Tag: Blockchain

Categories
Cryptocurrencies

Blockchain – Public, Distributed, Global Ledgers

You have probably already heard the term ‘Blockchain’ in the context of a new technological innovation. You would not be wrong to compare this advancement with other significant innovations such

You have probably already heard the term ‘Blockchain’ in the context of a new technological innovation. You would not be wrong to compare this advancement with other significant innovations such

You have probably already heard the term ‘Blockchain’ in the context of a new technological innovation. You would not be wrong to compare this advancement with other significant innovations such as the Internet because of its far and wide-reaching applications. What makes it so unique?

Consider an online Google document. When you create a document and share it with two other people, the original document remains, but everyone has access to it. The document is considered ‘decentralized’ since it can be accessed and modified by multiple people at the same time. The best part about such an online document is that everyone sees all the changes (and can even track them) when they are made, making it very transparent.

While blockchain is a tad more complicated technology than a Google doc, this analogy lays bare three vital features of blockchain:

☑️It is a digital record of events (transactions) that is distributed among many people. It is not copied or transferred copies.

☑️It is decentralized. This means that multiple individuals have real-time access to the asset and is not ‘owned’ or ‘controlled’ by a single entity or person.

☑️It is transparent. Being a ledger, all the people with access to it can trust the document since all the changes are preserved when made. 

So, what is blockchain?

Blockchain is best described as a distributed database. It is a storage technology where a digital ledger of transactions are stored in groups of transactions or sequence of blocks, chained together and distributed among many users in the network. This is where the term ‘blockchain’ originates.

Because blockchain is a way to keep records of items stored in millions of computers all over the world, it is essential to understand that it is not a device or currency. Think of it as an incorruptible ledger of transactions that are connected to each other such that one cannot be altered without requiring the alteration of all the other linked records.

Blockchain is undeniably an ingenious invention that is already conquering every aspect of modern human life – almost as much as electricity and the Internet did. This technology was the brainchild of one or a group of individuals known by the pseudonym Satoshi Nakamoto. To this day, the identity of Satoshi Nakamoto is still unknown.

Satoshi Nakamoto introduced blockchain to the world sometime in 2009 with the publication of the Bitcoin whitepaper. This innovation was largely inspired by the 2007/8 financial crisis, whose primary cause was the manipulation of the property market by financial banks. Bitcoin emerged as a currency alternative that would be free from manipulation, devaluation, taxation, or control by a central body. However, blockchain, the technology on which it runs, has since then evolved into something much more significant than just money and touching on almost every industry.

The humble beginnings of Blockchain

Contrary to what most people believe today, blockchain technology did not just arise out of nothingness with the publication of the Bitcoin whitepaper in 2008. Before it found its application in cryptocurrency, blockchain was a concept in computer science that had been around since 1979. In particular, it was theorized for use, in its primitive form, in the domains of data structures and cryptography.

With the invention of the hash tree by Ralph Merkle, patented as the Merkle tree in 1979, the first form of blockchain was already in practical use. Back then, the hash tree was used to handle and to verify data transferred between computer systems in peer-to-peer networks. The hash tree proved useful in validating data and ensuring the integrity of the data in the receiving system. This technology also ensured that false data was not transmitted and that users could prove the integrity of information shared using these early computers.

By 1991, the Merkle tree had evolved enough to create a chain of secured blocks of information. The series of data records, designed to be connected to previous blocks in the series, now contained a history of all the chains in the tree. With this addition, blockchain was born.

When Satoshi Nakamoto conceptualized the idea of a distributed blockchain that contained a secure history of all the data exchanged in the network, it gave rise to a world of possibilities that resulted in the invention of Bitcoin. What made this possible was that the security and transparency of transactions in the peer-to-peer network could be timestamped, and each transaction could be verified over the internet. The best part of the new technology was that it could be managed autonomously, and no single entity could claim absolute authority.

But what makes blockchain special?

Blockchain is a string of secured data that cannot be controlled by a single authority. The shared, immutable ledger that the connected chains of data forms has industry-disrupting capabilities for the simple reason that it is an ideal and practical democratized system.

While the information on this system is available for everyone to see and verify authenticity, it is almost impossible to alter, hence trusted. When blockchain is applied to any industry, it brings this nature of transparency with it, making it easy for countless individuals to be involved in it while maintaining accountability for every action or activity on the ledger.

Blockchain was first demonstrated to be practical and effective with the release of the Bitcoin Whitepaper, and it was quickly applied in digital currency. Soon after, the tech community found a lot many useful and practical uses of blockchain, and many more were theorized not so long later. One of the top features of blockchain that stood out almost immediately was that transactions carried out on the network carried no cost whatsoever. However, infrastructural investment was necessary to make it functional.

Benefits of global distributed ledgers

Consider the blocks of information on the blockchain as collections of data, much like records of financial accounts on a ledger. The chain, with all its benefits, is a very simple yet ingenious way to pass the data from one point to another in a secure and verifiable manner. The sender initiates the transaction, which is verified by hundreds, thousands, or even millions of computers that are part of the network.

When a block of transactions is verified, it is added to the chain and safely stored on the network, with a copy being stored on every computer on the network. The copy of the transaction will not only be unique in the record, but also in the history of records within the chain. This means that for a party on the network to alter or falsify the record, they would have to alter all the records in the chain sitting on all the computers on the network at the same time. This is almost impossible because it would take a lot of resources.

Bitcoin was a hugely successful and first virtual currency running on the oldest blockchain network because this format of storing information and conducting transactions could be trusted by all the parties in the network.

In summation, blockchain’s core benefits that make it ideal for use in cryptocurrency are:

☑️Efficiency and speed: Transactions on a blockchain can be completed much faster and more efficiently compared to the paper-heavy traditional processes that often involve a third-party. Considering that record keeping on a blockchain system is carried out on a single digital ledger available in real-time to all the peers in the network, clearing and settlement are super fast.

☑️Enhanced security: Before being recorded, transactions on a blockchain must be agreed upon aforehand. Once approved, transactions are encrypted and linked with previous and next transactions in a way that makes them tamper-proof. This is what makes blockchain ideal for use in any industry where the protection of sensitive data is crucial – from governance and financial services to healthcare and manufacturing.

☑️Great transparency: Since blockchain is essentially a digital ledger technology where all participants keep a copy of all ‘documentation,’ the data on it is not only alter-proof but also consistent and transparent. Data and transactions carried out in a transparent manner can be trusted by anyone who has access to it and can verify authenticity.

☑️Better traceability: Companies that deal in products that are manufactured and traded in complex supply chains often have a hard time tracing items in the market back to their origins to verify authenticity. With blockchain, each product can carry with it a history of transaction data that can go a long way in preventing fraud. To make this practical, manufacturers and distributors would need to record exchanges of the goods on a blockchain in such a way that an audit trail can show every stop and change of hand a product underwent.

☑️Lower costs of transactions: Every business needs to cut the costs of transactions as much as they can to increase their profits. Businesses that adopt distributed ledgers in their operations will need fewer third-parties and middlemen to make guarantees or carry out transactions since this technology builds trust between trading partners. They just need to trust the data on the blockchain to minimize the need to review every trading process or documentation.

