ways:

☑️ Users can anonymously serve the web, with advertisers still being able to monetize their attention.

☑️ Publishers can get their fair share of revenue that was previously lost to middlemen

☑️ Advertisers can glean more accurate data on their campaigns, enabling them to target audiences more effectively, and relevantly, next time 

The blockchain-based model eliminates fraud on behalf of advertisers 

What is the Brave Browser?

Brave uses a background ledger system to monitor your attention and what kind of content you mostly engage with. Based on this info, publishers are then paid accordingly. Also, users receive content that they most probably would like to see.

And although Brave measures your attention, that information remains anonymous, and your private data always remains in your control.

Your attention value, or the degree of attention you’ve devoted to an ad, is calculated using the incremental time the ad is viewed, plus the number of ad pixels visible in proportion to relevant content.

The Brave Bowser epitomizes the following features:

Privacy. Users can surf the web completely anonymously. Any information that would unethically be harvested is unavailable. All tracking is also blocked automatically.

Enhanced ad matching. Brave keeps an impressive collection of user data – from active tabs, URLs, keywords, and so on.

Improved user experience. Users never have to look for external servers for every new page. Ad matching is done locally, leading to better quality browsing, utilization of power, saving of internet data, faster browsing, and uninterrupted content flow.

Basic Attention Token Statistics 

BAT has a total supply of 1.5 billion tokens. As of December 18, 2019, it has a market cap of $229, 862, 410, and a 24-hour trading volume of $69, 897, 505. It ranks at number 34 in terms of market cap, while trading at $0.162913. Its all-time high was $0.980702 on Jan 09, 2018, while its all-time low was $0. 66209 on July 16, 2017.

Where to Buy and Store BAT

You can acquire some BAT tokens through any of the following methods: 

  • Funding a Brave wallet with Bitcoin, Ether or Litecoin – upon which an automatic conversion to BAT takes place
  • Using a credit or debit card through the Brave wallet
  • Buying BAT on cryptocurrency exchanges like Coinswitch, CoinbasePro, Binance, Kraken, Huobi, Bittrex, Coinex, and so on.

Being an ERC 20 token, you can store BAT in any ERC 20 supported wallet. You could also consider hardware wallets like Trezor, Ledger Nano, KeepKey, CoolWallet, and so on.

The in-house Brave wallet is also another great option.

Conclusion

BAT is one of the few crypto projects with big-name support, a straightforward case, and a feasible product. The founder of the project is the true and tried creator of the popular Firefox browser, and on top of that, he has the relationships to push BAT onto other browser platforms.

The technology has serious potential to reshape the way that users, advertisers, and publishers interact with each other – with everyone getting rewarded accordingly. It’s safe to say that BAT’s interruption of the current advertising ‘order’ is a matter of if, not when. It should be exciting to see how BAT turns tables.

Categories
Cryptocurrencies

Demystifying Maker – The Groundbreaking Stablecoin

Unpredictability and wild volatility swings have always been the bane of cryptocurrency’s existence. As a solution, crypto experts invented the idea of stablecoins – which is a cryptocurrency pegged against “real-world” money to tame the fluctuations of crypto. But stable coins also turn out to have their own share of problems.

Unpredictability and wild volatility swings have always been the bane of cryptocurrency’s existence. As a solution, crypto experts invented the idea of stablecoins – which is a cryptocurrency pegged against “real-world” money to tame the fluctuations of crypto. But stable coins also turn out to have their own share of problems.

Unpredictability and wild volatility swings have always been the bane of cryptocurrency’s existence. As a solution, crypto experts invented the idea of stablecoins – which is a cryptocurrency pegged against “real-world” money to tame the fluctuations of crypto. But stable coins also turn out to have their own share of problems.

Maker is a token and a platform that seeks to improve the stablecoin model while mitigating the volatility risk inherent with cryptocurrency.

In this guide, we’ll discover the Maker system, how it works, the place of Maker in the entire crypto ecosystem, and how you purchase the Maker token.

What is Maker?

To begin to understand Maker, we need to get a good understanding of what is a stablecoin. Stablecoins are a new class of cryptocurrencies that attempt to mitigate the risk of normal cryptocurrencies. Cryptocurrency prices are prone to volatile fluctuations, which ultimately makes them unsuitable for day to day use or as collateral. For instance, who’d want to spend 100 crypto coins on a pair of jeans only to find out the next month they’re worth a fortune? 

This is where stablecoins step in: to offer the best of cryptocurrencies – the privacy of money and instant processing, as well as the stability and predictability of fiat currencies.

The Maker System

The first thing to understand is that the Maker platform has a dual coin system: Makercoin (MKR) and Dai (DAI). Makercoin is a volatile token that governs the Maker platform. Dai is a stable coin designed for daily use, savings, and collaterals.

Dai is denominated in US dollars in a 1 DAI = 1 USD formula. Unlike the other stablecoins out there, DAI is not pegged to any fiat currency. Stablecoins that are pegged to fiat currency do not live up to the cryptocurrency vision of decentralization and censorship-resistance. By using external market economics, Makercoin is the volatile crypto coin that allows Dai to be a stablecoin.

As a decentralized stablecoin, Dai offers itself to four markets that could benefit from its use:

Gambling Markets – it doesn’t make sense to gamble with the wildly unpredictable cryptocurrencies. This would only expose the gambler to two risks: the risk that comes with the bet itself and the risk of the asset price. Using a stable cryptocurrency like Dai allows you to limit your risk solely to the usual probability of loss.

Financial Markets – Such financial markets like derivative smart contracts and options need collaterals of stable price values. The collateralized debt positions offered by the Maker platform also offers a permissionless, interest-free decentralized trading leverage, and decentralized tools.

International Trade – International transactions usually rack up high costs. Dai mitigates foreign exchange volatility while also removing the need for intermediaries in the transaction process.

Transparent accounting systems – Dai provides a completely transparent platform where all transactions can be verified – allowing organizations to improve efficiency and reduce the probability of fraud.

What Is the Use of the Maker Coin?

On the Maker system, the Maker token plays these roles:

Utility token. MKR is used to pay for the collateralized debt positions that generate Dai on the Maker ecosystem.

Governance token. Coin holders use the token to vote for operational changes in the Maker protocol through a continuous approval voting process. This means that the proposal that has the most votes from coin holders becomes the “top proposal” that can be activated to improve the protocol. 

Recapitalization Resource. The Maker system automatically creates new MKR tokens in case of a shortfall on the collateralization system.  

How Does The Maker Platform Work?

The Maker platform has a unique smart contract system called Collateralized Debt Position (CDPs). To generate Dai tokens, users must deposit collateral assets, which are then held by CDPs. Generating Dai also incurs the user some debt. The debt is what locks a user’s deposited collateral assets within the GDP until they can repay the debt in the same quantity of Dai, and withdraw its collateral.

Currently, “pooled ether” (PETH) is the only collateral accepted by the Maker system. To generate DAI, you must first convert Ether into the pooled ether.

A user’s interaction with CDP has the following stages:

Making the CDP. A user sends a transaction to Maker to initiate a CDP. They then send their PETH to collateralize the CDP.

Generating Dai. The user sends a transaction stating the amount of Dai they want from CDP. After generating Dai through this process, an equivalent amount of PETH is locked away in a CDP smart contract. They can only access this PETH when the Dai debt is paid off.

Debt Reconciliation. To get back their collateral, a user must pay off their outstanding debt in the CDP together with a “stability fee” that is essentially interest on the outstanding debt.

Withdrawing collateral. After the user’s debt and stability fee are paid off, the user can retrieve their collateral by sending a transaction to the platform

MKR Statistics

Makercoin impressively ranks at number 22 in terms of market capitalization. As of December 19, 2019, the crypto has a market cap of $476, 146, 583, a 24-hour trading volume of $4, 797, 594, and a circulating supply of 1 billion. Its all-time high was $1,773.92 on Jan 18, 2018, with its all-time low being $21.06 on Jan 30, 2017. Its current going price is $476.15.

How to Buy and Store MKR

Buying Maker comes with a two-step process. First of all, you need to buy some BTC or Ether from an exchange that accepts debit card deposits or bank wire. You then need to transfer the crypto to an exchange that will accept the BTC or Ether in exchange for MKR.

For example, you can buy BTC or Ether at Coinbase and exchange it for MKR in CoinbasePro, Gate.io, HitBTC, OKex, Kucoin.

Both coins of the Maker system are Ethereum tokens based on the ERC-20 protocol. As such, any ERC-20 compliant wallet is suitable for storing MKR. Hardware wallets such as the Ledger wallets, Trezor, Keep Key, Cool Wallet S, etc. are also recommended.

Conclusion

Maker addresses one of the biggest issues with cryptocurrency – its volatility. By stabilizing Dai’s value through external market systems, users get the best of crypto and fiat currency – privacy, instant payments, and the stability of value. Thus, you can invest in the crypto without worrying that its value will plummet overnight.

MakerDai also solves the issue of questionable centralization status and lack of transparency associated with other stable coins.  As it is now, Maker has the opportunity to seize the stage and become the ideal stablecoin. It has the recognition, a working model, and an irresistible proposition for the cryptocurrency economy.

Categories
Cryptocurrencies

Breaking Down the Populous Cryptocurrency

Many small and medium-sized businesses grapple with the issue of late invoice payments. Late invoices cause businesses to miss many money-making opportunities, not considering the error and fraud-prone paper-based trails of the existing invoicing system.

Many small and medium-sized businesses grapple with the issue of late invoice payments. Late invoices cause businesses to miss many money-making opportunities, not considering the error and fraud-prone paper-based trails of the existing invoicing system.

Many small and medium-sized businesses grapple with the issue of late invoice payments. Late invoices cause businesses to miss many money-making opportunities, not considering the error and fraud-prone paper-based trails of the existing invoicing system.

Blockchain technology can solve this by enabling decentralized, transparent, and error-free invoice financing that would save businesses money and time.

Populous is a platform that promises to simplify invoicing for businesses. In this explainer, we explore in more in-depth detail on how Populous achieves this, the role of its three tokens, how the future looks for the platform, and more.

What is Populous?

Populous is a peer-to-peer platform built on Ethereum’s blockchain that uses its distributed ledger technology to provide small and medium-sized businesses a global and efficient invoice financing platform. Populous describes invoice finance as “a form of funding that instantly unlocks the cash tied up in outstanding sales invoices. Business owners allow invoice buyers to buy invoices at a discounted rate in order to unlock the cash quicker. Once invoices are paid by the invoice debtor, the invoice buyer receives the amount previously agreed upon.”

In short, Populous wants to reduce or eradicate the need for third parties, intermediaries, or moderators in invoice processing and transactions.

How Does Populous Work?

On the Populous platform, there are two types of transacting parties: buyers and sellers. These parties exchange invoices via smart-contract-based auctions. We can think of invoice sellers as borrowers, with invoice buyers as investors.

To sell an invoice, you must first register your company. You will then wait until you receive approval from a Populous administrator. Once you’re approved, you can offer an invoice with specific sales goals. This will also need to be approved.

If your invoice offer is approved, an invoice buyer will view available invoices and identify which one they would like to invest in. The buyer will then make a bid for the invoice. They will also set an interest rate for the invoice.

Next, the invoice seller will view the bid, and if satisfied, confirm it. The seller then releases the invoice and then, via a smart contract, receives funds equivalent to the bid.

Populous’s Altman Z-Score Formula

The approval of bidders is done using an in-house credit rating system called the Altman Z-Score Formula. The formula is a financial modeling tool that assesses businesses’ credit risk based on these three factors:

  • The probability that a business will become bankrupt within two years
  • The probability that a business will default on terms of the agreement
  • The control measures of a business in times of financial distress

The Z-Score formula solely assesses a company’s suitability for the platform.

Sellers’ bids usually only last for 24 hours. A bid ends under either of the following circumstances:

  • An auction is successful – meaning your sales goal is matched with a bid
  • 24 hours elapse before your sales goals match a bid. In this case, you can either take the best available bid, cancel your offer, or submit another offer
  • You withdraw your offer, in which case you can completely cancel the auction or accept the best bid available 

Explaining Populous Tokens

The Populous platform has three tokens, which can be confusing at first glance. Let’s break them down below. 

Pokens

Pokens are the in-house currency of the Populous platform. The currency is pegged to an equivalent of fiat currency. For example, in the U.K, 1GBP Poken is equal to 1GBP, and in the US, 1USD token is equal to 1USD. Pokens are ERC 20 tokens, and users pay with them to acquire invoices. The Pokens themselves can be directly purchased from Populous with GBP, USD, EUR, and Yen. Other currencies will be converted to GBP on the London Stock Exchange rate before you can purchase the tokens. You can also buy Pokens using supported cryptocurrencies such as Bitcoin and Ethereum.

Pokens are ERC 20 tokens, meaning you can store them in any ERC 20 compatible wallet. 

Populous Platform Token (PPT)

These tokens were distributed to the public during the ICO and are used for investment purposes. PPT tokens have a capped supply of 53, 252, 246.

Apart from holding PPT, you can use it to invest in invoices. When you invest in an invoice through Populous, your tokens are put up as security for the investment, after which you receive Pokens in exchange. Once the invoice is paid, you receive Pokens as profit together with your Original PPT investment.

PXT

PXT (Populous eXtensible Business Reporting Language (XBRL) Token) is a token that allows you to access Business Intelligence (BI) data on the Populous XBRL Platform. With PXT, you can access the one quadrillion bytes of business on the Populous Data Platform. This data enables you to create customized reports regarding credit scores, SWOT analyses, your business’s financial health, and so on.

PPT Statistics

As of December 19, 2019, PPT has a market cap of $21, 423, 195, and a 24-hour trading volume of $1, 108, 105. Its all-time high was $76.49, while its all-time low was $0.298937. The token has a circulating and fixed supply of 53, 252, 246 tokens.

Where to Buy and Store PPT

Most exchanges do not allow you to buy crypto with fiat currency. You’ll thus need to buy BTC or ETH so as to exchange it with PPT. You can get the token on exchanges like Binance, Kucoin, P2PB2B, IDEX, Coinplace, LATOKEN, Bitrue, Livecoin, etc.

PPT is an ERC 20 token, meaning you can store it in any ERC 20 supported wallet, e.g., MetaMask and MyEtherWallet.

If you prefer tighter security (and who doesn’t?), you’re better off using a hardware wallet. Trezor, Ledger Nano, and Parity are some of the popular PPT compatible wallets.

What’s the Future of Populous?

So far, there doesn’t seem to be any serious competitor of Populous. The biggest challenge it faces is getting clients to ditch existing invoicing models and transition to their platform. For now, the Populous system is limited to the UK and China/HongKong markets. That means only invoices originating from those territories can be sold on the platform. Populous is likely working to implement support for more countries – something that will help it achieve its goal of being a global trading platform.

Conclusion

Populous is a platform with an excellent model and vision but is yet to truly capture the imagination of cryptoverse. This can partly be blamed on its current country limitation, or it could be because it’s still a ‘teething’ project. Either way, PPT needs to expand its platform and market itself better if it hopes to make a bigger impact on the crypto and blockchain sphere.

 

Categories
Cryptocurrencies

What Is Augur (REP)?

Ethereum’s blockchain has made it possible to build all sorts of exciting decentralized applications on its platform. Augur was one of the very first projects to take advantage of Ethereum’s smart contract and Solidity tools and create its unique protocol.

Ethereum’s blockchain has made it possible to build all sorts of exciting decentralized applications on its platform. Augur was one of the very first projects to take advantage of Ethereum’s smart contract and Solidity tools and create its unique protocol.

Ethereum’s blockchain has made it possible to build all sorts of exciting decentralized applications on its platform. Augur was one of the very first projects to take advantage of Ethereum’s smart contract and Solidity tools and create its unique protocol.

Unlike many of its contemporaries, Augur does not seek to improve upon any aspect associated with the crypto or blockchain technology like block sizes, scalability, transaction fees, or centralization. Rather, the project seeks to capitalize on blockchain technology to improve the traditional prediction markets model.

In this guide, we’ll look into this exciting project, how it works, whether it’s worth sinking your money into, and more.

What is Augur (REP)

Augur is a decentralized, peer-to-peer, and open-source prediction platform built on the Ethereum blockchain. When trading on Augur, you’re rewarded if you correctly predict the outcome of any future event – whether it’s an election, a football match, political events, policy decisions, a natural disaster, market crashes, weather events, and so on. The project’s website says “anything is fair game” – if you can’t find your preferred choice of a bet, you can create your own.

Augur leverages the “wisdom of the crowd” – the idea that a collective group of people is smarter than individual experts when it comes to problem-solving, general knowledge, predicting, etc. Those who predict the right outcomes win and those who don’t, lose. The more unlikely an event to occur, the bigger the reward for the accuracy of its prediction.

The platform has its own currency known as REP – “Reputation,” which people use to report on and dispute the outcome of events. Coin holders are rewarded for accurate predictions of events if they occur, while others can object if they don’t agree.

What Does Augur Aim to Achieve?

As a decentralized application on the Ethereum blockchain, Augur is censorship-resistant, is not owned by anyone, and thus cannot be shut down by anyone. Blockchain experts Jack Peterson and Joey Krug created the project in 2014 to ‘democratize’ the prediction markets.

With the creation of Augur, Peterson, Krug and the team had the following goals in mind:

  • To design a prediction market model operated and accessible by anyone
  • To enable people to make predictions with as little fees as possible
  • To achieve better accuracy of predictions compared to the traditional prediction model

How Does Augur Work?

Augur is more or less a decentralized take on traditional betting. The Augur protocol utilizes four processes in the prediction model, which we will expound below.

Creating Markets. Anyone can create a market of their choice on the platform. All you need is a small amount of ether and a hot betting topic. But first, you need to check the list of topics on the platform to avoid double coverage. You can come up with anything, from “Will Mark Zuckerberg Be Voted Out as CEO of Facebook in 2019?” to “Will France Take Home the World Cup in 2020?” to “Will Game of Thrones Return for a Sequel?” Users creating prediction markets usually set a ‘creator fee,’ which must be between 0 and 50%.

Trading. After a market is created, trading begins. Users can buy shares in the outcomes of the event, as well as receive rewards for participating and sharing their insights and opinions about the market. The price of the shares is calculated based on the likelihood of that event occurring. The more people buying into a particular event, the higher the price will be. Users also have the option to trade their shares with others or invest in unlikelier outcomes for better returns.

Reporting. This stage comes after a market closes – that is, a market’s underlying event takes place in the ‘real world.’ The potential result, known as ‘Outcome,’ is determined by profit-motivated ‘Reporters,’ who simply report the real-world outcome of the event. Any REP holder can be a reporter. Reporters who consistently provide accurate reports are financially rewarded, while those whose reports are not consistent with the actual outcomes are financially penalized. Note that users of the platform do not need to own or use REP, it’s only reporters who need it to participate in the reporting process.

Settlement. In this final stage, a trader can close their position by selling the position to another user in exchange for ether, or automatically settling their shares on Augur’s smart contracts. Predictions by users that turn out to be accurate are rewarded. Reporters whose reports were determined to be accurate are rewarded in reputation tokens, while reporters who did not respond or gave inaccurate information are penalized, with their share of tokens being given to reporters whose report was accurate.

REP Market Policy and Availability

As of December 12, 2019, REP’s market cap was $97, 856, 775, with a 24-hour trading volume of $7, 271, 550. At the token’s crowd sale in 2019, 8.8 million tokens were distributed to the public, with 2. 3 million tokens reserved for operational costs.

The REP token can be acquired on crypto exchanges such as Bittrex, Coinswitch, Poloniex, Coinbase, Kraken, etc.

Augur is an ERC 20 token, meaning you can store it in any wallet with ERC-20 support. Other options include hardware wallets such as Ledger Nano X, Ledger Nano S, Trezor, KeepKey, etc.

The Future of Augur, And Whether You Should Invest In It

Augur was one of the very first projects to launch on the Ethereum blockchain. It is also one of the Ethereum projects that made headlines upon its launch and continues to be consistent. Besides, the project has gotten the node of notable figures in the crypto and blockchain sphere.

Brian Armstrong, CEO of Coinbase, has described it as “an awesome project,” while Vitalik Buterin, Ethereum’s co-founder, noted its ingenuity when he called it “Uber for knowledge.”

We think that its uniqueness among other Ethereum tokens coupled with its solid reputation makes it a worthy investment. 

Conclusion

Augur has been on the scene for a while now – being one of the first to be built upon the Ethereum blockchain. It is a decentralized prediction market platform that’s available to anyone. With a small amount of ether, anyone can participate in event likelihood stock trading.

Categories
Cryptocurrencies

What is the ZRX Token?

Cryptocurrencies have stirred the financial space in a way that more and more people want to jump on this economic bandwagon. As the newest asset class, cryptos are overtaking other securities in an unprecedented fashion. But this is where we have a problem. For people to join the crypto revolution, they have to go through centralized exchanges. These exchanges, however, come with their own set of issues.

Cryptocurrencies have stirred the financial space in a way that more and more people want to jump on this economic bandwagon. As the newest asset class, cryptos are overtaking other securities in an unprecedented fashion. But this is where we have a problem. For people to join the crypto revolution, they have to go through centralized exchanges. These exchanges, however, come with their own set of issues.

Cryptocurrencies have stirred the financial space in a way that more and more people want to jump on this economic bandwagon. As the newest asset class, cryptos are overtaking other securities in an unprecedented fashion. But this is where we have a problem. For people to join the crypto revolution, they have to go through centralized exchanges. These exchanges, however, come with their own set of issues.

Enter decentralized exchanges (DEXs). DEXs, in which traders transact directly with each other, are fast becoming popular. 0x is one of the most high-profile of these types of exchanges, and it allows users to trade ERC 20 tokens via its native token, ZRX. In this guide, we’ll dive deeper into the 0x project, how it works, and the ZRX token and how to get your hands on it.

What is 0x?

0x is an open protocol designed to facilitate the peer-to-peer exchange of Ethereum tokens on the Ethereum blockchain. 0x was formed by industry experts Will Warren and Amir Bandeali in 2016.

The two envisioned a future where all kinds of securities, including stocks, precious metals, etc. could be traded as tokens publicly on the blockchain. 0x is created to be different from both centralized and decentralized exchanges and thereby provide the best combination of both their features.

It also seeks to solve problems that arise from both types of exchanges. Let’s begin with the issues facing centralized exchanges.

☑️ Susceptibility to Hacks

Centralized exchanges will always be prone to hacking attacks. Mt. Gox, Bitfinex and Binance are only some of the examples of centralized exchanges that have been hacked for Bitcoins worth millions of dollars. 

☑️ Subject to Mismanagement

Centralized exchanges are regulated by people who are fallible and prone to human error. The example of Mt.Gox is an exchange whose fate was caused by mismanagement.

☑️ Volume problems

Centralized exchanges often have trouble dealing with a sudden increase in demand. For instance, a sudden surge in demand for Bitcoin in November 2017 caused some exchanges to temporarily halt processing transactions while others experienced downtimes.

☑️ Subject to Regulatory Whims

Centralized crypto exchanges are registered in countries. This means they must play by the rules that the government of that country wishes to enact.

0x’s Technology and How It solves these, plus DEXes’ Problems

Decentralized exchanges rely on smart contracts for trading of ERC tokens. However, the sheer proliferation of tokens on Ethereum’s blockchain presents the problem of confusion and scalability. At the time of writing, there are more than 200,000 token contracts on the blockchain.

0x’s whitepaper notes: “End users are exposed to smart contracts of varying quality and security with unique configuration processes and learning curves, all of which implement the same functionality.”

This has caused several problems for the network, including increasing transaction costs for the network. This means for crypto exchanges, transactions would be charged a specified amount of ether. Also, as the volume of orders increases, the costs of operating it increases as well.

Second, the numerous exchanges have led to a fragmented user base and with it, fragmented liquidity for the DEXs crypto market. 

0x’s technology attempts to solve this by combining two technologies – State channels and Automated Market Maker. State channels take transactions off the blockchain, therefore reducing transaction fees. Automated Market Maker (AMMs) are algorithms that conduct trades between two parties, while also acting as the opposite party in transactions.

0x relies on “relayers” to host the off-chain order book and connect buyers and sellers.

Having seen how the platform aims to improve the DEX model, let’s look at how it addresses the main issues faced by centralized exchanges:

  • It provides a more secure platform as there is no single point of failure, thanks to the Ethereum blockchain which is open-source, pubic and distributed 
  • It eliminates the possibility of a rogue or malicious exchange running away with people’s crypto funds
  • It eliminates the whims of governments or regulators  
  • It makes crypto trading an affordable endeavor for all types of traders
  • It makes it effortless to swap tokens on the blockchain by removing the high transaction fees associated with centralized as well as smart contract decentralized exchanges. It intends to do this by taking transactions outside of the blockchain

What is ZRX?

0x has its own Ethereum token, known as ZRX. The token is used to pay relayers for their services. However, 0x’s main intention for the token is to facilitate decentralized governance over the 0x protocol upgrade system. This means anyone who owns ZRX gets to have input – proportional to their holdings, into any upgrades the protocol may get over time.

How to Buy ZRX

The ZRX token is available on the majority of crypto exchanges, including Coinbase, Binance, Bittrex, Shapeshift, Poloniex, Changelly, KuCoin, Huobi, Coinswitch, Bitit, and Idex.

Being an Ethereum token, ZRX can be stored in an Ethereum wallet. Other options include MyEtherWallet, Exodus, Eidoo, and Ledger wallet.

There is a fixed supply of one billion ZRX. During its launch, 50% of the tokens were released to the public, with the 0x project retaining 15%, 15% going to the developer fund, 10% to the founding team, and 10% to the project’s advisors and early supporters.

The Problems With 0x’s Approach

0X is an ambitious project and one that could be the solution to both centralized exchanges and DEXes problems. However, some crypto experts assert that the ZRX token has no clearly defined purpose.

Also, the staking approach – in which the more ZRX you hold the more you can contribute to the project’s development, means that it can be hijacked by investors with large holdings – which does not keep up with the spirit of decentralization. 

Also, some experts contend that the business model is not sustainable. By having its platform open and free, the project might be foregoing revenue from trades and setting itself up for failure in the future.

Conclusion

The 0x project has its flaws, but the protocol is a promising proposition. It solves the challenges presented by centralized exchanges while improving the decentralized exchange model. Its flexibility, versatility and its free availability may very well catapult it to be the future of cryptocurrency exchanges. It’s going to be interesting to see how this project pans out in the future.

 

Categories
Cryptocurrencies

Decentralized Financial Systems: What Are Their Benefits?

The current financial system is centralized. Currency is issued and regulated by governments or central banks. We also entrust our assets to finance firms so that we can get returns on savings. This translates to our financial systems being centralized. And therein lies the problem. Not only do centralized systems have a single point of failure, but they also comprise humans who are prone to making mistakes.

The current financial system is centralized. Currency is issued and regulated by governments or central banks. We also entrust our assets to finance firms so that we can get returns on savings. This translates to our financial systems being centralized. And therein lies the problem. Not only do centralized systems have a single point of failure, but they also comprise humans who are prone to making mistakes.

The current financial system is centralized. Currency is issued and regulated by governments or central banks. We also entrust our assets to finance firms so that we can get returns on savings. This translates to our financial systems being centralized. And therein lies the problem. Not only do centralized systems have a single point of failure, but they also comprise humans who are prone to making mistakes.

It also means many people are excluded from the financial system. For example, to qualify for a loan, one must have a bank account and a good credit score. And to have a bank account, a person must comply with the bank’s KYC procedures. For someone who doesn’t have the necessary KYC documents, it’s impossible to open a bank account and hence get access to banking services such as a credit card, savings account, loans, etc. 

In a centralized system, there is too much power in the hands of institutions, while a big chunk of people is excluded from financial services that would allow them to engage in activities of economic value. Also, entrusting our money in centralized financial institutions means we have very little say in how it is invested and handled – meaning there is no transparency.

So what can we do to solve the centralization problem? The solution is decentralized finance. Decentralized finance is an idea that has caught on, especially in the last couple of years. Crypto ‘purists’ are mainly responsible for pushing the concept into the fore, as they strive to accomplish ‘’Satoshi’s vision.” Bitcoin’s founder – Satoshi, had this as the very first line in the Bitcoin white paper: “A purely peer-to-peer version of electronic cash would allow online payments to be sent directly from one party to another without going through a financial institution.”

In this article, we deconstruct decentralized finance, its inherent features, its defining principles, and the benefits that it could herald for the finance world. 

What is Decentralized Finance?

When we take away all the buzz, “decentralized finance” comes down to mean financial access for all, without the middlemen. It’s the idea of handing economic power back to the people.

It’s another application of blockchain technology that aims to expand financial services to more people. Decentralized finance includes digital assets, smart contracts, protocols, and decentralized applications built on public blockchains. After all, blockchains such as Ethereum and Bitcoin are more than the driving technology of cryptocurrencies. They are open sources whose concept could change how the world economy works. 

The decentralized financial system movement has three core principles:

☑️Interoperability and Open Source – this means decentralized finance projects should be woven together on a technical level to strengthen their effects as a whole

☑️Accessibility and Financial Inclusion – this means the end goal is to have a financial system that’s accessible to at least everyone with internet connectivity, no matter their geographical location

☑️Financial transparency – this means that the market level of information of services is transparent to all participants while still preserving their privacy

Decentralized finance has six defining characteristics that set it apart from the private networks used by the traditional financial system:

  • Permissionless – this means anyone can connect to the network regardless of their social status or location
  • Decentralized – there is no central authority overseeing transactions. Records are kept simultaneously across numerous computers across the world
  • Trustless –  there is no need for a central authority to validate transactions as they are automatically validated
  • Transparent – all transactions are publicly available and auditable
  • Censorship resistant – interference by a central authority is not possible
  • Programmable – developers can code business logic into affordable financial services

Pros of a Decentralized Financial System

A decentralized financial system has a whole host of benefits that could change not only how we interact with money, but also improve the very premise that it originated from – namely cryptocurrency. The following are the advantages of decentralized finance:

Expanded financial access

With decentralized finance, anyone with a smartphone and internet connection has access to financial services. Currently, several barriers prevent a section of the world’s population from accessing financial services:

  • Status – lack of citizenship, identifying information, etc.
  • Wealth – high fees required to sign up for access to financial services
  • Location – long distances from financial service providers

A decentralized financial system equalizes finance such that a top financial trader at a global firm has the same access to financial services as a storekeeper in a remote area of Kazakhstan

Affordable Cross Border Payments

A decentralized financial system removes the need for costly intermediaries, making sending money to loved ones overseas more affordable.

In the current remittance system, there are too many intermediaries involved, making cross border payments too expensive. The current global remittance fee is roughly 7%. In a decentralized financial system, remittance fees could well be below 3%.

Improved Privacy and Security

In decentralized finance, individuals have full control and custody of their wealth. There are no intrusive KYC procedures, and transactions can take place without validation from a third party. This is unlike the current system where users’ wealth and personal information are stored in institutions where it is at risk.

Censorship-resistant

Decentralized finance has censorship-resistant financial products. Transactions are in unchangeable records, and the network cannot be shut off by governments or central banks at a whim. The decentralized finance system is entirely independent of existing legal or regulatory structures.

Simple to Use

A decentralized financial system would feature plug and play applications free of any complexity.

For example, a user in Morocco could receive a loan from India, invest in a business in the US, pay off their debt, etc., – all through interoperable applications.

