Tag: Decentralization

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Crypto Daily Topic

Challenges Facing Decentralized Finance

Decentralized finance involves the use of public blockchains in the monetary systems. It is a new fiscal scheme, thus has a lot of hot debates surrounding it. The term ‘public’ is fundamental and is relatable to that of the Ethereum public blockchain. A public blockchain has no room for centralized authority. 

Decentralized finance involves the use of public blockchains in the monetary systems. It is a new fiscal scheme, thus has a lot of hot debates surrounding it. The term ‘public’ is fundamental and is relatable to that of the Ethereum public blockchain. A public blockchain has no room for centralized authority. 

Decentralized finance involves the use of public blockchains in the monetary systems. It is a new fiscal scheme, thus has a lot of hot debates surrounding it. The term ‘public’ is fundamental and is relatable to that of the Ethereum public blockchain. A public blockchain has no room for centralized authority. 

Decentralized finance is crucial because not everyone around the world can access financial services. They are not available to up to 1.7 billion people in the world. Financial institutions are also unable to set the essential infrastructure that would make people access more money. The current infrastructure is massive, but it is inadequate, and cannot reach everyone out there.  

With decentralization, the current failures on infrastructure are as good as over. It eliminates the failure spot and ensures that it is possible to store and share records among different joints across the network. There is a lot of dependency on the centralized system for the current infrastructure to function. 

Comparison of the traditional and decentralized finance

The main difference between the traditional and the decentralized finance is the mode of work.

Traditional financial systems use centralization and lead to ineffectiveness and insecurity.  Security risks are tenacious in the current conventional financial system. 

There is also an increase in cybercrime due to lack of upgrades in the technologies used by financial institutions. There is a risk of hacking for most transactions. They all lead to data and fiscal risks.

On the other hand, decentralized finance ensures there is a solution to a certain extent. Due to the utilization of public blockchain, there is no reliance on a centralized system.

A decentralized system can function without requiring proper infrastructure. In simple terms, it decentralizes the economy and provides the viability of the economic activity to everyone in the world.

Another crucial feature of decentralized finance is the dApps short for decentralized apps. Through them, financial institutions can develop functional apps on the public blockchain. They also allow anyone to work together with them with less cost per interaction. 

What DeFi brings to the table

 

i) Permissionless

 

Public blockchain won’t require permission from anyone else to access and interact. It is thus a top choice for implementation in the world.

 

ii) Decentralization

 

Since there is no central authority, data storage occurs amongst the different joints in a network. 

 

iii) Transparency

 

There is transparency in the public blockchain.

However, the decentralized system’s growth and proponents face several challenges that would entirely affect its adoption. 

Challenges facing the decentralized finance 

 

1. Hacking of smart contract

 

Decentralized finance projects depend on smart contracts that run on Ethereum. The programs’ code is usually public, and anyone with sufficient knowledge can examine and interact with it. Blockchain networks that run on smart contracts are attractive to hackers. 

There was a scenario in 2016 when a hack resulted in the loss of 3.6m ETH. The value was approximately 70 million USD. The hack was around 10 percent of the total supply of ETH at that time. 

The hacker could not access the funds for 28 days. During that period, the Ethereum group managed to reverse the transaction. However, there is a high likelihood that a similar solution may fail to work ever again. 

 

2. Manipulation of oracles

 

The decentralized finance ecosystem depends on data providers known as oracles to distribute market data that resolves smart fiscal contracts. Oracles are also essential to Maker’s smart contracts in understanding the current price of ETH that determines whether there is adherence to the collateralization ratio.

Decentralized finance applications use price data as the most common type of data provider. Does the oracle respond to queries such as “What is the price of token Y?” What happens if there is a manipulation of the information that an oracle provides? An oracle error on 24th June 2019 led to inaccurate price data, causing an irregular performance on the Sythentix protocol. The malfunction allowed KRW holders to buy ETH at a discount. 