The extent of blockchain disruption today

Make no mistake about this: blockchain is a very disruptive technology that is already revolutionizing how the world works – even if you do not ‘feel’ it yet. While you may have already heard of how it is shifting the way we use the internet and how we view money, the global economy is quickly adapting to inevitable takeover by the digitization of assets.

The fundamental shift from the present-day Internet of information to the age of distributed data as assets is a clear sign that the new global economy with no intermediaries is happening, and nobody – not even the biggest banks and multinational tech companies making money off data – can stop it.

Blockchain technology was originally developed to help solve the various economic challenges facing the financial industry. But it has proven that it can achieve much more.

It can be programmed to record and store virtually any other form of data in any industry.

As a result, we have seen the development of different types of Blockchain, each of which is aimed at helping solve more than just financial challenges. Ethereum, for instance, has smart contracts and many other applications, which we will explain later.

Categories
Cryptocurrencies

Consensus and Consensus Mechanisms

Cryptocurrencies operate on a blockchain – a decentralized peer-to-peer system with no centralized authority that makes decisions on behalf of the other participants. While this system eliminates arbitrary decision making

Cryptocurrencies operate on a blockchain – a decentralized peer-to-peer system with no centralized authority that makes decisions on behalf of the other participants. While this system eliminates arbitrary decision making

Cryptocurrencies operate on a blockchain – a decentralized peer-to-peer system with no centralized authority that makes decisions on behalf of the other participants. While this system eliminates arbitrary decision making and corruption, it still presents a problem. How will decisions be made? How will things get done?

For blockchain networks to make decisions, there is a need to come to a consensus. Blockchains use “consensus mechanisms” to secure the network and verify transactions. Consensus mechanisms are protocols that ensure all nodes (devices that support blockchains by validating and relaying transactions) on the chain are harmonized and can collectively approve and add transactions on the blockchain.

Characteristics of a Good Consensus Mechanism

In order to ensure a consensus mechanism is fair and reliable and achieves the function of a “consensus,” it must possess certain qualities, like being:

☑️Agreement Oriented: A consensus mechanism should elicit the highest level of agreement possible from the group

☑️Collaborative: Participants in the group should put the best interests of the group above everything else

☑️Cooperative: Decisions should be made to benefit the group as a whole rather than individuals

☑️Egalitarian: This means the system is fair – every single vote must carry equal weight. No one vote can be more important than the rest

☑️Inclusive: As many people as possible should feel like their vote counts and want to participate in the process, unlike a regular voting process where people are unmotivated to vote because they feel as if their vote won’t count in the long run

☑️Participatory: The consensus mechanism should be designed in a manner that everyone can participate in the process

Consensus Mechanisms Used In Cryptocurrencies

Ever since Bitcoin pioneered the proof of work mechanism, multiple other consensus models have been experimented with and adopted. Some of these mechanisms have been created to sidestep the energy-intensive aspect of proof of work. Others aim to achieve faster and more convenient transactions. With that, here are some of the most common consensus mechanisms used in cryptocurrencies today.  

1. Proof of Work

Proof of work (PoW) is the consensus mechanism used by Bitcoin, the pioneer cryptocurrency. It involves a process known as mining, which confirms transactions and adds new blocks to the chain. To do this, miners usually solve challenging computational puzzles. The first miner to solve the puzzle is the one to add a block and to receive a reward in the form of crypto coins. The computational puzzles have certain unique features. Let’s take a look:

  1. They are asymmetric, meaning they can take a long time to figure out the answer, but it’s very easy to verify if the answer is correct
  2. They are solved with a trial and error method, meaning the only way to solve is to guess and keep guessing 
  3. Their difficulty changes in response to the rate at which blocks are being mined. The quicker the blocks are added, the harder the puzzles become, and the reverse is true

PoW is very effective against fraud, as it makes it almost impossible to alter anything in the blockchain – and that is improbable as it would mean re-mining all successive blocks. Also, no one user can monopolize the process, since both the mining machines and the power required to run them are quite expensive. 

2. Proof of Stake

Proof of Stake (PoS) allows people to validate transactions according to their ‘stake’ – the coins they hold. This means that the more cryptocurrency one has, the more computational or mining power they have. 

PoS was designed as a cheaper alternative to Proof of Work, as the latter uses up excessive power and is therefore very costly. PoS addresses this issue by assigning mining power per the ownership of coins. Instead of using energy to solve difficult puzzles, a PoS miner mines percentage that corresponds with his/her ownership stake. For instance, if a miner owns 2% of the Ether available, they can only mine, theoretically, 2% of the blocks. 

3. Delegated Proof of Stake

This is a special type of PoS. This consensus mechanism is very fast and able to complete more transactions per second (TPS) than PoW and PoS. In a Delegated Proof of Stake (DPoS), crypto coin holders stake their coins to elect a certain number of delegates. The weight of a vote depends on the voter’s stake – e.g., if person A stakes 5 coins for a delegate and person B stakes 2 coins, A’s vote carries more weight than B’s vote. 

Now, these delegates have the power to produce more blocks on the network. Delegates who receive the most votes can create blocks, and be rewarded with coins or a percentage of transaction fees (as is the case with PoW and PoS). The vote is dynamic, so the top delegates can change anytime. Also, the number of delegates depends on the design of blockchain: either a fixed number or all delegates above a certain paygrade. 

 4. Proof of Capacity (PoC)

This is a consensus mechanism that allows miners to utilize empty space on their hard drive to mine crypto coins. It uses a process called plotting, in which solutions to puzzles are pre-stored on digital storages. Once a storage has been filled with solutions, it can participate in creating new blocks. 

The plotting process uses a very slow hash function called Shabal and can take days or weeks. The takeaway is, PoC is a game of space: the more hard drive capacity you have, the more solutions you can store, and the better your chances of mining the next block. Burst coin is the first and only cryptocurrency to use PoC.

5. Proof of Elapsed Time (POET)

Proof of elapsed time is a mechanism that uses a sort of lottery system to choose block producers. Every single node has a fair chance at winning. The idea is to randomly determine who gets to create a new block, based on the time they have waited. 

A POET algorithm works as follows. Each participating node is supposed to wait for a randomly assigned period of time. The node whose designated waiting time ends first gets to create the next block. After this node “wakes up,” they commit to add a new block and then broadcasts the information to the whole network. The process then repeats itself. 

The POET consensus mechanism can only work under three conditions. First, there must be a system in place that ensures no one single person can run multiple nodes and second, that the waiting time is indeed random and third, that the winner actually finishes their waiting time. 

6. Proof of Burn

The proof of burn mechanism works by allowing miners to “burn” or “destroy” the cryptocurrency tokens, which allows them to create blocks in proportion to the coins burnt. 

The idea is that miners should show proof they have burned some coins – that is, sent them to an address where they can’t be spent. The process, unlike proof of work, for example, does not consume too many resources, and it also enables the network to remain quick and agile. Miners can either burn the native currency or coins of an alternative chain, upon which they are rewarded with the currency of the native chain. 

