Tag: Blockchain technology

Categories
Crypto Crypto Education

The Impact of Blockchain Technology on Marketing and Advertising

Blockchain has important implications for marketing and advertising. But according to The CMO Survey, only 8% of firms rate the use of blockchain in marketing as moderately or very important. Blockchain technology is not well understood and subject to a lot of hype. This combination creates a natural barrier to entry and has likely caused […]

Blockchain has important implications for marketing and advertising. But according to The CMO Survey, only 8% of firms rate the use of blockchain in marketing as moderately or very important. Blockchain technology is not well understood and subject to a lot of hype. This combination creates a natural barrier to entry and has likely caused […]

Blockchain has important implications for marketing and advertising. But according to The CMO Survey, only 8% of firms rate the use of blockchain in marketing as moderately or very important.

Blockchain technology is not well understood and subject to a lot of hype. This combination creates a natural barrier to entry and has likely caused marketers to take a “wait and see” approach. However, there are many reasons to invest the time now to understand the technology and begin exploring specific marketing applications for your industry. Like digital platforms, social media, martech, fintech, and numerous other innovations, the spoils of blockchain may go to early adopters who commit to ruthless innovation.

Blockchain’s properties — transparency, immutability, and security — make it reliable and trustworthy for applications such as supply chain management, smart contracts, financial reporting, the Internet of Things, the management of private (e.g., medical) information, and, even, electrical grid management. Meanwhile, its transmission model reduces the costs of transactions, enables verification and efficient exchange of ownership, and opens the door to real-time micropayments. It may make it possible for payment frictions to shrink, intermediaries to fade away, and consumers to own and control their personal information. Here, we see the disruptive potential of blockchain on marketing.

The Marketing Impact of Near-Zero Transaction Costs

Today, financial transactions have considerable costs. Retailers routinely pay credit card companies 3% payment processing fees, while gas stations pay even more. Vendors using eBay and Shopify pay listing and sales fees, and consumers pay transaction fees on payment portals like PayPal. All of these fees increase the cost of goods and are typically passed on to consumers. With the pervasive use of credit cards and debit cards, many merchants have set minimum purchases for their use to avoid having their profitability destroyed by fees.

Blockchain technology allows for near-zero transaction costs—even on microtransactions. Financial corporations like Mastercard and Visa already offer the ability to send money in any local currency over a blockchain rather than by swiping a credit card, taking advantage of the technology’s additional layers of security and transparency. On top of that, being able to cut intermediaries and connect directly the banks of both ends of each transaction can avoid most cross-border fees.

There are implications for marketers and advertisers as well. Today, marketers often try to get access to customer data by paying third-parties (like Facebook) to share information. But blockchain could allow merchants to use micropayments to motivate consumers to share personal information — directly, without going through an intermediary. For example, a grocery store chain with a mobile app can pay users $1 for installing the app in their phones, plus an extra $1 if they allow it to enable location tracking. Every time they open the app and spend at least a minute on it, the retailer can pay them a few cents or loyalty points’ worth of store credit, up to a maximum per day. During that time, they push deals and special offers to the user. Indeed, user-tailored deals open a legitimate mechanism to deliver personalized prices that are a function of the consumer’s profile. This approach has the potential to reduce fraud and minimize inaccurate or incomplete information from customers that currently plague these programs.

THIS ARTICLE ALSO APPEARS IN:

In the same way, marketers can enable “smart contracts” (virtual agreements that remove the need for validation, review, or authentication by intermediaries) that users can activate when they subscribe to email newsletters or sign up for a rewards program. Micropayments are deposited directly to the users’ wallets whenever they interact with commercial emails — or with ads, which brings us to our next point.

Ending the Google-Facebook Advertising Duopoly

A similar model could be used with website ads by compensating consumers for each page view. In 2016, HubSpot published a research study showing that a majority of Internet users dislike most forms of pop-ups and mobile ads and see online advertisement as intrusive and negatively disruptive. An increasingly common response is to install ad blockers, a trend that is having a major punitive effect on the industry. By 2020, it is estimated that ad-blocking adoption will cost publishers $35 billion.

Blockchain-enabled technology potentially allows marketers to recapture some of that revenue with a different type of model: marketers pay consumers directly for their attention—and cut out the Google-Facebook layer.

We believe that the Google-Facebook duopoly in digital advertising will soon be threatened by blockchain technology. While keyword-based search will not disappear completely, it will become much less prominent. Eventually, individuals could control their own online profiles and social graphs.

With blockchain technology, companies can bypass today’s social media powerhouses by directly interacting with consumers and can share the reward of ad exposure directly with them. In 2016, Google is reported to have generated an average of $73 per active user via ads. Of course, the $73 is just an average of nearly one billion active users. It is reasonable to expect that Google brings in much more than $1,000 for certain highly-valued demographics. Imagine the marketing possibilities when companies can efficiently transfer these values to consumers via “willingly-consumed” advertising enabled via blockchain technology.

Blockchain technology can also verify ad delivery and consumer engagement; avoid ad or email overserving, which angers consumers and demotivates them from buying; and prevent follow-me ads that are no longer relevant (such as when consumers have already made a purchase of the company’s or competitor’s products).

Ending Marketing Fraud and Spam

Fraud verification via blockchain will also help verify the origin and methodology of marketers. Micropayments will also effectively destroy the current concept of mass phishing spam that dilutes the effectiveness of marketing for everyone.

Some 135 billion spam emails are sent every day, currently accounting for 48% of all emails sent. Spammers receive only one reply for every 12.5 million emails sent. A very small blockchain-enabled payment to the recipient of the email will discourage the spammer by increasing the cost of this activity. It should also help companies identify consumers who are interested in the transaction by their willingness to make this exchange.

Similarly, for the internet, every time a user clicks on a link, there could be a micropayment. In most cases, the user will make a small micropayment (for example, one cent to read a news article). This would defeat the denial of service attacks — a type of cyber-attack that involves recruiting bots to hit a website with millions of requests that cause the website to go down or to provide poor response time.

Blockchain could also make it difficult for bots to set up fake social media accounts, flood users with deceptive messages, and steal online advertising dollars from big brands. Online authenticity is literally baked into blockchain technology. One company that is tackling the problem of social media fraud is Keybase.io, which enables individuals to use blockchain to demonstrate that they are the rightful owners of their various social media accounts. This will make the impact of marketing easier to track and marketing expenditures easier to justify — both are big wins for the profession.

As of 2016, $7.6B (or 56% of total display ad dollars) were lost to fraudulent or deceptive activity, a number that is expected to grow to $10.9B in the next years. By using blockchain technology to track their ads, marketing teams can retain control over all their automation practices, ensure that marketing spend is focused on ROI-generating activities, and directly measure the impact of marketing down to a per-user, per-mail metric. By tying user behavior and micropayments together, blockchain could solve the attribution problem that has bedeviled marketers for decades.