 

3. Ethereum non-scalability

 

Decentralized finance is essentially a movement based on Ethereum. Innovation and liquidity primarily focus on them. There is the launch of new projects all the time that aims to lure new users with better returns and more effective token assortment management.

Although there is little on the front-end, the Ethereum public blockchain carries out a lot of heavy lifting behind the scenes. There is dependence on the collaborative building network of the separate nodes.  

Due to the challenges facing its scalability, Ethereum either fails or becomes too expensive to work together with dApps. On several occasions, there have been network congestion. The best solution to the scalability challenges would be a significant upgrade in the network. It is happening already, but it will take time for its benefits to materialize ultimately.  

 

5. Stablecoin Fail

 

Maker is an Ethereum project that started operations in 2014.  In 2017, it came up with a stable coin DAI, which pegs softly to the US dollars. Anybody can use BAT, ETH, and USDC as the security to create DAI while maintaining a minimum ratio of 1 to 5 to 1 and 1 to 25 to 1 for the USDC. 

If, for example, you have 200 USD in the form of ETH, you can create 100 USD in the form of DAI. DAI is, at the moment, the most extensively utilized stablecoin in decentralized finance. In case of a hack on the smart maker’s contracts and the criminal access the user’s security, DAI becomes worthless. Such a move would affect the entire decentralized finance space. 

 

6. Overcollaterization

 

Due to a lack of guarantees in volatile markets, lenders usually seek higher security for their loans. It reaches a point where most lenders and borrowers will only work when there is a significant amount of assets as collateral. 

The situation undermines the vital function of borrowing and thus fails to satisfy one of the main ideas of decentralized finance: reaching those without access to the banks. Besides, it leads to a significant slash in the profits from leverage trading.  

 

7. Composability

 

Composability is among the most marketed elements of decentralized systems. It relates to how they can flawlessly integrate, enabling rapid growth, service complexity, and even new financial products. However, composability creates essential dependencies between decentralized finance protocols that could develop into systemic risks. 

 

8. Accessibility of the users’ tokens

 

In decentralized finance, tokens are under the management of smart contracts, which are non-living bits of programming codes. It is a non-custodial finance service that is contrary to the centralized system that uses humans. Custodial services call for heavy regulations. However, when the project is non-custodial, the team saves a lot of cash by dodging burdensome legislation.

Admin keys help the developers behind the decentralized finance project control the smart contracts that handle user funds. The weakness is a lack of transparency on who possesses the keys. There is a possibility that an individual could have access to all of them.

Conclusion

Although most people have internet connections, there is little public awareness of decentralized finance. Very few people know about it, which can affect its use rate. Besides, the fact that it is still in its infant stage means there are relatively high risks.

There is a dire need to solve most of its challenges to increase its viability to different administrations and organizations. Decentralized finance focuses on creating financial services that are distinct from the traditional fiscal and political systems. It has the potential to prevent instances of censorship, discrimination across the world and allow for a more transparent financial system.  

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Crypto Daily Topic

How Blockchain Technology Can Empower Influencers and Content Creators

Every advertising model in the history of marketing has experienced a plateau effect after a period of massive success. From the era of billboards, audio-visual mediums, to print media, advertising agencies have learned not to be fixated on one advertising model if indeed they want to keep up with the dynamic consumers’ behavior and connect with the target audience. This explains why digital advertising, as a new marketing strategy, has become increasingly popular among advertising agencies. By 2021, statistics show that the digital advertising budget will grow to more than $330 billion. 

Every advertising model in the history of marketing has experienced a plateau effect after a period of massive success. From the era of billboards, audio-visual mediums, to print media, advertising agencies have learned not to be fixated on one advertising model if indeed they want to keep up with the dynamic consumers’ behavior and connect with the target audience. This explains why digital advertising, as a new marketing strategy, has become increasingly popular among advertising agencies. By 2021, statistics show that the digital advertising budget will grow to more than $330 billion. 