7. Proof of Authority (PoA)

In a PoA consensus algorithm, people stake their identity to become block producers. The blockchain is secured, and transactions are verified by approved accounts known as validators. To become a validator, users disclose their identity, which is then cross-referenced with existing public data. There are three requirements which qualify one to be a validator on a PoA blockchain: 

1. Their identities must be formally identifiable on-chain with the ability to crosscheck it from data available on the public domain

2. Eligibility to become one should be above par – so that the position is filled by people with an honest incentive

3. The process must be uniform and fair across the whole choosing process  

The idea behind the PoA principle is that validators will act in good faith; trust is indeed the foundation of the protocol. 

8. Proof of Importance (PoI)

First introduced by NEM for its cryptocoin -XEM, the PoI consensus mechanism takes into account other qualities more than just the amount of coins one has. It is based on a user’s contribution to the network in all areas, including reputation, frequency of transactions, and overall balance. 

With PoI, the more active a user is, the more they qualify to “harvest” new blocks on the blockchain. This was designed to encourage network participants to actively conduct transactions rather than hoarding coins. 

The technology underlying PoI ensures the mechanism is manipulation-proof – so users can trust that miners’ selection is reliable and fair. 

9. Practical Byzantine Fault Tolerant Mechanism (PBFT)

PBFT is derived from the Byzantine Generals’ Problem, an analogy used in computer science. The Byzantine Generals’ problem is as follows. A group of Byzantine generals is preparing to launch an attack against an enemy. To win, they must attack at the same time. But the problem is, some of the generals might go rogue or act maliciously. So how will they launch a successful attack despite this probability? 

In other words, in any distributed computing system, there is always the possibility that some actors will not be honest or reliable. This is where PBFT comes in. The “fault tolerance” is the ability for a distributed computing network to reach a consensus despite the presence of malicious nodes that might fail to send information or relay the wrong information altogether. The majority of participants (at least 2/3) have to agree and execute transactions at the same time to avoid complete failure.

10. Proof of Activity 

Proof of activity is a hybrid of proof of work and proof of stake that attempts to combine the best qualities of both. The mining process starts with a standard PoW procedure – miners rushing to solve a computational puzzle. When a miner finds a new block, the system switches to PoS, with the block being only a template bearing header information and the miner’s reward address.

Then, a random group of validators is chosen from the network to validate the new block – according to the header information. Being chosen as the signer for a new block depends on the amount of cryptocoins a validator owns. When all validators sign a new block, it becomes a complete block and is then added on to the public blockchain network. 

In cases when some selected validators are not available to approve block, the process proceeds to the next new block, with other validators being chosen to sign on. The system runs in that manner until sufficient validators are available to sign off all produced blocks. In the proof of activity mechanism, mining rewards plus/or transaction fees are split evenly among the signers and the miners.

11. Leased Proof of Stake (LPoS) 

LPoS is an attempt to improve the proof of stake mechanism. PoS only allows users to create a block if they meet a certain minimum balance of coins. Also, not everyone can participate in securing and maintaining the chain or even get rewards. 

LPoS solves this by granting users the ability to “lease” their tokens to different contractors and receive a percentage of the payout as a reward. The more tokens are leased, the bigger the chance for a user to be selected to produce the next block.

In an LPoS environment, users can decide to run a full node or lease their stake to a full node. If the full node is selected to add a new block, the user gets a piece of the total transaction fees. In this way, the system allows everyone to participate in maintaining the network.

Conclusion

The takeaway is that all these mechanisms have the same goal: to reach fair and transparent decisions for all network participants. It’s intriguing to see how various mechanisms have evolved over time, and it certainly will be fascinating to watch as more enter the space, with each being (hopefully) better and more effective than its predecessor.

 

 

Categories
Crypto Daily Topic

Is EOS.IO Controlled By The Chinese Government?

EOS has something of a celebrity status in cryptoverse. The cryptocurrency broke into the scene in 2018 after the largest Initial Coin Offering in history – a staggering $4.1 billion.

EOS has something of a celebrity status in cryptoverse. The cryptocurrency broke into the scene in 2018 after the largest Initial Coin Offering in history – a staggering $4.1 billion.

EOS has something of a celebrity status in cryptoverse. The cryptocurrency broke into the scene in 2018 after the largest Initial Coin Offering in history – a staggering $4.1 billion. It is also Ethereum’s biggest rival – also supporting smart contracts and decentralized applications. The currency is currently among the largest in the market, taking the number 7 spot with a $2.9 billion in market capitalization.

EOS is based on the EOS.IO network – a type of blockchain technology that its creators maintain is a decentralized system. Founded by the private Cayman Islands-based company block.one, EOS has managed to distinguish itself from other cryptos with unique aspects that have made it one to watch.

First, it is the only cryptocurrency that does not charge transaction fees, although many in the crypto space have wondered if there is more than meets the eye concerning this proposition. Secondly, it claims to circumnavigate the scalability issue faced by the blockchain space. Having a transaction per second (TPS) speed of almost 4000, this makes it a ripe candidate for industrial-scale decentralized applications. Moreover, its Delegated Proof-of-Stake model for verifying transactions is way faster, and not as power-hungry as most cryptocurrencies’ mining procedures.

Background, Criticism, and Controversies

EOS was always rigged with controversy before it even got off the ground. The system was breached by hackers who got away with millions of dollars of investor money. Soon after, it was the subject of a phishing attack, which led to customers losing coins.

Less than a week before the mainnet (main network) launch, a Chinese security firm discovered several vulnerabilities in the EOS system. These vulnerabilities allow hackers to access any EOS node, construct and publish malicious smart contracts, or steal the key to supernodes, manipulate transactions, or acquire sensitive user data, including private keys.

The security firm said it notified EOS about the loopholes and that the network had promised to withhold the launch until the bugs had been fixed. But when the news hit the media, the network disowned the story and maintained that bugs had been fixed, and it was proceeding with the launch. 

For a company that had denied the presence of loopholes, their next move was bewildering. EOS proceeded to announce a Block.one Bounty Program to enlist the help of developers in discovering bugs in the network in return for financial rewards.

Then came EOS’s biggest source of controversy: its 21 block producers – who elicited doubt about the independence of the platform. The crypto community argued that that was too much power in the hands of a few people for such a large platform. The furor intensified when minutes from the 21 delegates meeting showed that they even had the power to “print” new EOS currency. Social media erupted, with the eventual consensus that “this is hardly democratic, let alone decentralized.”

Indeed, EOS has been accused before of colluding and “mutual voting “with Chinese crypto exchange Huobi. In 2018, a leaked Huobi spreadsheet suggested that the network’s supernodes had been colluding with the exchange to maintain power and keep their profits. 

What’s more, blockchain testing company Whiteblock has refuted that the EOS blockchain is truly censorship resistant or decentralized, submitting “the foundation of the EOS System is built on a flawed model that is not truly decentralized.”

China in the Fray

The speculation that EOS is bedfellows with or under the thumb of the Chinese government has been rife for a while. This speculation came to a head in June 2019 when a former member of the block.one and EOS team suggested that EOS was “now governed by a Chinese oligarchy.” This happened during the high-profile Tulip Conference.

And in September 2019, one of the companies that have partnered with EOS since the beginning called it quits. EOS tribe announced, via a blog post on Steemit, that it was stepping away from EOS as a block producer, citing an inability to earn funds for maintaining the blockchain without the support of big token holders.  