Categories
Cryptocurrencies

Blockchain Tech Growth and What It Means for You

We are living an important growth of applications based on Blockchain technology, what would be the definition of this technology? In 1968, young Americans died far from home in a war they did not understand, French students took to the streets contrary to the consumer society… people began to demand liberal self-management mechanisms, far from […]

We are living an important growth of applications based on Blockchain technology, what would be the definition of this technology? In 1968, young Americans died far from home in a war they did not understand, French students took to the streets contrary to the consumer society… people began to demand liberal self-management mechanisms, far from […]

We are living an important growth of applications based on Blockchain technology, what would be the definition of this technology?

In 1968, young Americans died far from home in a war they did not understand, French students took to the streets contrary to the consumer society… people began to demand liberal self-management mechanisms, far from regulations imposed by leaders, of which no one knew their true intentions… In that ecosystem, attractive ideas began to be forged that, far from the violence of ancient revolutions, defended property and pure capitalism, a capitalism that was managed from the will of individuals and that sought social justice from the conscious distribution of resources.

In the following years the theories that underpinned these ideas were written, the ideas that established the foundations of the collaborative economy as we understand it today. Currently, Blockchain is the technology that makes these ideas possible. Blockchain is the technology that makes individuals possible to interact with each other, without the need for an external regulator imposed by the system. That is, Blockchain does not need governments, ministries, or large corporations to regulate relationships between individuals. Blockchain is an intelligent arbitration system that through a fair consensus system, provides validity and trust to all transactions between individuals.

So the question is no longer what is Blockchain? The question is, if like the youth movement of May ’68 was cannibalized by the consumer market that was attacked, will the current market be able to absorb the Blockchain movement? We have seen that it has a multitude of applications Can you give us some examples of the use that is currently being given to this technology and what it can be given in the future?

Rivers of ink are being written about the things that can be done with Blockchain, but the reality is that getting out of the conceptual definition is not that easy. The real applications for the market are appearing now, and the most immediate possibilities are in financial transactionality, document certification, digital identity, and cybersecurity… Use cases are landing right now: Object traceability… and people, intellectual property, or virtual banks are already a reality.

And what will come? Blockchain can reduce costs in management processes in any company, including public administration. Blockchain securely reduces the time and price of financial transactions and information. Blockchain proposes transparent distribution systems that parameterize the signed contracts obliging compliance, systems that execute orders agreed automatically… The future is magnificent.

Why this blockchain boom? We come from a global economic crisis, a crisis in which bankers, businessmen, and leaders have not turned out very well, some morally, and others, also judicially. A crisis in which we have all suffered, if not in our own experience, if in of a close relative or friend, it has also been a public crisis, televised: televised the scavengers, televised the refugee children dying on the beach, televised trials in which everyone loses their memory, televised politicians, elected by the citizens and guarantors of democracy and the values of society, covering their faces to get into police vans… being aware of what’s going on, and seeing it every day in the media… Isn’t it tempting to cling to the mysticism of a technology that allows anyone to create a bank, that allows benefits to be democratized, that allows you to believe that you can get out of a system that no longer provides moral referents?.

The public networks of Blockchain, cannot be fooled, cannot be hacked, cannot be bribed… How can I not allow myself to dream of a world that works better? Dreaming is legitimate and human, as is hope… That’s why the gap I was referring to earlier, between the conceptual and real Blockchain, because, for many people, Blockchain is still the Grail, or even, for some, an exercise in alchemy. We must balance expectation and reality.

What are cryptocurrencies and what are their current utilities? Cryptocurrencies are the money of the future, digital money where instead of relying on a centralized system is used a “peer-to-peer” system with thousands of anonymous nodes that verify the transaction, thus avoiding 90% of the cost and increasing the speed of operations, with the ability to make transactions in seconds, whatever the recipient and regardless of their location: a few days ago, I was told how a transfer could be made to Hong Kong in 6 minutes and totally secure.

Its use can be purely economic, as if they were euros or any other fiduciary currency, for example, so the Bitcoin or Ether, can have an application as an investment in a company or project, where the currency is valued or devalued according to the total capital that supports the project, its initial offer to launch the currency is called ICO and currently exist around 800 different cryptocurrencies where the predominance of bitcoin over the rest is around 40%. And in other cases, cryptocurrencies can be used for a mere exchange of goods and services, as a digital “barter”.

Why this rise of cryptocurrencies and what is expected in the future of them? The boom is because people don’t want long waiting times, nor do they want to pay high commissions, we are in a society where we want everything already and as cheap as possible. And with Blockchain technology this is possible. In addition, the other great advantage is that they allow the distribution of “dividends” of a company in a very simple and equitable way depending on the number of tokens (cryptocurrencies) that are held of a project. People are also providing them as a future investment because the growth of the market, the trend, is sustained and bullish.

What are the main cryptocurrencies and what differentiates them? The main currencies for me are two, on the one hand, Bitcoin and second Ether, although there are many who will want to come out and growing in volume and quotation. Bitcoin was the first cryptocurrency considered as such, after several failed attempts in the ’90s, Satoshi Nakamoto, in January 2009, announced the creation of Bitcoin and since then has gone from being worth cents to approximately $2,500 worth today, its end is entirely economic and transactional and can easily predict significant growth in the near future, with an estimated $10,000 by the end of next year.

On the other hand, Ether that works on the Ethereum platform emerged as an improvement over the Bitcoin network, where transactions are made faster and are better adapted to run Smart Contracts, which are intelligent contracts that allow the network itself to carry out operations if certain premises are automatically fulfilled.

More and more coins will appear with new projects, I can recommend ReddCoin RDD, a project that integrates a digital currency platform in a transparent way in the main social networks so that the process of both sending and receiving money is very simple and rewarding for everyone. Another emerging currency is LBRY, which has created a free, open, and community-managed Blockchain digital marketplace. But, again, there are 800 digital coins and each one has its own particularity.

Going back to Blockchain technology, what is it based on and how is it built? Although it is a complex technology, I will try to explain it as simply as possible:

Imagine a thousand computers, scattered around the world, each in the home of a normal person, a family, a student… individuals who do not know each other and make independent decisions. Well, let’s imagine, those computers are part of a blockchain network.

And I’m sure you’re wondering: why are they part of the network? Because very simple, apart from believing in it, they also do it for money. For each of those computers, every time you transfer information or digital money, you get a small commission.

Once we have answered why a computer is put at the service of a public Blockchain network, we can now imagine that someone decides to send a transfer in a cryptocurrency to pay for tickets to a theater function. Well, all those computers, they distribute the commission money that costs me that transfer, but in turn, they also validate the transaction.

Let’s take an example of how a blockchain action is validated and what are the advantages of distributing the information: if I send to the thousand computers the information 1, the thousand computers keep the information 1. If someone tried to change the information of a computer and said that the information is 0 and not 1, a complex system of arbitration based on the theory of games would have the remaining 999 computers tell the changed computer “you made a mistake, the information is 1” and the changed computer would give back the correct information.