Improving the Crypto Ecosystem

Decentralized finance solves several problems in the crypto ecosystem. Unlike many cryptocurrencies that grapple with scalability problems, decentralized finance payment products are helping in making micropayments fast, low-cost, and convenient. For example, decentralized exchanges are helping drive liquidity for the crypto market.

Driving Innovation

Decentralized finance helps to drive innovation. People can create financial products whose rules will be coded in a smart contract, and offer them to the world. This leads to not only diversified financial products suitable for different financial needs but also more improved ones as developers compete to unleash the next superior product.

New Forms of Value

Decentralized finance products also contribute to the crypto ecosystem by creating new forms of value and expanding the original idea of cryptocurrencies. Thus, a decentralized financial system helps the crypto ecosystem expand and diversify – all for the benefit of users.

Conclusion

Decentralized finance is an exciting idea and one that could finally equalize financial services. What the internet has done for information could be what decentralized finance does for the global financial system. With rapid developments like digital assets, smart contracts, decentralized exchanges, etc., Satoshi’s vision may very well be an idea whose time has come.

Categories
Cryptocurrencies

The downside of centralized systems

In today’s finance, governments and central banks pretty much control the whole system – from the issuance of currency to setting of interest rates, while big players like regulators, corporations, and international organizations wield so much power over the system. As such, the current global financial order is centralized – with influence and power belonging at the top.

In today’s finance, governments and central banks pretty much control the whole system – from the issuance of currency to setting of interest rates, while big players like regulators, corporations, and international organizations wield so much power over the system. As such, the current global financial order is centralized – with influence and power belonging at the top.

In today’s finance, governments and central banks pretty much control the whole system – from the issuance of currency to setting of interest rates, while big players like regulators, corporations, and international organizations wield so much power over the system. As such, the current global financial order is centralized – with influence and power belonging at the top.

We have worked with centralization since the very invention of banking. That doesn’t mean it is the ideal system – far from it. A centralized system has its own challenges – some of which have contributed to the global problems we face today.

In this article, we break down the cons of centralized finance and what that means for the average person. But first, what exactly is a centralized finance system?

Defining Centralized Finance

Centralized finance, which characterizes today’s global financial system, concentrates authority, control, and decision making at the hands of the top few. Just like other sectors that employ a centralized approach, centralized finance features the following characteristics:

☑️ A clear chain of command – everyone interacting with the system – from employees to consumers, to intermediaries, etc., knows who to turn to for any major decision making.

☑️ Standard operating procedures – financial institutions follow specific standard procedures and methods. As all decisions lie with the managing body, there is little variation between departments and branches.

☑️ Bureaucracy – owing to the central chain of command, the more a financial institution grows, the more the layers of management and hoops that have to be jumped before reaching the front lines

Cons of Centralized Finance

Having all the decision making power and control at the top financial institutions means the entire system has to grapple with these risks and drawbacks:

Billions of People Are Unbanked

In the current centralized system, having a bank account is a prerequisite to accessing financial services. However, over 1.7 billion worldwide do not have a bank account, either due to banks being too far away, not having enough money to open an account or lack of necessary documentation or credentials.

 As a result, these people cannot access financial services to enable them to create economic value and improve their standards of living. As the high-economy countries run the global financial system, these people are left behind.

A Centralized System Favors the Financially Literate

To utilize financial services and participate in financial markets, one must have a degree of financial literacy. But currently, only one in three people have an understanding of basic financial concepts, with a majority living in high-income economies. A centralized financial system favors the financially literate while leaving behind the illiterate and semi-illiterate.

Without a basic understanding of financial concepts, it makes it hard for the bigger part of the population to make the right financial decisions and hence create wealth.

Global Inequality

In the centralized financial system, financial markets are usually dominated by those with the best connections to them. These people have access to financial opportunities and asset classes, capital, unhindered access to market information, and access to financial expertise. As a result, wealth is distributed in a top-heavy manner, i.e., the majority of global wealth is concentrated among very few people.

On the other side of the spectrum, the overwhelming majority of people have no access to information or even capital that can help them start building wealth. They may not only be living from hand to mouth, but they may also lack access to investment tools like stocks, bonds, mutual funds, etc.

High Intermediary Fees and Slow Transactions

Centralized finance tends to involve high intermediary fees while sending money across borders. The average cost for sending money overseas is 7% of the total value, and that rises to almost 11% when sending money via a bank.

Even worse, international bank transfers can take several days, leaving many people who are waiting for cash stranded. 

Low Trust in the Financial System

Due to the lack of transparency associated with centralized finance systems, many consumers have little or no trust for the model. A report by Edelman shows there is only a 57% level of confidence in the financial sector, with trust in governments – which regulate the financial industry, even lower. Many people report feeling they are not being served in acceptable standards.  

Currency Manipulation and Censorship

In a centralized financial system, governments have the power to manipulate fiat currencies. Venezuela and Zimbabwe are two examples of how governments have devalued currencies, causing runaway hyperinflation and a devastating effect of citizens. For instance, currency manipulation in Venezuela caused the price of a cup of coffee to skyrocket by over 772,400% in six months.

Centralized power also means governments and banks can financially censor citizens by freezing their accounts, assets, denying them access to payment systems, emptying their accounts, denying them access to their funds, etc. In short, a centralized system takes away the financial power of citizens.

Systemic Risk

With financial power held by just a few elite institutions, it means one abject failure can send the whole system crashing. This is illustrated only too well by 2008’s US’ subprime mortgages that threw a wrench into banks’ balance sheets, causing a massive downturn that created a ripple economic effect worldwide.

Centralization creates an “all eggs in one basket” scenario, and if that basket breaks, it can spell doom for the world’s wealth on a massive, destructive scale.

Extractive of Value Rather Than Adding Of Value

There are two types of economic activities: those that add value and those that extract value. In today’s centralized financial system, too much economic activity is intended to extract value from other parts of the economy, rather than adding value. To put it another way, much of today’s economic activity is geared at making a profit at the expense of other people and industries.

This state of affairs stifles innovation and advancements that could lead to a better financial system for the betterment of all, as everyone rushes to gain more value while contributing little to nothing in the system.

Complexity

In the centralized financial system, there is too much complexity of terms, concepts, and financial instruments, which increases instability or amplifies shocks in the system. For instance, the average person on the street cannot start to fathom complicated things like CDO-Squared or Commercial Mortgaged-Backed Securities. These complex financial instruments transfer the risks in the finance sector to other countries and industries, with negative consequences for the entire system.

Is There An Alternative?

With such drawbacks for the centralized financial system, is there an alternative? The answer is yes. The proliferation of mobile phones, internet connectivity, and the development of groundbreaking technologies such as blockchain could create never before seen opportunities for a decentralized, accessible-to-all financial system.

This evolution, however, depends on the attitude of governments and the existing financial system.  Its willingness, or lack of it thereof, to embrace decentralized financial solutions will very much determine the future of the global financial system.

Categories
Cryptocurrencies

What Is This Bitcoin Remittance Business All About?

Bitcoin and cryptocurrencies, in general, have been at the receiving end of governments’ crackdown around the globe, as they move to regulate its influence and prevent its use in illegal activities. On the other side of the lever, though, the crypto is basking in its surge in the global remittance market. 

Bitcoin and cryptocurrencies, in general, have been at the receiving end of governments’ crackdown around the globe, as they move to regulate its influence and prevent its use in illegal activities. On the other side of the lever, though, the crypto is basking in its surge in the global remittance market. 

Bitcoin and cryptocurrencies, in general, have been at the receiving end of governments’ crackdown around the globe, as they move to regulate its influence and prevent its use in illegal activities. On the other side of the lever, though, the crypto is basking in its surge in the global remittance market. 

Bitcoin is increasingly being used as a medium for cross-border money transfers – in which it lets users transfer money at a way more affordable price than the traditional system.

Remittance involves people sending money to their relatives and loved ones who live overseas. As more and more people migrate to high-income countries, the remittance business grows more and more. Such money is sent for school fees, daily expenses, starting a business, and other uses.

In this article, we’ll look at how Bitcoin came to be a powerful player in the remittance industry, just how Bitcoin-based money transfer works, why it’s the better option, and what the future holds.

Bitcoin-Based Remittance: A Background

In the olden days before the advent of Bitcoin, the global remittance business was dominated by players such as Western Union, PayPal, Moneygram, and so on. However, these channels are associated with exorbitantly high fees and slow processes, which can leave recipients stranded for days. The traditional remittance model faces the following challenges:

☑️ High intermediary fees – Fees can go as high as 10% of the total amount, which can be quite expensive

☑️ Slow money transfer – it takes days, sometimes weeks depending on the destination, for money to reach the recipient

☑️Susceptible to fraud – the current money transfer system is prone to hacks and theft. For example, Venmo, the Pay-Pal owned money transfer service lost a total of $40 million in the first quarter of 2018 from fraudulent transactions

Enter Bitcoin-based remittances. Also known as “rebittance,” this model slowly taking space in the global remittance industry. But how does it work? Let’s first compare it with the traditional money transfer model.

The Standard Remittance Model

To get a firm grasp of Bitcoin-based remittance, it helps to first look into how the traditional model works.

Let’s say, for example, a person working in the US wants to remit a dollar to their home country in Africa. They will go to a shop known as a Money Transfer Operator (MTO), hand over the cash at the prevailing exchange rate, after which the MTO starts the process of sending the money to the intended recipient. The MTO will charge for the service.

However, the MTO is only a frontend agent. The service, software, and system they are using are provided by a remittance software provider (RSP). The MTO only pockets a fraction of the fees it charges the customer, with the bigger chunk going to the RSP. On top of that, the MTO may also need to pay the RSP for installation, maintenance, and subscription of the software.

The overall cost of the transfer is thus borne by the end-user, who is the customer, as both the MTO and RSP try to retain the maximum fees possible. What’s more, the MTO may not be transparent about how they arrived at the specific exchange rate, which leads to the customer bearing another brunt of unfavorable rates.

How Bitcoin-Based Remittance Works

Bitcoin remittances work via a cloud-hosted solution for MTOS living in developing countries. As long as it’s connected to the internet, the cloud solution works seamlessly with little to no banking infrastructure.

Via a simple internet connection and free software or app running on a suitable device, MTOs can send and receive money on behalf of a customer, without any overhead costs for installation, subscription, or maintenance charges.

The transaction details, including Know Your Customer details and other anti-money laundering protocols, are secured in a low-cost database, which can also be a blockchain. 

The MTO will simply estimate the amount of money needed for a business that day or for several remittances, purchase an equivalent of Bitcoins in advance, and immediately sell them for the fiat currency in the destination country. For example, an MTO will buy Bitcoins and exchange them for Nigerian naira for all remittances towards Nigeria.

The Bitcoin-based business is almost risk-free as it sells the Bitcoin tokens almost immediately, minimizing chances of theft or hacking. Customers’ transactions are also conducted in a matter of minutes.

Big Savings on Transfer Fees

The end results of Bitcoin-based remittance is lower costs for the customer, faster and more convenient global money transfers, no subscription, installation, or maintenance fee for MTOs, higher commissions for MTOs, and a safe and secure remittance mechanism. 

The person operating the MTO doesn’t have to have any knowledge about the underpinning blockchain technology, thanks to the effortless interface that features incredibly easy steps to process the money transfers within seconds.

What Are Some Bitcoin Remittance Businesses?

Bitcoin remittances provide a way for there to be only one entity between the sender and the recipient. Although Bitcoin was designed as a peer-to-peer mechanism, the infrastructure to support that is simply not mature at this point. Thus, Bitcoin remittance companies have reduced the cost of sending the money from up to 10% to anywhere between 1% and 3%.

Bitcoin-based remittance companies are constantly mushrooming across different parts of the world. Some of the established names so far include BitPesa, Rebit, Payphil, Bitso, Coicove, Payfast, and Sendmoney.

The Future of the Bitcoin Remittance Business

Owing to its ability to instantly send money across the globe, Bitcoin is garnering more attention as a viable means for more convenient transactions. However, the traditional model still holds sway over the remittance business, and their services are still in plenty of demand.

However, as more people learn about Bitcoin-based remittances, they will likely gravitate towards these services as they are cheaper, quicker, and more secure. People will also want to ensure they extract the most value out of remitting money, resulting in Bitcoin-based remitting becoming more popular.

If the traditional model can’t keep up with this, the Bitcoin and cryptos, in general, might even take over the industry.

Conclusion

The Bitcoin remittance business is making brave inroads into the industry, and that’s because it provides a better alternative to the traditional model by many measures. Money transfer operators can run their business without the headache of overhead costs, and customers are sure their money is safe and secure, with the unprecedented minutes-only transactions. Still, this model is yet to go mainstream, mainly because it’s still a young technology – at least in this industry.  But this could change in the very near future as more people discover its ingenuity.

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Crypto Daily Topic Cryptocurrencies

The Future of Blockchain

Even though blockchain is mostly known for being the technology behind Bitcoin – and other cryptocurrencies, it is more than that. And yes, the revolutionary nature of cryptocurrencies is what makes cryptocurrencies stand out from other digital currencies. Blockchain is known for many things – but its immutability, transparency, and decentralization are what make it such an object of frenzied interest, research, and even apprehension from traditional systems.

Even though blockchain is mostly known for being the technology behind Bitcoin – and other cryptocurrencies, it is more than that. And yes, the revolutionary nature of cryptocurrencies is what makes cryptocurrencies stand out from other digital currencies. Blockchain is known for many things – but its immutability, transparency, and decentralization are what make it such an object of frenzied interest, research, and even apprehension from traditional systems.

Even though blockchain is mostly known for being the technology behind Bitcoin – and other cryptocurrencies, it is more than that. And yes, the revolutionary nature of cryptocurrencies is what makes cryptocurrencies stand out from other digital currencies. Blockchain is known for many things – but its immutability, transparency, and decentralization are what make it such an object of frenzied interest, research, and even apprehension from traditional systems.

Today, blockchain applications have transformed how things are done across multiple industries – from manufacturing, to supply chains, to identity management, to finance and countless others. Given that it’s still a young technology but with incredible potential, how does the future look? 

Blockchain: A Background  

The concept of blockchain was first ever mentioned by Scott Stornetta and Dr.Stuart Haber in 1991. In a white paper titled ‘How to Time-Stamp a Digital Document,’ the two discussed the idea of timestamping a document and linking it to the previous document in a manner that rendered it impossible to change the content of the documents. Essentially, this was the first idea of “cryptographically linked chain of blocks,” which is how we know the blockchain today. 

Of course, Bitcoin’s burst onto the scene and gave blockchain an impetus it hadn’t seen before.

However, in 2014, the conversation started shifting from Bitcoin and to the potential of its underlying technology. People began to realize blockchain’s potential for other uses, and the exploration of this idea kicked off. Blockchain 2.0 was now the next buzzword – referring to applications beyond cryptocurrency. Today, there are hundreds of blockchain applications already active, with even more being explored. 

The reason blockchain has gained so much traction is because it has brought out business-changing ideas in plenty of industries. It’s hailed for facilitating complete transparency, a peer-to-peer model of sharing information, and the unchangeable nature of its records. 

And its influence seems to be getting only stronger – to the tune that the International Data Centre predicts global investments on the technology to hit $11.7 billion in 2022. Blockchain solutions also feature in increasingly many companies’ agenda. 

What’s Holding Back Blockchain from the Mainstream?

For now, blockchain’s implementation faces many hurdles. These limitations have slowed it down – but only just, its mainstream adoption. It’s important to note that ‘slowed’ here is relative because, given the stakes, blockchain has, in fact made such an impressive showing. With that, let’s briefly look at some reasons why its implementation is still not full-throttle a decade later:

☑️ Cost – Most blockchain platforms consume too much energy compared with their actual transaction throughput, e.g., Bitcoin’s 7 per second and Ethereum’s 15 per second

☑️ Scalability – Partly due to the issue of low transaction throughput with blockchains, blockchains have just not attained the potential to serve many users

☑️ Data privacy – The public model of public blockchains is not very enticing to enterprises who would rather keep their sensitive data private (through projects like Hyperledger have made it their goal to solve this problem by developing private blockchains)

☑️ Insufficient blockchain knowledge – Blockchain solutions are still a novel and complex concept for the majority of people. Also, most organizations lack people who have an in-depth knowledge of the technology

☑️ Entrenched systems – most organizations see no reason to “fix something that’s not broken.” They have been working with established methods for so long and providing services to customers. Transitioning into fresh mechanisms can prove challenging.

Blockchain’s Development Trajectory

Despite blockchain being so promising, it’s still very much at the teething stage. Some people see it as not a technology issue, but an issue of breaking down barriers and collaboration between companies.  

And we already see this happening. Hyperledger is one example of a successful collaboration of organizations with the sole aim of pushing blockchain into the mainstream. With the coming together of more than 200 influential organizations spanning the blockchain, finance, manufacturing, academia, and more fields, Hyperledger is determined to ensure blockchain counts. Today the group has released about 15 projects, including blockchain projects, blockchain tools, and libraries, and so on.

Furthermore, many in the blockchain space contend that the technology is still struggling to break ground. However, the progress so far can’t be denied. 2014 was the year when Blockchain 2.0 became a thing. The next year we saw the introduction of an entire blockchain dedicated to smart contracts, one of the most touted and promising applications of the technology. Already, major industry players like Microsoft, UBS Group, and the BBVA group have already integrated smart contracts in their organizations – in various forms.

The year 2016 saw the explosion of more pilot projects. 2017 brought along with it more enterprise-level experiments, while 2018 and 2019 were the years we saw the crystallization of many projects and, ultimately, their application. 2019 has been the year of bolder forays into the blockchain sphere.

Blockchain: Thinking Ahead

Based on blockchain’s showing in the last few years, many experts think brightly of its future. The blockchain and its fellow distributed ledgers will soon become the preferred mode for many business transactions.

Forbes predicts that stablecoins – the “incredible manifestations of blockchain power” will find even more popularity. The publication also asserts that as fiat currencies falter, people will likely “turn to blockchain to safeguard their savings.” What’s more, it makes a strong case for blockchain’s future, saying it deserves to be applied to “better technologies” and that “those improvements are on the way.”

Author of “Blockchain Revolution” Don Tapscott calls blockchain a “platform for truth and trust” with “staggering implications…for virtually every aspect of society.” The technology, according to him, is revolutionary with “vast potential to change society.”

The Institute for Innovation Development notes that there are more than 50 industries already deploying blockchain, and that “this corporate activity and experimentation will increase exponentially.” It also foresees blockchain changing “how transparency and authenticity are derived” with all types of things – from food, to property ownership, to verifying memorabilia, to personal identification.  

Spencer Bogart of Blockchain Capital Blog sees blockchain’s development shifting from the “launching of insufficiently differentiated new chains to improving and building ‘up the stack’ of winning protocols.”  

The Future of Blockchain 

Blockchain is still experiencing “growing pains,” and thus, its potential is yet to be fully realized. However, given that it has already successfully penetrated so many industries, it’s likely a matter of time before it penetrates nearly every industry.    

Many people, from both within and without the blockchain community, acknowledge blockchain’s powerful potential to instill transparency in all aspects of the business. Dataversity says that the technology will “emerge as a savior for transactional integrity.”

Blockchain has also received support from higher-ups in the finance regulation sector. Former chairman for the US Commodity Futures and Trading Commission, writing for Coindesk, asserts that “emerging digital technologies” have “far-ranging implications for capital formation.”

The Future of Blockchain Companies foresees a blockchain era when businesses will easily exchange assets in a peer-to-peer environment without government interference or regulatory fear. If blockchain maintains its current level of trust, then the current lack of transparency and “lack of governance over personal data” will be a thing of the past. 

Conclusion

Blockchain is here to stay, and soon, we will be using it in our daily lives without even realizing it. And for the better – because, as stated many times in the article, this technology has the potential to revolutionize how we do things. And while blockchain’s development and adoption has been slow, we know its mainstream adoption is a matter of “when,” not “if.”

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Cryptocurrencies

What are the Real-Life Use Cases of Blockchain?

Blockchain is transforming the world around us. Introduced to the world by Bitcoin – the world’s most successful and popular cryptocurrency, blockchain has taken a life of its own and is slowly taking over industries. And why not? It’s a revolutionary technology that could instill transparency, promote accountability, and help us streamline processes like never before.

Blockchain is transforming the world around us. Introduced to the world by Bitcoin – the world’s most successful and popular cryptocurrency, blockchain has taken a life of its own and is slowly taking over industries. And why not? It’s a revolutionary technology that could instill transparency, promote accountability, and help us streamline processes like never before.

Blockchain is transforming the world around us. Introduced to the world by Bitcoin – the world’s most successful and popular cryptocurrency, blockchain has taken a life of its own and is slowly taking over industries. And why not? It’s a revolutionary technology that could instill transparency, promote accountability, and help us streamline processes like never before.

In this article, we look at some of the real-world blockchain implementations that are changing how things are done in respective spheres – from music to governance to insurance to healthcare and more.

Media

Ujo Music is a blockchain platform that lets artists users create, publish, distribute music, get rightfully compensated, and retain full copyrights. The Ujo platform is decentralized and transparent so that artists can see and verify anything without having to consult or rely on a centralized identity.

Transactions to purchase music are conducted directly using Ether. Transactions are also secured using an Ethereum Chrome plugin known as Metamask. This built-in payment infrastructure allows Ujo to provide a blockchain-based streaming service with better convenience and reliability than ‘legacy’ streaming services such as Spotify, Apple Music, and so on.

Real Estate

UbitQuity is a blockchain-based platform that aims to change centuries-old real estate transaction and record-keeping methods. It is one of the first platforms that offers a software-as-a-service (SaaS) to help real estate firms organizations achieve transparency, security, and accountability.

When a transaction takes place, information about the property is automatically recorded on a stack, thus saving time on future searches and increasing confidence of the customer and transparency for the whole process. Also, details of the transaction are immutable (permanent), and the buyer and the seller can both refer to the blockchain for details of the transaction at any time.

Identification

Uport is a company that helps to build and maintain trust between people and organizations by providing a decentralized, blockchain-based identity system. Anyone can register and store a globally unique identity onto the Ethereum blockchain, allowing users to take control of their identity, user accounts, and so on.

Also, users can issue and request credentials – including attestations, verifications, certificates, badges, and more. Uport’s platform also lets users digitally authorize transactions, legal documents, and other material using TouchID authentication. Examples of applications of the Uport include attendees’ verification at the third Developer Conference, registering citizens at Zug, Switzerland, and verifying identity and documents at the Brazil Ministry of Planning.

Manufacturing

LO3 Energy is a blockchain platform that allows users to manage their energy consumption by giving them the ability to generate, buy, store, and sell energy at the community level. To do so, they use Smart meter – an electronic device that records energy consumption, API (Application User Interface), blockchain, and Grid. The API and Grid provide a collaborative network with ‘legacy’ grid systems

The blockchain is for recording transactions and lets everyone on the network – buyer, seller, energy provider, etc. verify and have a copy of transactions. This saves a lot of back and forth time that would be spent verifying transaction details across different parties.

Finance

Aeternity is a smart contract interface that enables organizations to work with real-time and real-world data. The platform’s vision is to provide next-generation, unmatched scalability, and transparent governance.

Aeternity allows users to create smart contracts that become active when network consensus agrees that agreement terms have been met. For example, parties to a transaction could agree that the conditions have been met for automated payment. The consensus is achieved via a hybrid of Proof of Work and Proof of Stake consensus mechanisms.

Healthcare

MedRec is a blockchain platform that allows patients’ health history and data to be stored and accessed across different health providers, individuals, and healthcare specialists. On the part of patients, it helps them to have their medical information right at their fingertips. It also saves time that would have been spent cross-checking patients’ histories, allowing healthcare providers to administer timely care to patients. 

MedRec also protects patients’ privacy by not ‘storing’ data directly, but rather encoding metadata (data that give info about other data) through which records can be discreetly accessed by patients, healthcare personnel, and so on.

Supply Chain

Blockverify is a blockchain platform that aims to introduce transparency to supply chains. It’s a “blockchain-based anti-counterfeit solution” with a built-in mechanism for identifying counterfeit products and thus protecting brands.

Blockverify offers a transparent environment where it’s impossible to duplicate products. It will not only detect a counterfeit product already in possession, but it will also identify a product that has been diverted from its original destination and track it down. It can track fraudulent transactions of any type throughout the chain. Also, companies do not need to rely on trust because every step of the system is open for every participant to see.

Cybersecurity

Remme is a cybersecurity blockchain project that aims to protect users’ and companies’ data from cyber attacks. Its goal is to improve from the current standards of security to public key infrastructure (PKI) apps for the modern web.  Its products include a protocol that uses block producers to provide consistency and fault tolerance. They also enable companies to register keys on the Remme blockchain, as well as validate transactions by combining them into blocks.

Remme utilizes a delegated proof of consensus to allow block producers to validate the information that will be appended on the blockchain and ensures nodes are in agreement about the priority of how entries will be added. Its KeyHub product helps to track expired certificate dates, potential vulnerabilities, and any policy violations in the system.

Data Management

Factom is a company that aims to protect businesses, governments, and non-profits from data theft and instill transparency in systems. It provides data-layer technology to preserve and validate digital assets. It uses a Backend as a Service (BaaS) platform that makes it easy to secure data by employing a cryptographically unique fingerprint of the data, enabling clients to audit and share sensitive documents.

By using blockchain, organizations can achieve transparency, integrity, and security of data and also enable them to meet compliance and identity requirements. The Factom software can be used on a plug and play basis, allowing users to use it on the go without having to build an infrastructure from scratch.

Content Distribution

Paperchain is a blockchain solution that enables companies, artists, news organizations, etc. to have a decentralized, peer-to-peer marketplace. In this environment, parties can push their content and get paid for it while circumventing the current industry’s convoluted payment cycles. 

It aims to solve the problem in the current distribution and payment model where content creators can get paid months away from the time content is consumed for the first time. Paperchain takes the data of that content consumption, prices it, and closes the payment gap on the spot, so that content owners can get paid the same day.  

Advertising

NYIAX is a blockchain software solution that allows advertisers to trade advertising contracts via the use of a patented financial matching engine. Advertisers can buy, sell, and rent digital ad space as guaranteed contracts with complete clarity and transparency – thus boosting confidence among all parties.

As advertisers and other players trade advertising inventory, the use of distributed ledger and smart contracts offers an immutable and open record of transactions. Also, blockchain-based smart contracts automate the process, providing better returns on investment by reducing labor costs during the deal lifecycle.

Insurance

AIG, the international insurance company, is using blockchain technology to enable faster, borderless, and collaborative policy creation. The blockchain solution is based on Hyperledger Fabric. Coordinating and placement of insurance policies in multiple countries is a time-consuming and very complex process. This is where blockchain comes in. It helps the company streamline complex multinational processes and facilitate real-time sharing of policy information.

It also instills trust and transparency in the risk evaluation, and analyzing the process, enabling AIG to provide multinational insurance services more efficiently. Overall, the blockchain solution helps AIG achieve a new level of trust, reduce errors, clear backlog, and provide faster and more reliable services to clients.

Governance

Democracy Earth is an ambitious project to solve world issues like forced migration, terrorism, and unequal resource distribution through open-source decision-making software based on blockchain. The software can be used by both large and small institutions – “from the most local involving two people to the most global involving all of us.”

With this open-source, peer-to-peer decision-making network, Democracy Earth hopes political intermediation or political leadership will no longer be necessary. The project is currently building Sovereign, decentralized, and open-source democratic governance that can be used by any organization. The end goal of Democracy Earth is to have liquid democracy, complete ownership of personal data, borderless governance and censorship-resistant voting, debates, and ideas.

Conclusion

Blockchain is here to stay, and it will change how we interact with our environment and even with each other. It has the potential to help us achieve levels of transparency never seen before, make processes quicker, and cut red tape. Industry leaders need to shift their focus and incorporate blockchain in their businesses, which will not just improve how we conduct business but also society itself.

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Cryptocurrencies

Cryptocurrency Exchanges: Don’t open an exchange account before reading this

In the early days of Bitcoin, getting your hands on some crypto meant mining or meeting someone physically and paying cash. However, Bitcoin becoming more popular and other cryptocurrencies coming on the scene meant there had to be a simpler and safer way of getting crypto. The old method of one on one wasn’t going to be sustainable anymore.

In the early days of Bitcoin, getting your hands on some crypto meant mining or meeting someone physically and paying cash. However, Bitcoin becoming more popular and other cryptocurrencies coming on the scene meant there had to be a simpler and safer way of getting crypto. The old method of one on one wasn’t going to be sustainable anymore.

In the early days of Bitcoin, getting your hands on some crypto meant mining or meeting someone physically and paying cash. However, Bitcoin becoming more popular and other cryptocurrencies coming on the scene meant there had to be a simpler and safer way of getting crypto. The old method of one on one wasn’t going to be sustainable anymore.

Cryptocurrency exchanges provide a safer and simpler way to interact with this asset class. If you’re going to buy, trade, or sell a cryptocurrency, it’s almost guaranteed that you will have to use a crypto exchange.

In this explainer, we’ll discover what a cryptocurrency exchange is, what to know before committing to one, and how a crypto exchange works.

What Are Cryptocurrency Exchanges?

Cryptocurrency exchanges are websites where you can exchange one cryptocurrency for another cryptocurrency or fiat currency. The exchange acts as the intermediary between buyers and sellers of various cryptocurrencies.

Crypto exchanges that let you trade professionally – with access to industry trading tools, will require you to fulfill KYC (Know Your Customer) procedures, i.e., submit your identity credentials in order to register with them. But there are also exchanges that let you make the occasional, simple trade (without requiring sophisticated trading tools) without requiring you to open an account.

How Cryptocurrency Exchanges Work

Cryptocurrency exchanges match buyers with sellers. When a trader places an order, they are authorizing the exchange to trade their coins for the best available price.

To transact on a crypto exchange, you must first open an account with the exchange and go through a verification check to authenticate your identity. Once this process is successful, you need to fund this account before you can buy coins.

To fund your account, you will need to deposit cryptocurrency or fiat currency. Different exchanges accept different payment methods for depositing funds. Most exchanges will accept bank wire, debit/credit cards, money orders, etc. Some exchanges may also accept PayPal or even gift cards. For withdrawals, you can use any of the options provided by the exchange, which may include bank transfer, PayPal, check mailing, credit card transfer, bank wire, etc.

You will then place a ‘buy’ order on the exchange, requesting to buy your preferred cryptocurrency at any amount below the specified maximum price. When you place an order, the exchange will put this in its ‘order book.’ An order book is a list containing all outstanding orders from traders who either want to sell or buy crypto.

The exchange seeks to find matching offers for traders. For example, let’s say you want to sell one BTC at no less than $11,000. The exchange will try matching you with a buyer who’s willing to spend that money for that amount of crypto. If they find one, the sale happens. If no prices match that amount, no transaction takes place.

Makers and Takers

Cryptocurrency exchanges usually designate traders as either makers or takers. Makers and takers are also provided with different trading fee structures. Maker fees are generally lower than taker fees. This is because a maker order is not executed right away, and this contributes to liquidity for the market – which is what any exchange wants. By contrast, a taker ‘consumes’ liquidity’ by placing a market order that immediately gets filled, hence the higher fees.

Types of Crypto Exchanges

There are four types of exchanges and which are explained below.

1. ‘’Traditional’’ Cryptocurrency Exchanges – these exchanges are akin to the traditional stock exchanges. Traders can exchange crypto based on the prevailing market price. These exchanges usually charge a fee for each transaction. Some traditional crypto exchanges allow only crypto to crypto exchanges, while others allow for crypto to fiat exchange. Coinbase Pro is an example of a traditional crypto exchange, as is Kraken.