Eugene Luzgin of EOS Tribe said in the post: “We At EOS Tribe have never participated in the game of vote-trading and stayed true to our principles, and hence while we leave EOS as Block Producer, we are also free to speak truth and give warnings to the rest.” He added there was “…a vote buying and vote exchange practice” that “went mainstream and wide-spread among BPs” and that one of the “whales” – Bitfinex, had unvoted Western BPs. (For the uninitiated, a whale is an investor holding large amounts of a cryptocoin).

Interesting to note is that a majority of the whales in the EOS network overwhelmingly support BPs located in China. In the EOS Decentralized Proof-of-stake, the 21 nodes exercise all the power over the blockchain. The nodes are chosen by coin holders, who stake EOS coins in a vote for up to 30 BPs. The top 21 BPs are then selected. This vote is dynamic, meaning BPs can lose or gain their top-21 position at any time.

Currently, a majority of the BPs indicate their location to be China. An investigation by Coindesk, the cryptocurrency news site, has established that more BPs are, in fact, located in China, despite outward impressions.

Another factor that has raised eyebrows and led to further speculation is China’s insistence on ranking EOS as the top cryptocurrency whilst ranking Bitcoin, the most valuable and well-known, outside of the top ten. This has led to many in the crypto crowd to characterize EOS as a “censorable blockchain” and “pseudo-decentralized.” As for how the Chinese government arrives at these rankings, that remains a mystery.

What Is The Truth?

After Coindesk published an article that insinuated Chinese influence on EOS, EOS published an article deconstructing the allegation. Luka Percic wrote on Eoswriter (an EOS community website) that “even quoted people are claiming heavy out-of-context quoting…”

He went on to argue that there is no way to check the location of BPs and that most people refute that any BPs are China-based due to fear of the government’s censorship. He renounced the vote-buying as a “lie” and stated vote exchange is standard practice with blockchains, and that there is a democratized access to rewards for both large and small token holders.

Still, according to Coindesk, most of the main BPs on the network did not reply to questions on the controversy surrounding the crypto.

Regarding accusations against the network not being truly decentralized, EOS’s chief technology officer Dan Larimer has since clarified that his firm is not looking to achieve that status. In an interview with YouTube vlog “Colin Talks Crypto” aired on October 3, 2018, Larimer had this to say: “Decentralization isn’t what we are after. What we are after is anti-censorship and robustness against being shut down.”

Conclusion

While the broader crypto community is not privy to the exact inner goings-on of EOS, one thing is clear: long-term supporters of the network are now ambivalent about it while others have abandoned ship outright. Many in the community had hoped the crypto would attract major companies seeking a secure, censorship-free, high-throughput database. That doesn’t seem to be in the cards, at least right now.

Perhaps we should finish by reflecting on this statement to Coindesk by Lugzin: “Any centralized blockchain will be looked down on. I really liked the technology behind it. It’s the governance that’s screwing it now.” Coming from a former EOS insider, that’s pretty telling.

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.  

Categories
Crypto Guides

Understanding The Basics Of ‘Ethereum’ – A Revolutionary Cryptocurrency

Introduction
The most talked-about cryptocurrency after Bitcoin is Ether. Ether is second in market capitalization after Bitcoin. While the Bitcoin network is only about minting Bitcoins using the POW consensus

Introduction
The most talked-about cryptocurrency after Bitcoin is Ether. Ether is second in market capitalization after Bitcoin. While the Bitcoin network is only about minting Bitcoins using the POW consensus

Introduction

The most talked-about cryptocurrency after Bitcoin is Ether. Ether is second in market capitalization after Bitcoin. While the Bitcoin network is only about minting Bitcoins using the POW consensus algorithm, the Ethereum platform is much more than just the cryptocurrency that the network helps in minting. Vitalik Buterin developed the Ethereum platform by taking inspiration from Bitcoin whitepaper. He wants Ethereum to be something called ‘World Computer.’

Objective

The worldwide web(www), which came into existence with the advent of the internet, transformed our lives completely. To login to different websites, we store our email id’s and passwords in various machines, though the devices may be personal. Still, the credential information is stored in the servers of different websites around the world. Hackers make these servers as targets and steal our information, which results in a breathtaking loss. Hence Ethereum’s goal is to protect user’s data. Ethereum wants to disrupt the client-server model by using thousands of nodes across the globe run by individual volunteers.

Ether

So, where does Ether come into picture amidst all this? It is the cryptocurrency of the Ethereum platform. Ether is generated when each block of transactions gets added to the existing blocks in the Ethereum network. The number of coins made every year is a fixed amount as per the determination of the network. By now, we understand that the Ethereum platform offers decentralized internet or DApps – decentralized apps. As the services cannot be taken free of cost, Ether also helps in fueling the performance of these apps. To perform any transactions in the decentralized apps functioning on the Ethereum platform, one must pay in Ether. The transaction fees are also called as gas as it is the fuel to perform transactions.

Market Capitalization 

Ether is traded under the name of ETH in cryptocurrency exchanges. Each Ether costs about $172.49, while the market cap of Ethereum is around 18 billion dollars. The 24-hour trading volume is approximately 7 billion dollars.

Consensus Used

Consensus algorithms are the backbone of any blockchain network. Bitcoin and Ethereum both use Proof of Work (POW) as a consensus algorithm today. But Ethereum aims to move to Proof of Stake (POS) as POW is very costly concerning the power consumption and computational resources consumption as well. Ethereum hard fork is impending where the significant change is going to be the switch from POW to POS.

Price History

Ether started with zero price on July 30, 2015. 2016 was a slow-growth year for ETH, while 2017 saw tremendous gains beginning from the start of the year itself. By December 2017, the price was around $800. By January 2018, it achieved its highest rate ever with 1,261.03 dollars. A severe downfall has been seen in the same year; by June, it halved the value to $531.15 by December; it even reduced to $141.33. 2019 has been somewhat stable year compared to the previous years. In July 2019, the price was around $300, and at present, the price is at $172.49.

Conclusion

While Bitcoin has given birth to the concept of cryptocurrency, Ethereum went a bit ahead and explored the true potential of blockchain technology with decentralized apps. After Bitcoin, Ethereum is the next go-to cryptocurrency concerning any measure one can check. Ether price has been kind of stable this year, and investors can hold on to it for the long term as the hard fork of the Ethereum is only going to make the coin even better. Stay tuned for more informative content on individual cryptos.

Categories
Blockchain and DLT

How Is Distributed ledger Technology Different From Blockchain?

https://youtu.be/xFVjQv3cuYw

What is Distributed Ledger Technology, and how is it different from Blockchain?

Blockchain is becoming more and more accepted as a concept in the world of finance nowadays.

https://youtu.be/xFVjQv3cuYw

What is Distributed Ledger Technology, and how is it different from Blockchain?

Blockchain is becoming more and more accepted as a concept in the world of finance nowadays.

What is Distributed Ledger Technology, and how is it different from Blockchain?

Blockchain is becoming more and more accepted as a concept in the world of finance nowadays. The idea of blockchain has been explored by a greater audience every day, with even traditional centralized financial institutions are taking an interest in what blockchain can offer.
However, most of the traditional financial institutions have started to use another term alongside blockchain: the distributed ledger technology. Articles, as well as corporate statements, seem to use terms “blockchain” and “distributed ledger technology” interchangeably. This article will try to explain that there is a difference between the two terms as well as what the difference is exactly.