Every advertising model in the history of marketing has experienced a plateau effect after a period of massive success. From the era of billboards, audio-visual mediums, to print media, advertising agencies have learned not to be fixated on one advertising model if indeed they want to keep up with the dynamic consumers’ behavior and connect with the target audience. This explains why digital advertising, as a new marketing strategy, has become increasingly popular among advertising agencies. By 2021, statistics show that the digital advertising budget will grow to more than $330 billion. 

Within the digital advertising space, influencer marketing is fast-rising as a new marketing tool. The model capitalizes on social media users with a huge following to whom they recommend products or services. Similarly, brands are also aligning themselves with digital content creators whose craft is used on social media platforms as a marketing tool. As such, hiring the right content creators and influencers is considered an effective way of reaching customers as it can shift a brand’s image from obscurity into the limelight. 

Obstacles in Influencer Marketing and Content Creation 

Despite the success of influencer marketing, various hurdles are threatening the effective operation of this advertising model. They include:

1. Fraudulent influencers

With brands expected to increase their influencer marketing budget, it’s unfortunate that not all of them will get appealing results from influencer campaigns. The poor results can be blamed on fraudulent influencers who have created bogus followings and engagements using bots. When a brand hires such an influencer, it’s likely that their marketing campaign won’t be as effective as expected. 

While there are tools to scrutinize influencer campaigns’ effectiveness, the data collected is highly questionable since influencers can manipulate the engagements and even buy fake followers. That said, there is a need for a trusted tool that can evaluate influencers’ success and validate their engagements. 

2. Unreliable settlement systems

Usually, influencers and content creators are paid a one-time fee for their craft. On the other hand, brands and marketers use this craft to earn more engagement and impressions, which translates to more sales. However, there are huge discrepancies between profits from the increased sales and the one-time fee paid to influencers and content creators. Brands end up making more money than the initial amount they pay influencers and content creators for their marketing services. Similarly, brands may also pay way too much for influencer marketing, yet fail to achieve the marketing campaigns’ desired results. 

An ideal payment system would evaluate the impressions, engagements, and successful sales from influencer marketing and compensate them accordingly. This way, influencers will be fairly paid, while brands will be assured of getting value for their marketing budget. 

3. Third-party agencies

Brands spend a significant amount of money and time when hiring an influencer or content creator to market their product. From the actual budget for paying an influencer to the amount paid to marketing agencies who outsource influencers, the cumulative cost of influencer marketing is quite high, especially for small businesses. Moreover, the platforms on which influencers use to market the products tend to take a huge chunk off the marketing budget, which in turn reduces eats into the amount paid to an influencer. 

Blockchain as a solution

Blockchain is already known as the technology driving cryptocurrencies, but its application exceeds the digital assets space. In the influencer marketing niche, this technology can be used to overcome obstacles and streamline processes in the following ways: 

1. Guarantee authenticity of influencers

Blockchain can be used as a distributed ledger to create a system that logs influencers’ data such as previous works, number of followers and engagements, and reviews. The data is recorded in real-time, which allows brands to evaluate genuine comments and engagements, thereby ascertaining an influencer’s authenticity. Moreover, the system can also verify an influencer’s followers’ identities, mitigating the fraudulent influencer menace. 

2. Efficient payment systems

To ensure that influencers are fairly compensated, a blockchain-powered payment system can be built to include marketing data such as reach, clicks, impressions, and conversions. These datasets detail the value generated from the marketing campaign, which means that an influencer will be paid based on their craft’s success. Also, Brands will be guaranteed of marketing return on investment (ROI) as it is possible to track marketing goals and pay influencers depending on whether these goals have been achieved or not. 

Additionally, the use of smart contracts in these payment systems will help avoid settlement delays experienced in the traditional payment processes. As such, influencers and content creators will no longer have to wait long before they’re paid their dues. Payments are automatically disbursed once the marketing team approves the content. 