2. Cryptocurrency Brokers – these are online exchanges that allow traders to buy and sell crypto at a price determined by the broker. The transaction is thus between the buyer and seller and the broker, and not between buyer and seller. If you’re a new crypto trader, this is a favorable option because it’s easy to use, and the broker handles the transaction for you. However, you’ll pay a slightly higher price than the traditional crypto exchange. Coinbase and Shapeshift are examples of this exchange.

3. Direct Trading Platforms – these exchanges offer direct peer-to-peer trading where people across the world can exchange crypto with each other. These platforms do not have a fixed market price; instead, buyers and sellers settle on a price. AirSwap and LocalBitcoins.com are examples of this exchange.

4. Cryptocurrency Funds – these are pools of professionally managed cryptocurrency assets that allow you to purchase and hold crypto via the fund. These funds allow you to invest in crypto without having to store it directly. Cryptocurrency funds are usually for investment purposes only. Grayscale Bitcoin Trust is an example of such a fund.

What Is A Decentralized Cryptocurrency Exchange?

A decentralized cryptocurrency exchange (DEx) is an exchange that operates without any governing authority. That means that the platform is run on a blockchain where traders can buy/sell on a peer-to-peer basis. Since it operates on a blockchain, a DEx does not hold any assets, user info, etc.

A DEx uses smart contracts to generate ‘proxy tokens,’ which are used instead of an asset- and this proxy token is used as the base for trades by users.

What to Look For In an Exchange

Before choosing your ideal crypto exchange, it will help to do a little research. Here are some aspects you should consider:

☑️ Reputation – it’s important to find out what other people say about an exchange. Look at reviews and ask questions on forums like BitcoinTalk, Quora, Reddit, and so on. Also, look at what reviews by reputable industry websites have to say.

☑️ Fees – before signing up for any exchange, be sure to look through the website and understand their deposit, transaction, and withdrawal fees. Different sites have varying fees.

☑️ Payment methods – check the payment options offered by the website. Is it a debit/credit card? Bank wire? PayPal? If an exchange has many options for payment, the better for you. Bear in mind that buying crypto with a credit card requires identity clarification and is slightly expensive because it’s prone to fraud, and it has higher processing fees. Also, buying crypto via bank wire will take longer than other options because it takes time for banks to process.

☑️ Verification requirements – the majority of the big names in crypto exchange will require some proof of identity before you make deposits and withdrawals. Other exchanges might allow you to remain anonymous. Just remember verification might be necessary to protect the exchange against scams – which comes down to protecting you and your holdings as well.

☑️ Geographical restrictions – some exchanges will exclude certain countries from their entire platform, while others will only restrict some services. You want an exchange that offers full access to all user functions and tools that you need in an exchange.

☑️ Exchange rate – exchange rates can differ substantially from one exchange to another. You can save a lot if you do a little homework before settling for any particular exchange. That said, expect rates to fluctuate up to 10% or higher, sometimes.

Conclusion

Cryptocurrency exchanges allow us to interact with crypto securely. Picking the crypto that matches your specific needs can be a daunting process. Remember to look at things such as fees, payment options, country-specific services, and reputation, etc. before settling for an exchange. Bear in mind too that you’re not limited to using only one crypto exchange.

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Cryptocurrencies

How can Blockchain be applied in various industries?

Ever since blockchain got its first prominent use with Bitcoin in 2009, the technology has no signs of slowing down. If anything, it’s poised to change so many facets of our lives. It will protect our business dealings, simplify property registration, save us from hiring intermediaries, protect our identities, and more.

Ever since blockchain got its first prominent use with Bitcoin in 2009, the technology has no signs of slowing down. If anything, it’s poised to change so many facets of our lives. It will protect our business dealings, simplify property registration, save us from hiring intermediaries, protect our identities, and more.

Ever since blockchain got its first prominent use with Bitcoin in 2009, the technology has no signs of slowing down. If anything, it’s poised to change so many facets of our lives. It will protect our business dealings, simplify property registration, save us from hiring intermediaries, protect our identities, and more.

We already see some of the exciting applications of blockchain. The most obvious one is cryptocurrencies – the borderless, censorship-resistant digital currency. Another application is borderless payments, which are already improving lives via timely money remittances.

So, what blockchain applications are on the horizon? We explain the above mentioned in more detail, as well as list more promising applications of this amazing technology. 

Banks

The banking industry could benefit from blockchain in so many ways. Unlike banks that cease operations at night and on weekends, blockchain never sleeps. By integrating blockchain into banking operations, banks can provide way quicker and more convenient services to customers. For example, with the current banking model, if you deposit a check on Friday at 6.pm, you will likely have to wait until Monday to cash it. If blockchain was in play, though, you wouldn’t take more than 10 minutes before that money hits your account.

Banks could also use blockchain to exchange money between institutions faster and more securely. For example, in stock trading, the clearing and settlement process takes up to three days or even longer for international trading. And the more days the money is in transit, the more risks and costs it is exposed to. If banks employed blockchain solutions, it could save them significant costs as well as save customers a lot of banking and insurance fees.

Cryptocurrencies

Fiat currencies are regulated by a central authority, such as a bank or government. Under this system, a user’s money is technically subject to the whims of either the bank or the government. If the bank collapsed, their money is at risk. If they live in a dictatorial jurisdiction, their assets could be frozen at any time if they were so far as deemed to be a threat to such a system. And if a government is unstable, so is citizens’ currency.

On the other hand, blockchain, the technology that underpins cryptocurrencies, is global, decentralized, and under no one’s authority of control. If someone holds cryptocurrency – those funds cannot be seized or frozen by an authoritarian state. Neither will it devalue in the face of political or government instability. Countries with unstable currencies can also use cryptocurrency as a more stable currency.

Healthcare

The healthcare industry can leverage blockchain to maintain and store patients’ medical records securely. For instance, when a medical report is generated, it can be securely recorded in the blockchain – where patients will have confidence that it will not be altered. The health records could also be encrypted and stored on the blockchain, with only specific individuals having the key to the information – thus ensuring privacy.

Blockchain could also solve the problem of patient identifiers, for which there is none that is universally recognized so far. A unique patient identifier would solve the problem of mismatched patient electronic health records, which sometimes leads to errors in patient care and puts patients at risk. 

Blockchain application in healthcare could also facilitate the seamless exchange of information with reduced costs. Also, the nearly instantaneous processing of requests would mean a more secure and efficient exchange of health records between healthcare providers. 

Smart Contracts

Blockchains can enable the coding of smart contracts. Smart contracts are contracts that self-execute when the specified conditions are met. Smart contracts are just like traditional contracts in that they define the agreements, obligations, rules, and penalties applicable to the parties involved. However, whereas traditional contracts will rely on human execution, smart contracts automatically enforce those obligations.

With smart contracts, the need for intermediaries, chaperones, lawyers, or generally third parties is eliminated. This saves time and the administration fees that would have been utilized for that end. There’s also no room for confusion as a contract’s terms are clear for all parties to see. Also, any party can refer to the contract at any time.

Cross Border Payments

The traditional remittance system is not up to par with today’s fast-paced world. It takes days for recipients on the other side of the world to receive money. There are also several intermediaries involved who all get paid a fraction of the total amount, creating an expensive and frustrating experience. Also, it’s prone to human error and open to illegal activities such as money laundering.

The blockchain could solve these problems substantially. It could provide a cheaper, faster, and more secure payment system. It could also instill transparency and hence help stamp out the illegal flow of money.

Governance

Blockchain technology could be used to ensure full transparency in voting, elections, or any other kind of poll taking.

Utilizing blockchain solutions for voting processes carries the potential to eliminate fraud as votes are recorded on a public blockchain, making them impossible to alter in any way. Also, votes are publicly available for everyone and election candidates to see – eliminating possible litigation scenarios and allowing countries to move forward after the election season.

Also, the automated process means fewer elections personnel will be needed, thus saving resources. It would also mean people can conveniently vote from anywhere, thus bolstering election turnout. 

Supply Chain Auditing

Today’s customer wants to know if companies do indeed mean what they say when they make ethical claims about products. Blockchain could easily provide us with proof about the backstories that come attached to the things we buy – from food to medicine to clothing to minerals and more.

With an immutable, public, and time-stamped record-keeping, we could begin to see more accountability and transparency in supply chains. For example, it would be easy to see the supply path of ‘ethical’ diamonds and confirm if they are, after all, ethical.

This also applies to food supply chains. Nowhere is the supply chain more contentious than in food. Blockchain would show us the origin of food from farm to table so that customers can confirm, for instance, if eggs are organic as claimed by the supplier. This would help bolster customer confidence and help stamp out food fraud.

Internet of Things (IoT)

Internet of things is a network of physical devices embedded with actuators, sensors, internet connectivity, etc. All these features are supposed to enable such objects to collect, exchange, and act on data, which then leads to improved system efficiency.

Blockchain-based IoT devices are already around us. For example, we have the Ethereum BlockCharge, which is used to charge electric vehicles as well as CryptoSeal, a tamper-proof seal for ensuring drug safety.

Blockchain will play a major role in IoT. It will help provide security and protect against hackers. Also, its protection against data tampering will prevent rogue actors or devices from disrupting a home, a factory, or a transportation system.

Identity Management

Today, there’s a growing need for better identity management. The ability to verify your identity is a prerequisite to accessing online financial services. But how can we be sure that personal data is safe from online security risks? Current remedies for this problem are faulty at best. Blockchain technology can provide a method to prove who you are, while also granting us the possibility to digitize personal documents.

Developing universally agreeable digital identity standards is a challenging process. Apart from the obvious technical challenges, such a solution requires cooperation between governments and the private sector. Factor in, too, the need to navigate the legal labyrinths of different countries. The decentralization, security, and borderlessness of blockchain would provide solutions to these problems and pave the way for the creation of a digital identity standard.

Property Registration

Registering property has got to be one process that many would agree is burdensome and time-consuming. Between having to go to the local county’s office and having the property manually entered into the central database, it can prove an arduous task. And in the case of a property dispute, claims of ownership must be checked against the database.

This process is not just susceptible to fraud; it’s also costly and prone to human error. Even the tiniest mistake could make tracking property ownership inefficient. Blockchain-based property registration could eliminate the need to scan documents and having to physically track down physical files. Storing ownership information on the blockchain could instill more confidence in owners that their property deed is accurate and unalterable.

These are just some of the current and promising applications of blockchain. Blockchain has tremendous potential to change how we do a lot of things – whether it’s business, personal data handling, how we send money, and so on. One thing that’s clear, though, is that with blockchain, everyone is held to the highest degree of transparency and accountability. This is one of the pillars of this technology – and one that could help us construct fairer practices and hence, societies.

Categories
Cryptocurrencies

How Exactly Does Blockchain Work?

Anyone who’s heard of cryptocurrency has most probably heard of blockchain. If you ask most people, they’ll tell you blockchain is cool. But they probably won’t tell you much beyond that. That’s because not everyone understands how blockchain works.

Anyone who’s heard of cryptocurrency has most probably heard of blockchain. If you ask most people, they’ll tell you blockchain is cool. But they probably won’t tell you much beyond that. That’s because not everyone understands how blockchain works.

Anyone who’s heard of cryptocurrency has most probably heard of blockchain. If you ask most people, they’ll tell you blockchain is cool. But they probably won’t tell you much beyond that. That’s because not everyone understands how blockchain works.

Not that it’s a hopelessly complicated concept. On the contrary. It’s just a groundbreaking technology with many firsts that might take some getting used to. In this article, we break down what’s blockchain, its history, how it works, and the properties that make it so revolutionary.

What is Blockchain?

The concept of blockchain is credited to computer scientist Stuart Haber and physicist W.Scott Stornetta. In a 1991 white paper, the two wrote a white paper that proposed the idea of time stamping and using private key signatures (based on cryptography) on submitted data.

This idea inspired the work of many other computer scientists and cryptography enthusiasts – leading to the creation of the first blockchain application – Bitcoin.  

‘Blockchain’ can be defined in several ways. Some people may understand it as a literal chain of blocks – though not in the real sense of those words. Others would understand it as a decentralized digital diary or ledger. (Decentralized means everyone can have access, and no single authority makes the rules.)

Both are correct. In this context, ‘block’ is essentially transaction data stored on a ‘chain,’ which is the public database. Every block in the blockchain contains several digital pieces of information, which we’ll detail below:

☑️ Information about transactions including date, time, and the amount of cryptocurrency in the transaction

☑️ Information about the participants of transactions, i.e., a digital signature (not their real name)

☑️ Distinct information that distinguishes it from other blocks, known as a ‘hash.’ (a hash is a string of letters and numbers generated by a ‘hash function.’ A hash function is a mathematical function that converts random letters and letters into an encrypted text of fixed length.)

A single block on the blockchain can only store up to 1MB of data. Depending on the size of transactions, a block can hold a few thousand transactions.

How Blockchain Works

When a block is validated (that is, the transactions in a block are verified), it is recorded on the blockchain. But for a block to be added on the blockchain, four things must happen: 

A transaction must take place.  

That transaction must be verified. After you pay for goods in a store with crypto or you send cryptocurrency to your loved one, that transaction must be confirmed as accurate and legitimate. Unlike with other public records of information like Wikipedia or your local library where there’s someone in charge of verifying new data entries, the blockchain relies on a network of computers for that task.

Verifying means checking if the transaction is as you said it was, in regards to the details of the purchase, time, amount, and participants. 

The transaction must be stored in a block. After a transaction has been confirmed as legitimate, it gets the approval to join a block where there are many others like it.

The block is given a unique identifier called a hash. Once all transactions of a block have been verified, it’s given a distinctive code that will differentiate it from all other blocks on the blockchain. Then, that block is added to the blockchain. 

When a block is added to the blockchain – it becomes a public matter of record available for anyone to see. A quick look at Bitcoin’s blockchain, for instance, will show you traction data along with the info about when (“Time”), where (“Height”) who (“Miner”) added the block to the blockchain. 

The blockchain network is maintained by network participants. These participants are also called nodes and is composed of a myriad of interconnected computers spread across the globe. Every node has a copy of the blockchain, and all participants are equal in authority. 

Therefore, blockchain transactions take place within a global, peer-to-peer network. Its peer-to-peer characteristic makes it decentralized, borderless, and censorship-resistant. (Censorship resistant means anyone can interact with the blockchain on the same terms as anyone else, and no one person can singly modify the content on the blockchain.)

A central part of many blockchains – including Bitcoin, is mining, which relies on computers to run a series of hashing algorithms to “mine” or process the most recent block. Each blockchain uses a different type of hashing algorithm. For example, Bitcoin uses the SHA-256 algorithm. ‘SHA’ stands for Secure Hash Algorithm. The SHA-256 takes an input of alphanumeric characters of any length and converts it to an output of 64 characters (256 bits). 

Once a block is mined, the miner broadcasts it to all miners (nodes) in the network. They then confirm its validity before adding to it to their copy of the blockchain. They will also include the hash from the previous block onto the new block – hence the name blockchain. 

The model of producing new blocks by running a series of hashing algorithms is called Proof of Work (PoW). PoW is the model used by Bitcoin, the first application of blockchain and the world’s first cryptocurrency. PoW, however, uses extremely high computing power and hence, electricity – leading to the development of other models meant to improve on it – for example, Proof of Stake (PoS). 

The Principles of Blockchain

Blockchain has three main inherent characteristics that have made it such a revolutionary technology. These characteristics are as follows:

  • Decentralization
  • Transparency
  • Immutability 

Decentralization 

On a blockchain, each participant in the network has access to the whole blockchain. No one participant has control over or regulates its information. Also, every participant can validate the records on the chain.

You can also transact directly with other users on the blockchain – send money, receive money, etc. without an intermediary.

In the same way, the blockchain is also architecturally decentralized such that there’s no one single or even several points of failure. For an attacker to gain control of the blockchain, they would have to gain control of more than half (at least 51%) of the network – which is almost impossible.

Transparency

Blockchain technology came with an unprecedented level of transparency. If speaking from a cryptocurrency viewpoint, for example, all transactions are recorded on the blockchain and identified by the owner’s public address. In cryptocurrency, this is what is referred to as pseudonymity, i.e., while their public address is open information, their real identity is not disclosed.

In real-world blockchain applications, for instance, the supply chain, every single step of the process is available for all to see. This introduces transparency never before seen in the world.

Immutability

In the context of blockchain, immutability means that once something has been recorded on the blockchain, it cannot be changed or altered.

Blockchain achieves this via a cryptographic hash function – which is taking an alphanumeric input of any length and giving it an output of a fixed length.

The immutability of blockchains means it can be applied to many situations to encourage accountability when people know that they can’t manipulate information or accounts.   

Conclusion

The technology behind cryptocurrencies is interesting and revolutionary. It’s decentralized, transparent, and immutable nature is what makes it so unique. It’s what has made Bitcoin a household name and pushed cryptocurrencies to the fore. The next time you’re talking about blockchain, hopefully, you’ll be doing so with much more confidence.

Categories
Cryptocurrencies

What Are The Real-Life Applications Of Cryptos?

The word Bitcoin first came to light a decade ago when Satoshi Nakamoto mailed cryptography nerds a technical white paper of what he called the new electronic cash system.” A decade later, it has become a household name, a pioneer in what seems like the next technology-inspired global revolution. The cryptocurrency itself and its anchor blockchain technology are now household names. But questions still abound about what Bitcoin really is and its real-life applications.

The word Bitcoin first came to light a decade ago when Satoshi Nakamoto mailed cryptography nerds a technical white paper of what he called the new electronic cash system.” A decade later, it has become a household name, a pioneer in what seems like the next technology-inspired global revolution. The cryptocurrency itself and its anchor blockchain technology are now household names. But questions still abound about what Bitcoin really is and its real-life applications.

The word Bitcoin first came to light a decade ago when Satoshi Nakamoto mailed cryptography nerds a technical white paper of what he called the new electronic cash system.” A decade later, it has become a household name, a pioneer in what seems like the next technology-inspired global revolution. The cryptocurrency itself and its anchor blockchain technology are now household names. But questions still abound about what Bitcoin really is and its real-life applications.

Chances are you are either familiar with the term Bitcoin or have interacted with this crypto technology at one point. You probably heard the interesting but cautionary tale about a cryptography nerd that paid for two Pizzas with 10,000 BTC just about the time the digital currency was gaining momentum.

Today, one Bitcoin is valued over $7,500, and at one time, it hit the highs of $20,000. The once worthless digital coin has now become a major topic in the global finance arena. Central bank heads and governments are rushing to tame the coin that they consider a threat to the government-controlled currencies. Some like China have banned Bitcoin use within its borders.

Note that while these political and policy challenges have contributed significantly to Bitcoin price volatilities, they have done little to negate its penetration into the global economy. And in this guide, we will be looking at some of the real-life applications of the Bitcoin digital currency. Here are a few:

Purchasing food and property:

You, too, can use bitcoin to pay for Pizza. Unlike in 2010, however, you don’t need 10,000 BTC to pay for it. The massive Bitcoin popularity has seen several fast food companies innovate their payment systems to include Bitcoin. The move has also seen the birth and adoption of the Pizzaforcoin technology that processes Bitcoin and 50 other cryptocurrency payments in the fast foods industry.

The bitcoin revolution has spread way beyond the fast-food industry and into the global eCommerce industry. Here, the ever-increasing number of online shops like Overstock and Microsoft will ship different products and process your Bitcoin payment option. Propy.com – an international real estate company – has started accepting Bitcoin payments whileMyCOINreality.com is also advertising homes that you can purchase using Bitcoins.

Inventive middlemen like Gyft are also making it possible for you to buy from popular eCommerce stores like Amazon and Target that don’t accept Bitcoin payments via the digital currency – albeit indirectly. To achieve this, Gyft helps you convert your bitcoins to gift cards that you can use to shop.

Paying for social and professional services

People around the world are also using bitcoin to pay for social/ entertainment and professional services. One of the online industries most impacted by bitcoin payments is the sports betting and casino industry that has grown tenfold since the launch of bitcoin. The primary driver of the explosive growth witnessed here is the fact that most of these bitcoin processing companies support anonymous betting, deposits, and withdrawals.

Traditional online casinos were highly regulated, taxed, and limited to the nationality of members that they can accept in their casino. Bitcoin casinos don’t report your winnings to the tax authorities, aren’t bound to a specific jurisdiction, and will process registration for individuals from virtually any part of the world.

Interestingly, you can also use Bitcoins to settle payments for different professional services. Lucerne University – a vocational art and science institute – in Sweden was among the first to process bitcoin payments for tuition. Ever since King’s College in New York, Cumbria University in the UK, and the European School of Management and Technology in Berlin have since started accepting Bitcoins. Law firms, hospitals, and accountancy firms have also joined the bandwagon.

Salary payment:

Japan has, on several occasions, and different global platforms been hailed for having the most progressive cryptocurrency laws. Here, bitcoin and a handful of other cryptocurrencies are accepted as a legal property that can be used in place of fiat currencies in monetary transactions throughout the country.

New Zealand would, however, make history as the first country to okay the payment of salaries, goods, and services and adequately regulate the bitcoin taxation process. Here, companies get to pay their employee salaries and goods and services via bitcoin while obeying the different tax laws like the Pay As You Earn (P.A.Y.E) deductions and other withholding taxes.

Alternative to inflation-stricken global currencies:

In Bitcoin, Satoshi Nakamoto saw the solution to all the inherent limitations of the fiat currencies, chief among them inflation. The inflation menace in almost every instance caused by having too much money in circulation, which effectively translates to a loss of the currency’s value. To arrest this and make Bitcoin inflation-proof, Satoshi limited the number of Bitcoins that will ever be created to 21 million coins.

All over the world, failed and failing nations like Zimbabwe and Venezuela have been witnessing cases of hyperinflation that make their currencies worthless. At the peak of inflation in Zimbabwe, for instance, saw the country’s inflation hit over 200 million percent. In Venezuela, inflation towers way above 10 million percent, and nothing seems to work – not even the devaluation of their Bolívar currency. The situation in the country is so dire that residents are using the bolivar notes to makes bags for sale in and outside the country.

In both of these countries, the tech-savvy and much of the elite class have already turned to bitcoin and other cryptocurrencies as a means of preserving their cash. While the rest of the country turns to the US Dollar and currencies of neighboring countries, this elite class has turned to bitcoin transactions. In Harare, Zimbabwe, for instance, there has been installed several cryptocurrency ATMs for Bitcoin and Litecoin aimed at providing the citizenry with highly reliable and trustworthy financial exchanges.

Sending cash home:

There is a staggering number of expatriates working all over the world. And they all have one common problem – finding a secure, efficient, and cost-effective means of sending cash home. Most avoid banks primarily because of their exorbitant fees, and also due to the heat, most of the institutions turn their way in the form of scrutiny by the host country governments. But they also don’t want to risk their cash by trusting these rather unconventional, unreliable, and equally pricey online payment methods.

Most of these individuals have, therefore, turned to bitcoins. The only time most of these will have to interact with their host country’s financial institutions is when converting their cash to bitcoins. Sending cash home in the form of bitcoins has gained track in recent years because the transfers are free. International bitcoin transfers are also safer and instantaneous, unlike bank transfers that often take as much as five days before the cash reflects on the home country’s bank accounts.

Trade and digital asset investments:

The global perception of Bitcoin and blockchain technology has tremendously improved, as evidenced by favorable bitcoin policies in most economies. However, most of these countries are yet to acknowledge the digital currency as a legal tender. Crypto operations have thus been left on the fringes of unregulated online trade. It, therefore, would be right to say that crypto trade on exchanges accounts for the largest form of crypto application in real life. In most cases, the traders on these platforms seek to exploit the highly volatile nature of digital currencies by profiting from their regular price fluctuations.

When Bitcoin first premiered in these crypto exchanges, it was valued at no more than a few cents. The forces of demand and supply would, however, see it skyrocket and hit $20,000 at its peak in early 2018. Today, one BTC is valued at over $7,500. Either of these figures and valuations represent thousands of percentage value growth in a short ten years.

Investment analysts have gone on to label it the best performing investment product, overtaking the traditionally hailed real estate and money markets. There also is a general feeling that all factors held constant; Bitcoin’s value will continue to soar. This has the in effect, created the next most popular form of real-life application of this coin – Bitcoin investments.

Unlike bitcoin trade, where traders buy the coin with the intent of selling it as soon it reports a small percentage jump in price, investment refers to a long term buy and hold strategy. Bitcoin investors will, in this case, buy and hold on the coin for the longest time with the intention of drawing maximal profits from its long term and consistent value growth.

Pay for travel and accommodation:

Apparently, you can book for your local or international air flight or accommodation and pay with Bitcoins. Travel companies like Cheapair.com make it possible for you to purchase air tickets and make accommodation bookings that you pay with Bitcoins. They will also connect you with cruises, tour guides, and even international cruises that accept bitcoin payments.

Donate to charity:

If you are passionate about charity and would like to donate to charitable courses, you don’t necessarily need to go through the troubles of converting your bitcoins to fiat currencies. The world isn’t short of not-for-profit organizations that accept bitcoin and other crypto donations. The most popular today, include The Water Project that builds clean water solutions in Sub Saharan Africa using pooled funds, Common Collections that donates pooled Bitcoins to refugees and underprivileged global communities, and even Julian Assange’s WikiLeaks that advocates for more transparency from governments and corporations by leaking what they consider classified information.

Buying and selling art

For the longest time, the art industry was dominated by the super-rich, who used art as a store of value. The landscape is, however, changing and transforming into a more welcoming niche where virtually anyone can buy and sell art. But did you know that you can now initiate art transactions using Bitcoin? Companies like Bitpremier.com have already created an online platform that connects art sellers and buyers willing to transact using Bitcoin.

Paying for VPN or domain name:

Different internet companies are also alive to the use of Bitcoin and, therefore, accept bitcoin payments for various services. NameCheap, a domain registration company, will, for instance, let you buy and renew the domain name for your blog or website via bitcoins. And if you are trying to avoid trackers and keep your online activities private, Express VPN lets you subscribe for their premium services with bitcoins.

Pay for monthly bills:

Your post payphone service provider is also keen on digitizing their payment systems. AT&T, for instance, started accepting Bitcoins as a payment method for users seeking to settle their phone bills.

Conclusion

A decade ago, Bitcoin was no more than an idea on a technical white paper that only cryptography nerds could decipher. And when the online community started appreciating its monetary value, 10,000 BTC could only buy two Pizza. Ten years later, it has become the center of attention for financial institutions, governments, and central bank heads that consider it a threat to the traditional banking and financial systems. Countries like China have banned its use within its borders, while others like the United States have resorted to suppressing its influence in the country. However, none of these strategies has stood in the way of bitcoin morphing into a globally accepted digital currency.

Categories
Crypto Daily Topic Cryptocurrencies

Hyperledger Fabric – A blockchain based enterprise solution

Blockchain is the future. Yes, the technology powering cryptocurrencies has incredible potential to change how institutions and industries work – and our very lives. When you’re talking about radical transparency

Blockchain is the future. Yes, the technology powering cryptocurrencies has incredible potential to change how institutions and industries work – and our very lives. When you’re talking about radical transparency

Blockchain is the future. Yes, the technology powering cryptocurrencies has incredible potential to change how institutions and industries work – and our very lives. When you’re talking about radical transparency in supply chains, no more annoying red tapes, and contracts without a horde of lawyers – you’re talking about blockchain technology.

These are just examples of what blockchain is capable of. It’s a revolutionary technology that could be used for good. And no entity or organization recognizes this more than Hyperledger – a global coalition of forward-thinking organizations whose aim is to advance blockchain.

It’s one of the most exciting organizations in the blockchain sphere – and whose work is incredibly important. But what is Hyperledger? Let’s dissect everything about it – from members to its architecture to its exciting projects, to companies that are already utilizing its platform. 

What is Hyperledger?

Hyperledger is an umbrella network of institutions that seeks to support the collaborative development and improvement of distributed ledger systems so that they can support global business transactions.  The project was founded by the Linux Foundation in 2015, with the founding members announced in February 2016. Hyperledger calls its design ‘’The Greenhouse for Enterprise Blockchains” – as it aims to incubate and develop practical blockchain-based solutions and applications to today’s challenges

The project is backed by a global alliance that includes over 200 leading organizations from the blockchain technology, finance, technology, software, academia, system integration, manufacturing, Internet of Things (IoT) and more fields. They include big names such as Accenture, Airbus, American Express, Cisco, Consenys, SAP, Huawei, Samsung, Microsoft, Oracle, Ripple, YaLE, UCL, University of Cambridge, and more.

The Hyperledger Architecture

Hyperledger’s architecture utilizes the following business components:

☑️ Consensus layer – which deals with creating agreement on the priority of transactions, as well as the accuracy of transactions contained in a block

☑️ Smart contract layer- which takes care of processing transaction requests and authorizing valid transactions

☑️ Communication layer – which deals with peer-to-peer communications

☑️ Identity management service – the function that maintains and validates the identity of users and maintaining trust on blockchain

☑️ API (Application Programming Interface) – a software that facilitates external applications and users’ interaction with the blockchain.  

What Hyperledger Is Not

When talking about Hyperledger, it’s important to get it right about what it’s not. Hyperledger is not a company, a cryptocurrency, or a blockchain. Hyperledger is something of an open hub for pushing enterprise blockchain development. The platform does not endorse any cryptocurrency. Its focus is on blockchain technology and how to harness it for the good of the world.

Its website tells us: “Not since has the web itself has a technology that promised broader and more fundamental revolution than blockchain technology. Blockchain can be used to build a new generation of transactional applications that establishes trust, accountability, and transparency at their core, while streamlining business processes.”

Hyperledger wants to ensure that blockchain thrives, stating, “Only an open-source, collaborative software development approach can ensure the transparency, longevity, interoperability, and support required to bring blockchain technologies forward to mainstream adoption.”

In short, the project is about bringing minds and brains together to further the blockchain idea. It’s not about commercial incentives or a get-rich scheme. That’s why Hyperledger has no plans for developing a cryptocurrency. Executive Director Brian Behlendorf made this clear from the start, saying, “You’ll never see a Hyperledger coin. By not pushing a currency, we avoid so many of the political challenges of having to maintain a globally consistent currency.” (source: https://www.bitcoininsider.org/article/43420/wtf-hyperledger)

Hyperledger Projects

The Hyperledger ‘greenhouse’ incubates and promotes a range of industrial blockchain technologies, frameworks, tools, interfaces, and applications. As of November 2019, Hyperledger projects are as follows:

Hyperledger Aries

This is the youngest project by Hyperledger. Its goal is to advance the use-case of blockchain to provide identity solutions. It does this by providing an open-source, interoperable tool kit for creating, transmitting, and storing genuine identities. It relies on another Hyperledger project – project Ursa, for cryptographic support to achieve security and safety for identity credentials.

Hyperledger Avalon

Avalon is the project’s implementation of the Trusted Compute Specifications published by the Ethereum Enterprise Alliance. Avalon is intended to provide safe and trusted off-chain computing resources to improve the scalability of public blockchains, all without compromising on the privacy accorded by these blockchains. 

Hyperledger Besu

This is the first public blockchain project to join the Hyperledger fold. It was formerly known as Pantheon, a project by the blockchain company ConsenSys. Besu is an Ethereum client (software that executes Ethereum’s protocol) that allows users to create decentralized application (DApps), smart contracts, and mine ether. The project is keen to separate concerns between consensus algorithms and other blockchain features.