Returning to our example of ticket purchases, the thousand computers validate that from my account a transfer of an X value has been made to the theater account, if someone wanted to change or hack that information, they would have to “change their mind” to the thousand computers.

Why are more and more banks (and non-banks) using this technology? In my opinion, Blockchain is a wonderful technology, the best-built data certifier, and validator. In addition, as noted above, the deployment of distributed data chains reduces management costs and can optimize process times. With this argument… How can companies and organizations not want to have this technology?

There is a special case, which is the financial institutions. Their situation with Blockchain is very special. On the one hand, they are forced to understand and play on the Blockchain board, because the reality is that anyone can create a virtual bank, the financial startups, the so-called fintech, are creating financial ecosystems independently of the big banks, and regulations such as the PSD2 directive are coming on top of them, which makes the growth of this new competition even more possible… All this encourages them to move forward.

But also, they have very strong regulations that they must comply with, they have spent a lot of money to generate operating systems that, effectively, work, the average age of customers earning money is high enough and far enough from an on-line industrial revolution to worry about now, and its conservative nature, makes them afraid of a technology they fail to fully understand. We’ll see in the future, whether the brake was stronger than the advance or… vice versa.

How could this technology revolutionize personal and institutional relationships? In personal and institutional relationships I am clear about the next step with Blockchain, and it affects two basic characteristics of both personal and commercial relationships: reputation and truthfulness.

As digital identity systems and data validation systems advance, it is going to be very difficult to cheat or lie on the network. I am aware of the European Union’s intention to move forward on the issue of unique digital identity registers so that our identity as citizens transcends the virtual world.

Categories
Crypto Guides

Different Facets Of The Blockchain Technology

Introduction We have seen many topics related to blockchain explaining different facets of the technology. This article is an attempt to put together the main aspects of the technology and how it has shaped up so far from the invention of bitcoin as the first application of blockchain technology. 🔗 Cryptocurrencies The blockchain journey starts […]

Introduction We have seen many topics related to blockchain explaining different facets of the technology. This article is an attempt to put together the main aspects of the technology and how it has shaped up so far from the invention of bitcoin as the first application of blockchain technology. 🔗 Cryptocurrencies The blockchain journey starts […]

Introduction

We have seen many topics related to blockchain explaining different facets of the technology. This article is an attempt to put together the main aspects of the technology and how it has shaped up so far from the invention of bitcoin as the first application of blockchain technology.

🔗 Cryptocurrencies

The blockchain journey starts with cryptocurrencies. The blockchain technology journey started with the bitcoin platform. The coin is the first cryptocurrency ever, and it changed the course of the finance industry for good. Cryptocurrencies include the properties of cryptography, which result in the property of immutability.

Peer-to-peer networks lead to decentralization, which has become the need of the hour with ever-growing frauds. The cryptocurrency platforms use different consensus algorithms like Proof of Work, Proof of Stake, Delegated Proof of Stake, Proof of Burn, etc., which overcome Byzantine Fault Tolerance issues. People who maintain the network and confirm the transactions are incentivized using the local currency of the platform.

🔗 Cryptocurrencies with enhanced privacy features

Blockchains being transparent, it is easy to find the transactions done by different users in the platform. Hence a few platforms have enhanced privacy features so that the transactions made are not traceable. Coins from the Cryptonote family are a good example. Monero is an excellent example from cryptonote, which uses ring signatures, which obscures the sender and receiver’s address. The amount is also restricted by default.

🔗 Different types of Blockchains

While cryptocurrency platforms have a protocol that they should be open and permissible, it is not a hard and fast rule for blockchain technology. We have permissioned ledgers, which are also called private blockchains. An excellent example of private blockchains is enterprise blockchains like hyperledger platforms.

We also have permissionless ledgers, which are public blockchains. Good examples of permissionless are cryptocurrency platforms. We have hybrid platforms as well, which are a mix of public and private, leveraging the properties of both the platforms wherever required.

🔗 Applications of blockchain other than cryptocurrency

Blockchain technology has made its way to almost all the fields. Healthcare, supply chain, agriculture, energy trading, valuable goods/diamond digitization, shipping industry, trade finance, music, publications, art, gaming, etc. Blockchain being a niche technology, the adoption is still low, but the recent surveys across the industries only prove that they have started implementing the technology or looking to implement at the moment.

🔗 Non-crypto applications on top of cryptocurrency platforms

Ethereum has many DAPPs developed and operating on its platform, but we cannot say that these applications run on cryptocurrency applications. Ethereum is a broad platform with a multitude of smart contracts operating on them serving different purposes. There are applications on the top of the bitcoin platform which convey messages. Protocols like Counterparty, Factum, Colored Coins allows the creation of tokens to denote something with a fraction of bitcoin value.

🔗 Projects to tackle scalability issues

The main drawback of blockchain platforms is scalability, and many projects have been developed to address the same. Segwit, segregation of witness aims to remove the signature from the main block and store it somewhere else to increase the block’s space for more transactions.

We have sidechains that intend to transfer some of the workloads to an adjacent chain, called sidechain, which may or may not run on the same consensus algorithm but are equally secured. The hacking of the main chain doesn’t affect the side chain and vice versa. The sidechains are used to test innovations and implement smart contracts if they are not feasible to run on the leading network.

Conclusion

These are some of the facets to show how blockchain as a technology has grown to address the drawbacks from one stage to another. Many have speculated that the technology is not very much useful and is overhyped. But with all the developments since its inception and all the money being poured into the technology, we can only say that it is here to stay and improve a lot and prove itself for time and again.

Categories
Crypto Guides

Brief Introduction To The Revolutionary ‘Neo’ Blockchain

Introduction

Introduction

Introduction

Neo is an open-source, decentralized blockchain platform founded in 2014 by Da HongFei and Erik Zhang. These are the same duo who started Shanghai-based blockchain R&D company’ OnChain.’ Neo is often known as Ethereum of China due to its similarities, but the project has its own set of goals, which we will be looking further in this article.

Neo is formerly known as Antshares, and the rebranding happened in 2017. Since the rebranding, the company’s motive is to achieve a smart economy using blockchain technology and an essential feature of blockchain smart contracts to issue and manage digitized assets.

Neo wants to achieve a smart economy by giving digital identity to digitize assets and further use automation in the management of digital assets using smart contracts and henceforth achieving a smart economy using a distributed network.

Digital Assets + Digital Identity + Smart Contracts = Smart Economy.

Let us look into the three components that make up the smart economy in detail below:

Digital Assets

Digital Assets are anything that exists in a binary format and with a right to use. The right to use property is essential for a digital asset to exist. Any asset that can be stored digitally can be said as a digital asset. Some examples of digital assets include logos, images, illustrations, presentations, spreadsheets, etc. Assets can be easily digitized on the neo platform is a transparent, trustworthy, and auditable manner. The Neo platform allows the linking of a physical asset with a digital avatar using digital identity, which is valid by law. Thus, the platform protects the assets.