Distributed ledger technology
Distributed ledger technology, or DLT, as some people may call it, is a database of records that aren’t stored or confirmed by a central body. This database is then spread across several nodes. Each node saves an identical copy of the ledger, therefor making it decentralized. Each participant node of the network works independently from one another.

 

The distributed ledger technology ensures that each node updates independently. The nodes vote on each update to ensure that the majority of the nodes agree with the conclusion reached. This voting process is called consensus. Distributed ledger technology dramatically reduces the cost of trust.
With that being said, distributed ledger technology may sound just like blockchain, but it is not.

Distributed ledger technology offers the implementer to have more control over how it is, in fact, implemented. While distributed ledger technology is technologically decentralized and relies on similar consensus guidelines as blockchain, it offers its owner to dictate its structure, purpose, and function.
This technology can be considered the first step towards a blockchain, but they won’t necessarily make a chain of blocks. A distributed ledger can be stored across many servers, which then communicate to ensure the most accurate and up to date record of transactions is maintained, without the need to create blocks.
Blockchain
Blockchain is, in fact, a form of distributed ledger technology. However, blockchain has very specific technological features.

Blockchain ensures cryptographic signing and linking groups of records of transactions in the ledger.

This way, blockchain forms a chain, which is where it got the name from. Depending on the specifics of a certain blockchain, the public is given the opportunity to give their opinions on how it is structured and where it is headed.
Bitcoin can be considered a true example of a blockchain user. It shows how a blockchain should run. Bitcoin is completely open, and anyone can contribute to its code and give their opinion on how to improve it. Meanwhile, distributed ledger technology only has part of it decentralized. The governing portion of the ledger is completely centralized.
Distributed ledger technology and blockchain are not interchangeable
Even though every blockchain is a form of a distributed ledger, not every distributed ledger can be considered blockchain. The two terms cannot be used interchangeably as they represent similar, but not the same things.

With that said, some organizations, corporations, and institutions may prefer distributed ledger technology over blockchain. The Bank of England is considering distancing themselves from the volatility associated with blockchain by supporting distributed ledger technology. Many corporations also might prefer the idea of a decentralized ledger so they could keep matters in their hands while using the word blockchain to capitalize on the public’s interest.

Categories
Crypto Guides

How Does A Cryptocurrency Work? (Example – Bitcoin)

In the previous articles, we have learned the definition, properties, and purpose of cryptocurrency. But it is vital for us to know how cryptocurrencies work. In this article, let us

In the previous articles, we have learned the definition, properties, and purpose of cryptocurrency. But it is vital for us to know how cryptocurrencies work. In this article, let us

In the previous articles, we have learned the definition, properties, and purpose of cryptocurrency. But it is vital for us to know how cryptocurrencies work. In this article, let us find out that by taking the example of Bitcoin.

Below are some of the important terminologies you should know before going further.

Peer to Peer Network (P2P) – The networks where computational devices are joined together with the internet instead of using a central server are called peer to peer networks. Hence there is less chance of a network failure than the standard server model to form a network.

Miners – Miners are the participants in the network who validate transactions. Thus, the creation of new Bitcoins is often referred to as the mining of bitcoins.

Nodes – The individual computational devices in the network are called nodes. The nodes are joined to form a P2P network.

Consensus algorithms – To validate the transactions, the miners in the network should agree whether a transaction is valid or not. The blockchain network uses consensus algorithms to get this job done.

How does the Bitcoin network work?

The blockchain network is set up in a peer to peer way, enabling decentralization of the network effectively, removing the server model. Bitcoin network bundles a certain number of transactions into a block, and these blocks are linked using cryptographic hashing techniques. The miner should validate these blocks for the authenticity of the transactions. To confirm them, the system proposes a challenge to the miners, and the first miner to solve the problem, propagates the message throughout the network. The solution to the challenge is called ‘nonce.’ The complexity of finding this nonce increase as the number of blocks keeps increasing in the system. The other miners validate and approve the transactions if the transactions are not fraudulent.

Bitcoin as reward

The miner who achieves the solution first gets rewarded in the network in the form of Bitcoins. This is how and why the Bitcoins are generated in the network. The miners should be rewarded to keep them motivated and committed to the network. Without miners, the network wouldn’t be sustainable.

To transact Bitcoins in the network, users must pay transaction fees as well. These transaction fees are also in Bitcoin. Hence these transaction fees and Bitcoins generated are paid as a reward to the miners for validating the transactions.

POW as a consensus algorithm

Bitcoin uses Proof of Work (POW) as a consensus algorithm. POW proposes a challenge to the network, which is to be solved to validate the transactions. But why is it necessary? Because POW discourages denial of service. Below are the steps involved in POW in general.

  • The service requester requests service from the service provider.
  • The service provider gives a challenge that should be a bit complex for the service requester to resolve but easy enough for the service provider to check.
  • The service provider proposes this challenge to avoid the exploitation of the service from the service requester.

The exact same concept is used in the Bitcoin network, as well. The miner must expend a considerable amount of computational energy and electricity to solve the challenge. Because by doing this, he/she will not validate fraudulent transactions to be accurate. If they do validate fake transactions, they will lose all the time and computational power they spent and also the chance of gaining a reward. POW is the most efficient consensus algorithm so far, and it makes the Bitcoin network efficient.

We hope you understood the working of Bitcoin. Cryptocurrencies other than Bitcoin with different blockchains and consensus work in a different way. You will know about each of them in the upcoming articles. Let us know if you have any questions in the comments below. Cheers!

Categories
Crypto Videos

What Is Blockchain – Common Mistakes Traders Make

https://youtu.be/t-HJjjB05kQ

What is Blockchain, and how is it different from cryptocurrencies?

As both the concept of blockchain and cryptocurrency are new to the general public, many people started to

https://youtu.be/t-HJjjB05kQ

What is Blockchain, and how is it different from cryptocurrencies?

As both the concept of blockchain and cryptocurrency are new to the general public, many people started to

What is Blockchain, and how is it different from cryptocurrencies?

As both the concept of blockchain and cryptocurrency are new to the general public, many people started to use it interchangeably. However, using them in this manner is wrong. Part of this confusion can be attributed to how these terms came into use, instead of being introduced by their formal definition and distinguished as different. Let’s delve deeper into how these two terms are different and what they mean exactly.

What is blockchain?
Blockchain (originally blockchain) is a distributed ledger technology. It is basically a list of records called blocks, which are linked using cryptography. Each block has transaction and message information bundled within it. These blocks are then validated and posted on a transaction chain next to the previous blocks in the chain. Blockchain permanently records every single detail, and stores it.
When Bitcoin was the only blockchain as well as the only cryptocurrency, there wasn’t much of a need to make a distinction between the terms. For this reason and for people to understand the concept and what it represented easier, the terms “blockchain” and “cryptocurrency” were used interchangeably. As time passed and the technology matured, the distinction had to be made. The uses of blockchain quickly diverged from the pure money aspect to ideas such as decentralized name registry, delivering messages in a discrete way, etc.