Hyperledger Burrow

Burrow is a permissioned Ethereum smart contract machine that handles transactions and executes smart contracts on the Ethereum Virtual Machine.

Hyperledger Caliper

Caliper is a framework meant to measure the performance of multiple blockchain solutions. It contains several performance indicators such as Transactions per Second, transaction latency, resource consumption (CPU, memory, etc.), and so on. The resource is meant to be used by various Hyperledger projects as they roll out frameworks.

Hyperledger Cello

This is a tool designed to be the operational dashboard for Blockchain – to minimize the effort applied while creating, managing, and using blockchains. It can be used as a reference tool by blockchain developers.

Hyperledger Explorer

This a dashboard utility module that lets users create various user-friendly applications on which others can view, monitor, search, organize, or query various artifacts and developments in blockchain. It includes details such as name, chain codes, details of blocks, transaction data, and other relevant information on the blockchain network.

Hyperledger Fabric

Hyperledger fabric is a framework that acts as a foundation for creating blockchain-based products, solutions, and applications. Its components, such as membership and consensus, can be used on a plug and play basis. It fills the privacy and confidentiality gap that makes traditional blockchains less than ideal for enterprise-level blockchain solutions.

Hyperledger Grid

This a set of tools that allows developers to select the most optimizable components for developing supply chain blockchain-based solutions.

Hyperledger Indy

This is a distributed ledger that provides tools, libraries, and components for decentralized identities to address issues of identity management. Indy can be used solely but is interoperable with other blockchains.

Hyperledger Iroha

Iroha is a distributed ledger software that infrastructural and IoT projects can easily incorporate into their systems. It features simple construction, a crash tolerant consensus algorithm, and other characteristics that make it easy to integrate into such systems.

Hyperledger Quilt

This is a Java version of the Interledger protocol that allows payments across any payment network, whether with fiat or crypto. It has an implementation of all core functions required to send or receive payments. 

Hyperledger Sawtooth

The Sawtooth project aims to keep ledgers truly distributed and make smart contracts more secure. It is designed for use across many fields, including IoT and finance. Its dominant characteristics include being both permissioned and permissionless and using the Proof of Elapsed Time (PoET) consensus algorithm.

Hyperledger Transact

Hyperledger Transact is a library that provides a standard interface for writing distributed ledger software – in order to simplify the task for developers.

Hyperledger Ursa

Ursa is a shared cryptographic library that seeks to assist developers not to duplicate cryptographic work and hopefully increase security for future developer applications.

Real-Life Applications of Hyperledger

Hyperledger is already in application across industries – from food to diamonds to healthcare. Companies are using the platform to achieve more transparency, eliminate fraud and streamline processes. Here are examples of such companies:

Everledger is a company that uses a blockchain solution based on the Hyperledger platform to inject more transparency in the diamond supply chain – and thus help prevent fraud and illicit trading. The diamond community shares concerns over stone’s origins and authenticity – and this is where Everledger comes in. It traces the journey of every stone from mining to the consumer so that customers are assured of the integrity of their diamonds.

DigiPharm is a company that aims to promote fair pricing in the healthcare sector. It has built its platform on the Hyperledger Fabric protocol to enable seamless implementation of fair pricing agreements, lower costs, and help remove long-standing barriers that prevent patients from accessing quality healthcare. 

HealthVerity is a platform that creates, aggregates, and exchanges healthcare and consumer data.  It has integrated the Hyperledger Fabric protocol to better manage consumer and patient preferences in a way that best complies with changing privacy requirements.

E-Food is a food traceability program based on the Hyperledger platform that traces all quality and logistics activities on the supply chain. It enables a ‘food to farm’ approach to making food supply and production more transparent – enhancing customer trust and preventing food fraud. 

Conclusion 

Hyperledger has taken a rare and noble path – one for advancing the blockchain idea without monetary incentives. Its projects already demonstrate the ability to transform industries by making it easier to adopt and utilize the technology for the benefit of both businesses and the most important player in it all – the customer. We can only hope that more companies across the board will take up the Hyperledger idea and deliver blockchain benefits to the grassroots.

Categories
Cryptocurrencies

Breaking Down SegWit – A step by step guide

SegWit is one admittedly complex concept in the blockchain world. Most crypto veterans probably still have no idea what it is or what it’s really about. And for those just

SegWit is one admittedly complex concept in the blockchain world. Most crypto veterans probably still have no idea what it is or what it’s really about. And for those just

SegWit is one admittedly complex concept in the blockchain world. Most crypto veterans probably still have no idea what it is or what it’s really about. And for those just now entering the blockchain sphere – it can be confusing even to begin wrapping your head around it.

Whichever the case, it’s essential to get it right – especially if you’re planning to interact with Bitcoin and other cryptocurrencies such as Litecoin.

The good thing is we help you take care of this in this article. So let’s discover what SegWit is, how it came to be, what it holds for the crypto market place, and more.

What is SegWit?

Segwit is the name given to a Bitcoin protocol upgrade developed in 2015 and implemented in August. 23, 2017. It was designed as a solution to the scalability of Bitcoin and other cryptocurrencies with a similar model, like Litecoin.

Bitcoin confirms a new block every 10 minutes, with each block only able to hold a certain number of transactions. Bitcoin’s block size is only 1MB – and this limits the number of transactions that can be confirmed for every block. As a result, the Bitcoin blockchain only processes an average of about seven transactions per second (TPS). This pales in comparison to other payment systems like Visa and PayPal, which handles 1700 TPS and 193 TPS, respectively.

SegWit’s bright idea is to increase the block size on the blockchain by removing digital signatures from transactions. When certain parts of a transaction are removed, it frees up space for more transaction throughput on the chain.

Segregate here means to separate, and witnesses are the signatures. So, SegWit is shorthand for “segregated witness,” which means to separate signatures from transaction data.

The SegWit idea originated with Bitcoin developer Pieter Wuille and was developed by him together with other developers, resulting in it being implemented as a soft fork in 2017 on the Bitcoin network. This upgrade brought a number of benefits for the blockchain network – including improving transaction speeds and increasing block capacity. It also solves the so-called transaction malleability issue – which we’ll discuss below, right after we deconstruct the ‘soft fork.’

What Is A Soft Fork?

Any software needs updates to improve its functionality or fix performance issues. In the cryptocurrency world, such updates or changes are known as forks.

A soft fork is a blockchain update that doesn’t split the chain into two.

In other words, a soft fork is an upgrade that is backward compatible with the previous software. A soft fork does not need nodes in the network to upgrade so as to follow the same network since all blocks on the ‘new’ blockchain follows the same consensus rules (a set of rules that all nodes usually enforce to validate a block and its transactions). In other words, a soft fork is backward compatible because old nodes will still recognize the new blocks on the upgraded blockchain.

A soft fork requires a majority of miners (nodes) to activate it so that it becomes operational. SegWit is one such type of a soft fork – it’s compatible with the old version of the Bitcoin blockchain.

What is Transaction Malleability, and Why is Fixing it Important?

Transaction malleability is a flaw in Bitcoin’s code that allowed bad actors to potentially change transaction signatures. Changing here means altering the unique ID of every Bitcoin transaction before it’s verified on the network. 

If someone tampers with a transaction signature, it could cause a transaction between two parties to be corrupted. Now, we know records on the Bitcoin blockchain are immutable, i.e., they can never be changed or altered. This resulted in invalid transactions being stored forever on the blockchain.

Signatures are the only way a transactions’ unique ID can be modified. SegWit came along and removed the need for a signature to be on a transaction. Even if someone alters the signature, the unique ID remains the same. The signature will still be checked, but this time not when calculating a transaction’s fingerprint, or identifier.  

SegWit’s Implementation Issues

After SegWit went live, its implementation was anything but immediate. Even today, the protocol is yet to be fully adopted by network participants. This is due to several reasons – including the different motivations of different users on the network. It’s also because it’s not mandatory, and some participants are okay with the original Bitcoin protocol.

Another reason is that there are different participants in the Bitcoin ecosystem playing various roles – so implementation of any new protocol is not exactly automatic. For example, the Bitcoin network relies heavily on wallets in which users will store their private and public addresses.

There are also crypto exchanges and other players in the ecosystem who need to upgrade their systems and hence ‘facilitate’ any changes in the network. For an upgrade to be adopted, all these organizations need to embrace it, and this doesn’t always pan out favorably.

A new software update would change the way transactions are carried out on the network. This might be good news for Bitcoin believers – but not necessarily for corporate interests. Consider, for example, the investment in billions of some of these companies. There is high motivation to maintain the status quo and not ‘rock the boat.’

There is also the question of wallets that were not able to support the protocol immediately. It took a while before some of the most widely used wallets – like Trezor and Wallet, could enable it.

There’s also the issue of miners. SegWit was designed to go live if a supermajority of miners signaled support for it. However, the larger portion of the miner community refused to activate the protocol. This is because SegWit was incompatible with a mining optimization software known as AsicBoost that they were using.

The miners’ refusal led to an interesting showdown. Bitcoin enthusiasts rallied around an idea called User Activated Soft Fork (UASF) – which meant they would activate the protocol on their own Bitcoin nodes if miners did not. The UASF would have split the Bitcoin network into two – one with SegWit and another without. The resulting outcome was not going to be favorable for anyone – which is probably why a few days before the UASF ‘deadline’, miners caved in and activated the protocol.

SegWit’s Adoption Challenges and Current Status

SegWit’s “backward-compatible” status, i.e., ensuring network participants who haven’t upgraded to it can coexist with those who have, means some participants have not been in too much of a hurry to adopt it.

Most Bitcoin-businesses, as well, would rather focus on customer acquisition than implementing not such necessary technologies. Rusty Russell, a blockchain developer at the blockchain company Blockstream, echoed this to the crypto news website Coindesk in 2018. He said that the priority for startups was “optimizing for growth and not implementing cool new tech.”

Implementing SegWit is also quite an involving task – both time-wise and financially. Founder of the crypto exchange Gemini, Tyler Winklevoss owned to this in a Reddit Q&A earlier this year. He said retrofitting wallets to accommodate SegWit was a “very tricky procedure” that required designing “a new hot wallet from the ground up.”

Nevertheless, SegWit has, over time, gained traction, thanks to Bitcoin increasing in value and a subsequent increase in transaction fees. For this, users are more inclined to use efficient, SegWit-enabled solutions. Businesses have noticed this shift and are now being forced to adapt.

For instance, in October of 2019, Bitcoin Segwit had reached usage rates of 56.82%, and Litecoin Segwit had hit 75%. These are encouraging figures that point to increased adoption of the protocol in the future.

Pros of SegWit

Solves the issue of transaction malleability

Facilitates faster transactions on the blockchain since waiting time is reduced 

Makes bitcoin transactions cheaper – faster transactions mean lower transaction fees

Helps Bitcoin and other cryptocurrencies achieve better scalability

Reduces the size of each individual transaction 

Helps new and exciting developments like the lightning network

Cons of SegWit

SegWit’s idea relies on eliminating some data off the blockchain. Some Bitcoiners believe keeping data off the blockchain is in itself a failure – like admitting the bitcoin model can’t stand on its ‘own feet.’

Miners now get lesser transaction fees for every individual transaction

SegWit’s implementation is a complex process that wallets have to do on their own. Some may not have enough resources to do it or may not get it right the first time

The implementation means more resources being used overall – owing to the increase in block capacity, transactions, bandwidth, and so on

The off-chain containing signature data will need to be maintained by miners as well. Unlike the blockchain where they get block rewards and a fraction of transaction fees, there is no reward for maintaining SegWit

Some in the Bitcoin community believe it’s a short term fix to a long term problem. They argue that it doesn’t really solve the scalability problem and that only changes to the blockchain size and changing how transactions are processed on the blockchain will really help Bitcoin to scale

The protocol has caused divisions in the Bitcoin community, leading to ‘forking wars,’ with the hard fork Bitcoin Cash resulting out of this

Conclusion

SegWit is a fundamental change to the Bitcoin ecosystem and one that sets the stage for further upgrades down the road. Removing the need to include identifying information on transactions on-chain brings several benefits such as more and faster transactions, fixing the thorny malleable transactions issue, and more.

But despite it being a promising, innovative solution – its adoption has been rather slow. Some people welcome it as an improvement to the world’s most popular cryptocurrency, while others think it highlights Bitcoin’s shortcomings. However, recent statistics show a marked improvement – something encouraging for its proponents. And from the current trend – its adoption looks set to go only forward. Let’s wait for what the future holds for both camps.

Categories
Cryptocurrencies

Cryptocurrency Risks You Need To Watch 

Ten years after the first cryptocurrency was launched, thousands more have filled the scene. Today, they are a digital asset class that either confounds or fascinates many. The latter makes

Ten years after the first cryptocurrency was launched, thousands more have filled the scene. Today, they are a digital asset class that either confounds or fascinates many. The latter makes

Ten years after the first cryptocurrency was launched, thousands more have filled the scene. Today, they are a digital asset class that either confounds or fascinates many. The latter makes them an attractive investment option – and indeed, many have become rich from trading in cryptos. 

However, the crypto world can prove murky. Thanks to some of their inherent characteristics like being intangible, decentralized, and incredibly volatile, cryptocurrencies are fallible to unique risks that anyone hoping to interact with them should be aware of.  

In this article, we explore some of these risks so you can stay safe while interacting with this digital asset class.

The Future is Uncertain 

Cryptocurrencies are known for their wild and unpredictable down and upswings. The crypto market is thus an unstable market marked by speculation and uncertainty. Trading in cryptocurrencies could set you up for huge losses – or huge profits, depending on market events. Consider, for example, how Bitcoin achieved a high of $20,000 in 2017 – from a paltry $700 at the beginning of the year. And as of November 2019, it’s trading at $7617. All these figures are nowhere near stable or predictable. 

And in 2018, the total market capitalization of cryptos fell from a massive $183 billion to a low of $100 billion. 

These fluctuations mean you shouldn’t rush all in to invest in cryptocurrencies – especially with money you can’t afford to lose. The same applies to transactions in crypto. Let’s say you’re purchasing something expensive with crypto. What if the price drops before you close the deal? You will have to fork out more crypto than you had planned for. The takeaway is: practice due diligence before trading in, or transacting with cryptocurrencies. 

Cold Shoulders

Governments, businesses, and institutions are yet to fully embrace cryptocurrencies. Some businesses are wary of the currency due to its history of instability. They are thus reluctant to accept it as a means of payment. 

What’s more, many governments around the world are either openly hostile towards it or just plain indifferent. As a result, people and businesses are ambivalent or outright mistrust it. 

For example, China has long banned banks from engaging in any activity that encourages the survival of cryptocurrency in the country. And in other countries such as Russia, using crypto to pay for things is illegal.  

The Entry Is Wide, But the Exit Is Narrow

Since Bitcoin successfully busted on the scene, it’s become almost impossible to keep up with every other cryptocurrency that gets introduced virtually every week. As of now, the number is nearing 3,000. There is a low barrier for entry for cryptos – which creates a wide entry for new ones to enter the market. 

However, most of these coins start with a frenzy and end up fizzling out, or devaluing. People that rushed in to invest in these cryptos are left stuck with valueless coins in their hands, with no one willing to buy them. 

Extortion and Manipulation 

Cryptocurrencies are a very appealing asset class – thanks to their sophisticated technology and the potential to make you rich under the right conditions. For this very reason, they are susceptible to all manner of social engineering and fake news such as fear, doubt, and uncertainty.  

Crypto beginners, along with the naïve, can easily become prey to these tricks, misinformation, cyber fraud, market manipulation, and other risks. 

Another area of extortion is Initial Coin Offerings. Some cryptocurrency projects have run away with investor money after these sale events. 

Hype and Noise 

There’s a lot of noise surrounding cryptocurrencies. From social media to news headlines to crypto forums, everyone is now ‘expert.’ 

A lot of people buy into the noise instead of doing their own research. What if prices crash when you’ve put substantial money into an overhyped cryptocurrency? The cryptocurrency market can give you handsome returns – but only after you make informed bets backed by research and patience.

Theft Hovers Above

Stories abound of crypto hacks that led to substantial losses. The crypto community is still reeling after the massive hack of 850,000 bitcoins from Mt.Gox – which led to the exchange closing shop and filing for bankruptcy. Another case is when hackers made away with 7,000 bitcoins from Binance. 

These are only examples of the hack all too familiar in the cryptocurrency industry. If you have crypto holdings, they are always prone to hacking, phishing, stealing, or other ill-intentioned activity. Passwords can be stolen or hacked. Your hardware wallet can be corrupted or stolen. For this, it’s vital to employ extra caution when dealing with cryptocurrency. 

Human Error 

‘Man is to error’ is true with cryptocurrencies. Thanks to their intangible nature, a simple thing as forgetting your password could lead to a loss in crypto funds. Losing hardware, spilling a drink on your paper wallet, transposing numbers, etc. are enough to create losses. Think of an exchange taking place, and you enter the wrong public key. You could lose thousands of crypto. 

Technological Risks 

The computational complexities and high energy consumption associated with some cryptocurrencies such as Bitcoin are also their limitations. Although Bitcoin and some mainstream cryptocurrencies have proven resilient, such aspects could backfire on others. 

Also, the decentralization of genuine blockchains cushions them against certain risks, like having a single point of failure. However, not all cryptocurrencies are truly decentralized as they claim. For this, investors should be on the lookout for cryptocurrency projects that claim to be decentralized, yet are really not. 

Forking Wars

Forking is a specter that’s always hanging over some cryptocurrencies. This can lead to a loss of confidence in the market and cause price falls. Forks can also erode market share, valuation, and interfere with the adoption of crypto. 

Forking can also lead to factions – with one supporting the original currency and other supporting the fork, as was observed with Bitcoin and Bitcoin Cash in 2017. This may significantly erode trust in either currency.  

Conclusion

Cryptocurrencies have made an indelible print on the world already – and they’re here to stay. Investing in cryptocurrencies can make you a fortune but under the right conditions. The first thing is to understand the perils associated with them before you start using them. Before you dip your toes into the murky waters of cryptocurrency, we hope this list of ‘crypto risks’ will be your lighthouse.

Categories
Cryptocurrencies

Is The Lightning Network Bitcoin’s Cure-All?

Scalability was always a thorny issue for Bitcoin since day one. When Satoshi Nakamoto first proposed the cryptocurrency, the very first comment by James MacDonald featured this comment “We very

Scalability was always a thorny issue for Bitcoin since day one. When Satoshi Nakamoto first proposed the cryptocurrency, the very first comment by James MacDonald featured this comment “We very

Scalability was always a thorny issue for Bitcoin since day one. When Satoshi Nakamoto first proposed the cryptocurrency, the very first comment by James MacDonald featured this comment “We very much need such a system, but it does not seem to scale to the required size.” A decade later, scalability is a concern that the Bitcoin and other mainstream cryptocurrencies have to grapple with.

What exactly is scalability? Well, Bitcoin has only ever been capable of processing an average of 7 transactions per second (TPS). This was okay at the beginning, but as the cryptocurrency gained more use and acceptance, congestion on the network increased. As a result, transactions took longer to be processed, and transaction fees went up.

If Bitcoin has any hopes of becoming a fully viable alternative to current payment systems – let alone the ‘world’s currency’ – as many Bitcoin believers envision, it will need to solve the current salability issues it faces.

To put this into perspective, compare Bitcoin’s current meager 7 TPS and Visa’s average of 1700. In the face of this dismal scalability potential for Bitcoin, the cryptocurrency’s enthusiasts have been hard at work reimagining the system and how it can be improved. There is one proposal that has caught the attention of the Bitcoin community and one which holds potential. This is the Lightning Network.

What is the Lightning Network?

The Lightning Network (LN) is based on this premise: there’s really no need to record every single transaction on the blockchain. As such, LN is a second layer technology on Bitcoin’s blockchain that allows two users to use a micropayment channel between each other – with the hopes to scale Bitcoin’s transaction processing.

By removing transactions from the main blockchain, LN is expected to remove the backlog of transactions and reduce or get rid of transaction fees altogether. It will drastically speed up transactions, positioning Bitcoin for everyday use.

How Does the Lightning Network Work?

The Lightning Network comprises an off-chain layer on Bitcoin’s blockchain. It features multiple payment channels that allow two parties to open a payment channel and conduct transactions between them. Two users can open a payment channel that will allow them to shift funds back and forth between their wallets.

These transactions are processed differently from the standard transactions on the main blockchain, being only updated there once the two parties open and close a channel.

To open a payment channel, the two users need to set up a multi-signature wallet and deposit some funds into it. This is the first transaction, and it’s called the funding transaction. Funds stored in the multi-signature wallet can only be accessed upon both (or more) parties providing their private keys. This means a party can only access and/or spend the funds with the consent of the other.  

The two users can conduct unlimited transactions between themselves without having to let in the main blockchain on their activities. This approach considerably scales up transactions’ speed since they don’t need to be approved by all nodes on the blockchain network.

The private channels between parties combine to form a web of lightning nodes that can channel activity among themselves. This web, or network, is the Lightning network.

The ingenuity of the Lightning Network is that once it achieves mainstream acceptance, users will not have to open a new channel to interact with others. They will be able to transact with ‘new’ users via existing channels – that is, channels with users with whom they already have a relationship. The network will execute this by automatically finding the shortest path.

Finally, the Lightning Network is being tested for another exciting feature – the ability to conduct cross-chain transactions of crypto swaps – that is, being able to exchange one crypto to another. This may render crypto exchanges – as we know them, obsolete.

Will You Pay Fees for Using the Lightning Network?

Yes, users will be required to pay fees on the Lightning Network. The fees will comprise routing charges for routing transaction details between lightning nodes, plus Bitcoin’s transaction fees to open and close payment channels.

At the moment, there are zero fees on the network owing to very few lightning nodes. However, if the project succeeds, charges are set to increase, but only slightly. In any case, if the fees became too expensive, a user has the option to move back to the main blockchain.

Implementations of the Lightning Network

The concept of LN was first proposed by Joseph Poon and Thaddeus Dryja in 2015. Currently, there are four major teams developing the concept.

Each is operating on the BOLT specification – which allows them to connect with each other as a unified network rather than separate groups competing with each other. The BOLT specification has been developed by the blockchain technology companies Block stream, ACINQ, and Lightning Labs – to allow each company’s products to interact with the others. These are the implementations and groups behind LN’s current exploration:

1. C-Lightning

C-Lightning is being developed by Blockstream. It’s coded in the C programming language and is created to only operate on Linux, with the possibility to run on Mac if you modify some coding and parameters.

This implementation supports lightweight nodes that you can run from the computer chip Raspberry Pi, allowing you to connect with other users without necessarily being online. As such, people can more conveniently adopt and contribute to the LN.

C-Lightning also features a wallet that lets you manage funds, whether online or offline.

Another exciting feature of C-Lightning is you can transact anonymously over the TOR network, so you don’t have to worry about privacy issues.

2. Éclair

Éclair is being developed by ACINQ, a French company. It’s very much like C-Lightning, with the only differences being in the coding and user interface. You can operate Éclair on Windows and also with the Raspberry Pi acting as the network node.

Éclair also has a mobile wallet for Android that you can use as a regular Bitcoin wallet and the Lightning Network for cheap and instant transactions. However, it’s advisable to not send large amounts of crypto on the wallet as its development, just like the Lightning Network, is yet to go mainstream.

Éclair is also compatible with C-lightning and Ind, another LN implementation that we’ll look at next. This means users can connect with another user(s) on either network.

3. Lightning Network Daemon (LND)

LND is under development by Lightning Labs. It’s written in the Golang programming language and can run on Linux and Windows. It’s compatible with both C-Lightning and Éclair as well as the Litecoin Lightning Network.

LND also features a desktop wallet that allows users to open a payment channel and shift funds between each other.

4.Lit

Lit is being developed by the Massachusetts University of Technology under their Digital Currency Initiative. Lit functions fairly the same as the other LN implementations, except it’s designed to support all SegWit coins as well, including those that may be developed in the future.

However, Lit does not support interoperability with the other LN implementations since it supports more coins than indicated by the BOLT specification.

MIT is currently developing a solution known as LitBox that will allow users to conduct transactions without needing to be connected to the internet.

Lit is also currently developing a multi-hop routing channel, the lack of which has made it lag behind other LN implementations. Since Lit is being developed by a small, non-commercial-driven team, its progress is slow, and at the moment, it has little real-world utility.

Benefits of the Lightning Network ;

The Lightning Network is still actively in development. The concept looks great on paper, but whether it will work as envisioned remains speculative at this point. If the network were to succeed, Bitcoin users can expect several upsides coming with it. Here are some of them:

Faster transaction speed. You can expect transactions to be much faster, thanks to the elimination of the need for validation of all nodes in the network. Also, this will be a massive step for cryptocurrencies’ ability to compete with the current financial set up in payment processing.

Transaction fees. LN developers and enthusiasts are banking on the network to contribute to the reduction or elimination of transaction fees, as transactions will be chiefly taking place outside of the main blockchain.

LN may prove suitable for micropayments – like paying for coffee, drinks, shopping, and so on. This is because it has an ideal environ for the transfer of small currency values. Also, it will allow for transactions to take place between devices without the need for human intervention, which reduces error and saves time.

Scalability. This is the most anticipated solution of the LN – which is touted to potentially facilitate at least 1 million transactions per second.

Atomic swaps. Provided that two blockchains feature the same cryptographic hash function (and most do), users will be able to send funds from one blockchain to another without the need for an intermediary. This is not just cheaper, but faster.

Security and Anonymity. The LN technology might be the thing to finally bring true anonymity to cryptocurrency. The majority of cryptocurrencies, including Bitcoin itself, are pseudonymous – meaning you can conduct transactions without revealing your identity, but transactions can still be traced back to you. LN will enable transactions to take place off-chain, making them impossible to trace.

Problems with the Lightning Network

The lightning network is a technology that’s still being explored. As such, it still experiencing ‘teething’ problems. The following are some of them.

Lightning networks are meant to be decentralized, like the blockchains, they aim to improve. However, they could instead lead to a centralized network that characterizes the traditional banking system in which banks and other financial organizations regulate transactions. Influential businesses will have more open connections than other users, resulting in their lightning nodes being centralized hubs on the network. And failure at such a hub could feasibly crash the network.

LN does not really solve the transaction fee problem. Bitcoin fees will undoubtedly rise in the future, Lightning Network or not. If these fees increase, LN will be rendered obsolete as it would become cheaper to transact on the main blockchain. Thaddeus Dryja admits as much: “Bitcoin’s transaction fees could go up again and hinder the lightning network’s adoption among merchants.”

Lightning network nodes are required to be connected to the internet at all times to facilitate transactions. This renders them vulnerable to hacks and thefts. Also, offline storage, which is the safest for cryptocurrencies, is not possible on a lightning network.

Going offline would present a new set of problems for the Lightning Network, like the Fraudulent Channel Close. The fraudulent channel close means one party could easily close a payment channel and take crypto funds for themselves when the other is away. Although there’s a given window of time when the other party could contest the closing of a channel, it could expire if either party is offline too long.

The “centralized” inclination of the lightning network means funds are concentrated in specific nodes within the network. In a scenario when such a node went offline, it could lead to a downtime of the entire network, cutting off user’s access to their funds.

To open and close a payment channel, you need to do so on the main Bitcoin blockchain. This requires manual work and yet more fees.

When is the Lightning Network Coming?

The cryptoverse is eagerly awaiting this groundbreaking technology to fully come into form. It’s worth noting the concept targeted Bitcoin at first, but it’s currently being explored for more cryptocurrencies, including Zcash, Litecoin, Stellar, Ether, Ripple, and more.

So far, Bitcoin has been tested on Éclair and LND networks with success. It’s also a good sign that the Lightning Network’s specifications have been published. This means developers can apply the rules and implement LN in their preferred programming languages.

Still, the technology is very much in its nascent stages. As of now, the average user cannot really send and receive payments via the network. Moreover, the implementations are still being dogged by bugs – leading developers to warn users not to send real money over the network – yet.

It’s important to note that the technology’s code is very complex and requires rigorous proofing. If the Bitcoin community, and indeed the whole world, is to adopt the technology, it must prove to be safe, reliable, and a veritable upgrade from the blockchain.

Currently, there is no official launch date for the Lightning Network, with each implementation taking a different approach. With that, experts predict that the network may take from several months to two years before going live.

Conclusion

The Lightning Network sounds exciting. It has the potential to improve Bitcoin and the entire cryptocurrency market as we know it. Think instant payments, anonymity, and reduced fees – LN could herald a new beginning for the crypto ecosystem.

However, Bitcoin and crypto fans have a while to wait before the technology can really live up to its promise. It also remains to be seen whether it will live to the promise, to begin with. We can only wait to see what exciting developments and updates the implementations have in store.

Categories
Cryptocurrencies

9 Best Cryptocurrency Wallets in 2019

Unlike fiat money, cryptocurrencies do not have a central authority or a designated place where you can safely keep them. But just like with real money, you need to store

Unlike fiat money, cryptocurrencies do not have a central authority or a designated place where you can safely keep them. But just like with real money, you need to store

Unlike fiat money, cryptocurrencies do not have a central authority or a designated place where you can safely keep them. But just like with real money, you need to store your crypto funds somewhere safe and secure.

Cryptocurrency wallets are the answer to the “how do I interact with my crypto coins safely?” question. A cryptocurrency wallet lets you trade, store, buy, sell, and swap cryptocurrencies in a safe way.

It can be difficult identifying the crypto wallet that suits your personality and needs. Whether you’re the laid back guy or girl that likes to check into cryptoverse once a week, the savvy trader who’s always on top of the market, or the HODLer, we have compiled a list of the top cryptocurrency wallets that are reputable, secure, and convenient to help you navigate the crypto world as safely and rewardingly as possible.

We based our criteria on supported cryptos, security, recovery options, and more. Read on for the top 9 cryptocurrency wallets in the market today.

Top Cryptocurrency Wallets

Ledger Nano X

Ledger Nano X is the latest hardware wallet offered by crypto solutions company, Ledger. The wallet won the “Consumers Innovation Honoree Award” during its launch – stirring the attention of crypto enthusiasts. 

The wallet’s screen is designed to display all the details of your transactions at once. It has two buttons, which will control the entire operation of the hardware wallet. The Nano X is also Bluetooth enabled, enabling you to pair it with your iPhone or Android and check your balance, send and receive crypto, and add accounts – all with a few taps on your phone. 

Ledger Nano X has an in-built rechargeable battery, so you don’t have to worry about tagging along the USB cable everywhere with you. It will also allow you to store up to 22 coins and ERC-20 tokens with its live version and is compatible with other crypto wallets ranging from MyCrypto, MyEtherWallet, Magnum Wallet, Yoroi Wallet, AdaLite, Trinity, Galleon, OWallet, LisKish and more. 

As of November 2019, Nano X supports a cool 1338 crypto assets, from the most popular ones like Bitcoin, Tether, Ethereum, Litecoin, Ripple, Ethereum Classic, Cardano, to other less known ones like Pundi, Quant, Aeternity, RHOC, CA, and so on.

The device is equipped with a state-of-the-art security chip – the CC EAL5+ – making it nearly impossible for your cryptos to be stolen. 

Ledger Nano X allows users to connect it via two ways: USB and Bluetooth. Currently, it’s compatible with 64-bit computers (Windows+, macOS, and Linux), as well as iOS 9+ and Android 7+. 