Two forms of digital assets

Global Assets: These are assets that are recognized by all smart contracts and clients.

Contract Assets: These are assets that are only recognized by specific smart contracts and cannot be used in other contracts

Digital Identity

Identity can be defined as a set of attributes that relate to an entity. Neo enables the creation of identity information of individuals, organizations, and entities in an electronic form, thus making it digital. It does this by verifying identity using fingerprints, facial recognition, voice recognition, and SMS. For the smooth functioning of digital assets, digital identity is essential. Neo uses X.509 digital identity standard, which is a widely accepted digital issuance model.

Smart Contracts

Smart contracts are any piece of self-execution code when a predefined specific set of instructions are met. Smart contracts are immutable and should be able to run on multiple nodes without compromising its integrity. Neo requires three essential features for smart contracts; they are deterministic, terminable, and isolated. Smart contracts can be codes in any mainstream coding language like C#, Java, Go.

Key Characteristics of Neo

🔗 Neo uses dBFT, Delegated Byzantine Fault tolerance model for consensus mechanism. In dBFT consensus, nodes are chosen by Neo holders to generate blocks and validate the transactions. In turn, they have to hold certain Neo tokens as a threshold and maintain some performance requirements.

🔗 Neo’s transaction speeds are considered to be one of the highest among the available with 1000 TPS. High transactions per second lead to centralization by only a few users mining and validating the transactions.

🔗 The platform supports all the mainstream coding languages for smart contracts, which helps prevent developers from learning new languages to work on the platform.

Neo has two local tokens, Neo and Gas. Neo is used to create blocks and manage the network while Gas is the fuel that powers transactions in the Neo system.

Many Governments across the world are trying to incorporate blockchain functionalities into the day to day activities of the running of the government to achieve a smart economy. Neo, with its faster transaction speeds and with its core fundamentals, enable the goal to accomplish in a much quicker fashion.

Categories
Crypto Guides

What’s Stopping Blockchain’s Mass Adoption?

Introduction

Introduction

Introduction

Blockchain technology came into the picture with the advent of cryptocurrencies. Since the value of cryptocurrencies is increasing exponentially day by day, people have started exploring its base technology, which is Blockchain. Blockchain has a lot of use cases in various industries say Supply chain, healthcare, agriculture, energy, data storage. In spite of all the use cases and numerous numbers of projects, consortiums in action today still the technology is considered to be nascent. Any technology takes time to reach masses, but Blockchain has certain hindrances that are stopping it from mass adoption. Let’s see some of them below.

No Universal Use Case

People often compare Blockchain as a new age internet. Just as the Internet changed the world forever, Blockchain is considered to do the same in the digital world. The Internet was created to provide information worldwide with the worldwide web. It created an industry for itself and reigned it. When it comes to Blockchain, it doesn’t have an industry of its own. It surely promises enough to revolutionize most of the existing sectors, but if there were one industry of its own, then the adoption and results would have been very promising. The combination of next-generation technologies, Artificial intelligence, machine learning, Blockchain, and the Internet of things may create an industry of its own that could be revolutionary.

Complicated Usage

The technology is quite complicated to use provided its secure nature. To perform a transaction in the bitcoin network, there should be an address with a string of numbers, wallets, transaction time, transaction fees, and a lot of stuff. All this terminology is pretty new to a novice user and finds it pretty challenging to use. Mass adoption will be possible only if we educate people enough. Most of the people know about Blockchain only through cryptocurrencies, and that notion should change. People should understand that Blockchain is much more than just cryptocurrencies.

Scalability

One of the significant issues with mass adoption is scalability, i.e., the number of transactions per second (TPS). When we take cryptocurrencies, the original bitcoin blockchain processed only 7 TPS. As the adoption of cryptocurrencies increased, processing time and transaction fees increased drastically, which will discourage people from using cryptocurrencies. Visa/Mastercard supports 24000 TPS, which is used worldwide and is very reliable. Even though some platforms are claiming 40000 TPS, we should check whether they are safe enough or not.

Standardization of Smart Contracts

Smart contracts have received popularity, and many enterprises have started using the same for their business needs. But there is no standardization, and there are a lot of vulnerabilities when it comes to smart contracts. The code is not standard. There is a scope for a lot of vulnerabilities. Hence if certain standards are established like formal verification of contracts to check vulnerabilities, the security of the system increases more.

Energy Consumption Issues

It is a well-known fact that proof of work, which is mainly used in bitcoin blockchain as of today, consumes a lot of energy. Environmentalists throughout the world are entirely against it. Hence the usage of energy friendly consensus algorithms like proof of stake should be used if mass adoption is to be made. Recently Ethereum has shifted to proof of stake from proof of work, which is a welcome move.

Regulation by Governments

Finally, governments should agree or accept the trade, registrations, or any legal matter of the sort to be done in blockchain platforms. As per the government rules, if certain transactions should be done only on paper, then it is not possible to use Blockchain. Governments across the world are at least trying to regularize cryptocurrency, considering the widespread usage. Hence, technology use in other aspects should also be considered.

These are some of the reasons that are holding back the mass adoption of this amazing technology. It is important to note that there is a lot of research and development being done in this space to overcome the above-mentioned hurdles.

Categories
Cryptocurrencies

Blockchain Operating Systems: Everything you’ll ever need to know

The days when blockchain was only associated with Bitcoin seem to be behind us now. Blockchain technology is currently being explored for all manner of applications. We’re currently talking about blockchain operating systems as the next blockchain trend.

The days when blockchain was only associated with Bitcoin seem to be behind us now. Blockchain technology is currently being explored for all manner of applications. We’re currently talking about blockchain operating systems as the next blockchain trend.

The days when blockchain was only associated with Bitcoin seem to be behind us now. Blockchain technology is currently being explored for all manner of applications. We’re currently talking about blockchain operating systems as the next blockchain trend.

A blockchain operating system is one that employs blockchain tech as the support in the background. Think of your Android smartphone or Windows PC. These devices operate on the basis of a supporting system in the background, with all the commands being executed on the surface. A blockchain OS works by capturing all commands locally, but with the authenticating, execution, and recording of the commands happening on the blockchain.

Blockchain operating systems are still very much in the nascent stage, and a quick search through the internet reveals several projects are hoping to claim the title of “the world’s first blockchain operating system.” However, most of these projects are not clear on what solution they provide, while others offer a product that’s so far from the concept.

Having said that, we were able to pin down two blockchain operating systems that are up and running, while another is still in beta, but shows strong promise. Let’s look at those projects right after exploring how a blockchain operating system works.  