What is cryptocurrency?
Unlike blockchain, cryptocurrency is not a distributed ledger, rather a user of the technology. A Cryptocurrency can be regarded as a tool or resource on a blockchain network. Cryptocurrency is a digital currency created on the basis of cryptography. Describing what blockchain is when Bitcoin is given as an example is easy, but the story takes a shift when Ethereum becomes an example.
Cryptocurrencies are considered a future of the world’s monetary system, while blockchain is the technology that powers it. However, without other features that cryptocurrencies themselves offer, blockchain is nothing more than a ledger.

The difference between cryptocurrency and blockchain.

The differences between cryptocurrencies (Bitcoin will be taken as an example), and blockchain can be shown in this comparison:
Definition – Bitcoin is a cryptocurrency. A bit over a decade has passed after Bitcoin was created, and the world is full of altcoins, all trying to add value to the market by trying to fix a problem in the world.

Blockchain, on the other hand, is a kind of distributed ledger technology which records transactions between efficiently and permanently. Blockchain became known as the technology that enables the existence of cryptocurrency as we know it.
Main aim – Bitcoin’s whitepaper clearly states the intents of Satoshi Nakamoto for this cryptocurrency. It was created so it could speed up the cross-border transactions while reducing the government’s control over the transaction and simplifying the process by removing the third-party intermediaries.
Blockchain is a technology that should be used to provide a cheap, safe, secure, and transparent environment for peer-to-peer transactions. As a distributed ledger, blockchain offers a reliable way to store data as well as to access it.
Use-case – Bitcoin is a cryptocurrency that intends to be used as a medium of exchange, store of value, unit of account, and standard of deferred payment. However, it is not there yet, but it might be in the future. Even so, Bitcoin is a currency and can only be used for transacting itself.

Blockchain has a much wider range of usability as it can be used for transacting information, property titles, stocks, etc. Many industries are exploring blockchain as a valid upgrade to their existing systems.

Why people abuse and overuse the term blockchain
With so many projects looking for a solid marketing strategy, blockchain came at the right time. Many companies have used the word “blockchain” to describe their new business model improvements. This brought them immense popularity on the stock market and in general. However, is this increase in the popularity of these companies justified, or just based on a buzzword?
Blockchain is an amazing concept and an overall improvement in almost every way when compared to what companies work with nowadays. However, it does require a couple of key factors that cryptocurrencies such as Bitcoin offer and add to it.
Bitcoin is trustless, borderless, immutable, decentralized, and transparent. Blockchain and Bitcoin work together to create all of these characteristics. However, they do not work as well without each other. Blockchain would not be trustless or decentralized if it would be used by companies, as they would control it and its transactions. Blockchain turns into nothing but an online ledger. It does not get supported by all of the aforementioned characteristics.

Conclusion

Both Bitcoin and Blockchain can be considered revolutionary and a step ahead in the development of society as a whole. These two innovations cannot be used interchangeably, but they should surely work together to bring their best to the game.

Categories
Crypto Daily Topic

Is Blockchain overrated?

Blockchain is a form of distributed ledger technology. It has very specific technological features that differentiate it from other forms of a distributed ledger. Every transaction that blockchain processes is

Blockchain is a form of distributed ledger technology. It has very specific technological features that differentiate it from other forms of a distributed ledger. Every transaction that blockchain processes is

Blockchain is a form of distributed ledger technology. It has very specific technological features that differentiate it from other forms of a distributed ledger. Every transaction that blockchain processes is linked into groups of records. This way, blockchain forms a chain of blocks of transactions, which is where it got the name from. Bitcoin is a true example of proper blockchain use. It is entirely open, and anyone can contribute to its code and give their opinion on how to improve it.

This article will hopefully provide insight into how blockchain is used, promoted, and what’s wrong with the marketing industry nowadays.

How is blockchain promoted?

Blockchain seems to have become a magic buzzword when it comes to crowdfunding as of lately.  Many companies proudly state that they have implemented blockchain technology in one of their aspects of business, or that they will extremely soon. Truth be told, this has brought an immense interest to these companies, especially the blue-chip companies that had nothing to do with cryptocurrencies before.

People have started associating blockchain with security, decentralization, immutability, etc. and they are not wrong. However, what many people don’t understand is that most of these companies did not even implement a true blockchain. Instead, they made a centralized version of it.

Pillars of an open blockchain

Andreas Antonopoulos has established that an open blockchain can be described by five attributes: open, borderless, neutral, censorship-resistant, and public. If a company implements anything other than a blockchain that doesn’t have these five attributes, it doesn’t really need a blockchain. It requires a boost in marketing, which it will get through parading the word blockchain.

Open blockchain

Open blockchain means that anyone can participate in it and that everyone can access it without authorization, vetting, or ID checks. An open blockchain does not know or care if you are even human. Both people and software can use blockchain without any restrictions.

Borderless blockchain

Just as the word says, blockchain has no borders. Blockchain is international and does not care where its users are from. It should be a truly international phenomenon.

Neutral blockchain

Neutral means that each part of the information on the blockchain is free. While cross-border money has to sometimes go through security checks, neutral blockchain does not care who the funds or information is traveling from or to, what matters is that they get to the destination.

Censorship-resistant blockchain

Censorship-resistant blockchain means that there is no personal, corporate, or government body that can stop a transaction from occurring. A true open blockchain does not require any authorization, but it also does not get affected by anyone wanting to stop or reverse transactions.

Public blockchain

Public blockchain means, simply put, that every transaction of information or funds through it is entirely transparent and verifiable. It ensures that no one can “cheat” the blockchain.

These five pillars build a truly open blockchain. Anything that does not have these five attributes is not an open blockchain.

What’s wrong with a non-open blockchain

Blockchain has been created as an improved ledger system that can solve many problems safely, quickly, and more transparent. However, most companies are not trying to implement an open blockchain system because they don’t want to. They want to remain centralized and have a closed blockchain governed by the company itself. So, is it so bad that they wish to remain centralized?

No, it is not wrong. Any entity can decide what it wants or does not want. However, using the word blockchain gives false expectations to people. Whenever blockchain implementation has been mentioned, people flock with their money and start buying shares of said company, with expectations of improvement towards decentralization. However, that does not happen.  Even if companies implement something that they call blockchain, it is not an open blockchain, rather a distributed ledger that does not have all of the characteristics of blockchain.

Conclusion

Using blockchain as a buzzword for generating funds is certainly a good marketing move, but it is borderline illegal. People are given false hope, which is allowed and accepted only because most people do not know what a true blockchain is. People associate blockchain with Bitcoin and all its aspects, which is why they decide to invest their money into a promising concept implementation into a big corporation.

 

 

Categories
Cryptocurrencies

Understanding Ethereum – A Step-by-Step Guide

When we thought we had heard it all about blockchain, and what it does, Ethereum sprang up. To many, it was seen as just another Bitcoin, but what most people

When we thought we had heard it all about blockchain, and what it does, Ethereum sprang up. To many, it was seen as just another Bitcoin, but what most people

When we thought we had heard it all about blockchain, and what it does, Ethereum sprang up. To many, it was seen as just another Bitcoin, but what most people didn’t know was that the project presented a timely idea, and a life-changing one whose implementation was bound to lead the world to new paths.