Also, Nano X allows you to recover your crypto account even if you lose your device. Its 24-word recovery phrase, a.k.a seed phrase, is a list of words that stores all the info you need to recover your wallet.

Ledger Nano S

Listing two wallets from the same company might seem an overkill, but Ledger’s products deserve space on this list simply because they both go toe to toe with the best in the market.

Ledger Nano S is the older sibling to Nano X but has qualities that help it maintain its revered place in the wallet market.

Nano S’ screen lets you see everything at a go, with two buttons that let you control it. Your wallet is protected with a secure chip always locked by a pin code. That and its offline status secures your private key from prying eyes and internet vulnerabilities.

Customers can choose from either matte black, saffron yellow, lagoon blue, transparent, and jade green colors. Nano S can support 1100+ cryptocurrencies and tokens, including Bitcoin, Bitcoin Cash, Ethereum, Bitcoin Gold, Litecoin, Waves, Ark, Stealth, Horizen, and more.

Just like Nano X, Nano S is compatible with other crypto wallets such as Yoroi, MyCrypto, MyEtherWallet, Fairy Wallet, Beryllium, VeForge Vault, OWallwt, Neo Wallet, Kin Laboratory, and more.

You can connect Ledger Nano S to the computer via a USB 2.0 port, and the system is compatible with 64-bits computers (Windows 8+, Mac 10.8+) and Linux. It’s also compatible with Android 7+ smartphones.

The wallet doesn’t need to be charged – it uses your PC’s power when you plug it in.

KeepKey

Launched in 2015, KeepKey is one of the most recognizable crypto wallets. The wallet uses advanced security technology to protect your funds from theft and hacks. Even if someone gets hold of your wallet and installed it in a modified software that’s not designed by KeepKey, the device wouldn’t let them proceed.

Part of the reason KeepKey is popular is that it’s embedded with a cryptocurrency exchange – ShapeShift – making it possible to trade crypto coins and tokens right on the device. 

KeepKey supports 12, 18, and 24 recovery phrases to enable you to recover your cryptos in case the device is spoiled, stolen, or lost.

KeepKey wallet supports eight cryptocurrencies – namely Bitcoin, Bitcoin Cash, Bitcoin gold, DASH, Dogecoin, Ethereum, Litecoin, and Digibyte. It can also host 46 ERC-20 tokens, including Decentraland, Edgeless, FisrtBlood, Gnosis, District0X, Dai, CyberMiles, and more. Also, users can interact with 1000 more cryptos via KeepKey and MyEtherWallet integration.

KeepKey is compatible with Windows, Mac, and Linux, and you will find the KeepKey Client app on either of the platforms via Google Chrome. iPhone and Android users can access KeepKey by installing the MyCelium app available on Google Play and Apple’s App Store. If you want to use a phone to operate KeepKey, you have to connect to your phone using an OTG adapter cable.

Exodus

Exodus wallet is a desktop and mobile wallet that gives users the whole crypto experience – from sending to loved ones to paying for things to HODLing to trading right within the software. It has a simple design that even beginner traders will find it extremely easy to navigate. Its versatile design with real-time display of digital assets; and a customizable portfolio that allows you to change themes, background color, and other features has endeared it to the crypto community.

As of November 2010, the wallet supports 102+ crypto coins and tokens, including Bitcoin, Bitcoin Cash, Bitcoin Gold, Ethereum, Ethereum Classic, plus other little known ones like Genesis Vision, Salt, Otum, Leopring, Aragon, Storj, Decred, TrueUSD and more.

Exodus is a perfect option for users who trade regularly or want to trade on the go. It’s also very convenient to log in to your account and pay for things. And if you lose access to your assets, it provides the option of a seed phrase that will generate your wallet address and private keys.

The wallet doesn’t store any of your information online – including your passcodes and private keys. This is a good thing because it keeps your crypto safe from hackers, but it also means it’s your sole responsibility to protect your account.

Being a software wallet, you don’t need extra hardware like OTG or USB cables to access your wallet. All you need to do is install it on Windows, Linux, or Mac and get to interact with crypto in no time.

CoolWalletS

CoolWalletS is a hardware mobile cold storage introduced in 2016 by the Taiwanese company CoolBitX. With the mobile wallet, you can store, swap, send, and receive crypto at the single touch of a button. The wallet is integrated with Binance DEX and Changelly crypto exchanges, so you never miss any trading opportunity. 

If you’re looking for a discreet (which is a no-brainer when it comes to your private keys), portable, lightweight, and sleekly designed wallet, the CoolWalletS is your go-to option. The wallet is ‘cool’ enough to look exactly like a credit card – so no one will be the wiser to the fact that you’re transacting with a crypto wallet. 

CoolWallet utilizes a high-end security solution – Secure Element (SE) to store your private keys – making it virtually impossible for your coins to be stolen. The secure element is also capable of verifying if your device has been tampered with- by verifying its integrity. CoolWallwet also uses passcodes, a touch ID, and a 2+1 factor authentication (with facial recognition) – which in our opinion sums up to pretty foolproof security. 

On top of that, CoolWalletS is waterproof, shockproof, and temperature resistant – meaning you can get away with quite a lot with your wallet still intact.

The wallet provides support for Bitcoin, Ripple, Ethereum, Bitcoin Cash, Horizen, ICX, stable coins, and ERC20 tokens, with BitDegree, Formosa Financial, Metal, Cortex, USD Dollar, JoyToken and others. 

CoolWallet utilizes Bluetooth Low Energy (BLE) to facilitate connection to your smartphone or tablet. Currently, it supports iOS 9.1+, and Android 5.0+, with at least the BLE version of 4.0. 

Indacoin

Indacoin is a mobile-based crypto wallet offered provided by UK-based Indacoin Limited, the company that runs the Indacoin crypto exchange. Launched in 2013, the wallet allows users to instantly buy crypto with the use of their credit or debit card. As well, you can exchange and manage cryptocurrency from right within the wallet with the use of a single app. However, the wallet does not support selling crypto as of now.

Russia and Turkey users can use Indacoin to withdraw crypto to a debit or credit card. Users from other countries only have the option of crypto-based withdrawals.

The wallet features an intuitive and easy to use interface that makes it stress-free to buy, receive, swap, or trade crypto on the go. The wallet provides support for 100+ cryptocurrencies, including big hitters like Bitcoin, Ethereum, Ripple, Bitcoin Cash, Tether, Litecoin, Binance as well as other less dominant ones like IOTA, Bumbacoin, Chesscoin, CondenSate and so on. 

To ensure users’ safety, Indacoin only accepts 3D-secured cards like MasterCard and SecureCode and Visa Verified. Indacoin also does not store your card details – a move that protects your personal data. Purchases are also verified via a verification code sent via SMS to your phone. 

Indacoin is available for Android 4.1+ and iOS 9.0 and later versions. 

Trezor 

Trezor is almost an instantly recognizable name in nearly every crypto setting. That’s because it was the first-ever wallet to store crypto offline, and it has so far maintained the reputation of being one the most secure hardware wallet out there. Trezor is available in two models: Trezor One and Trezor Model T. The difference between the two models is Model T lets you control it via a touchscreen while One uses two physical buttons.

Both models let you view the status of your transactions on the display. You don’t need a battery to power them since they will be powered by your PC when you plug them in.

Trezor supports 1000+ coins, with big-timers like Bitcoin, Litecoin, Stellar, EOS, DASH, ZCash, Monero and also others you probably haven’t heard of, like Seele, Revain, FunFair, GNY, Unobtanium, Fusin, Tael, Ruff, Numerai, Insolar, Polis, DADI and so on.

The wallet is also compatible with other crypto wallets, including Exodus, Magnum, Bloks.io, AdaLite, and Yoroi.

Trezor provides the option of creating a seed phrase that protects your private key in the event of theft, loss, and destruction. It supports BIP39 phrases – which it doesn’t store nor remember. This way, even if someone gets their hands on your wallet, your account remains safe. As a further protective measure, Trezor’s hardware case is ultrasonically welded in such a way that it cannot be restored after breakage. 

The device is compatible with both computers and smartphones. If you have Windows 7 and later versions, macOS 10.11+, Linux, and Android, you can get Trezor and try it out.

Guarda

Guarda is a non-custodial web, desktop, mobile, and Chrome Extension wallet that allows you to buy, sell, receive, send, and store crypto. Introduced in 2017, the wallet is one of the few that allows so many functionalities for crypto in ‘one roof.’

The web and desktop wallets can be used on any device running on Windows, Linux, or macOS, while the mobile-based wallet allows Android and iOS users anywhere, anytime. Its inbuilt crypto purchase function lets you buy crypto using both crypto and fiat currencies. Besides, it features an exchange that lets you effortlessly swap coins from one currency to the other.

All Guarda’s wallets are non-custodial – meaning you are entirely in charge of your addresses and private keys. Also, your personal information is not out there in the hands of a third party, and you won’t be subjected to intrusive Know Your Customer procedures.

Guarda requires you to save a backup file each time you create or import a wallet. You get logged out of the account if there’s no activity for a particular period. All backups are secured through the cutting edge Advanced Encryption Standard (AES), so your sensitive data is always safe and secure. What’s more, you can configure the mobile version wallet to require Touch ID/Face ID unlock.

You can even import private keys From Guarda’s own wallets or other exchange, desktop, or web-based wallets. There’s also a dedicated menu that lets you connect to Ledger Nano S and view your transactions on the Nano S wallet on Guarda. 

You can create your own ERC20 tokens via the wallet’s Guarda Token Generator – another exciting functionality of this wallet.

Guarda supports over 40 major blockchains and 10,000+ tokens. Household names like Bitcoin, Ethereum, DASH, Litecoin make the list. So do other little known ones like Groestlcoin, ReddCoin, Maker, Gulden, Expanse, Gemini dollar, and so on.

Coinbase

Coinbase wallet is an app wallet provided by the crypto exchange Coinbase that offers your state of the art security for your crypto. With Coinbase, you can store tokens bought from other exchanges or Initial Coin Offering events. Users can also interact with Ethereum-based decentralized applications (DApps) on its DApp browser.

Cooinbase is a separate product from the exchange – meaning you don’t have to have an account on the exchange to access and use the wallet. Anyone from anywhere with any IOS or Android device can download and install it.

It’s important to distinguish between the Coinbase wallet and the exchange wallet on Coinbase.com. The exchange wallet will store your private keys on Coinbase’s servers, while the wallet app lets you store your private keys on your device. Also, with the app, you can easily move cryptocurrency from its existing wallet apps like Metamask, MyEtherWallet, and others.

With Coinbase Wallet, your private keys are secured with Secure Enclave – a high-end security feature that enables your wallet to remain intact even if it were hacked. On top of that, the wallet employs biometric technology to prevent unauthorized success.

Another remarkable feature by the wallet is always keeping you up to speed with the current price of cryptos in your local currency. Over 100 fiat currencies are supported – including EUR, GBP, USD, AUD, and CAD.

Currently, the Coinbase wallet lets you manage Bitcoin, Bitcoin Cash, Ethereum, Ethereum Classic, Litecoin, and all ERC-20 tokens. You can also store cats, monsters, art, and even ERC721 digital collectibles all in one beautiful gallery.

The wallet lets you back up your private keys on Google Drive and iCloud. Some people are skeptical about how safe those options are, but with a strong, unique password and multiple-factor authentication, we think they can be considered safe.

You can operate the wallet on iPhone, iPad, and iPod Touch as long as the device supports version 11.0 or later versions. For Android devices, you need to have at least the 6.0 version or later versions. The Coinbase wallet app is available for download on Google Play and iOS App Store. 

Conclusion

If you’re serious about crypto, you need to get a safe, secure, and robust crypto wallet. Each of these options provides one of the best experiences possible of interacting with crypto. Of course, you should get the wallet that best suits your needs, your personality, and how regularly you interact with crypto. Also, ensure to buy your wallet directly from the company’s website, just to stay safe. 

Categories
Cryptocurrencies

Personal vs. Hosted Wallets: Don’t Buy any Crypto before Reading this

If you’re crypto user, you may have heard of the expression “Not your keys, not your coins.”  This phrase summarizes the debate among crypto users about which is a superior

If you’re crypto user, you may have heard of the expression “Not your keys, not your coins.”  This phrase summarizes the debate among crypto users about which is a superior

If you’re crypto user, you may have heard of the expression “Not your keys, not your coins.”  This phrase summarizes the debate among crypto users about which is a superior crypto wallet – personal or hosted. It originates from the idea that if your crypto is stored in a wallet whose crypto key you don’t possess, then you can’t truly claim ownership over those coins. 

Difference between Personal and Hosted Wallets

A cryptocurrency wallet is necessary if you want to store, trade, or spend crypto. There are many crypto wallet providers in the market that can help you interact with crypto safely and securely. Some crypto newbies get confused about whether these providers offer personal or hosted wallets.

A personal wallet, also known as a non-custodial wallet is one that allows only one person to know and possess the private key – the owner. Also, the wallet provider does not control your crypto holdings.

By contrast, a hosted wallet, a.k.a a custodial wallet allows a third party to know your private keys without revealing them to you. The provider controls your crypto – i.e. sending, receiving, and storing it on your behalf. Thinks of a hosted wallet as akin to a bank – it stores your cash and will not give you the keys to access the vault, but it has promised to avail the money to you upon request.

The Caveat

Both wallets may look like and function the same way, but the ramifications of using either are polar opposites. For example, the question of who is responsible if crypto funds are lost or stolen falls on whoever held the keys.

However, crypto holdings that have more than one private key present the conundrum of who is liable in case of loss. (Some wallets require more than one party to hold the private keys. One key could belong to you, the other to the hosting service, and the other to a trusted third party. Such wallets are known as multi-signature wallets.) It’s important that before you commit to anyoneany one wallet provider, you clarify if it’s you, or your wallet provider, who controls the keys.

Now, both types of wallets come with their perks, but each one also comes with its cons. Let’s take a look at each’s benefits and disadvantages below.

Pros and cons of personal wallets

Pros of Personal Wallets

You have full control over your crypto funds. You won’t have to submit a request every time you wish to send or spend them

You get to choose your fees – either the default fee or a higher fee depending on how fast you want a transaction to be

Your funds are safe from hacking, phishing attacks, and other vulnerabilities associated with the internet (which is where most hosted wallets are stored)

You are not subject to any Know Your Customer (KYC) procedures. (KYC is the process of verifying the identity of a customer and assessing their suitability for services)

You can store your coins offline, which is a far safer storage option especially for large coin holdings

Cons of Personal Wallets

Losing your private key when you had not backed it up means your crypto funds are lost forever.

Your funds are at risk of being stolen if your device, e.g., mobile or computer, is compromised by a virus or other type of malware

Pros and cons of hosted wallets

Pros of Hosted Wallets

Your wallet provider can help you recover your funds if you make a mistake, e.g., sending funds to a wallet that’s no longer supported, forgetting your login details, and so on

Some wallet providers allow you to transfer funds free of charge to users of the same wallet

You can access your funds more conveniently whenever you want to send or transact in crypto

Some hosted wallets provide a backup fund, like insurance, to compensate customers if your cryptos are lost as a result of a mistake on their end.

Cons of Hosted Wallets

Some wallet providers are known to freeze/ confiscate customer funds as a result of perceived illegality on the customer’s end

You can be subjected to KYC procedures which may reveal too much of your personal information

Some wallet providers will charge you extra fees as a way for them to gain profit

Your wallet is susceptible to hacking, resulting in your KYC information and funds being compromised

Conclusion

Now that we’ve dissected the meaning behind hosted and personal wallets and the perks and shortcomings of both, it’s up to you to determine if “Not your keys, not your coins,” rings true after all. The fundamental difference between personal and hosted wallets is that in one type, you’re in full custody of your crypto, while in the other, the coins are indeed yours, but you don’t have complete control. Before you decide on a wallet, do your research and determine which type of wallet meets your needs.

Categories
Cryptocurrencies

A Simple Guide to Cold and Hot Wallets

Cryptocurrency wallets are software or devices that allow users to send, receive, and store cryptocurrency.  Most cryptocurrencies have designed their own wallets, e.g., Bitcoin has the Bitcoin wallet, Ethereum has

Cryptocurrency wallets are software or devices that allow users to send, receive, and store cryptocurrency.  Most cryptocurrencies have designed their own wallets, e.g., Bitcoin has the Bitcoin wallet, Ethereum has

Cryptocurrency wallets are software or devices that allow users to send, receive, and store cryptocurrency.  Most cryptocurrencies have designed their own wallets, e.g., Bitcoin has the Bitcoin wallet, Ethereum has the Ethereum Wallet, and Litecoin has Litecoin-QT. However, there are some companies that design third-party wallets that allow you to store more than one type of cryptocurrency. If you want to interact with any cryptocurrency, i.e., sending, storing, and spending, a cryptocurrency wallet is necessary.

There are two broad categories of wallets: hot and cold wallets. In this explainer, we delve into what makes a wallet hot or cold, the pros and cons of each, and how to stay safe when handling crypto – whether you’re using a hot or cold wallet.

What Are Hot and Cold Storage Wallets?

The terms hot and cold wallets are used to describe the medium that is storing a cryptocurrency. Hot wallets are purely online-based, while cold wallets are offline-based. In other words, hot wallets are connected to the internet, while cold wallets are not.

A hot wallet is hosted online through platforms that offer these storage services. A user entrusts their public and private keys to the platform, which then secures and manages it for them.  Many hot wallets are free – all you need to do is sign up and start using the service. It’s advisable not to store huge amounts of cryptocurrencies in a hot wallet – they are vulnerable to hacking. Also, you should research intensively before committing to one type of hot wallet. This is due to the following reasons:

☑️ Some hot wallet providers are not providers at all – they are scam projects looking to rip off oblivious users

☑️ Different hot wallet providers provide different user interface experience

☑️ Some hot wallets are designed to work in tandem with other apps or to support only certain cryptocurrencies

☑️ Different hot wallet providers have varying levels of expertise, commitment to safety and security, and different end goals

☑️ Some hot wallet providers are willing to continuously upgrade their model to keep up with changing hacking tricks, while others are not

Cold wallets are considered the safest crypt wallets because they are immune to cyber-attacks and other on line hazards.

Just like with hot wallets, you should consider the following factors before committing to any cold wallet:

☑️ The wallet shouldn’t be too hard to use – choose a wallet that doesn’t need a lot of practice before you can get it right

☑️ The wallet should be convenient – while all cold wallets are more suitable for long term storage and HODLing, some provide more convenience in terms of size, being discreet, etc.

Types of Hot Wallets

Hot wallets fall mainly into two categories: cloud-based wallets and multi-signature wallets. What sets these categories apart is the number of keys that control the crypto account.

Cloud wallets store cryptocurrencies using any device that has an internet connection, including a smartphone or computer.

Multi-signature wallets, also known as multi-sig wallets, are wallets that require more than one key in order for the transaction to proceed. This makes it difficult for hackers to access the information or execute a brute force attack on the wallet (which is guessing multiple private keys until you find the right one.)

A multi-sig wallet may, for example, issue three private keys: one held by the host, the other by the user, and the other one by a third trusted party.

Types of Cold Wallets

There are two types of cold wallets, and these are hardware and paper wallets.

Hardware wallets are physical devices that keep your private keys on a hardware device with the look and functionality of a USB device. Some developers provide hardware devices that are compatible with several web interfaces, but not interacting with the internet at all. In the same way, hardware devices let you conduct online transactions without having your private key interact with the internet whatsoever.

Paper wallets, on the other hand, are generated by printing out your private key and storing it offline. A software program creates them offline and is then deleted afterward to erase any trace of the key.

Cold or Hot Wallets?

New crypto users often ask themselves this question: Which is better, cold, or hot wallets? Well, that depends on your needs.

If you’re going to be interacting with your crypto often, e.g., by active trading or paying for things regularly, then it’s best to operate an easy-to-access hot wallet. However, it’s highly recommended that you don’t keep large sums of crypto in a hot wallet since if it gets hacked, you will lose all your cryptos. In other words, store small sum, for-daily-use cryptos online, and keep the rest in cold storage.

In terms of security, cold wallets win hands down. They are safe from viruses, hacking, and other types of malware. Some developers even design them in such a manner that even if you plug them in a computer that has malware, it remains unscathed. However, cold wallets are susceptible to getting lost, a fire, water, or theft. The lesson here is to keep your cold wallet in a secure, private place safe from prying eyes, fire, water, and wear and tear.

As we’ve so far mentioned in this article, hot wallets are susceptible to internet hazards like hacking, phishing, scamming, and so on. Online wallet providers may put in place the most stringent security measures, but even that has been known to fail. The most foolproof measure to secure your online-based cryptos may be insurance. Some sites like Coinbase and Binance have insured their clients’ crypto assets in case of loss or theft, which is reassuring.

Based on this information, the decision to use hot or cold storage is entirely yours. However, you should first know the advantages and disadvantages of each type of wallet before deciding upon either. Here are the perks of hot and cold wallets together with their cons.

Pros and cons of hot and cold wallets

Pros of Hot Wallets

Most of them are free

They offer quick access to your cryptocurrency

They are easy to use

Cons of Hot Wallets

They are susceptible to cyber fraud and cannot guarantee full safety

Your funds can be permanently lost in the hands of your wallet provider.

Pros of Cold Wallets

They are secure and robust methods of storing crypto assets long-term

They are immune from cyber fraud

You don’t entrust them to a third party – you are in full control of your funds

Cons of Cold Wallets

They can be expensive, depending on the model

They are not ideal for day-to-day use or for making micropayments

They are susceptible to loss, theft or external damage

They are not convenient for trading purposes

Best Practices for Keeping Your Wallet Secure 

Whether you settle on a hot or cold wallet, you can save yourself a lot of heartache by taking some safety precautions:

  • Keep as little cryptocurrency as possible in the wallet that you use frequently
  • Use applications such as Google Authenticator to enhance security for your online wallet
  • Disable any automatic updates for your hot wallet
  • Don’t access your hot wallet via public Wi-Fi
  • Enable multiple-factor authentication for your wallet
  • Backup your wallet and keep the backups in several safe locations
  • Update your software regularly

Conclusion

If you’re looking to invest, trade, or make transactions using cryptocurrency, a crypto wallet is essential. A good wallet can be the difference between safely keeping your coins and losing them. The most important thing to remember is that hot or cold; your wallet’s safety largely depends on you. Also, remember to take your time and go over the available options before deciding to settle on any particular wallet.

Categories
Cryptocurrencies

The Supply Structure of Cryptocurrencies

Cryptocurrencies are unlike any other asset in several ways. One of these is their deflationary nature. Just like fiat currency, cryptocurrencies will decline in value if their supply exceeds demand.

Cryptocurrencies are unlike any other asset in several ways. One of these is their deflationary nature. Just like fiat currency, cryptocurrencies will decline in value if their supply exceeds demand.

Cryptocurrencies are unlike any other asset in several ways. One of these is their deflationary nature. Just like fiat currency, cryptocurrencies will decline in value if their supply exceeds demand. Different cryptocurrencies use different tactics to combat inflation – from burning coins to destroying, to limiting mining rewards so that fewer coins are released into circulation. Others have a fixed supply cap so that their supply is always less than their demand – preventing their devaluation. 

Cryptocurrencies can be grouped into three supply classes based on their supply cap and the deflationary tactics they employ so that their supply never exceeds demand. Majority of cryptocurrencies fall under the following supply classes: 

  1. Finite supply with no emission
  2. Finite supply with controlled emission
  3. Infinite supply with uncontrolled emission

Emission, a.k.a emission curve, emission rate, or emission schedule is the speed at which a cryptocurrency’s coins or tokens are released into circulating supply. The majority of cryptocurrencies are designed so that new coins are released on a regular basis – which is referred to as controlled emission. 

Others have been designed so that no further release will ever take place (no emission), while others are designed while leaving the emission question open-ended. In other words, such cryptocurrencies have uncontrolled emission. 

In this explainer, we discuss some of the well-known cryptocurrencies to shed light on these supply classes and the anti-inflation approaches they employ. 

Finite Supply with No Emission

In this category, we discuss three popular cryptocurrencies that have a finite supply with no emission – namely NEM, Binance Coin (BNB), and Ripple (XRP).

☑️ NEM – New Economy Movement is a blockchain network whose native currency is XEM. The NEM blockchain was launched in 2015 with the goal of building a “new economy based on the principles of financial freedom, decentralization, equality, and solidarity.”

XEM is particularly very popular in Japan, where it’s hailed as second only to Bitcoin. The crypto has enjoyed top-ten status in the largest cryptocurrencies by market capitalization – for instance, being seventh in 2017. As of November 2019, the crypto is occupying the 28th position. 

The crypto has a fixed (finite) market supply of 9 billion. And transactions are validated through harvesting.

Harvesting in NEM is similar to mining in Bitcoin – serving the same purpose of validating transactions and creating new blocks in exchange for the native coins. The cryptocurrency introduced the proof of importance consensus mechanism – which essentially means granting voting power based on how many coins a user owns and how many transactions they have made. Thus, whoever gets to harvest a block is determined by randomly selected big stakeholders on the XEM network. 

☑️ Binance Coin (BNB) – BNB is the native currency of the Binance platform. Binance is a crypto exchange – currently the largest in the world by market volume. Binance coin was initially launched on the Ethereum blockchain but has since been moved to Binance’s own blockchain – the Binance Chain.

Binance coin’s supply is capped at 200 million tokens. The crypto cannot be mined, as all coins were pre-mined before the Initial Coin Offering (ICO). 100 million tokens were offered to the public during the ICO, 80 million given to the founding team, and 20 million to angel investors. 

Today, BNB is used by traders on the Binance platform to pay for trade transactions like trading fees and withdrawal fees. The coin can also be traded for other crypto coins. Users on Binance exchange receive a 50% discount for the first year, a 25% discount the following year, a 12.5% discount rate the third year, a 6.75% rate in the fourth year, and no discount then onwards. 

As the discount rate decreases, so will the value of the crypto-coin. To counteract this devaluation, Binance utilizes a process known as “The Burn.” The platform will burn tokens based on the performance of the trading platform until 50% of the crypto is destroyed. The aim of this burning will be to stabilize the price of BNB overtime. After 50% is burned, only about 100 million tokens will remain.

☑️ Ripple (XRP) – XRP is the native currency of the Ripple platform. The Ripple platform was created with the aim of using blockchain technology to improve payments, remittances, and currency exchange. This would be achieved by making these processes quicker, cheaper, and faster. The XRP token acts as the in-between between currencies. Since it doesn’t discriminate against any currency, it becomes a bridge between one currency to another.

The Ripple cryptocurrency – abbreviated as XRP, is the third-largest crypto by market capitalization. The maximum supply of XRP is 100 billion tokens – all of which were mined pre-release. According to Ripple, no more coins will be created.  

Over time, the supply of cryptocurrency will decrease. Ripple achieves this by destroying the XRP tokens after they facilitate transactions. At the time of issuance, Ripple founders awarded themselves 20 billion tokens. In 2017, the company placed 55 billion tokens into an Escrow account – selling 1 billion tokens every month for the next 55 months. If all coins are not bought, the remaining tokens will be returned to the account for sale after the 55 month period. 

Finite Supply with Controlled Emission 

In this category, we will discuss the most recognized cryptocurrency that fits the limited supply with controlled emission – or whose creation is a regulated process. 

Bitcoin is the pioneer cryptocurrency. At the time of this writing, its market cap is $156 billion, commanding more than half the total crypto market. Bitcoin’s supply is capped at 21 million, and the release of new Bitcoins is achieved through a process known as “mining.” 

The bitcoin network has been programmed to award “blocks” every ten minutes to miners who are, in turn, awarded free Bitcoins for their effort. The block rewards are halved for every 210,000 blocks mined. 

At inception, miners received 50 coins for every block mined. It was then halved to 25 coins, then to 12.5 coins, with the next halving – in May 2020, bringing them to 6.25 coins. If the Bitcoin network remains intact and the halving process maintains the same formula, Bitcoin will reach its max supply in 2140. 

Infinite Supply with Uncontrolled Emission

Cryptocurrencies in this supply category have no supply cap, and their release into circulation is not a fixed variable. We’ll use the most popular crypto falling in this category – Ethereum. 

Ethereum is an open-source blockchain that enables people to create decentralized applications. Launched in 2015, it’s a result of the movement towards eliminating third internet parties from monetary transactions.  

The platform enables the creation of smart contracts and decentralized applications without the possibility for downtime, fraud, or third-party interference. (Smart contracts are computer nodes that allow the exchange of anything of value. Ethereum allows agreements between parties to self-execute when specific conditions are met – hence “smart contracts”)

Ether (ETH) is the native currency of the blockchain platform, and it’s used to fuel transactions on the network. It currently has no capped market supply, with its developers having a “we’ll figure it out as we go” approach. ETH miners originally received 5 ETH as block rewards, but this was reduced to 3 ETH after the Byzantium update to the Ethereum blockchain in October 2017. The reduction in block rewards is in an effort to reduce inflation and devaluation of the currency by reducing the amount of newly released ETH.

However, discussions are in place in the Ethereum community to introduce a hard cap on ETH. Vitalik Buterin, one of the key developers of the network, suggested this in April 2018: “In order to ensure the economic sustainability of the platform under the widest possible variety of circumstances…I recommend setting a MAX_SUPPLY = 120, 204, 432 of ETH…” However, discussions by ETH developers and enthusiasts about the subject are yet to yield fruit as of November 2019.

Conclusion 

It will be very intriguing to see the evolution of crypto supply models adopted by new and yes – existing cryptos as we go forward. Will the crypto market be more favorable to flexibility, as in the case of infinite supply with uncontrolled emission, or certainty – as in the case of cryptocurrencies such as Bitcoin? Will it matter at all? Whatever the case may be, the cryptoverse is set for some interesting times ahead. 

Categories
Cryptocurrencies

The ultimate guide to cryptocurrency mining

So, can you still make enough money out of crypto mining in 2019? This simple guide tells you everything you need to know about cryptocurrency mining. And acts as the

So, can you still make enough money out of crypto mining in 2019? This simple guide tells you everything you need to know about cryptocurrency mining. And acts as the

So, can you still make enough money out of crypto mining in 2019? This simple guide tells you everything you need to know about cryptocurrency mining. And acts as the perfect launchpad to a successful crypto mining career.

The concept of cryptocurrency mining is often baffling to people outside cryptoverse and even to some inside it. Cryptocurrency mining, a.k.a crypto mining, is the process by which transactions between cryptocurrency users are verified and added on to the long list in the public blockchain ledger. The same process also introduces new coins into the circulating supply of a particular cryptocurrency.

Cryptomining is achieved via the use of specialized computers. Technically, anyone with a computer and internet can mine cryptocurrency. The only problem in actual success with crypto mining depends on several factors, such as which crypto you’re mining, how powerful your computer is, and the cost of electricity where you live. (More on that later). Depending on all these factors, crypto mining may be more expensive – both financially and time-wise – than anything you’re gaining from it.

Who Are Cryptocurrency Miners? 

Cryptominers are sometimes called the backbone of many cryptocurrency networks. And they’re worthy of this title because they are the ones responsible for issuing new crypto coins, validating transactions, and ensuring the security of blockchain networks.   

Bitcoin miners use specialized computers known as application-specific integrated circuits (ASICs), which are designed for the sole purpose of mining cryptocurrency. ASIC miners are usually designed to mine a specific cryptocurrency. This means a Bitcoin ASIC miner can only mine bitcoin. A Litecoin ASIC miner can only mine Litecoin, and so on. 