How a Blockchain Operating System Works

A blockchain works pretty much like a transaction processing engine. Whether processing a payment, tracking the shipment from the warehouse to your doorstep, blockchain applications are all about authenticating, recording, and processing transactions. It’s the same way that any operating system works – commands (transactions) are issued via mouse clicks or screen taps, and the user performs all tasks on the device.  This is the same concept that blockchain operating systems are based on – with them being viewed as more efficient than traditional operating systems.

Examples of Blockchain Operating Systems

ConsenSys Codefi

ConsenSys Codefi is a blockchain operating system that’s an offshoot of ConsenSys, a blockchain company that’s been in existence since2014.

In a September 2019 release statement, the project describes itself as “a product suite built for the next generation of commerce and finance…utilizing blockchain technology to optimize business processes and payments, digitize financial instruments, and build a customized decentralized applications.”

The Codefi platform is built atop Ethereum and aims to help everyone – from entrepreneurs to the banking system, decentralized networks and developers – benefit from the blockchain technology revolution. Through Codefi, organizations and individuals can digitize processes and assets ranging from equities to loans to real estate.

Its product suite comprises four products:

  • Codefi Assets: A platform to create, issue and manage digital assets on public or permissioned networks
  • Codefi Networks: A collection of tools to empower individuals to utilize crypto
  • Codefi Payments: A platform with a single dashboard in which individuals can interact and transact with cryptocurrency
  • Codefi Data: An engine for managing data, analytics, and risk for cryptocurrency and blockchain networks

LibertyOS

LibertyOS calls itself the “world’s first blockchain operating system.”

A look through its landing page shows the project is still in beta and is still asking for people to invest in the project.

It has a native token, the LIB token, through which advertisers can buy ad-space, and users can earn money through watching those ads – in a safe, clean and spam-free environment. Through this model, LibertyOS hopes to be self-sustaining.

The LibertyOS platform intends to be big on privacy and security, even incorporating a TOR browser. User behavior will not be tracked or recorded on the platform.

The team behind LibertyOS has combined skill and experience from industry leaders such as Microsoft, Google, Amazon, and IBM and education from top universities such as UC Berkeley, Stanford, and Harvard.

Nynja Virtual Operating System

Hong Kong-based NYNJA Group Ltd. has collaborated with Amgoo smartphone manufacturers to distribute its blockchain-based virtual operating system on the company’s phones. The vOS has a communications layer supporting voice, text, and video conferencing tools, alongside project management, e-commerce, and smart contract features, as well as developer tools and business solutions.

On the NYNJA platform is also a multi-currency wallet that supports Bitcoin, Ethereum, and all ERC-20 tokens. Individuals can also exchange digital goods like music, templates, photos, code, and services like translation, design, consulting, and so on. The NYNJA marketplace works very much like the Uber model – you can get a pre-qualified professional to work instantly on your project at the touch of a button.

Final Thoughts

With blockchain operating systems, users will have all the advantages of blockchain: security, privacy, decentralized apps, and so on – right on their computers and even mobile phones.

As of early 2020, Blockchain operating system is still a very young technology. It may take a few years before we see fully-fledged blockchain operating systems. After all, computer operating systems took decades before they became mature, functional operating systems. Bitcoin itself took five years before seeing any transaction, and yet it has spawned an entire unstoppable industry. What’s truly certain is that we’re going to be seeing many exciting blockchain operating systems in the future.

Categories
Crypto Guides

Hyperledger Technology – The Enterprise Blockchain Solution

Introduction

Introduction

Introduction

Blockchain is proving to be ubiquitous in a short period from its invention, with the first significant application being a cryptocurrency. Just like how we use HTML while browsing the internet today, blockchain is going to be the hidden layer in many applications, soon making users not even know that blockchain is implemented in the software we are using. Hyperledger technology is an open-source umbrella project of different blockchain platforms and related tools developed by the Linux Foundation to address enterprise-level issues with blockchain technology.

Since blockchain is the underlying technology of the Hyperledger project, it has been made open source so that anyone can contribute to the code, thus making the development faster to meet the enterprise-grade requirements. IBM, Intel, and SAP Ariba are other significant contributors to the Hyperledger project. There are different platforms available in Hyperledger Technology, prominent ones being Hyperledger Fabric, Hyperledger Sawtooth, and Hyperledger Indy. Let us have a look at these platforms in detail below:

🧬 Hyperledger Fabric

Hyperledger Fabric is the first project proposed to Linux’s Hyperledger project, where IBM has made a significant contribution. This platform is best suitable for healthcare, agriculture, manufacturing, and capital markets. The Fabric project can bring transparency and clarity to the real world. Tuna fish is a 40-billion-dollar market plagued with a lot of illegal activities right from the source to the consumer plate.

Using the Hyperledger Fabric project ‘Supply Chain of Tuna fish’, we can track each part of the process. While there will be many actors playing their role in the network, not every actor is know about the entire process. Only the fisher and say the owner of the restaurant, which uses the tuna, will be updated with the whole process as requires so that they can transact privately. Hyperledger Fabric V2.0 is the latest standard release in Jan 2020.

🧬 Hyperledger Sawtooth

Intel made most of the contributions to the Hyperledger Sawtooth project. The Sawtooth platform supports the dynamic change of the consensus algorithm, which is very helpful at the enterprise level. This enables the enterprises and consortia to make transactions, consensus algorithms that support their business needs.

Also, another unique characteristic of Sawtooth is that it supports both permissioned and permissionless blockchain networks. Like Fabric, Sawtooth is also used in the Supply chain. Sawtooth Marketplace is used for trading digital assets in specified amounts, whereas Sawtooth Private UTXO is used for digital asset creation and trading. Version 1.2 is the latest release of Sawtooth.

🧬 Hyperledger Indy

Hyperledger Indy is a unique platform that stores digital identities of different blockchains and distributed ledgers. The stored digital identities are interoperable across various domains and different blockchains. It indeed acts as a decentralized repository of identities, which drastically helps in reducing identity thefts if used across the globe.

To quickly deploy these platforms at the enterprise level, different tools are developed as well where Hyperledger composer is the one used to deploy Hyperledger Fabric, but it is almost dead now. Hyperledger Caliper, Cello, Explorer, Quilt are some other tools that are used.

Conclusion

Hyperledger, as an enterprise-grade platform for blockchain implementations in various industries, is encouraging the adaptation of blockchain widely. This being an opensource project, many people are contributing to the source code, which is, in turn, moderated by the governance board and approves the changes in a very efficient and transparent way. The Hyperledger umbrella has many projects in the pipeline, which will bring more efficiency in the business, thus saving millions in cost.

Categories
Crypto Guides

Lightning Network – A Potential Solution To Blockchain Scalability Issue?

Introduction

Introduction

Introduction

Cryptocurrencies that were in the boom a few years back are still in the business, and it is believed that their decentralized blockchain technology will keep them alive for a very long time.