I know you’ve probably heard about Ethereum, but you’ve probably dismissed it as just another crypto. But what is it in the first place? Could it be just another crypto? Is it the same thing as ether? And what is it used for? Well, in this article, I’ll be expounding it in detail to answer these and to show you why Ethereum is not just another crypto.

What is Ethereum?

For starters, Ethereum is a software platform that allows developers to generate and deploy decentralized applications that are accessible globally. If you want to create a decentralized application, that not even you can control, then the Ethereum platform is the place to go. All you need to do is understand Ethereum’s programming language – solidity – and begin coding.

In simple words, Ethereum is the infrastructure that lets you run decentralized apps worldwide.

You will find some people using the words Ethereum and ether interchangeably. So is Ethereum and Ether one and the same thing? Well, let’s find out.

Ethereum and Ether – Are they any different?

The concept of Ethereum and Ether can be a little confusing. When we hear Ethereum, we are quick to associate it with other cryptocurrencies like bitcoin. To make it clearer, Ethereum is a platform built on blockchain where developers can build and deploy thousands of applications using smart contracts.

Ether, on the other hand, is the fuel that powers the Ethereum network, and the programmable money sold on cryptocurrency exchanges. 

The same way you’ll need gas for your car, ether is necessary for you to deploy and run applications on the platform. Ether is the power behind smart contracts and running DApps, token generation during ICOs, making payments, and facilitating transactions on the ETH blockchain.

In summary:

✅Ethereum is the platform; ether is what powers the platform

✅Ether can be bought and sold, Ethereum cannot

✅Ethereum has multiple applications; ether has a single application, enabling operations on the parent blockchain.

So, are Ethereum and Bitcoin similar?

Well, the two are similar in that they are both blockchain networks, but there are some significant technical disparities between the two. There is a very substantial difference between Bitcoin and Ethereum in both purpose and capability. While the former track’s ownership of digital currency, the latter’s primary focus is to support decentralized applications. 

In short, we can say that Bitcoin is a peer-to-peer currency that can be transferred instantly between transacting parties securely. Ethereum, on the other hand, supports smart contracts. And if you are wondering to yourself what a smart contract is, then you will be pleased to know that at the core of these Decentralized applications is a smart contract. So, what exactly is a smart contract?

What is a Smart contract in Ethereum?

A smart contract is simply a phrase coined to describe best “a computer code that can veto the exchange of property, money, content, shares, or anything valuable.” In blockchain language, a smart contract is a self-executing computer program that completes whenever certain conditions are met. It is a programmed code that runs without the possibility of third-party influence, fraud, downtime, or censorship.

All blockchains can process code, but most of them are limited. With Ethereum, it becomes different. Instead of allowing for limited operations, Ethereum lets developers create as many applications as they can, something never experienced before.

What are the uses of Ethereum?

The main use of Ethereum is to enable developers to create and deploy decentralized apps where these decentralized apps, also known as DApps, serve particular functions to users. By virtue of being built on a blockchain, decentralized apps are not controllable by any person or central system.

Ethereum can be used to decentralize any centralized service. From the existing intermediary services across a myriad of industries such as bank loans to other seemingly less interesting systems like voting and title registries, Ethereum can be used to get them all decentralized.

Another objective use of Ethereum is in the building of Decentralized Autonomous Organizations (DAO). This is an organization with no apparent leadership, run exclusively by programming code on a variety of smart contracts recorded on the Ethereum blockchain. The code takes the position of organization rules and structures, totally eliminating the need for a centralized control like in a traditional organization. Anyone who purchases tokens becomes a part-owner of a DAO, but instead of converting tokens to equity shares, tokens give people voting rights.

Ethereum is currently being accessed as a reliable platform for launching other cryptocurrencies. Following the ERC20 token standard laid down by the Ethereum Foundation, interested developers can also start their own versions and raise funds through an ICO. Through this strategy, token issuers set the amount of money they intend to raise before offering it in a crowd-sale in exchange for Ether. The last two years alone have witnessed ICOs raising Billions of dollars on the Ethereum platform.

Conclusion

For all the talk of decentralizing the system, Ethereum appears to be the ultimate solution. Its rise is suggestive of a market ready to embrace positive changes, and a platform for development in an area previously shadowed with uncertainties. It presents a bold claim for a futuristic technology unreliant on third-party forces, including social and political interferences. 

 

Categories
Cryptocurrencies

Everything You Need to Know About Cryptocurrency and the Rise of Digital Currencies

Cryptocurrency has taken the financial space by a storm. It’s almost impossible to go for a week without hearing of a new cryptocurrency being launched or another one soaring to

Cryptocurrency has taken the financial space by a storm. It’s almost impossible to go for a week without hearing of a new cryptocurrency being launched or another one soaring to

Cryptocurrency has taken the financial space by a storm. It’s almost impossible to go for a week without hearing of a new cryptocurrency being launched or another one soaring to record highs, sending savvy investors rushing in. For most people, though, the concept remains foggy if not downright complicated. In this article, we break down everything about cryptocurrency, including: is it the same thing as digital currency?

Cryptocurrency is an internet-based medium of exchange. “Crypto” refers to the fact that the currency uses cryptography to secure and verify transactions and regulate the release of new units. One of the most defining features of cryptocurrency is that it relies solely on the internet: it has no issuing or regulating authority, nor is it bound by geographical restrictions.

Cryptocurrency or Digital Currency?

It’s easy to conflate these two terms, especially since financial analysts and the media often use them interchangeably. So what’s the difference after all? The key thing to grasp is that all cryptocurrencies are digital currencies, but not all digital currencies are cryptocurrencies.

Digital currency is the term for any form of money that’s available only in digital form. This money is not tangible like, say, coins. Digital money can be transferred from one person to another, be traded for another currency, and can be used to transact, just like physical money. It can also be sent to and received in any place in the world.

The defining difference between cryptocurrency and digital currency lies in one word: crypto. Cryptocurrencies are a form of digital currency that is based on cryptography – a technique that combines elements of art, science, and mathematics to convert readable text into unintelligible text so that information is secured from unauthorized parties.

If you’re looking to invest in cryptocurrency and are still confused about what it is or you just want to sound smart when you’re talking about digital currencies, then it helps to know exactly the difference between the two.

Differences between Cryptos and digital currencies

☑️Structure: Digital currencies are centralized, meaning their transactions are regulated by a particular entity, like a bank. Cryptocurrencies are decentralized, meaning regulation within the network is done by the community in the network.

☑️Transparency: Digital currency transactions are confidential. Cryptocurrency transactions are transparent and are in public record, i.e., anyone can see the transactions of any user since transactions are recorded on an open chain – the blockchain. 

☑️Potential for Manipulation: Digital currencies have a centralized system that can exert authority over transactions – like canceling or freezing them at the request of a legitimate party. Cryptocurrencies are not controlled by any authority, and cannot be manipulated. 

☑️Legal Status: Most countries have established a legal framework for digital currencies. For cryptocurrencies, the same cannot be said, at least currently.

Common Cryptocurrency Lingo

You don’t have to be the originator of Bitcoin to understand some of the most common “cryptocurrency speech” around. Here is a definition of some of the most used words to ease you into the world of cryptocurrency.