As cryptocurrency has increased in value, so have more cryptominers jumped into the bandwagon. As such, crypto mining has become so competitive that it’s no longer profitable to mine alone. Today, most cryptocurrency mining is done by “mining pools” in warehouses that have low-cost electric power. 

Mining pools are made of a group of miners who agree to share block rewards in proportion to the amount of work that each contributed to finding a new block (a block is essentially a collection of unconfirmed transactions plus a set of data about those transactions) 

What Is Hash Rate? 

Hash power, or hash rate, is the measure of the processing power of a mining computer. The higher the hash rate, the faster the next block on the blockchain network is found. The creator of the first cryptocurrency – Satoshi Nakamoto – intended for Bitcoin to be mined via computer CPUs. However, innovative programmers soon discovered they could derive more hashing power from graphic cards and wrote mining software to facilitate this. 

Graphic cards were then surpassed by Field Programmable Gate Arrays (FPGAs), which were soon phased out by ASICs, which packed inordinately more hashing and staying power. Nowadays, all serious crypto mining is done with ASICs, usually in low-cost electricity areas and in thermally-regulated areas. (Data mining centers are thermally regulated because the power ASICs consumes ends up as so much heat.)

What Is The Purpose Of Mining And How Does It Work? 

Cryptocurrency mining is actually another term to refer to a type of validation model known as proof of work (PoW). Different cryptocurrencies utilize different validation models to facilitate their release into circulation. Apart from proof of work, the other more common validation model is proof of stake, which uses a random selection of stakeholders (coin holders) as transaction validators. 

However, in PoW – which is used by cryptos such as Bitcoin, Bitcoin Cash, Litecoin, and others, miners compete with each other to solve computational puzzles to solve the next block. 

So, what is the point of mining at all? Mining is central to cryptocurrencies that rely on PoW TO keep the network functional. There are many intricacies involved with mining, but it has three most important functions which are as follows: 

It issues new coins into circulation.

Unlike fiat currency, which can be issued by the central bank at any time, mining is what facilitates the entry of new crypto coins into circulation. The issuance of new coins is set in the cryptocurrency code, so miners cannot manipulate the system or create new coins out of thin air. 

It validates transactions on the network 

When transactions are sent on the blockchain network, miners include these transactions in their blocks. A transaction is only considered secure and complete once it’s recorded on the blockchain – because that’s when it’s added on the public blockchain.

It secures the blockchain network 

Miners keep the blockchain network secure from attacks. The more miners are on the network, the more secure the network is. The only way to sabotage a blockchain network is for one miner to have more than 51% of the network’s hash power, which is near impossible with the many different miners working on the network across the globe.

How Miners Make Money and Block Rewards

Block rewards refer to the crypto coins that are awarded by a blockchain network to block miners each time they mine a block successfully. These rewards are issued by cryptocurrencies that use the proof of work consensus mechanism. Most miners channel these rewards back to the ecosystem to fuel their mining costs while keeping the rest.

Bitcoin – the first cryptocurrency and the pioneer of cryptocurrency, currently rewards miners with 12.5 BTC for each mined block. In the beginning, miners were rewarded with 50 BTC. Satoshi Nakamoto, the creator(s) of Bitcoin, embedded “halving” – or what’s colloquially referred to as “halvening” in cryptoverse, into the system so that the block reward is slashed into two after every 210,000 blocks have been mined. Bitcoin’s halvening happens after about every four years. 

Another example is Litecoin, which also halves its mining rewards. Litecoin’s halving occurs after every 840,000 blocks. As of November 2019, the block reward for the cryptocurrency is 12.5, having been halved from 25 in August.

The question that bugs many in cryptosphere is this: what happens after these cryptocurrencies’ coins, and others that rely on mining, are all mined? How will miners be rewarded? Well, besides block rewards, these crypto’s protocols have also provided transaction fees as a means of reward. The transaction fees will shoot up once the maximum supply is achieved – in response to increased demand. Thus, new coins may no longer enter into circulation, but miners will still have a payday. 

Cryptocurrency Mining Step By Step

When a transaction is made on the blockchain, e.g., a user sending bitcoin to another user’s address, the transaction must be recorded – that is, the information must be indicated on a new block

  • This block must be secured and encrypted so that it cannot be reversed or modified, and is up for grabs for all miners on the network 
  • To encrypt the block, miners must find the solution to a computational puzzle through trial and error method in a race to find the proper cryptographic hash for the block. 
  • Once a miner finds a new block, it’s verified by other computers in the network in a process known as consensus and then added on the blockchain.
  • If a miner has successfully mined, verified, and secured the block, they are awarded newly created coins.

The Downsides to Cryptomining

Though mining is the lifeblood of certain cryptocurrencies, it comes with its own share of challenges. Some of these are as below: 

Complexity: Cryptomining is not for the uninitiated. Even people with a pretty good grasp of cryptocurrencies and blockchains might find themselves befuddled in the first few days. What’s more, you’ll need to assemble a range of equipment such as a customized mining computer, an ASIC chip, cooling equipment, and so on. 

On top of that, you’ll need to read a lot, keep abreast of what’s happening in the crypto world, and be prepared to make mistakes once in a while.  

Electricity Costs – Mining can prove quite expensive, mainly because it consumes a lot of electricity. The ASIC computers and the massive servers involved usually rake up enormous power bills. Bitcoin mining is especially electricity-intensive – so much that it has raised questions from ecologists who argue that it’s becoming a threat to the environment. 

Current estimates show that the current global power consumption by Bitcoin mining is a minimum of 22 terawatt-hours per year – which is almost the same as the annual power consumption by Ireland. 

Hardware Costs – Mining farms need to spend a lot of money to purchase stronger equipment every other few months as the prior equipment becomes obsolete due to increased mining competition. The cooling systems further add up to the hardware costs. 

Vulnerability: The proof of work model is vulnerable to an individual or an entity gaining control of 51% of the network’s computing power. If this were to happen, it would essentially hold the network hostage. The more dominant mined cryptocurrencies like Bitcoin, Litecoin, Bitcoin, and Monero are safe from this nature of attacks. However, smaller cryptocurrencies that require longer block processing durations and have weaker daily volumes could fall prey easily. 

Conclusion

The concept of cryptocurrency mining is fun, as it can be confusing. This guide should lift part of the mystery surrounding the concept. It has been interesting to see the evolution of crypto mining – from being able to mine from the comfort of your home on your PC to dedicated warehouses solely for mining. The innovation of ideas that have gone into the space is also exciting, and we can only wait to see what more the enterprising mining community comes up with in the future.   

 

 

Categories
Cryptocurrencies

Public and Private Keys: A must read before buying any cryptocurrency 

If you’ve heard of cryptocurrency, you’ve probably also heard of private and public keys, or at least private and public address. You’ve also probably wondered about the concept behind them.

If you’ve heard of cryptocurrency, you’ve probably also heard of private and public keys, or at least private and public address. You’ve also probably wondered about the concept behind them.

If you’ve heard of cryptocurrency, you’ve probably also heard of private and public keys, or at least private and public address. You’ve also probably wondered about the concept behind them. This simple guide is all you need to understand the concept and secure your coins. 

Private and public keys are important components of blockchain – the technology behind cryptocurrencies. To understand cryptocurrencies better and stay safe while interacting with them, it’s essential to know the meaning of private and public keys and their role in cryptocurrency. 

Public and private keys are based on cryptography, which simply means the science and art of encrypting information so that third parties can’t understand it. In other words, cryptography enables data to be stored and communicated in a manner that unauthorized parties cannot understand. It’s employed today in private and public keys to make blockchain- and hence cryptocurrency, a safe environment for users. 

Cryptography is mostly famous for being used in wartime, especially by Julius Caesar, the Roman military general who sent encrypted messages to his generals to ensure the enemy couldn’t understand them. Known today as Caesar’s cipher, his cryptography involved shifting each letter of a word three times to the left of the alphabet. 

Today, encryption is all around us, even if we don’t realize it. From our phone apps to our phone screens to our credit cards – all these are encrypted to protect our personal information.  

Symmetric Key Cryptography and Asymmetric Key Cryptography  

Cryptography exists in two forms: asymmetric key cryptography and symmetric key cryptography. 

In symmetric cryptography, the same key is used to both encrypt and decrypt the message. A good example is Julius Caesar’s encrypted messages. The same key, i.e., using three letters to the left of the alphabet, can be used to decrypt or decode the message. Another example is today’s door lock, in which the same key is used to lock and unlock the door. 

The drawback to symmetric key cryptography is somebody can figure it out soon enough. Using the above examples, for instance, it’s easy for someone to steal a key to a door lock. And Julius Caesar’s opponents could figure out the cipher, eventually.

Asymmetric cryptography, on the other hand, is more complex. Two keys are used to decrypt information. In the case of blockchain, one key – the public key, is used to encrypt data and a second key – the private key, is used to decrypt it. 

Asymmetric cryptography adds an extra layer of security to a transaction by securing both the item transacted and the recipient’s ability to access it.  

Public Key Cryptography and Blockchain

The idea behind blockchain technology is to create a network where people can securely carry out transactions without the possibility for a third party or a central authority interfering. The security of the network, transactions, and parties involved is crucial to this process. In a traditional model, the third party, or the authority, usually provides the security – like the bank overseeing transactions, or protecting money in general.

But the blockchain model has no overseeing authority. So how will security be ensured? The answer is in public and private keys – which are based on cryptography. 

Public and private keys are digital assets that, when combined, form a digital signature, allowing the secure sharing and unlocking of information or data. 

What’s the Difference between Public and Private Key? 

Since the blockchain model uses cryptography to facilitate transactions, and public cryptography uses both public and private keys, every user on a blockchain network has a public and private key.

Now, the keys are usually randomly generated alphanumeric sequences that are unique to every user.   

A blockchain network, e.g., Bitcoin, usually generates a private key when a user creates a wallet. This key uses 256-bit encryption. This encryption makes use of really large numbers that unauthorized parties can’t guess or calculate. After the key is generated, it’s incredibly important that it’s kept private and secure. Nobody other than the owner is to see or have access to it. 

The private key confirms a person’s identity when carrying out a transaction on the blockchain. 

By contrast, the public key is exactly that – the key that an individual shares with the public, or in this case, the blockchain network. The public key is also generated by the blockchain network based on the private key. This means it’s only that private key in the world that can decrypt a message attached to that public key.

It helps to think of the public and private keys in real-world terms. Think of the public key as your bank account number – people who know it can send you money through it. The private key is like your pin code – it’s only known to you, and you use it to access the money in your bank account. 

How Public and Private Keys Work

An individual’s private and public keys combine to create a digital signature that proves their ownership of funds and allows them access to those funds. To carry out a transaction on the blockchain, a person must use both keys together. 

The following is an illustration of how public and private keys work. Person A wants to send, let’s say, Bitcoin to Person B. They can do this by obtaining Person B’s public key, and attaching the relevant information – in this case, the number of coins, to that public key, and then send it to Person B. 

As the information is attached to person B’s public key, and it’s only their private key than can decrypt the information on their public key, Person A is sure that it’s only Person B who can see that information on the blockchain network. So, Person A will use Person B’s key to encrypt the information, because only Person B’s private key can decipher it.

Person B receives the information from Person A, and using their private key, creates a digital signature which will unlock the information and access it. 

The role of a digital signature is central to this process. On the blockchain network, it serves these three purposes:

☑️ It proves that the owner of a private key has authorized a transaction

☑️ It proves that a transaction is undeniable – i.e., there’s no doubt that the owner and they alone authorized the transaction, and they cannot repudiate their involvement in it in future

☑️ It proves that the transaction has been authorized by that signature and has not been altered or modified by anyone after it was signed

How does Blockchain Use Cryptography? 

The blockchain model uses cryptography in these ways: 

Protects the identity of users – It enables every individual to keep their identity private, so they can securely transact on the network

Secures blocks –It allows people to execute transactions on the blockchain, which then adds blocks which no one can modify, sealing them permanently

Validate transactions – It enables individuals on the network to confirm transactions are indeed initiated by who they say they’ve been initiated by, and they can thus be added on the blockchain 

Conclusion 

It’s exciting to see how cryptography – the technology behind public and private keys, has evolved from being used during medieval wars to become the technology that enables people to transact on the futuristic blockchain world. And as blockchain technology continues to become accepted by other industries outside of finance, cryptography will continue to be central. It will be exciting to see how art and science will play a role in blockchain-based processes in the future. 

Categories
Cryptocurrencies

Will Adaptive Scaling Problems be the Death of Blockchain?

With all the hype blockchain has generated in the business and technical press, would you believe it that it has one serious limitation that risks rendering it obsolete in the

With all the hype blockchain has generated in the business and technical press, would you believe it that it has one serious limitation that risks rendering it obsolete in the

With all the hype blockchain has generated in the business and technical press, would you believe it that it has one serious limitation that risks rendering it obsolete in the near future?

Blockchain technology has proven to have the potential to disrupt many industries. However, before it is considered a real and viable alternative to the age-old centralized systems that have brought humanity thus far, systems running on it must be able to process transactions way faster than what it is capable now, and scale sufficiently to be useful for both large and small systems.

Even as cryptocurrencies take center stage in the evolution of blockchain technologies, there are still lingering questions as to whether the problem of scalability can be sufficiently addressed without trading off any of the technology’s core features. This concern has brought forward the blockchain scalability trilemma, which dictates that blockchain systems must choose two out of the three main attributes:

☑️Security

☑️Decentralization

☑️Scalability

At present, all major blockchain applications have focused on maximizing the benefits of security and decentralization at the expense of scalability.

To fully appreciate the extent of adaptive scalability in cryptography and in particular, cryptocurrency, we may need to take a step back and understand the history of this revolutionary technology.

History and development of cryptography

Ever since humans could communicate, there has always been a need to communicate selectively. Even before the development of written language, the art of coding messages such that only the intended persons could access the information was common. Unauthorized persons could access the message being transmitted but could not extract or understand it. This is the art of cryptography.

Cryptography, the base technology of cryptocurrency, may seem like a very young technology, but it is not. It is a science and an art that has been used for almost 4,000 years to conceal secret messages in such a way that only the intended recipient can decode it. The earliest known evidence of the use of cryptography was found in inscriptions carved in the tomb of ancient Egyptian Great Chief  Khnumhotep II, back when written language relied on hieroglyphic symbols.

Cryptography has steadily evolved with the advancement of communication technology and only took a major leap with the development of digital media.

With the evolution of computing as a medium of communication, many cryptographic algorithms that use different protocols and apply unique functions have been developed. The only thing that has been constant throughout the ages is the fact that cryptography is not static.

The steady advancement of computing and the invention of new cryptanalysis methods have led to the adoption of newer and stronger algorithms. In the process, these have led to the use of larger key sizes to encrypt and decrypt messages.

More complex cryptanalysis became necessary because the development of better computing technologies render older cryptographic algorithms inadequate to provide the protection they were intended to offer. However, because of the adaptive scaling of cryptography, older algorithms, methods, and functions are often supported in newer ones to ensure backward interoperability and compatibility.

Adaptive scaling in cryptographic algorithms

The primary purpose of cryptography is to offer confidentiality, nonrepudiation, authentication, and integrity of data for communications in private and public networks and storage media.

Cryptography is also the base technology on which cryptocurrency is built. One of the core features of cryptography that makes cryptocurrency possible is adaptive scaling. This is the idea that the cryptocurrency is developed with measures that ensure that it will work, as intended, in both small and large scales.

The epitome application of cryptography in modern technology was the invention of cryptocurrency. Cryptocurrency is a digital asset that is used as a medium of exchange. It relies on strong cryptography for three things:

☑️ To verify the transfer of assets from one user to another.

☑️ To control the creation of additional units.

☑️ To secure financial transactions

Bitcoin’s adaptive scaling problem

One of the greatest challenges that the developers of Bitcoin, the first cryptocurrency, had to deal with was scalability. The scalability problem of cryptocurrency refers to the limits on the number or amount of transactions that the network on which the asset runs, in this case the bitcoin network, can hold.

Bitcoin’s scalability problem was brought on by the fact that the records on the network, aptly referred to as blocs, are limited in both size and the frequency in which they are produced.

A bloc on the bitcoin network is a ledger of transactions that take place within the network. To overcome this adaptability problem, the size of a standard block is limited to 1MB and is produced on average every 10 minutes. These limits are put in place to constrain the bitcoin network’s throughput to make it run efficiently on computing machines with different capabilities.

Bitcoin’s algorithm is designed to adjust after the addition of 2016 blocks to the blockchain. In theory, it takes about two weeks. The mining process (verification of blocks before addition to the blockchain) gets harder or easier depending on how long it takes for the 2016 blocks to be verified and added to the chain.

The spike in the price of Bitcoin in December 2017 brought to light Bitcoin’s major scalability challenge. The explosion of attention and popularity attracted millions of new users and even more transactions, leading to the Bitcoin network reaching the limits of its capacity. Considering that the network limited to about seven transactions per second, it quickly became overloaded. This shows that if Bitcoin was to go mainstream today, it would definitely be bogged down by hefty transaction fees and massive delays that would render it impractical.

Solutions to cryptocurrency adaptive scaling challenges

The limited size of a block of transactions on the bitcoin network was bound to create a performance bottleneck that resulted in the delay of processing transactions that cannot fit into a block and the increase of transaction fees.

To address such a problem in their ‘blockchain 2.0’ cryptocurrency, the developers of Ethereum introduced an adjustable block size feature. The size of a block of smart transactions was determined by the number of gas units that could be spent per block, known as block gas limit. At present, the average Ethereum block size ranges between 20 and 30kb, and miners are accepting blocks with block gas limits of about 10,000,000.

There have been other measures developed to deal with the adaptive scaling problems in cryptographic digital assets. One of the most effective ways is incorporating algorithms that limit the supply of the tokens or coins over time to create scarcity.

Bitcoin’s fundamental appeal is that there will only ever be 21 million coins in circulation. The planned limitation on the potential amount of coins in supply ensures an excellent stock-flow ratio, which naturally makes Bitcoin a great investment.

Another effective solution to the adaptive scaling problems is the use of a reward formula that consistently reduces the rewards awarded to miners for verifying transactions on the network. The bitcoin network halves the reward to miners after every 210,000 blocks are added to the blockchain to ensure that there is a steady supply of Bitcoins.

However, this is only a solution that will work for as long as the 21 million bitcoins have not been mined. Once the limit is reached, the mining rewards will be insignificant, and Bitcoin will have to shift to rewarding its miners with transaction fees instead, as posited by Satoshi Nakamoto in the Bitcoin whitepaper.

Categories
Cryptocurrencies

Everything You Need To Know About Crypto Currency Wallets

So you’ve bought your cryptocurrency, what’s next? Unlike fiat currency, cryptocurrency doesn’t have real-world institutions that keep and protect your money. And storing it on the crypto exchange may not

So you’ve bought your cryptocurrency, what’s next? Unlike fiat currency, cryptocurrency doesn’t have real-world institutions that keep and protect your money. And storing it on the crypto exchange may not

So you’ve bought your cryptocurrency, what’s next? Unlike fiat currency, cryptocurrency doesn’t have real-world institutions that keep and protect your money. And storing it on the crypto exchange may not be a good idea, especially with incidences of exchanges being hacked or turning out to be a scam. Thankfully, innovative people have come up with brilliant ideas to enable crypto users store their coins safely.

In this article, we’ll discuss what crypto wallets are, types of crypto wallets, and what you should consider before investing in one, and more.

What Is A Cryptocurrency Wallet?

A cryptocurrency wallet is a device, a physical medium, or a software program that stores private and public keys and allows users to transfer, receive, or spend their cryptocurrency. You don’t walk around holding your fiat money, do you? You store it in a bank or some type of wallet to protect it. That’s the same principle with crypto wallets. 

How Do Cryptocurrency wallets Work?

Many people don’t understand how cryptocurrency wallets work mainly because they try to associate them with traditional wallets. Unlike “real world” wallets, crypto wallets don’t store crypto ‘money.’ In fact, cryptocurrencies are not stored in any physical shape or form, so they can’t technically be stored in any single location. What exists is records of transactions stored in a public ledger or – the blockchain.

What crypto wallets store is the public and private keys- which are used to access your public cryptocurrency address and transaction signatures.

Both of these keys are just a combination of random numbers and letters. To better understand public and private keys, we can compare them to our bank account. The public key is like your bank account number – people who know it can send you money. But the private key is like your pin code or password – you’re the only one who knows it. The same logic applies to crypto wallets – people can send you cryptocurrencies, but you will need to use your passcode to access it.  

When someone sends you, let’s say, Bitcoin, they are essentially transferring ownership of the coins to your wallet’s address.

For you to access those coins and spend, store or transfer them to somebody else, your wallet’s private key should be compatible with the public address the coins are assigned to. If the two keys match, the balance in your wallet increases, while the sender’s decreases. There is no real exchange of the currency. The transaction exists in the form of “a transaction on the public ledger” and a change in the balance of both parties.

What are the Types of Cryptocurrency Wallets?

There are several types of crypto wallets that enable you to store and access your crypto coins. ‘Type’ here refers to the medium that the wallet is built on. This could be software, hardware, or paper. Software wallets can be on desktop, web, or mobile

☑️Desktop Wallets: These wallets are usually downloaded and installed on your computer. From then on, they are only accessible from that particular computer. By broad definition, desktop wallets provide more security than their online and mobile counterparts because they don’t rely on third parties for data. However, they are vulnerable to hackers or malware. But these wallets are a good solution for traders of small crypto amounts.

☑️Web Wallets: These wallets are cloud-based and store your private keys on a server. They can be accessed from any internet-enabled device from any location. They are controlled by a third party, too, which renders them susceptible to hacking and theft.  

Different web wallet providers provide different features, some of which can link to mobile and desktop features and sync your addresses across your devices.

☑️Mobile Wallets: These wallets run as an app on your phone. They are great solutions for active users who interact with their crypto coins often. They can be used to pay for goods at e-stores or physical stores by allowing you to scan a QR code.

Since any crypto user requires access to the blockchain network – which is large enough, mobile wallets use a simpler verification technology. This means they utilize small subsections of the blockchain by relying on certain trusted nodes to ensure they get the correct information.

While mobile wallets provide much more convenience, they are also more prone to hacking. And if someone gains entry to your phone, you could lose control of your funds.

☑️Hardware Wallet: these wallets store your private keys on a hardware device like a USB. Hardware wallets are by far the most secure of any wallet because they are immune from malware attacks, hacking, and funds cannot be transferred out of the device in plaintext. Some providers even offer hardware wallets with a screen that can verify and display important details, like a recovery phrase and details of the transaction you wish to make.

Depending on the provider, hardware wallets can be compatible with several web interfaces and support several currencies. You can easily make a transaction by simply plugging the device to an internet-enabled device, enter your passcode, and carrying out your transaction.

☑️Paper Wallet: These wallets are essentially printouts containing a public and private key. They are usually printed as QR codes, meaning you can quickly scan them and transfer them to a software wallet to carry out a transaction. This process is known as ‘sweeping’ and can also involve manually entering the keys on the device. A paper wallet can also be a piece of software that can generate the keys, which are then printed. 

Just like hardware wallets, paper wallets are immune to hacking and malware attacks. Still, you need to take certain precautions, like ensuring no one is watching you when you’re generating a paper wallet and using a printer that is not connected to the internet. Also, you need to keep your paper wallet in a dry and safe place to avoid exposure to water and wear and tear. You could even keep it in a sealed plastic bag or laminate it and store it in a safety deposit box.

How Secure Are Crypto Wallets?

The level of security of a wallet depends on its type and the service provider. Web-based wallets are more vulnerable since hackers could gain access and steal your coins. On the other hand, offline wallets are safer because they are not connected to the internet and don’t rely on a third party. 

The most important thing to remember is regardless of the wallet you’re using, whether online or offline based, your private key is what matters. You lose the private key, you lose your funds. Bear in mind that cryptocurrency transactions are irreversible, so utmost care is necessary. 

That said, here are some measures you can take to secure your online wallet: 

☑️Back up your wallet. This simply means don’t store everything online. Store only small, daily-use amounts online. Store the rest away in a highly secure environment, like a paper or hardware wallet. Offline storage will ensure your currency is safe in case of computer failure or virus attacks. 

☑️Update software. Hackers are usually smart people, and they keep devising new ways to infiltrate security software. So what do you do? You keep up with them. Ensure your software has the latest security enforcements. This applies to both your wallet software and computer, or mobile software. 

☑️Add layers of security. When it comes to online wallets, the more the security layers, the safer they are. This can mean setting long and complicated passwords. Use wallets that enable multi-factor authentication or other extra pin code requirements. You could also choose wallets that offer multi-signature transactions – meaning another user or users must approve before any transaction takes place. 

Can You Store All Your Cryptocurrencies In A Single Wallet? 

Some wallet providers design wallets dedicated to the storage of only type of cryptocurrency. For instance, Armory and Copay are designed to store only Bitcoin. But other providers allow you to keep a variety of cryptocurrencies. Instead of purchasing a wallet that only supports one currency, you may find it more convenient to purchase or signup one that allows you to store, access, and spend your coins from the same location.

Are Crypto Wallets Anonymous? 

Just like how your identity on a cryptocurrency blockchain is pseudonymous, i.e., recognizable by your public address, so are crypto-wallets. Your actual identity will not be there, but your wallet address could be traced back to you.

In addition, to prevent illegal use of cryptos, most exchanges will require your full identity – which means they know your identity is linked to your wallet transactions. 

Which Is The Best Cryptocurrency Wallet?

New crypto wallets are always being introduced. Your decision to pick a specific crypto wallet depends on how you intend to use it. Ask yourself these questions:

Do you need your cryptos for everyday use or for holding as an investment?

Do you need to access your wallet from anywhere or just at home?

Do you plan to use and/or trade several currencies or just one?

What is the security track record of your considered wallet?

What is the reputation of the manufacturer?  

With that, here are some of the tried and tested crypto wallets in the market: Atomic Wallet, Ledger Nano, Trezor, Armory, Mycelium, Bread Wallet, Copay, Electrum, Exodus, and Jaxx. 

Conclusion 

By now, you should have a pretty good idea of what a wallet is, how it works, and probably identified your preferred wallet choice. Remember, the type of wallet you choose should respond to your needs – be it ease of transfer or security from hacking attacks.

Categories
Cryptocurrencies

What Can You Buy With Crypto Currencies?

Cryptocurrencies have come a long way. In the not-too-distant past, most people used crypto mainly for speculation, and it is easy to see why. There were countless reports of people

Cryptocurrencies have come a long way. In the not-too-distant past, most people used crypto mainly for speculation, and it is easy to see why. There were countless reports of people

Cryptocurrencies have come a long way. In the not-too-distant past, most people used crypto mainly for speculation, and it is easy to see why. There were countless reports of people who had become overnight millionaires as a result of investing in crypto. Still, such rosy stories were quickly erased from people’s minds when the very opposite started happening. The group that invested after the first windfall was quickly impoverished by making belated and ill-advised decisions. With many and frequent bubbles, the crypto market was beginning to look like a graveyard, but things have since acquired a reasonable measure of stability.

Fast forward to 2019! While speculation was the overriding factor making people invest in crypto, the modern user of cryptocurrencies has other and even more important considerations. People want to know where and how easily they can spend their cryptocurrencies. That is why you’ll find that many online retailers have readily embraced crypto, and there are countless online stores where these currencies are readily accepted. 

One of the leading online retailers that have been accepting cryptocurrencies for a long time is Overstock, whose payments are processed using the third party site Coinbase. Other well-known sites include eGifter, a website that sells online cards, and Fancy.com.

Even when online retailers do not have an in-house system that allows them to accept cryptocurrencies, it is now possible for almost any kind of retailer to make this possible. There are plenty of platforms and apps that make it possible for retailers to accept crypto payments, and some of the leading ones include Square and Shopify. The latter, for instance, has a global clientele and has hundreds of thousands of online merchants using its software platform. This basically means that you are likely to get any product or service from an online seller as long as the business uses the Shopify software. Moreover, where most other platforms are limited to Bitcoin, Shopify makes it possible for merchants to accept payments in a host of other cryptocurrencies.

You Can Still Use Crypto Even When Retailer Site Doesn’t Expressly Say So

Any mention of online shopping must bring the giant retailer, Amazon, to mind, and you must wonder whether it is possible to make purchases using cryptocurrencies. While Amazon does not allow for purchases using cryptocurrencies, you can make an indirect payment using Purse.io. This ability to make use of cryptocurrencies even when the retailer site does not expressly say so is not limited to Amazon.

At the end of the day, what really matters is where you have stored your cryptocurrency, and there are various ways in which you can make the storage to make your shopping hassle-free. If you are in the habit of shopping using your debit card, for example, you have the ability to link your cryptocurrency to a debit card. These cards are usually backed by the leading card companies such as MasterCard, and any location accepting MasterCard will make it possible for you to use the cryptocurrency.

Where Speed and Privacy Are Of the Essence

Players in the hospitality industry were among the first people to embrace the use of cryptocurrencies, and it is easy to see why. In a world where people constantly feel that their privacy is being intruded upon, joining the crypto world ensures, among other things, that the individual’s privacy is protected. That is why one of the leading travel booking companies, Expedia, was one of the first to embrace this kind of currency.

You can, therefore, book for your flight and accommodations on the site using cryptocurrency, thus making the entire travel experience seamless. Another renowned travel site that accepts cryptocurrency is bitcoin.travel. On the site, you can pay for your entire package from travel to accommodation and even attractions at the destination using bitcoins. Other players offering similar services and accepting cryptocurrencies are Travala, Future Travel, and CheapAir.

When it comes to speed of execution, paying using cryptocurrencies eliminates most of the hurdles that were prevalent when non-digital payment methods were used. That is why you’ll find that some of the companies that have embraced crypto include AT&T, one of the leading global carriers. And as if to say that this might be the favorite way to make payments now and in the future, the ever-innovative Virgin Group, through its subsidiary, Virgin Galactic (the company that was expressly created to offer space travel) also accepts payments via cryptocurrencies.

The speed of execution is also what makes payments via cryptocurrencies a favorite for professionals in IT. Many domain creators such as NameCheap (which sells domains) accept crypto. In addition, a leading online retailer of computer hardware, NewEgg, also accepts bitcoin payments, as does the tech giant Microsoft.

Charities and Non-Profits

In addition to the many merchants accepting cryptocurrencies, there are also many charities and non-profits to which you can make a donation using these currencies. One of the most well-known charities that accept such donations is Save the Children, which tries to provide for the basic needs of impoverished children globally. And if you have been enjoying the services provided by Wikipedia and wish to make a donation, you can easily do so using bitcoin.

Crypto Is All-Encompassing

When it comes to cryptocurrency usage in 2019, perhaps the real question should be what you cannot buy rather than what you can buy using cryptocurrencies. Whether you want to pay for your pizza or shop online for your favorite coffee, buy a limo, or even pet food, the chances are that there’s a retailer ready and willing to accept bitcoin or some other cryptocurrency. The acceptance of cryptocurrencies is also global, and that is why you’ll find that on top of online stores, many brick and mortar stores around the world accept cryptocurrencies.

Of course, there’s much that needs to happen to make cryptocurrencies the ideal way to shop. And this will only occur when more companies start accepting cryptocurrencies received directly from the buyer rather than the current trend where most merchants only accept payments made via debit cards or payment processors. When all is said and done, you can buy almost anything using one or other cryptocurrencies.