The transactions on credit cards and debit cards are different from that of transactions on cryptocurrencies. VISA (a payment provider) processes about 4,000 transactions per second. In fact, it has a capacity of 65,000 transactions to process per second. But, a typical Bitcoin Blockchain, on the other hand, can process only up to seven transactions per second with a block size of 2MB. Hence, there is a clear issue of scalability. Also, the Bitcoin transaction costs are pretty high when compared to other traditional transaction methods. Thus, to solve this issue, the ‘Lightning Network’ technology came into existence.

What is the Lightning Network technology, and why do we need it?

The Lightning Network technology is a system that is used to process a transaction instantly. This technology was developed to send and receive payments instantly without any hassle and also to reduce transaction fees. In the next section, let’s see the backend of this technology.

Working of the Lighting Network Technology

⚡ A multi-signature wallet with some amount of Bitcoins is set up either by the sender or the receiver.

⚡ The public blockchain network keeps a record of the user’s wallet address and the balance sheet* (smart contract). This process is referred to as the payment channel.

*Balance sheet – An agreement that proves how much Bitcoin belongs to whom.

⚡ When the payment channel is wholly set, the parties can make any number of transactions without the involvement of the blockchain network.

⚡ On each transaction, the parties update their multi-signature wallet to keep track of how many Bitcoins were sent to whom.

⚡ So, basically, the balance sheet is the one that is always updated and not the blockchain network. A copy of this balance sheet is maintained by both parties.

⚡ Finally, when all the transactions are completed, the payment channel is closed. The most recent balance sheet is presented to the blockchain network for verification. And when the transaction is confirmed, the users receive their share of Bitcoins into their wallets.

The Interconnected Lightning Network

A great feature of the Lightning Network is the interconnection in the network. Let us understand this with an example. For instance, let’s say there is a payment channel between P1 and P2. And there is P3 who has a payment channel with P2. Now, if P3 wants to transact with P1, a separate channel need not be created between P3 and P1. P3 can send the coins to P2, and P2 can, in turn, send it to P1 and complete the transaction. Hence, making the Lightning Network interconnected.

The Present and Future

Presently, the proof-of-concept is being implemented on the Bitcoin Testnet. And an experimental implementation is being carried on the Bitcoin Mainnet. In fact, this technology has come into the real world in a few countries, and it ought to grow in the coming years. That’s about Lightning Network and its working. Let us know if you have any questions in the comments below. Cheers!

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
Blockchain and DLT

Avoid the Hype Surrounding Blockchain and Consider Alternatives

For some people, the words blockchain and bitcoin (BTC) are so thoroughly intertwined that the mention of one brings to mind the other. This association is almost natural, considering that

For some people, the words blockchain and bitcoin (BTC) are so thoroughly intertwined that the mention of one brings to mind the other. This association is almost natural, considering that

For some people, the words blockchain and bitcoin (BTC) are so thoroughly intertwined that the mention of one brings to mind the other. This association is almost natural, considering that it’s the BTC that gave prominence to the term. Yet the fact is that blockchain technology had been researched many years before the advent of bitcoin in 2009. 

The enthusiasm with which the blockchain technology has been received by the business world is easy to appreciate. First, bitcoin has enjoyed great success over the years and, though other cryptocurrencies could only be playing catch up, they too have something to show for their efforts, and this success is attributed to the adoption of the blockchain technology. Secondly, it has been established that the blockchain technology can be adopted in other financial institutions and, in fact, can be greatly useful in many diverse industries.

Proponents of the blockchain technology give the impression that it is infallible and totally secure and that it would provide safeguards against many problems that bedevil many industries today. Its famed data storage potential could, therefore, be exploited by players in many industries, including property rights records, healthcare services, legal services, and supply chain services, among many others.

Blockchain’s Main Selling Points

There are many things that make blockchain attractive to the business community, and one of the things that make business owners enthuse over it is the fact that it allows for the creation of immutable records which can be relied on in the event of a contractual dispute. Such a system, therefore, makes it possible for parties in a dispute to solve their disputes in a transparent and amicable manner without having to involve any third parties. Other people find the technology attractive because data stored there is decentralized, which some people consider a huge positive because such data cannot be manipulated, and this is a further aid to transparency. 

Counter Arguments

While blockchain proponents find the technology attractive for the above reasons, those opposed to it find fertile grounds to counter it for the very same reasons. First, where decentralization is supposed to be positive, most organizations will be averse to it because it makes the company’s private records available to the prying eyes of people from whom it should be kept away. In this category could be people you keep your company’s secrets away from, such as your competitors. 

Secondly, creating and maintaining the immutable records comes at an astronomical cost. Blockchains do not only consume incredible amounts of energy but do so performing simple but heavily duplicated tasks. Contrary to what people have been made to believe, a blockchain is not a distributed system in the true sense of the word. The impression that is created when we hear of a distributed computing system is that all the computers in the system could be performing different operations. The converse, however, is true – whether you have a thousand or even ten million computers in the system, they all perform the same identical task. What then, you might wonder, do you stand to gain by using such a huge capital outlay on machines that are only duplicating each other’s efforts? This is the kind of expense that many businesses cannot afford, and before joining the blockchain bandwagon, it’d be prudent to explore possible alternatives.

Possible and Easy Alternatives to Blockchain

Perhaps the first thing that every prudent business owner needs to think about before employing blockchain technology is its return on investment (ROI). The prohibitive costs we have alluded to above and the redundancy of the computers used means that getting an ROI could prove difficult. Yet there’s no reason why business owners should be in a hurry to invest in technology when there are tried and tested affordable alternatives available. Here are a few:

☑️Using a Centralized Database

Despite the hype surrounding decentralization, companies have nothing to lose (and actually have a lot to gain) by maintaining centralized databases. Such databases do not only maintain privacy but are easier to maintain and are affordable as they do not need to hold duplicate info, as is the case with a blockchain.

☑️Using a Backup Service

Contrary to what blockchain proponents might argue, there’s very little persuasion to back data up on multiple devices at the aforesaid prohibitive expenses. A company that desires to back its data up can do so by simply contracting one of the many contractors providing such services at very reasonable prices. Backup services have been around for some time, and we know they can be relied upon not only to store your data affordably but also safely. By encrypting your data before handing it over to the service providers, you are guaranteed that your company secrets are safe. And saying that such services are affordable is a huge understatement – the cost of storage with a backup service is completely insignificant when compared to the costs on a blockchain.

☑️Using a Distributed Ledger

An easy way to enjoy the benefits that people crave for when investing in blockchain technology is by investing in distributed ledgers. Unlike blockchains, distributed ledgers do not have scalability issues, yet they, too, are decentralized. On top of being transparent, such ledgers offer great security against the threats of cyber attacks as they could be distributed across various sites and locations. Where a blockchain consists of a chain of blocks, distributed ledgers never need to use such a chain, and this is what makes them capable of processing vast amounts of data in very little time and would, therefore, be a more meaningful substitute for blockchains.