☑️Blockchain: Every new record in a cryptocurrency network is recorded as a “block.” It’s so-called because it’s resistant to alteration. Blocks are linked together by cryptography – hence “blockchain.”

☑️Mining: This is the process of verifying transactions before they are recorded on the blockchain network. Mining involves solving complex computational puzzles and decrypting codes.

☑️HODL: “Hold On For Dear Life,” meaning holding onto your cryptocurrency coins despite unfavorable market conditions.

☑️Altcoins: This is the name given to all other cryptocurrencies after Bitcoin – the first and most successful cryptocurrency to date.

☑️CAP: This is a shorthand of market capitalization, which means the total number of coins in supply multiplied by the going price.

☑️Peer to Peer: In a peer to peer model, two or more computers interact directly with each other without the intervention or presence of an intermediary.

The Rise and Future of Cryptocurrency

Only years ago, cryptocurrency was an academic concept explored without much success. That was until 2009 when the first cryptocurrency was launched and took the world by storm. Since then, thousands of cryptocurrencies have been launched with varying levels of success. Today, the cryptocurrency model is being explored by institutions: including governments and financial institutions to make processes more efficient and secure 

If the success of Bitcoin, the most popular cryptocurrency, is anything to go by, then the future of cryptocurrencies is bright. Other cryptocurrencies such as Ripple, Ether, Litecoin, and Cardano have commanded a significant share of attention and investment. Initial Coin Offerings (ICOs), akin to the shares of a company, continue to generate excitement and interest in the crypto market.

How Can You Buy and Use Cryptocurrency?

The most important thing is to know how you can benefit from cryptocurrency and how to stay safe while doing so. Whenever you purchase a cryptocurrency, you become the owner of a private key to the wallet address of the coin(s).

With this key, you can access and spend your bitcoin to pay for things or transfer to anyone. Where you place your key is crucial because it means the difference between holding your valuable coins and losing them. So, how do you safeguard your coins? Innovative individuals and companies have come up with crypto wallets that, apart from protecting them from theft, enable you to store, send and monitor their balance. Here are the various types of wallets available today.

Desktop wallets: This type of wallet allows you to send and receive cryptocurrency addresses on your computer. An example is Cryptonator, which enables you to store several cryptocurrencies in one account.

Online wallets: These are web services that allow you to store your cryptocurrencies online. You can access them anywhere, anytime. 

Mobile wallets: These are apps that allow you to encrypt your cryptocurrencies and pay for services right from your phone.

Paper wallets: These are pieces of paper with QR codes on them, one being the public address at which you receive your cryptocurrency, the other being your private address where you send them.

Hardware wallets: These are USB devices that store bitcoin electronically and keeps your private keys.  

Conclusion

By now, you should have a fair understanding of this exciting thing called cryptocurrency. Though a bit daunting at first, it’s an exciting and revolutionary technology with something to discover every day. Remember, like with everything, the more you learn about it, the more you get comfortable and possibly invest in its ever-growing potential.

 

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Crypto Market Analysis

Blockchain or Cryptocurrency?

Blockchain and Cryptocurrency
Technology advancements have brought us many amazing things. One of them is Blockchain along with Cryptocurrencies. However, there is quite a big debate in this field. It’s

Blockchain and Cryptocurrency
Technology advancements have brought us many amazing things. One of them is Blockchain along with Cryptocurrencies. However, there is quite a big debate in this field. It’s

Blockchain and Cryptocurrency

Technology advancements have brought us many amazing things. One of them is Blockchain along with Cryptocurrencies. However, there is quite a big debate in this field. It’s regarding the importance of Cryptocurrencies in the world, while no one disputes the importance of Blockchain. One side of the debate says that Cryptocurrencies ARE Blockchain and that the two can’t be separated, while the other hand says that Blockchain is a great invention, while Cryptocurrencies are not here to stay. Before analysing the subject, we have to know what the definitions of both Blockchain and Cryptocurrencies are.

Blockchain vs Crypto

A Blockchain is merely a chain of blocks, while Cryptocurrencies are currencies built on Blockchain that serve a particular purpose they are made for. When Bitcoin was the only Blockchain, no one tried to separate or differentiate the two. However, once more Cryptocurrencies started to emerge, people saw the distinction. But, can one work without the other?

Blockchain vs Crypto

Cryptocurrencies work on the Blockchain, which serves as a distributed ledger. That way, it forms a network. Cryptocurrencies are nothing more than tokens that value the utility that the protocol presents. That way, Blockchain and Cryptocurrency work hand in hand, and should not be thought about as separate entities.

A distorted view of Blockchain

You can hear “Blockchain is revolutionary, but Cryptocurrencies are meh” from many people nowadays. However, that is an extremely distorted way of looking at things. The reason for that is the actual devaluation of Cryptocurrencies as the “driver” of the blockchain “vehicle”. There are tokenless Blockchains, but they are far from perfect. On the other hand, Cryptocurrencies have the potential to reach their true purpose of fully decentralising an operation, valuing it at the same time, and doing it healthily and without any artificial aid.

Cryptocurrency vs Blockchain

Future of Blockchain without crypto

Many companies are trying to approach the Blockchain integration without actually considering Cryptocurrencies. Anything can, of course, happen, but Blockchain without Cryptocurrencies most likely won’t. The symbiosis between the two is too great and too valuable to pass on.

Cryptocurrencies are here to stay, and so is Blockchain. The actual Cryptocurrencies we have today might not survive, but the concept will.

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Crypto Market Analysis

Today´s Crypto Events 18.6.2018

This is the Cryptocurrency events calendar. All the news about the upcoming hard fork, releases, exchange listings,  updates, conferences, new launches, etc.

Today´s Events 18/6/2018

Docademic (MTC) – Monthly Airdrop

LATOKEN (LA) – Blockchain Economic Forum

StarCash Network (STARS) – Major Announcement

Pylon Network (PYLNT) – Roadmap Release

THEKEY (TKY) – Token Release

Aerium (AERM) – Swap Deadline

iExec RLC (RLC) – Deployment on Mainnet

Pylon Network (PYLNT) – Transactive Energy & Blockchain

IOTA (MIOTA) – First Charging Station in The World

Aion (AION) – Developer Meetup

Status (SNT) – Livestream

Synereo (AMP) – New Leaderboard

OriginTrail (TRAC) – Lunar Orbiter Release V1.0B-Rc

Ripple (XRP) – Listing on CoinSpot

Cashaa (CAS) – Livestream

Pillar (PLR) – BAI

DADI (DADI) – Developerweek

TokenPay (TPAY) – Listing on Cryptopia

Categories
Crypto Market Analysis

Blockchain getting closer

Blockchain getting closer

JPMorgan has created the Quorum open source platform based on blockchain with the aim of applying it to the financial world. Although the development has been internal, its applications are huge and is attracting much interest in other areas. National Bank of Canada, for example, is assessing debt issuance based on Quorum.
The possibility of simplifying processes and, therefore, costs, is an aspect that is present in the mind of many investors that could be based on chain blocks to expedite international transfers, interest rate payments, or issuance of financial instruments.
The interest in the project has bequeathed to a point where JPMorgan has thought to separate Quorum from the bank’s activity so that it grows without constraints.

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