Categories
Cryptocurrencies

Blockchain – Public, Distributed, Global Ledgers

You have probably already heard the term ‘Blockchain’ in the context of a new technological innovation. You would not be wrong to compare this advancement with other significant innovations such

You have probably already heard the term ‘Blockchain’ in the context of a new technological innovation. You would not be wrong to compare this advancement with other significant innovations such

You have probably already heard the term ‘Blockchain’ in the context of a new technological innovation. You would not be wrong to compare this advancement with other significant innovations such as the Internet because of its far and wide-reaching applications. What makes it so unique?

Consider an online Google document. When you create a document and share it with two other people, the original document remains, but everyone has access to it. The document is considered ‘decentralized’ since it can be accessed and modified by multiple people at the same time. The best part about such an online document is that everyone sees all the changes (and can even track them) when they are made, making it very transparent.

While blockchain is a tad more complicated technology than a Google doc, this analogy lays bare three vital features of blockchain:

☑️It is a digital record of events (transactions) that is distributed among many people. It is not copied or transferred copies.

☑️It is decentralized. This means that multiple individuals have real-time access to the asset and is not ‘owned’ or ‘controlled’ by a single entity or person.

☑️It is transparent. Being a ledger, all the people with access to it can trust the document since all the changes are preserved when made. 

So, what is blockchain?

Blockchain is best described as a distributed database. It is a storage technology where a digital ledger of transactions are stored in groups of transactions or sequence of blocks, chained together and distributed among many users in the network. This is where the term ‘blockchain’ originates.

Because blockchain is a way to keep records of items stored in millions of computers all over the world, it is essential to understand that it is not a device or currency. Think of it as an incorruptible ledger of transactions that are connected to each other such that one cannot be altered without requiring the alteration of all the other linked records.

Blockchain is undeniably an ingenious invention that is already conquering every aspect of modern human life – almost as much as electricity and the Internet did. This technology was the brainchild of one or a group of individuals known by the pseudonym Satoshi Nakamoto. To this day, the identity of Satoshi Nakamoto is still unknown.

Satoshi Nakamoto introduced blockchain to the world sometime in 2009 with the publication of the Bitcoin whitepaper. This innovation was largely inspired by the 2007/8 financial crisis, whose primary cause was the manipulation of the property market by financial banks. Bitcoin emerged as a currency alternative that would be free from manipulation, devaluation, taxation, or control by a central body. However, blockchain, the technology on which it runs, has since then evolved into something much more significant than just money and touching on almost every industry.

The humble beginnings of Blockchain

Contrary to what most people believe today, blockchain technology did not just arise out of nothingness with the publication of the Bitcoin whitepaper in 2008. Before it found its application in cryptocurrency, blockchain was a concept in computer science that had been around since 1979. In particular, it was theorized for use, in its primitive form, in the domains of data structures and cryptography.

With the invention of the hash tree by Ralph Merkle, patented as the Merkle tree in 1979, the first form of blockchain was already in practical use. Back then, the hash tree was used to handle and to verify data transferred between computer systems in peer-to-peer networks. The hash tree proved useful in validating data and ensuring the integrity of the data in the receiving system. This technology also ensured that false data was not transmitted and that users could prove the integrity of information shared using these early computers.

By 1991, the Merkle tree had evolved enough to create a chain of secured blocks of information. The series of data records, designed to be connected to previous blocks in the series, now contained a history of all the chains in the tree. With this addition, blockchain was born.

When Satoshi Nakamoto conceptualized the idea of a distributed blockchain that contained a secure history of all the data exchanged in the network, it gave rise to a world of possibilities that resulted in the invention of Bitcoin. What made this possible was that the security and transparency of transactions in the peer-to-peer network could be timestamped, and each transaction could be verified over the internet. The best part of the new technology was that it could be managed autonomously, and no single entity could claim absolute authority.

But what makes blockchain special?

Blockchain is a string of secured data that cannot be controlled by a single authority. The shared, immutable ledger that the connected chains of data forms has industry-disrupting capabilities for the simple reason that it is an ideal and practical democratized system.

While the information on this system is available for everyone to see and verify authenticity, it is almost impossible to alter, hence trusted. When blockchain is applied to any industry, it brings this nature of transparency with it, making it easy for countless individuals to be involved in it while maintaining accountability for every action or activity on the ledger.

Blockchain was first demonstrated to be practical and effective with the release of the Bitcoin Whitepaper, and it was quickly applied in digital currency. Soon after, the tech community found a lot many useful and practical uses of blockchain, and many more were theorized not so long later. One of the top features of blockchain that stood out almost immediately was that transactions carried out on the network carried no cost whatsoever. However, infrastructural investment was necessary to make it functional.

Benefits of global distributed ledgers

Consider the blocks of information on the blockchain as collections of data, much like records of financial accounts on a ledger. The chain, with all its benefits, is a very simple yet ingenious way to pass the data from one point to another in a secure and verifiable manner. The sender initiates the transaction, which is verified by hundreds, thousands, or even millions of computers that are part of the network.

When a block of transactions is verified, it is added to the chain and safely stored on the network, with a copy being stored on every computer on the network. The copy of the transaction will not only be unique in the record, but also in the history of records within the chain. This means that for a party on the network to alter or falsify the record, they would have to alter all the records in the chain sitting on all the computers on the network at the same time. This is almost impossible because it would take a lot of resources.

Bitcoin was a hugely successful and first virtual currency running on the oldest blockchain network because this format of storing information and conducting transactions could be trusted by all the parties in the network.

In summation, blockchain’s core benefits that make it ideal for use in cryptocurrency are:

☑️Efficiency and speed: Transactions on a blockchain can be completed much faster and more efficiently compared to the paper-heavy traditional processes that often involve a third-party. Considering that record keeping on a blockchain system is carried out on a single digital ledger available in real-time to all the peers in the network, clearing and settlement are super fast.

☑️Enhanced security: Before being recorded, transactions on a blockchain must be agreed upon aforehand. Once approved, transactions are encrypted and linked with previous and next transactions in a way that makes them tamper-proof. This is what makes blockchain ideal for use in any industry where the protection of sensitive data is crucial – from governance and financial services to healthcare and manufacturing.

☑️Great transparency: Since blockchain is essentially a digital ledger technology where all participants keep a copy of all ‘documentation,’ the data on it is not only alter-proof but also consistent and transparent. Data and transactions carried out in a transparent manner can be trusted by anyone who has access to it and can verify authenticity.

☑️Better traceability: Companies that deal in products that are manufactured and traded in complex supply chains often have a hard time tracing items in the market back to their origins to verify authenticity. With blockchain, each product can carry with it a history of transaction data that can go a long way in preventing fraud. To make this practical, manufacturers and distributors would need to record exchanges of the goods on a blockchain in such a way that an audit trail can show every stop and change of hand a product underwent.

☑️Lower costs of transactions: Every business needs to cut the costs of transactions as much as they can to increase their profits. Businesses that adopt distributed ledgers in their operations will need fewer third-parties and middlemen to make guarantees or carry out transactions since this technology builds trust between trading partners. They just need to trust the data on the blockchain to minimize the need to review every trading process or documentation.

The extent of blockchain disruption today

Make no mistake about this: blockchain is a very disruptive technology that is already revolutionizing how the world works – even if you do not ‘feel’ it yet. While you may have already heard of how it is shifting the way we use the internet and how we view money, the global economy is quickly adapting to inevitable takeover by the digitization of assets.

The fundamental shift from the present-day Internet of information to the age of distributed data as assets is a clear sign that the new global economy with no intermediaries is happening, and nobody – not even the biggest banks and multinational tech companies making money off data – can stop it.

Blockchain technology was originally developed to help solve the various economic challenges facing the financial industry. But it has proven that it can achieve much more.

It can be programmed to record and store virtually any other form of data in any industry.

As a result, we have seen the development of different types of Blockchain, each of which is aimed at helping solve more than just financial challenges. Ethereum, for instance, has smart contracts and many other applications, which we will explain later.

Categories
Cryptocurrencies

Consensus and Consensus Mechanisms

Cryptocurrencies operate on a blockchain – a decentralized peer-to-peer system with no centralized authority that makes decisions on behalf of the other participants. While this system eliminates arbitrary decision making

Cryptocurrencies operate on a blockchain – a decentralized peer-to-peer system with no centralized authority that makes decisions on behalf of the other participants. While this system eliminates arbitrary decision making

Cryptocurrencies operate on a blockchain – a decentralized peer-to-peer system with no centralized authority that makes decisions on behalf of the other participants. While this system eliminates arbitrary decision making and corruption, it still presents a problem. How will decisions be made? How will things get done?

For blockchain networks to make decisions, there is a need to come to a consensus. Blockchains use “consensus mechanisms” to secure the network and verify transactions. Consensus mechanisms are protocols that ensure all nodes (devices that support blockchains by validating and relaying transactions) on the chain are harmonized and can collectively approve and add transactions on the blockchain.

Characteristics of a Good Consensus Mechanism

In order to ensure a consensus mechanism is fair and reliable and achieves the function of a “consensus,” it must possess certain qualities, like being:

☑️Agreement Oriented: A consensus mechanism should elicit the highest level of agreement possible from the group

☑️Collaborative: Participants in the group should put the best interests of the group above everything else

☑️Cooperative: Decisions should be made to benefit the group as a whole rather than individuals

☑️Egalitarian: This means the system is fair – every single vote must carry equal weight. No one vote can be more important than the rest

☑️Inclusive: As many people as possible should feel like their vote counts and want to participate in the process, unlike a regular voting process where people are unmotivated to vote because they feel as if their vote won’t count in the long run

☑️Participatory: The consensus mechanism should be designed in a manner that everyone can participate in the process

Consensus Mechanisms Used In Cryptocurrencies

Ever since Bitcoin pioneered the proof of work mechanism, multiple other consensus models have been experimented with and adopted. Some of these mechanisms have been created to sidestep the energy-intensive aspect of proof of work. Others aim to achieve faster and more convenient transactions. With that, here are some of the most common consensus mechanisms used in cryptocurrencies today.  

1. Proof of Work

Proof of work (PoW) is the consensus mechanism used by Bitcoin, the pioneer cryptocurrency. It involves a process known as mining, which confirms transactions and adds new blocks to the chain. To do this, miners usually solve challenging computational puzzles. The first miner to solve the puzzle is the one to add a block and to receive a reward in the form of crypto coins. The computational puzzles have certain unique features. Let’s take a look:

  1. They are asymmetric, meaning they can take a long time to figure out the answer, but it’s very easy to verify if the answer is correct
  2. They are solved with a trial and error method, meaning the only way to solve is to guess and keep guessing 
  3. Their difficulty changes in response to the rate at which blocks are being mined. The quicker the blocks are added, the harder the puzzles become, and the reverse is true

PoW is very effective against fraud, as it makes it almost impossible to alter anything in the blockchain – and that is improbable as it would mean re-mining all successive blocks. Also, no one user can monopolize the process, since both the mining machines and the power required to run them are quite expensive. 

2. Proof of Stake

Proof of Stake (PoS) allows people to validate transactions according to their ‘stake’ – the coins they hold. This means that the more cryptocurrency one has, the more computational or mining power they have. 

PoS was designed as a cheaper alternative to Proof of Work, as the latter uses up excessive power and is therefore very costly. PoS addresses this issue by assigning mining power per the ownership of coins. Instead of using energy to solve difficult puzzles, a PoS miner mines percentage that corresponds with his/her ownership stake. For instance, if a miner owns 2% of the Ether available, they can only mine, theoretically, 2% of the blocks. 

3. Delegated Proof of Stake

This is a special type of PoS. This consensus mechanism is very fast and able to complete more transactions per second (TPS) than PoW and PoS. In a Delegated Proof of Stake (DPoS), crypto coin holders stake their coins to elect a certain number of delegates. The weight of a vote depends on the voter’s stake – e.g., if person A stakes 5 coins for a delegate and person B stakes 2 coins, A’s vote carries more weight than B’s vote. 

Now, these delegates have the power to produce more blocks on the network. Delegates who receive the most votes can create blocks, and be rewarded with coins or a percentage of transaction fees (as is the case with PoW and PoS). The vote is dynamic, so the top delegates can change anytime. Also, the number of delegates depends on the design of blockchain: either a fixed number or all delegates above a certain paygrade. 

 4. Proof of Capacity (PoC)

This is a consensus mechanism that allows miners to utilize empty space on their hard drive to mine crypto coins. It uses a process called plotting, in which solutions to puzzles are pre-stored on digital storages. Once a storage has been filled with solutions, it can participate in creating new blocks. 

The plotting process uses a very slow hash function called Shabal and can take days or weeks. The takeaway is, PoC is a game of space: the more hard drive capacity you have, the more solutions you can store, and the better your chances of mining the next block. Burst coin is the first and only cryptocurrency to use PoC.

5. Proof of Elapsed Time (POET)

Proof of elapsed time is a mechanism that uses a sort of lottery system to choose block producers. Every single node has a fair chance at winning. The idea is to randomly determine who gets to create a new block, based on the time they have waited. 

A POET algorithm works as follows. Each participating node is supposed to wait for a randomly assigned period of time. The node whose designated waiting time ends first gets to create the next block. After this node “wakes up,” they commit to add a new block and then broadcasts the information to the whole network. The process then repeats itself. 

The POET consensus mechanism can only work under three conditions. First, there must be a system in place that ensures no one single person can run multiple nodes and second, that the waiting time is indeed random and third, that the winner actually finishes their waiting time. 

6. Proof of Burn

The proof of burn mechanism works by allowing miners to “burn” or “destroy” the cryptocurrency tokens, which allows them to create blocks in proportion to the coins burnt. 

The idea is that miners should show proof they have burned some coins – that is, sent them to an address where they can’t be spent. The process, unlike proof of work, for example, does not consume too many resources, and it also enables the network to remain quick and agile. Miners can either burn the native currency or coins of an alternative chain, upon which they are rewarded with the currency of the native chain. 

7. Proof of Authority (PoA)

In a PoA consensus algorithm, people stake their identity to become block producers. The blockchain is secured, and transactions are verified by approved accounts known as validators. To become a validator, users disclose their identity, which is then cross-referenced with existing public data. There are three requirements which qualify one to be a validator on a PoA blockchain: 

1. Their identities must be formally identifiable on-chain with the ability to crosscheck it from data available on the public domain

2. Eligibility to become one should be above par – so that the position is filled by people with an honest incentive

3. The process must be uniform and fair across the whole choosing process  

The idea behind the PoA principle is that validators will act in good faith; trust is indeed the foundation of the protocol. 

8. Proof of Importance (PoI)

First introduced by NEM for its cryptocoin -XEM, the PoI consensus mechanism takes into account other qualities more than just the amount of coins one has. It is based on a user’s contribution to the network in all areas, including reputation, frequency of transactions, and overall balance. 

With PoI, the more active a user is, the more they qualify to “harvest” new blocks on the blockchain. This was designed to encourage network participants to actively conduct transactions rather than hoarding coins. 

The technology underlying PoI ensures the mechanism is manipulation-proof – so users can trust that miners’ selection is reliable and fair. 

9. Practical Byzantine Fault Tolerant Mechanism (PBFT)

PBFT is derived from the Byzantine Generals’ Problem, an analogy used in computer science. The Byzantine Generals’ problem is as follows. A group of Byzantine generals is preparing to launch an attack against an enemy. To win, they must attack at the same time. But the problem is, some of the generals might go rogue or act maliciously. So how will they launch a successful attack despite this probability? 

In other words, in any distributed computing system, there is always the possibility that some actors will not be honest or reliable. This is where PBFT comes in. The “fault tolerance” is the ability for a distributed computing network to reach a consensus despite the presence of malicious nodes that might fail to send information or relay the wrong information altogether. The majority of participants (at least 2/3) have to agree and execute transactions at the same time to avoid complete failure.

10. Proof of Activity 

Proof of activity is a hybrid of proof of work and proof of stake that attempts to combine the best qualities of both. The mining process starts with a standard PoW procedure – miners rushing to solve a computational puzzle. When a miner finds a new block, the system switches to PoS, with the block being only a template bearing header information and the miner’s reward address.

Then, a random group of validators is chosen from the network to validate the new block – according to the header information. Being chosen as the signer for a new block depends on the amount of cryptocoins a validator owns. When all validators sign a new block, it becomes a complete block and is then added on to the public blockchain network. 

In cases when some selected validators are not available to approve block, the process proceeds to the next new block, with other validators being chosen to sign on. The system runs in that manner until sufficient validators are available to sign off all produced blocks. In the proof of activity mechanism, mining rewards plus/or transaction fees are split evenly among the signers and the miners.

11. Leased Proof of Stake (LPoS) 

LPoS is an attempt to improve the proof of stake mechanism. PoS only allows users to create a block if they meet a certain minimum balance of coins. Also, not everyone can participate in securing and maintaining the chain or even get rewards. 

LPoS solves this by granting users the ability to “lease” their tokens to different contractors and receive a percentage of the payout as a reward. The more tokens are leased, the bigger the chance for a user to be selected to produce the next block.

In an LPoS environment, users can decide to run a full node or lease their stake to a full node. If the full node is selected to add a new block, the user gets a piece of the total transaction fees. In this way, the system allows everyone to participate in maintaining the network.

Conclusion

The takeaway is that all these mechanisms have the same goal: to reach fair and transparent decisions for all network participants. It’s intriguing to see how various mechanisms have evolved over time, and it certainly will be fascinating to watch as more enter the space, with each being (hopefully) better and more effective than its predecessor.

 

 

Categories
Cryptocurrencies

Cryptocurrencies and Crypto Regulations

Since the debut of the first cryptocurrency only ten years ago, thousands of more cryptos have filled the space, disrupting not just finance but technology itself. And in recent years

Since the debut of the first cryptocurrency only ten years ago, thousands of more cryptos have filled the space, disrupting not just finance but technology itself. And in recent years

Since the debut of the first cryptocurrency only ten years ago, thousands of more cryptos have filled the space, disrupting not just finance but technology itself. And in recent years, cryptos have become especially popular such that they have attracted the attention of governments seeking to exert some form of control over their seemingly unlimited potential.

Cryptocurrencies were discussed in a high-level meeting for the first time ever, in the 2018 G20 summit, about the possibility of introducing regulation of the crypto industry. The G2O countries declared in a statement that they would “regulate crypto-assets for anti-money laundering and countering the financing of terrorism…”

Although the move did not lead to any concrete action on the part of many countries, the discussion at such an influential meeting was a sign that it was no longer business as usual.

Challenges Governments and Regulators Face

Still, most countries of the G2O and indeed the world have yet to effect full regulation of the industry. The sudden emergence of cryptocurrencies and the new technology has caught most regulators off guard, and they still grapple with how to regulate them. This is due to reasons such as:

☑️Most regulators and governments don’t know how to classify Initial Coin Offerings (ICOs)

☑️Most regulators don’t know how to properly classify the sheer cryptos in existence – are they coins, tokens, stable coins?

☑️The fear of stifling innovation by overregulation – where do they draw the line between protecting users and suppressing innovation?

However, while some countries have taken zero notice of cryptocurrencies, others have responded to it with vigor: both receptive and unwelcoming.

In this article, we explore the cryptos regulation space, the widely divergent approaches taken by a selection of countries, key areas for regulation, and the current crypto news dominating political and financial discourse: Facebook’s cryptocurrency project: Libra.

Areas for Crypto Regulation

With the crypto world having various levels – mining, trading, etc., countries have been looking at different areas for regulation. Let’s take a look:

Exchanges, trading, and mining

There’s always the question of how cryptocurrencies should be classified. Are they securities, are they commodities? The category they fall in is the one that determines how they will be regulated. 

Regulators have also weighed the mining aspect – which is verifying transactions and recording them on the blockchain ledger. The process involves designated computers and is known to consume excessive amounts of power. For some governments, this is an area that has occasioned regulation.

Fundraising and ICOs

ICOs are the way crypto startups raise money by issuing crypto coins in exchange for fiat money or other cryptocurrencies.

ICOs represent a potential risk. Some ICO processes have turned out to be fraud, while some companies are looking to fundraise without a solid proposal for an asset.

Investing Instruments

With cryptocurrencies acquiring more clout, investors are looking to get a piece of the action. But the unregulated nature of crypto exchanges plus their susceptibility to malicious attacks render them a risky proposition. This has precipitated a drive to regulate cryptos to make them safer investments.

Governments and Citizens: Warnings about Cryptocurrencies

While governments around the world may issue different warning to citizens about the issue of cryptocurrencies, there’s a common theme running through them. Countries usually alert their citizens about cryptos’ potential weak spots:

☑️The high volatility cryptocurrencies – Cryptos are prone to drastic fluctuations in market prices, which might render them risky investments

☑️Unregulated organizations – Unlike fiat money, cryptos are issued by unregulated entities, which means there’s no one standard, safe, or ethical code of conduct binding them

☑️No legal recourse – Unlike investing in stocks or bonds, investing in cryptos has no legal protection in case of losses

☑️Facilitating illegal activities – Thanks to their anonymous (or pseudonymous nature, in some cases) transactions, cryptocurrencies are a favorite for criminal activities

Cryptocurrencies, Regulations, and Banks

The attitude of the banking system towards cryptocurrencies is wary since they see them as a threat that may cause an eventual bust of the traditional model.

This has seen banks reluctant to support crypto-related businesses, which could significantly limit the potential and growth of these businesses.

In this way, the traditional system could be the wedge that regulators will continue to use to keep the crypto industry in check.

Other sentiments concerning banking and cryptos have come from powerful individuals, perhaps pointing to the increasing and unstoppable power of cryptocurrencies. Some of these comments have come from the president of the United States, who has denounced cryptos and called for them to be regulated “if they want to become banks.”

In a tweet on July 2019, Donald Trump made the comments On Twitter, declaring he is “not a fan of Bitcoin and other cryptocurrencies”, which are “based on thin air” and that cryptocurrencies must “become subject to all Banking Regulations, just like other banks” if they wanted to become banks.

Understandably, such sentiments from the world’s most powerful leader sparked a fresh round of discussion about the regulation of cryptocurrencies. However, it remains to be seen if the president could aggressively go after cryptocurrencies and if those efforts would succeed.

Regulations by Country

Countries all over the world have taken quite disparate approaches to cryptocurrencies: from outright bans to open and liberal approaches to cautious optimism. Let’s take a look at how different countries are handling the crypto phenomenon and how some small nations are already establishing themselves as crypto havens.

United States

In the US, the treasury has classified bitcoin as a convertible decentralized virtual currency. The trading regulatory body: The Commodity Futures Trading Commission (CFTC) has classified bitcoin as a commodity. And the tax body, IRS, recognizes Bitcoin as taxable property. The Securities and Exchange Commission (SEC) considers cryptocurrencies as securities.

Though cryptocurrencies are not legal tender, the government recognizes them as “a medium of exchange, a unit of account, or store of value.” Finally, the Department of Justice is in consultation with both the SEC and CFTC to design legislation for the space.

Canada

Canada deems cryptocurrencies to be securities at the Federal Level. The Canadian Securities Administrators (CSA) directs for existing securities laws to be applied to Initial Coin Offerings and Initial Token Offerings, as well as crypto investment funds and exchanges.

Canada also allows the use of cryptocurrencies, but not as legal tender. The Financial Consumer Agency of Canada directs that “you can use digital currencies to buy goods and services on the Internet and in stores that accept digital currencies. You may also buy and sell digital currency on open exchanges, called digital or cryptocurrency exchanges.”

Canada’s tax laws and rules are also applicable to cryptocurrency transactions.

China

Banks and payment companies are not allowed to facilitate bitcoin transactions. Financial firms also cannot hold or trade cryptocurrencies. On April 1, 2014, the People’s Bank of China, which is the central bank, ordered financial institutions to close bitcoin trading accounts within two weeks. Crypto exchanges and trading platforms were effectively banned in September 2017.

The clampdown on crypto-related activity has precipitated the movement of several exchanges and mining companies setting up operations in other countries, like the mining company Bitmain which has since moved to Singapore.

The UK

The UK has warned citizens about the dangers of investing in ICOs and the speculative nature of cryptocurrencies. Still, the country has taken a cautious approach: neither giving the crypto industry carte blanche nor instituting stringent measures against it.

British lawmakers in 2018 launched an inquiry into digital currencies and blockchain to establish the impact of the cryptocurrencies. At the time, Nick Young, Treasury Committee member, said in a statement: “Striking the right balance between regulating digital currencies to provide adequate protection for consumers and businesses, whilst not stifling innovation, is crucial… ”

As of October 2019, the sale, purchase, and transfer of cryptocurrencies are still unregulated.

Switzerland

In Switzerland, cryptocurrencies are legal. In fact, the country’s economics minister Johann Schneider-Ammann said Switzerland wanted “to be the crypto nation” at a 2018 crypto finance conference.

The Swiss Federal Tax Administration deems crypto to be assets and subject to the Swiss wealth tax. The Swiss Financial Market Supervisory Authority (FINMA) has also published guidelines for ICOs, but to apply existing financial regulation to the fundraising model. FINMA has also stated that regulation will be applied to the crypto industry on a case-by-case basis.

The European Union

The EU’s European Supervisory Authorities released a statement in 2018 warning consumers about the dangers of cryptocurrencies. “VCs (virtual currencies) such as Bitcoin are subject to extreme price volatility and have shown clear signs of a pricing bubble and consumers buying VCs should be aware that there is a high risk that they will lose a large amount, or even all, of the money, invested,” the organization said in a statement.

The European Central Bank classifies bitcoin as a convertible decentralized virtual currency. And the European Banking Authority has advised banks not to deal in cryptocurrencies until regulations are in place.

In 2016, the European Parliament voted with an overwhelming majority to institute a task force for monitoring virtual currencies. It was revealed in 2017 that the proposal would include requirements for crypto exchanges to identify suspicious activity, including fraud and money laundering. As of 2019, one of the most popular crypto exchanges, LocalBitcoins.com, has implemented measures to verify customer identities in compliance with the EU’S 5th Anti-Money Laundering Directive.

Malta

Malta, the small country in the Mediterranean, is another jurisdiction that is seeking to regulate cryptos, blockchain, and distributed ledger technology. In July 2018, the Maltese parliament passed three cryptocurrency and blockchain bills into law, setting up the first regulatory framework for crypto technology in the world.

The first is the Virtual Financial Assets Act, which regulates crypto platforms ranging from ICOs, brokers, asset managers, wallet providers, etc. The second is the Malta Digital Innovation Authority, which established a regulatory body, the Digital Innovation Authority Department, to certify crypto platforms and address legal issues arising out of the crypto space.

The final bill, the Innovative Technology Arrangement, and Services Act, is responsible for registering tech providers and their services.

“I think that blockchain technology, DLT, and cryptocurrency is where innovation is happening right now, and we are very glad that Malta can offer the first jurisdiction in the world to regulate this sector,” said the country’s Prime Minister, Joseph Minister in a statement to Forbes.

Gibraltar

In 2018, Gibraltar, the British Overseas Territory, introduced its Digital Ledger Regulatory Framework to regulate the crypto industry. Per the regulations, any firm using blockchain or DLT for “storing or transmitting value belonging to others” should be authorized by the country’s financial regulator.

The minister of commerce, Albert Isola, told CNBC in an interview that the “purpose of the framework is to create a new form of commercial activity. We are going to regulate it in a safe environment, seeking quality firms to come to Gibraltar in a way not to stifle innovation, but to actively support it.”

Some of the principles of the law are as follows include:

☑️Providing customers with clear and accurate information concerning risks

☑️DLT providers possessing enough resources to ensure they can run in a “safe and smooth” manner

☑️DLT providers taking “all reasonable precautions” to safeguard customer assets against “unexpected eventualities and threats.”

☑️DLT companies applying “adequate” anti-money laundering and counter-terrorist financing protocols.

Bermuda

The island country in the North Atlantic Ocean established its regulatory framework: the Digital Asset Business Act (DABA) to regulate the crypto industry. The set of laws apply to any identity incorporated in Bermuda and engaging in digital assets business – whether within or outside the country, and any similar business incorporated outside Bermuda but operating in its territory. 

The country’s latest regulation delineates the information that a company should provide during an ICO process. This includes a description of the project, how the ICO will be financed, the technical standard of the asset to be issued, and the identity of the fundraiser participants.

The Facebook Case

Perhaps no cryptocurrency project in the world has roused multinational pushback and threatened the traditional banking system as much as Facebook-affiliated Libra. Libra is a stablecoin (cryptos designed to offer price stability and are backed by a reserve asset such as fiat money) proposed by Facebook and whose release is projected to be in 2020. With Facebook’s 2+ billion users worldwide, the project could very well change the face of global finance.  

But before it’s even released, the project has been met with opposition from governments and banks who have voiced concern over its harmful potential: a threat to the global financial system, a gateway for all illegal activities, data privacy abuse, stripping nations of monetary sovereignty, etc.  

The US, UK, EU, France, Germany, and India are some of the countries that have spoken out against the project. The European Union financial services commissioner, Valdis Dombrovkis, responded by promising a new regulatory framework for cryptos, especially Libra. In September, French and German regulators voiced their objections, stating the crypto could threaten the Euro and unlawfully privatize money.  

And the G7, the world’s most powerful countries have warned that cryptocurrencies such as Libra “pose challenges for competition and antitrust policies” and that it mustn’t launch until regulatory concerns are addressed.  

Earlier in 2019, Facebook had released the names of 27 companies that made up the Libra Association – the nonprofit association which is behind the project. However, buckling under the regulatory pressure, several companies have abandoned the project, including MasterCard, eBay, and Visa. Other companies have also announced the intention of departure.  

However, Libra has stated that it doesn’t have the intention of bucking regulation. Dante Disparte, the head of communications for the project, had this to say: “We agree that the Libra project should be appropriately regulated, so calls for regulation are not a ‘setback’ or a ‘blow’ to the project. Responsible financial innovation and regulatory oversight are not in contest.”

The significance of Libra is that it could trigger more stringent and global clampdown on cryptocurrencies. It could be the cryptocurrency that changes the regulatory, and in fact, the cryptocurrency landscape for good.  

Conclusion

A common theme running through governments and regulators is they have yet to figure the potential power of cryptocurrencies, or even what their future looks like. Still, one thing is clear: regulatory scrutiny for cryptos is set to increase.

Thus, crypto-related businesses: issuers, trading platforms, exchanges would do well to establish safe registration practices, robust security for their platforms and customers, and seal any loopholes that might facilitate illegal activities. This will encourage the growth of the industry while continuing to power innovation in the space.

 

Categories
Cryptocurrencies

What is Ripple? A Complete Guide to the Cryptocurrency

Ripple has undoubtedly made a ripple in the world of finance and the cryptocurrency community. From making headlines for alleged price manipulation to its unusual monetary policy, the currency has

Ripple has undoubtedly made a ripple in the world of finance and the cryptocurrency community. From making headlines for alleged price manipulation to its unusual monetary policy, the currency has

Ripple has undoubtedly made a ripple in the world of finance and the cryptocurrency community. From making headlines for alleged price manipulation to its unusual monetary policy, the currency has firmly made a mark in the finance world. 

Ripple Explained

The first thing to know is that Ripple is both a cryptocurrency and a digital payment and exchange platform. The ripple cryptocurrency – abbreviated as XRP, is the native currency of the Ripple platform.

Ripple is more recognized as a digital payment platform than for its cryptocurrency. Through its Ripple Network (RippleNet), the model circumvents the multiple intermediaries and high fees typical with traditional banking models. 