Conclusion

Finally, are we arguing that companies should completely keep away from blockchain technology? Of course not! On the contrary, there are good enough reasons why every business owner should keep an eye out on the goings-on in the blockchain industry. By educating themselves on the latest trends and comparing their company needs with what the new technology has to offer, business owners will be in a great position to find out how their businesses could benefit from the technology. Ignoring such developments will ultimately mean that a company might fail to take advantage of them at the opportune time. What every company owner, however, needs to be aware of is that there’s too much hype surrounding the blockchain word, and most of it is driven by ignorance. Given that there are very serious financial implications behind the implementation of this technology, it’d be a grave mistake to invest in it simply to be seen “to be with it.” As with many other forms of technology, there are affordable, appropriate, and more practical options, and that’s what you might consider using.

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
Blockchain and DLT

What Problems Do Cryptocurrencies and blockchain Solve?

Most people have heard the term cryptocurrency. But while some are confused by it, most have no inkling about what it means, or what it’s all about.

Cryptocurrency is an

Most people have heard the term cryptocurrency. But while some are confused by it, most have no inkling about what it means, or what it’s all about.

Cryptocurrency is an

Most people have heard the term cryptocurrency. But while some are confused by it, most have no inkling about what it means, or what it’s all about.

Cryptocurrency is an internet-based digital currency that utilizes cryptography to secure and facilitate transactions. Cryptocurrencies, sometimes simply called cryptos, leverage a technology known as blockchain – which lends them features like decentralization, immutability, impermeable security, and transparency.

Decentralization means that all participants in the network have equal power to approve transactions without the need for a central authority. Their high degree of security is enabled by the fact that transactions are broadcast across thousands of nodes, which must confirm any change to the system. This makes it impossible for malicious parties to hack the system.

More and more cryptos are entering the space, each with improvement in certain aspects of their predecessor. But is there actual value beyond cryptocurrencies being a means of exchange? Is the technology that powers cryptos applicable outside the world of finance? In this article, we explore the different challenges in our world that cryptocurrency is solving or has the potential to solve – from borderless money transfers to real estate, to centralization, to data privacy, and more.

Intermediation Fees

Cryptocurrencies solve the problem of intermediation charges. In the current money transfer business, there are so many intermediaries involved in the process – all of which contribute to excessive amounts of fees for customers. Also, the current options for sending money are not only expensive but also take days. 

Cryptocurrency has the potential to solve these problems and is already being used in several applications to this end. Take BitPesa, a service currently operating in Nigeria, Kenya, Uganda, Tanzania, Senegal, and the Democratic Republic of Congo. This service uses a blockchain-based system to send money within a day, as opposed to the traditional methods which take days and at a much cheaper rate (1% to 3% cost of transactions).

Another case is the Monetha payment system – which is based on the Ethereum cryptocurrency protocol. The system can carry out transactions five times cheaper and 10,000 faster than conventional systems. 

 Centralization

 One of the most exciting aspects of the technology underlying cryptocurrency is that it’s entirely decentralized – meaning it is not dependent on any authority for control. This essentially removes the need for a central authority while preventing one entity from having too much power over the system. 

Centralized systems have certain inherent weaknesses that make them ineffective in the long run. Firstly, as it has a single point of data control, a centralized system is more susceptible to malicious attacks. Centralized systems are also prone to price manipulation – whose results benefit only those at the top.

Centralization also raises the question of privacy. As digitization becomes the norm in the average person’s life, so is the concern for the safety of their data. The sheer volumes of people’s private data associated with centralized systems, especially with their vulnerability to bad actors, is not a favorable idea for the average person. 

This is where cryptocurrency comes to the rescue. A decentralized structure levels the field for all participants in the network such that no one entity has too much power to manipulate the system. A decentralized, peer to peer network is also secure. This is enabled by the fact that for hackers to successfully gain access to the system, they would have to hack more than half the nodes in the network, which is nearly impossible. 

Privacy

Traditional payment models like banks leave a trace of financial transactions. With cryptocurrency, it’s different. Cryptocurrencies are built with privacy and security that allow you to conceal your identity and transactions. Some like Dash, Monero, Zcash, Verge, Bytecoin, etc. have even been created to provide complete anonymity. 

There are several methods that cryptocurrencies use to conceal user information. Some use high-level encryption tools like The Invisible Internet Project and Tor, while others employ cryptography methods that provide proof of knowledge – without revealing that knowledge.

Double Spending 

Cryptocurrencies also solve the issue of double-spending. Double spending, as the term suggests, is spending the same money more than once – a potential flaw with digital currencies. With physical cash, it’s impossible to spend the same money twice. For example, you go to the ice cream stand and ask for an ice cream cone worth 1 dollar. You pay in cash and hand over the dollar to the cashier. As soon as you hand over the dollar, you can’t spend it again.  

On the other hand, a transaction with digital currency involves broadcasting to all the ‘nodes’ in the network. These nodes have to receive and confirm the transaction, and this takes time. This is where the concern of duplication arises. How can we be sure someone will not copy the transaction and rebroadcast it before it has been received and confirmed?

It’s hard to verify the real owner of a digital token – considering it can be cloned, duplicated, copied, or shared infinitely. Simply put, it’s difficult to confirm if a token has only been spent once.

Cryptocurrency solves this by ensuring users cannot double-spend coins. Blockchain – the technology underlying the currency, has a powerful mechanism that enables all nodes in the network to be aware of every transaction. And since the nodes show the history of the order in which they received a transaction, any attempts to double-spend are pointless.

Unbanked Populations 

Currently, 1.7 billion worldwide are unbanked – without access to financial services like insurance, investment, loans, money transfers, or deposit accounts. The lack of access to financial services makes it impossible for these people to escape the vortex of poverty. Meanwhile, traditional financial institutions like banks do not have the requisite structure to cater to this market segment without incurring losses. 

Blockchain-based solutions offer ways to provide financial services and still make a profit. They eliminate the need for expensive brick and mortar banking infrastructures. 

For example, blockchain technology can decrease the costs of providing microfinancing services. They also remove the need for the manual, multiple verifications that are associated with transferring money to emerging markets. This is made possible by smart contracts that radically cut costs and speed up local and international transfers. 

An example of crypto-based solutions changing lives by providing banking services happens in Venezuela. The collapse of the country’s Venezuela Bolivar currency has resulted in people using cryptocurrencies as an economic lifeline, making them more resilient in an unstable economy. 

Food Fraud

Cryptocurrency based technology also helps to prevent food fraud. One high profile case of food fraud was the horsemeat scandal in parts of Europe when meat advertised as beef in supermarkets was discovered to be horsemeat. 

Food fraud can occur in several forms – including adulteration, which is substituting an ingredient with a cheaper one, and misrepresentation – which includes fashioning a product as organic when it isn’t. These fraudulent practices not only pose health risks to consumers but also cost the food industry billions of dollars each year.  