History of Ripple

XRP was founded in 2012 by Jed McCaleb and Chris Larsen. The model integrated the elements of an earlier payment system called OpenCoin that was designed by decentralization expert Ryan Fugger.

After its launch in 2012, it became the second-oldest crypto after Litecoin. As of October 2019, Ripple is the third-largest cryptocurrency by market cap – after Ethereum and Bitcoin.

Network Design and Security Model

The XRP ledger is to Ripple what blockchain is to, say, Bitcoin. The ledger is a decentralized and peer-to-peer network of servers that powers borderless payments across multiple banking systems across the world. XRP acts as a bridge between currencies, making it easy to exchange any currency for another.

The XRP ledger uses the Ripple Protocol Consensus Algorithm (RPCA) to verify transactions. This algorithm enables the numerous nodes on the network to decide by consensus which transactions will go through, and in what order. These confirmations take only four seconds.

Monetary Policy of XRP

The maximum supply of XRP is 100 billion. The coins were all pre-mined before issuance, and according to Ripple, no other coins can ever be created. 

20 billion coins were given to Ripple founders Chris Larsen, Arthur Britto, and Jed McCaleb. Another 20 billion has been sold to companies and individuals, 7 billion is held by Ripple. In 2017, Ripple placed 55 billion in an escrow account, releasing a billion XRP each month for the next 55 months. At the end of each selling period, all unbought coins will be returned to escrow accounts for issuance beyond the 55 months. To decrease XRP’s supply overtime and prevent its devaluation, Ripple destroys XRP coins after they have been used to facilitate transactions. 

XRP can be divided down into six decimal places, and the smallest unit is known as a drop. This means 1 million drops are equal to 1 XRP. 

Differences between XRP and Bitcoin

Being the native currency for the Ripple ecosystem, XRP significantly differs from other cryptocurrencies in several ways. And since Bitcoin is the pioneer and the most popular of all cryptos, it makes sense to juxtapose the two to understand XRP better. Here is how the two cryptos differ:

☑️Aim of Development: Bitcoin was created as a digital means of exchange, but without the central authority and control exercised over fiat currencies by banks and governments. By contrast, Ripple was created for the banking system as a payment settlement, remittance system, and currency exchange. The idea was to design a system for asset transfers that were quicker, cheaper, safer, and more transparent.

☑️Mining Rewards: Ripple is not designed to be mined, unlike Bitcoin. All 100 billion XRP coins were pre-mined before their release. Only 43 billion are in circulation as of October 2019. On the other hand, Bitcoin has to be mined before being released, and miners get mining rewards in the form of BTC coins. 

☑️Protocol: Bitcoin is enabled by a technology known as blockchain to verify and confirm transactions. XRP is powered by an independent, patented ledger known as Ripple Protocol Consensus Algorithm to process transactions. Also, Bitcoin uses a proof-of-work mechanism to validate transactions, while Ripple relies on a consensus protocol to do so.

☑️Transaction Speed: Bitcoin transactions take 10 minutes on average, while XRP transactions take an incredible 4 seconds.

☑️Approach to the Banking Establishment: Bitcoin and other cryptocurrencies are disruptive to the established monetary system, with the potential to replace it in the future. Conversely, Ripple is cozy with the established system, with its value proposition, in fact, relying on being adopted by banks as a payment and settlement network.

Where to Buy and Store XRP

You can buy Ripple at any of the popular cryptocurrency exchanges, including Coinbase, Bittrex, Kraken, Binance, and Changelly.

For those intending to hold the coin for the long term, it is recommended to store your currency in cold (offline) storage such as a hardware wallet because it’s much safer and invulnerable to hacking attempts. An example of such a wallet is the Ledger Nano S and CoolWallet S, both of which support XRP.

For more active and frequent traders, having a software wallet such as Ripple’s own wallet or Edge and Abra wallets is more appropriate. Also, bear in mind that to store your coins in a Ripple Wallet, you need to deposit a minimum of 20 XRP. 

Should You Invest in XRP? 

XRP offers a quicker way for banks to process transactions faster, which could streamline banks’ operations in a major way and benefit both sides massively. Therefore, the question of whether XRP is a good candidate for investment depends on whether more banks and other financial institutions will adopt it as their payment and settlement infrastructure. Since no one is sure whether Ripple will succeed in its vision, the future value of XRP remains highly speculative for now. 

In any case, there is no such thing as a safe investment, and each decision bears a risk. Therefore, it’s entirely up to you to decide. 

Conclusion 

Being one of the most talked-about cryptocurrency and with its current rank among cryptos, Ripple looks set to continue being dominant in the crypto space. However, its potential for increasing in value hinges very much on the attitude of the banking establishment, something the crypto community is watching keenly. 

 

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Cryptocurrencies

EOS Coin Review

EOS is the native cryptocurrency for the EOS.IO blockchain protocol. It is a relatively new player, having launched in 2017 but went to raise a record-breaking $4 billion in its June 2018 ICO. According to the system developers – Block.one – EOSIO seeks to solve the Bitcoin and Ethereum’s inherent problems. These include creating an […]

EOS is the native cryptocurrency for the EOS.IO blockchain protocol. It is a relatively new player, having launched in 2017 but went to raise a record-breaking $4 billion in its June 2018 ICO. According to the system developers – Block.one – EOSIO seeks to solve the Bitcoin and Ethereum’s inherent problems. These include creating an […]

EOS is the native cryptocurrency for the EOS.IO blockchain protocol. It is a relatively new player, having launched in 2017 but went to raise a record-breaking $4 billion in its June 2018 ICO. According to the system developers – Block.one – EOSIO seeks to solve the Bitcoin and Ethereum’s inherent problems. These include creating an open and free platform for the development of faster, more secure, and simpler decentralized applications.

The blockchain development startup claims to have been the first to infuse the WebAssembly engine into a blockchain software. The Block.one initiative has even resorted to creating their own blockchain from the ground up dubbed the EOSIO 2 that the company claims to be 16x faster than their original EOSIO version.

But how true are these claims? How viable is the EOSIO project and its EOS cryptocoin? Is it safe for the global web-products development to rely on the blockchain and host their different service son the platform? We look at all these and more in this EOS review.

How does EOS work?

EOS was first created as an Ethereum app on the ERC20 project, migrated to the EOS.IO upon the launch of the EOS Mainnet. The coin and its blockchain platform have, over time, earned the nickname “Ethereum on Steroids” given their speed and efficiency. Developing different applications on this platform, for instance, is free.

And while Ethereum blockchain supports no more than 30 transactional transfers per second, EOS is specially designed to supports millions of such transactions. More importantly, DApps developers don’t need specialized skills. You don’t need to learn a new programming language to start developing apps on this platform as it supports all popular languages that developers “know and love” like C++.

How can you acquire EOS coins?

There are two primary ways in which a crypto trader or investor can lay claim to EOS tokens. One is by way of mining the coins, and the most popular yet is through active trade on different crypto exchanges.

EOS, however, maintains a different coin mining strategy. Unlike most blockchain networks like Bitcoin that use the proof-of-stake consensus protocol that’s open to all, EOS uses the Delegate-proof-of-stake protocol. This implies that there are only 21 block producers that can validate an EOS transaction, and they are elected by the EOS coin-holders. And the higher the number of EOS coins you own, the higher the chance of being elected as a block producer.

The rest of the online crypto trading community can acquire by buying EOS tokens from different exchanges. Several leading and second-tier crypto exchange companies have embraced the coin and provided a platform where it can be openly exchanged for crypto or fiat currencies. Some of the leading markets where you can trade EOS coins include Binance, KuKoin, Huobi, Biftinex, and Kraken.

How safe is EOS?

We aren’t aware of any security or safety concerns with regards to the EOS coins or its anchor blockchain technology. And though the brand has only been around for about two years, it has made significant inroads towards a secure blockchain environment. They haven’t just moved from the Ethereum network to their own Mainnet but have also come up with several security measures. Key among them is the incorporation of WebAuthn Support for secure transaction signing without the need for additional software.

What did we like about the crypto coin?

Speedy transaction processing: EOS was created to solve such problems as speedy transactions – inherent to leading blockchains like Bitcoin, Ethereum, and Litecoin. According to Block.one, the EOS blockchain is infused with several systems and protocols aimed at accelerating the transaction speeds on the platform. While Ethereum will only process 30 transfers per second against Ripple’s – considered the fastest blockchain – 1,500, EOS claims to process millions of transactions, making it the fastest blockchain technology.

Supports the most common programming languages: we are also drawn to the fact that EOS has positioned itself as all-welcoming. Through the creation of the most versatile DApps development platform, it has made it possible for every developer to create an app on the platform using virtually any programming language.

Free of charge for developers: On most blockchain platforms, developers have to pay to host and develop apps on the platform. EOS is, however, different as it is one of the first free blockchain development platforms. Here, developers can access the EOSIO platform and develop different apps using the language of their choice free of charge.

What needs improvement?

Controversial voting process: EOSIO maintains 21 positions for block producers. These producers, according to the company, are voted for by any EOS crypto holder. We, however, find this voting process quite complicated and not as transparent as Block.one may want EOS crypto coin holders to believe.

Exposure to market risk during the three days of staking during a vote: The voting process for the EOS block producers is said to be free and open for all EOS-coin holders. What the blockchain technology company doesn’t overemphasize is the fact that to participate in the vote, you must stake your coins for three days. During this time, the staked coins are locked in and cannot be sold. We feel that such a move, however, exposes these coin-holders to massive risk should the coins lose value during the lock-up period.

No maximum EOS coin supply: Digital currencies were supposed to address some of the inherent limitations of the fiat currencies. The most prominent one being inflations. This explains why most crypto coins have put limits on the number of their tokens in circulation. We, therefore, feel that by having a limitless number of coins, EOS doesn’t address this problem.

Bottom line

EOS coins and their native Blockchain platform EOSIO are revolutionizing the aspect of security and speed when it comes to blockchain transactions. They are also redefining the openness of the blockchain technology by making it possible for virtually everyone to create a decentralized app on their platform using their preferred language. We are, however, more interested in the speed of their transactions. Moving forward, we will continue monitoring the company to see how they address the voting process concerns and the issue of locking up EOS assets for days.

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Cryptocurrencies

Tether Review: How Safe or Stable Is This Stable Coin?

Tether is a pioneer of a hybrid class of blockchain-based crypto coins referred to as Stable coins. These were developed with the sole purpose of addressing cryptocurrency volatilities synonymous with

Tether is a pioneer of a hybrid class of blockchain-based crypto coins referred to as Stable coins. These were developed with the sole purpose of addressing cryptocurrency volatilities synonymous with

Tether is a pioneer of a hybrid class of blockchain-based crypto coins referred to as Stable coins. These were developed with the sole purpose of addressing cryptocurrency volatilities synonymous with cryptocurrencies such as Bitcoin and Ethereum. The stability of Tether is made possible by the fact that each Tether coin issued is collateralized by traditional fiat currencies on a 1:1 ratio. The most popular stable coin today is the US dollar Tether(USDT). 

But how safe and effective is the pioneer stable coin? Who can use this stable coin? What challenges has it faced to date, and what have been some of its solutions? We address these all in this comprehensive Tether Review.

What is tether, and how does it work?

Tether is a digital currency that seeks to provide you with the benefits of both an open-sourced blockchain technology and traditional fiat currency. According to Tether Limited, their systems convert cash deposits into digital coins whose value is tethered to the price of global currencies like the USD, EUR, and Yen. The company also claims to hold fiat currency in reserves that are equivalent to the Tether coins in circulation today. These Tether coins are then used to facilitate different crypto transactions. For instance, pure crypto-to-crypto exchanges, USDT serves as an alternative to the US Dollar.

Who can use the stable coin?

Like most other cryptocurrencies, there are no restrictions on the use of Tether across the globe. The stable coin has, however, received mass adoption by crypto traders and investors operating in crypto exchanges that do not accept fiat currencies. In this case, the stable coin has been used to load cash in an out of the different markets. Additionally, these crypto industry players have also been using the crypto coin as a hedge against different investments. Note that the increased circulation of these coins has also seen most crypto enthusiasts embrace Tether as a store of value.

How safe is Tether?

Tether derives its stability and safety from the fact that it was designed to always be worth $1.00. The unwritten rules of engagement between Tether and its USDT coin holders are that Tether Limited will, at all times, maintain a cash reserve of $1.00 for every tether issued. The company further promises to regularly audit and make public the company’s financial records.

These would show how much Tethers coins are in circulation at any given time and their cash and cash equivalent backings. While this sounds interesting, it should be noted that there is no contractual agreement between Tether Limited and its clients towards the fulfillment of this or other promises. We address these in detail in the risk and concerns section below.

Risks and concerns:

☑️Lack of proper auditing:

While Tether Limited claims to have backed tether coins 1-to-1 with traditional fiat currencies, they haven’t audited their financial records in more than two years. This didn’t go unnoticed by the crypto community, who demanded to know the ratio with which the company backs its stable coin. In reaction to this, Tether Limited had its lawyers – and not an audit firm  – release a report about the same. Our concerns aren’t just on the lack of proper auditing reports but the qualifying language these lawyers use in drafting this report.

☑️The legitimacy of Tether reserves:

The lack of verifiable and reliable audit reports from Tether Limited makes us question their claim of 1:1 tether to fiat currency reserve. And our concerns are only aggravated by the fact that USDT coin holders don’t have the legal power to demand an audit from Tether Limited. The 1:1 reserve is just a promise that Tether can break anytime.

☑️Bitfinex – Tether collusion:

There were reports and that Bitfinex and Tether – both share common management – were using USDT to manipulate Bitcoin price. These reports that saw Bitfinex exchange Subpoenaed by the New York Attorney General claimed that Bitfinex was creating Virtual USDT and using it to wash trade Bitcoin. In another incidence, the New York Attorney General’s office accused Bitfinex of Using Tether’s funds to cover over $850 million missing funds. Both instances make us question the independence of Tether and its fiat currency reserves.

What we like and don’t like about tether

what we like:

It reduces transaction time: Bank deposits and withdrawals in and out of different crypto exchanges can take between 1 to 4 days to process – or more during weekends. Tether transactions, on the other hand, take no more than a few minutes to complete.

Lowers transaction fees: Having to deposit and withdraw funds in and out of the bank every time you need to enter into a crypto position isn’t just tedious, but it is also expensive. Tether transactions are cheaper and relatively fast.

A safe haven during periods of unsustainable volatility: What happens when your preferred crypto assets hit unsustainable highs? The best move here is to cash out and wait for the coin to dip before making another buy. Tether presents you with the perfect safe-haven for your investments away from risky volatilities and the often-high withdrawal and deposit fees.

Downsides to the use of Tether:

Zero-interest: The fact that Tether will always be valued at $1.00 implies that you don’t stand to gain from price fluctuation of interest. This makes it less attractive than bank deposits.

Riskier than bank deposits: Banks are highly regulated, regularly audited, and deposits therein insured. Tether isn’t regulated and doesn’t live to its promise of transparency through regular audits. Furthermore, should you lose Tether funds, there is no guarantee that you will be compensated.

Where can you trade tether?

Virtually all major crypto exchanges and a significant number of medium-sized exchanges accept USDT trades. The coin’s popularity within the crypto community is evidenced by the fact that it currently appears on the top-ten list of most traded crypto coins.

Final word

Tether has made significant contributions towards taming the crypto industry volatilities. It has provided traders and investors with an inexpensive, safe haven for their coins. It has also significantly cut down on time wastage experienced with bank transactions. There, however, are major concerns with regards to how Tether Limited manages their fiat reserves. These have dented the crypto community’s trust in the stable coin through breach of promise and lack of transparency. You, therefore, need to exercise caution when dealing with this controversy-rigged stable coin.

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Cryptocurrencies

Bitcoin Cash (BCH) – Everything You Need to Know

We cannot talk about Bitcoin Cash without understanding the fundamentals of Bitcoin. Bitcoin was created in response to the financial crisis of 2008/2009. Satoshi Nakamoto, the creator of this revolutionary

We cannot talk about Bitcoin Cash without understanding the fundamentals of Bitcoin. Bitcoin was created in response to the financial crisis of 2008/2009. Satoshi Nakamoto, the creator of this revolutionary

We cannot talk about Bitcoin Cash without understanding the fundamentals of Bitcoin. Bitcoin was created in response to the financial crisis of 2008/2009. Satoshi Nakamoto, the creator of this revolutionary network, envisioned a world where people would transact financially without the need for intermediaries. Bitcoin did not just eliminate intermediaries in financial transactions. It also made transactions more secure, convenient, and faster.

However, scalability issues, slow transaction speeds, and extortionate transaction costs associated with BTC prompted some stakeholders to discuss proactive measures to counter rising resistance from different quarters and competition from emerging solutions. This led to the ultimate birth of BCH – or bitcoin cash.

The Birth of Bitcoin Cash

Bitcoin Cash was launched in August 2017 by the Bitcoin network as its hard fork, with the primary objective of improving scalability. A hard fork is simply an alternative of the original coin – the BTC. And since the alternative – in this case, the Bitcoin cash- could not be accepted by 100% of the users, there was a split. And this led to the birth of the Bitcoin Cash.

In this case, Bitcoin cash is similar to the original bitcoin, but not necessarily identical. Bitcoin cash was born as a result of the recommended updates to the BTC’s protocol that were not agreed upon by everyone.

To understand the need for BCH, we need to pause a little and reflect on some of Bitcoin’s limitations: the block size and scalability issues. Well, as you may know, transactions on the Bitcoin network are confirmed in blocks. And a single block is confirmed every 10 minutes. The maximum size of each block is 1Mega Bite, which can only hold a maximum of 2700 transactions. This, in turn, limits the Bitcoin network to about 2700 transactions every 10 min, which translates to 4.6 transactions per second.

Comparing that to the VISA network that processes 1700 transactions per second, you will understand just why Bitcoin scalability was an issue. As a result, two separate camps emerged with solutions to this scalability. One camp suggested the need to have the block size increased from the current 1mb to 8mb. Such that the network would be eight times faster. The second camp was against the whole idea of increasing the block size and instead looked for solutions to optimize transaction size handling. This debate went on for a while and eventually led to the proponents of a bigger block size creating the Bitcoin cash.

BCH key achievements

☑️Bitcoin Cash has comparatively cheaper transaction fees, estimated at $0.20 per transfer. That means people will save a lot of money, unlike with Bitcoin, which charges around $1 per transaction. It should be remembered that charges once shot up to an all-time high of $30 per transaction on the bitcoin network.

☑️Bitcoin Cash is way faster in processing transfers, so you won’t have to wait for an hour for a transaction to confirm.

☑️With Bitcoin Cash, more people can transact at the same time as it is capable of processing numerous transactions per second – 116 transactions per second. That is not the case with Bitcoin.

The above features have been made possible as a result of the Bitcoin Cash block expanding to 8 times larger than a Bitcoin block. This has consequently made BCH not only cheaper and faster than BTC but also a lot more scalable. That would explain why more people are adopting BCH as their preferred cryptocurrency in a fast-developing digital market.

Valuation of Cryptocurrencies – Bitcoin Cash Vs. Bitcoin

As a novice, you may be wondering where cryptocurrencies derive their actual value. Naturally, cryptocurrencies such as BCH and BTC get their value from their levels of adaptation, and that includes their use and demand.

Analyzing them from the points of growth in value as well as ROI, these two currencies hold substantial value. Bitcoin has been around for much longer and is more valuable, but Bitcoin Cash has been consistently gaining users, and hence, its value has continued to soar.

Bitcoin Cash may be one of the newest entrants into the market, but how it sought to address the drawbacks associated with “established cryptocurrencies” can only suggest good times ahead. First and foremost, scaling issues synonymous with Bitcoin are considered a major turn off to potential investors, and the fact that Bitcoin Cash conclusively addressed them comes as good news from every perspective you look at it.

The projection on the ground spells dark times ahead for Bitcoin unless their developers work harder in fixing the issues pointed out. In the meantime, Bitcoin Cash will continue serving as the popular choice for more people who would wish to transact with reliable cryptocurrency.

Conclusion 

Given how the globe is embracing crypto technology as an alternative to traditional banking and trade, structural advancements on Bitcoin Cash (and other cryptocurrencies) are inevitable. As we grasp with the growth of the digital scene, everything points towards a convenient, cost-effective way of transacting. Whether BCH will eventually attain its goal as the ultimate solution or not, we have already seen and experienced its purpose in wholesome. Save for the wars of recognition, all that seems to matter is how far or how strong BCH will hold on, and how it will push other currencies to follow suit in simplifying money transfer and trade in general for generations to come. 

So far, so good. The lines are being drawn on the distinction between Bitcoin and Bitcoin Cash. It doesn’t matter who produces the goods, but what the world needs is a reliable, consistent currency that puts the interests of the masses first. 

 

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Cryptocurrencies

Binance Coin: All you need to know

Binance coin is a crypto token created by the cryptocurrency exchange platform Binance. The coin is denoted by the symbol BNB. Launched in July 2017, the cryptocurrency initially ran on

Binance coin is a crypto token created by the cryptocurrency exchange platform Binance. The coin is denoted by the symbol BNB. Launched in July 2017, the cryptocurrency initially ran on

Binance coin is a crypto token created by the cryptocurrency exchange platform Binance. The coin is denoted by the symbol BNB. Launched in July 2017, the cryptocurrency initially ran on the Ethereum blockchain until Binance launched its own blockchain – the Binance chain. Binance coin has an overall limit of 200 million tokens.

The Binance Platform

Binance was founded by Changpeng Zhao, also known as CZ by crypto enthusiasts. It’s a global cryptocurrency exchange that’s currently the biggest crypto trading platform, at least by volume.

Users of the platform can use BNB to pay for fees on the Binance platform such as listing fees, exchange fees, trading fees, withdrawing fees, and any other fees. Like any other cryptocurrency, the coin can be traded against other supported cryptocurrencies.

Security Model and Transaction Processing

Binance Chain uses the Tendermint byzantine-fault-tolerant as a consensus protocol. This mechanism uses several types of nodes:

Validator nodes – a selection of the network community who vote to validate transactions

Witness nodes – These nodes witness the consensus mechanism and broadcast transactions to all other nodes  

Accelerator nodes – these nodes speed up the transaction process

Monetary Policy of Binance Coin

BNB’s market cap is at 200 million tokens. At its launch and Initial Coin Offering in 2017, 100 million tokens were released to the public, 80 million to the founding team, and 20 million to angel investors (high-net-worth individuals who provide financing for a startup in exchange for equity in the company).

Binance coin’s first year provided a 50% discount on trades, with the discount reducing by half each following year. The discount will end from the fifth year going forward.

To combat devaluation of the currency, Binance plans to use 20% of its profits to buy back Binance tokens and burn them until only 50% of Binance tokens are remaining in the market. (Coin burning means removing coins from circulation permanently, reducing a coin’s circulation. The burning process is recorded as a transaction on the blockchain, and it’s thus completely transparent)

How is Binance Coin Different from other Cryptocurrencies?

Binance differs from other cryptocurrencies like Bitcoin, Ether, Litecoin, etc. in at least these two ways:

First, It is an integral part and will, in the future, become the native currency of the Binance platform.

And secondly, users of Binance can use the coin to pay for the trading fees of the platform, which is way cheaper than paying the full fees

How to Buy and Store Binance Coin

If you wish to own Binance coins, you can acquire them via a cryptocurrency exchange. Since the Binance platform is a crypto exchange itself, you can get BNB by trading it with over 100 currencies. You can also trade BNB on IDEX, Gate.io, Trade Satoshi, etc. You can also buy it directly from Eidoo, Invest Feed, Kyber Network, etc.

Crypto coins are very soft targets for hackers – so it’s crucial that you safeguard them by securing them in a wallet. Some popular wallets where you could keep your Binance coin are Trust, Trezor, Enjin, Blox, Request, Metal Vault, Jaxx, Ledger, etc.

Uses of Binance Coin

☑️Buying goods and services across various establishments 

Binance coin has enabled various ways of using BNB to pay for products and services in an increasing number of businesses. An example is TravelbyBit, an Australian startup that has unlocked the ability of Binance and many other cryptos to be used by more than 150 establishments.

☑️Paying for trading fees on Binance

Crypto traders can save money by using BNB to cover crypto trading fees in the crypto exchange platform.

☑️Investing in other cryptocurrencies

You can use Binance coins to invest in new and innovative cryptos that are listed on Binance’s token launch program: the Binance Launchpad.

☑️Securing cash when you need it

Binance coins can be used to acquire loans through Nexo – a crypto-based loan platform, or exchange BNB for cash through Dether – a platform that allows people to trade the coin for money.

☑️Paying for certain social media services 

Social media has become an important part of people’s lives all over the world, and BNB is being used for various functions on social networks. For example, the coin can be bought on Investfeed – the crypto social network, or as a gift token on Uplive, a video streaming platform.

☑️Trading as an altcoin

Binance Coin can be traded on several cryptocurrency exchanges, including on the Binance platform. Other exchanges include Komodo, IDEX, kyber.network. 

Should You Invest in Binance Coin?

When deciding whether to buy (and invest) in Binance coin, consider the following facts about the currency:

Binance coin has witnessed unprecedented success and in a short amount of time. In only two years, it has achieved a 2.8 billion market capitalization.

A dedicated and industry-savvy team backs the Binance platform. This team had also enabled the crypto to stave off insecurity issues such as in 2018 when they successfully repelled a malicious attack.

As of October 2019, the price of the coin is $18 – a growth of more than 10,000% since its launch

Its progressive economic model of burning coins should see it continue to increase in demand and token value.

Conclusion

Binance coin has become a force to be reckoned with in the crypto space. Cryptocurrency traders can not only invest in the coin but also use it to duck high fees while trading on the Binance platform. And with the current growth rate of the currency, it is set to increase in value, especially after the launch of its own blockchain. Thus, BNB is a great asset option to add to your portfolio.

 

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Cryptocurrencies

Understanding Litecoin – A step by step guide

Litecoin is a peer to peer, decentralized digital currency that is based on the Bitcoin protocol. It uses Scrypt as its proof of work (an algorithm for confirming transactions by

Litecoin is a peer to peer, decentralized digital currency that is based on the Bitcoin protocol. It uses Scrypt as its proof of work (an algorithm for confirming transactions by

Litecoin is a peer to peer, decentralized digital currency that is based on the Bitcoin protocol. It uses Scrypt as its proof of work (an algorithm for confirming transactions by other network participants). Litecoin (LTC) uses blockchain technology to maintain a public ledger of all transactions. The currency is referred to as Bitcoin’s lighter sibling as it was created using the Bitcoin source code, but it can be mined 4 times faster than Bitcoin (BTC). This, in addition to its lower price, makes it more suitable for faster, everyday purchases.

History of Litecoin 

Litecoin was created in 2011 by Charlie Lee, a former Google employee. It was released on October 7, 2011, via the open-source client GitHub, with the network going live on the 13th of the same month. This makes it the first altcoin – a term used to describe all other cryptocurrencies besides Bitcoin.

Since it was launched, it has experienced stable growth and ranks 7th in market capitalization today. Charlie’s mission was to create a cryptocurrency that had the same tight levels of security like Bitcoin, but more suitable for everyday transactions.

Differences between Litecoin and Bitcoin

Litecoin is, by its creator’s own admission, a clone of Bitcoin. If we are to understand Litecoin, comparison with Bitcoin is therefore necessary. These characteristics set the two cryptos apart: 

☑️Mining Algorithm: Both currencies use a proof-of-work algorithm. Bitcoin uses the SHA-256 algorithm, whereas Litecoin uses Skrypt. The SHA-256 is famous for its complexity and uses more power, while Scrypt is computationally less intensive and uses more memory, but also less power.

☑️Transaction Speed: Litecoin’s block time, i.e., the time it takes to process a block, is 2.5 minutes while Bitcoin’s is 10 minutes. This makes Litecoin 4 times faster and also more capable of processing more transactions in any time frame.

☑️Total Coins: Bitcoin has a market supply of 21 million coins, while Litecoin maxes out at 84 million. While it would appear that Litecoin has more potential, both cryptos have the ability to be broken down and transferred in very tiny amounts (for example, the minimum for BTC being a hundredth million or 0.000 00001). With both currencies being able to be divided down so much, the cost of one full coin is not consequential as it may seem.

☑️Rewards: When someone mines a block, they are rewarded a certain number of coins for their contribution to the network. The current block reward for both BTC and LTC is 12.5. Bitcoin’s rewards are halved after every 210,000 blocks have been mined while Litecoin’s reward halving happens after every 840,000 blocks. Because of the block time difference of 2.5 min and 10min for LTC and BTC, respectively, there is more opportunity for LTC miners to be rewarded. 

Current Litecoin Statistics

Litecoin is currently trading at $55.92, with its market cap being $3.5B. Its 24-hour volume is $2.6B and its circulating supply of 63, 476, 342 with a maximum supply (market cap) of 84 million. Its All-Time High was $375.29 in December 2017 with its All-Time Low being in January 2015 at $1.11. 

Characteristics of Litecoin

Just like with other mineable cryptocurrencies, Litecoin has several familiar elements that differentiate it from other types of digital currencies. Some of these are:

☑️Pseudonymous addresses – meaning users can transact without revealing their personal credentials, but the public address still having the possibility of being linked to them

☑️Blockchain – which is a public ledger where all transactions are recorded  

☑️Block Rewards – people who perform the computational work to effect transactions on the BLockchain are rewarded with a specific number of LTC coins   

☑️Transactions are peer to peer (meaning between two computers, without a regulating authority), and are censorship-resistant (meaning no corporation or government can interfere with them) 

How to Invest in Litecoin 

Investing in Litecoin means swapping your currency for Litecoin currency. For instance, 1 Litecoin is equal to $54.81 today. When the value of Litecoin rises, you can exchange Litecoins back to dollars. To invest in Litecoin, you need a digital wallet. So far, Coinbase is one of the best digital wallets where you can buy/sell and store your Litecoins and other cryptocurrencies.

What are the Risks of Trading Litecoin? 

As with other cryptocurrencies, there is not much history to compare the future performance of Litecoin. Since it’s still so “young”, the question of how you can estimate its future value is difficult to answer. Here are some risks associated with trading Litecoin: 

  • Changes to international capital controls may cause a decline in demand for cryptocurrencies. Countries such as China have laws that regulate the flow of capital out of the country – driving people to invest in cryptocurrencies to circumvent such restrictions. A change in these laws could affect Litecoin’s demand.    
  • Cryptocurrencies are still largely unregulated, rendering them a risky option for some
  • Litecoin is prone to market fluctuations – though many investors regard this is a positive risk 

Uses of Litecoin

Litecoin can function as any fiat currency (money that has been declared by the government as legal tender), and it can be used to pay for goods and services. An increasing number of businesses are accepting Litecoin as a legitimate means of exchange. From pet supplies to jewelry to cars to music to health and beauty, food, and travel, there are many places where the currency can pass.

You can also transfer quickly Litecoin to anyone, anywhere, thanks to its short block time and confirmation rate. 

Also, due to its often wild fluctuations – much like other cryptocurrencies, it is a very attractive investment for investors, who can bet on its exponential increase at any given time.  

Conclusion 

Litecoin has witnessed steady growth since its creation and by the look of things, it will only become stronger. This is due to its impressive processing time, and its adoption by trusted crypto exchange and storing platform, Coinbase. Remember, before investing in Litecoin or any other cryptocurrency; it’s important to do your research.