While there are systems in place to curb food fraud, they aren’t completely tamper-proof, and it’s still very possible to play the system. Blockchain technology can be used to design systems that can track and authenticate every step of the food supply chain. This means that every party that handles food: from the farmer to the manufacturer to the store to the kitchen to your plate, becomes a block in the blockchain. The thing with blockchain is that it’s completely transparent, and its stringent verification process makes it impossible to misrepresent or forge a transaction. 

An example of cryptocurrency in action for food safety is Vietnam-based TE-FOOD, which has created a system in which every step of food production can be traced. Using the blockchain protocol, TE-FOOD provides a transparent and immutable (unchangeable) environment to track thousands of pigs, chickens, and eggs, increasing trust in the food ecosystem. 

Contract Conflicts

Traditional contracts are often the source of many business and legal conflicts arising from miscommunication, poor drafting, etc. It’s also a process that involves a coterie of lawyers, time-consuming negotiations, and a multitude of drafting phases. 

Enter smart contracts, the crypto-based technology that digitally facilitates, verifies, and enforces contract negotiations and performance. This type of contract enables trusted business agreements to happen without the need for third parties, a central authority, or lawyers.

Smart contracts work by self-execution of the negotiations between the parties. The contract is written in lines of code, after which both the code and the agreement are distributed across a blockchain network. This code controls the execution of the contract, and agreements are trackable and irreversible.

The decentralization and transparency of blockchain eliminate the need for an intermediary – saving time, money, and conflict. Besides, the technology is faster, cheaper, and secure, allowing for more reliable contracting. Where traditional contracts need long-winded verification procedures, smart contracts proceed with the utmost speed and efficiency. They set the stage for specific outcomes, removing any confusion or the potential of protracted litigation battles.

Election Fraud

In an era when the integrity of elections is increasingly under the microscope, blockchain can provide solutions for transparent and fair elections. Candidates who lose elections may launch legal battles that can delay the result and hold a country hostage. 

The blockchain digital ledger intrinsically creates an audit trail that not only simplifies the verification process but also minimizes the cost for expensive election apparatus. Furthermore, the process is wholly transparent so that anyone and everyone can verify the integrity of the results.

Crypto technology further provides an irrefutable record of the votes cast – eliminating the possibility for election rigging. Moreover, voters can cast their votes from the comfort of their mobile phones, enabling them to have a say in the process no matter their location.

Internet of Things 

The Internet of Things (IoT) is a concept of creating a network of devices with the internet and each other, including vehicles, home appliances, communication devices, wearable devices, and pretty much everything you can think of. The idea is to make the things we interact with daily to be more valuable to us. For example, your coffee maker monitoring when you wake up and then making coffee, or your shower heating 20 minutes before you reach home. 

The Internet of Things promises increased productivity and enhanced asset utilization to improve our modern lifestyles. But a significant impediment to the adoption of IoT has been the closed ecosystem (a system in which one or two people control the system), which some manufacturers stipulate as a requirement. This locks out other vendors from availing products to consumers, while also being denied a choice to compare and use hardware from different manufacturers. 

Also, IoT raises a lot of security and data privacy concerns, seeing as these devices would be communicating with external networks, rendering them vulnerable to hackers. Cases of connected refrigerators or automobiles being hacked are well documented. Also, IoT devices contain enormous amounts of data, which can lead to massive security breaches.

Blockchain technology can help solve these problems by:  

  1. Decentralizing the IoT to enable devices to connect directly; without manufacturers locking consumers into any particular ecosystem. 
  2. Decentralizing the IoT to prevent attacks – as a hacker would have to target all nodes on the network to obtain data – which is highly improbable   

Lack of an Identity 

Currently, 1 billion people worldwide do not have an identity. A large fraction of this number is refugees. When refugees are forced to flee their homes, many leave behind essential documents such as ID cards, birth certificates, and passports. Being able to prove one’s identity is critical because, without it, it’s difficult to access services that help begin a new life, local integration, or self-sufficiency – like a bank account, healthcare, a SIM card, etc. 

Cryptocurrency technology can come in useful in these contexts. The technology can host and transact infinite amounts of data on its publicly available ledger. Furthermore, identities on the network cannot be falsified, tampered with, and are time stamped.

Governments and charity organizations can use blockchain-based technology to issue digital identification to refugees, which would enable them to prove their identity and that of their loved ones and access financial services, healthcare, and education.

One example of blockchain improving refugee’s life is that of Bitnation, a startup that utilizes the technology to help refugees obtain digitally-enabled ID documents. By verifying a person’s social media presence and linking it to their social security number, passport, and other documents, he/she can prove their identity to the host government.

Arbitrary Asset Freezing

Cryptocurrencies can help citizens living in autocratic jurisdictions retain financial independence in contexts where governments unfairly freeze their bank accounts and assets. When people living in these countries run afoul of powerful individuals, their assets can be frozen or their attempt at transactions in local currency barred. 

Unlike fiat currencies (government-issued currencies), cryptocurrencies are immune from tyrannical whims. Crypto funds and transactions are stored in numerous nodes around the world, rendering government control infeasible. 

Real-Estate 

The cryptocurrency protocol can be used to solve many problems in the real estate industry, among which are fraud, high fees, price barriers, etc. 

Firstly, a cryptocurrency protocol can remove the need for paper-based record trails that are susceptible to manipulation and falsification. Blockchain transactions are tamper-proof and transparent, ensuring all parties transact fairly.   

Secondly, blockchain transactions are time-stamped – allowing for a party to prove without a doubt that a particular transaction took place at a specific date and time. The decentralized and transparent nature of blockchain also means everyone involved can know – and verify ownership details. 

Furthermore, blockchain-enabled smart contracts can help cut costs by eliminating the need for middlemen like banks, lawyers, guarantors, etc.

Blockchain can also enable tokenization (turning things into digital, tradable assets) such that even low-income buyers can own part of the property – while also allowing the seller to at least get a fraction of the total payment on the spot. 

Accountability in Nonprofits

Public trust in charities has dwindled in recent years due to cases of embezzlement and mismanagement coming to light. Blockchain technology can help these organizations achieve financial transparency.

Crypto coins such as AidCoin are designed for this very purpose: to allow transparent donations to legitimate charities. This way, donors can monitor where their money is going, and charities are forced to channel donations to the right purposes. 

An exciting use of this application is by the World Food Programme (WFP) to securely provide thousands of people with cash assistance. In Jordan, refugees can enter a store and simply look at an iris scanner, which then verifies their identity and then expends a food voucher. This system is based on Ethereum, a cryptocurrency.

Conclusion

These uses are just some of the numerous applications of cryptocurrency technology in solving problems in our everyday life. Across the food industry, finance, technology, and other sectors, exciting and innovative uses of cryptocurrency are being discovered every day. Also, more cryptos with real-world applications will keep budding if the current landscape is anything to go by.