3. Decentralize marketing

By implementing a blockchain-driven influencer marketing platform, third-parties such as marketing agencies become obsolete. Therefore, brands and businesses can interact directly with influencers and content creators without incurring outsourcing fees charged by marketing agencies. Influencers are also freed from the conventional centralized platforms, the likes of Instagram and YouTube that charge a substantial amount of money for running ads. With the monopoly of centralized platforms out of the way, micro-influencers will have an equal opportunity to showcase their craft without facing unnecessary stiff competition from macro-influencers. 

At the moment, there is little hope, if any, that blockchain-based influencer marketing tools will fulfill their promises to content creators and marketers working on influencer campaigns. This is because developers tasked with building these tools have no experience in influencer marketing; thus, they may fail to address the fundamental issues ailing the industry. Nonetheless, there are some noteworthy tools with a feasible work plan that makes them likely to succeed in offering solutions to the influencer market. These include: 

i) Steemit

Steemit is a decentralized microblogging and social media platform where users are rewarded with the native STEEM cryptocurrency for creating and curating content. Similar to Reddit, Steemit has upvotes and downvotes functions that measure the value of the content. 

ii) Boosto

Boosto takes a unique approach in empowering influencers in that it enables them to build their online stores on the Ethereum blockchain. This way, influencers, who also double up as content creators, have absolute control of their crafts and thus can choose who views it. The craft can be digitized or rather converted to digital tokens, which can be auctioned to followers. 

Boosto has also partnered with dApps developers to build sales tracking tools that monitor genuine engagements. This goes a long way into ensuring that influencers on the platform are genuine and have real followers, unlike traditional social media platforms. 

iii) Creator coin

Creator coin is a digital currency launched by Rally, a startup company committed to promoting interactions between content creators and their fans. Using this digital currency, influencers can recreate their customized cryptocurrency, which they can use to reward their followers and build engagements. For instance, an online streamer can create a cryptocoin and award it to fans who spend time watching their live streams. In turn, the fans could use the custom-branded crypto to buy virtual items from the same streamer or another one who shares the same platform. Influencers can also sell their services and products to fans who pay for them using Creative coin. 

Conclusion 

Influencer marketing, being a relatively new model of advertising, is faced with unprecedented obstacles that existing technologies have failed to address adequately. Emerging technologies, particularly blockchain, can be deployed to offer solutions that mitigate these challenges and build a virtual economy that supports the growth of content creators. As influencer marketing grows, it, therefore, becomes necessary for stakeholders to utilize blockchain technology to increase the effectiveness of this new marketing model. 

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Crypto Daily Topic

How Blockchain Can Transform the Tourism Industry 

Since the introduction of online flight booking, the global tourism industry has grown exponentially – thanks to the convenience of making flight reservations from a mobile device. Despite the efficiency brought by such technologies, the travel industry is populated by a myriad of intermediary companies that make traveling quite a hassle. From flight companies, travel agents, tour operators, to destination management companies, all of which defeat the purpose of using travel solutions for convenience. Additionally, throughout the travel, customers’ data is exchanged numerous times, which ends up compromising their privacy, especially if the systems used aren’t secure enough. 

Since the introduction of online flight booking, the global tourism industry has grown exponentially – thanks to the convenience of making flight reservations from a mobile device. Despite the efficiency brought by such technologies, the travel industry is populated by a myriad of intermediary companies that make traveling quite a hassle. From flight companies, travel agents, tour operators, to destination management companies, all of which defeat the purpose of using travel solutions for convenience. Additionally, throughout the travel, customers’ data is exchanged numerous times, which ends up compromising their privacy, especially if the systems used aren’t secure enough. 

Since the introduction of online flight booking, the global tourism industry has grown exponentially – thanks to the convenience of making flight reservations from a mobile device. Despite the efficiency brought by such technologies, the travel industry is populated by a myriad of intermediary companies that make traveling quite a hassle. From flight companies, travel agents, tour operators, to destination management companies, all of which defeat the purpose of using travel solutions for convenience. Additionally, throughout the travel, customers’ data is exchanged numerous times, which ends up compromising their privacy, especially if the systems used aren’t secure enough. 

Just as Bitcoin was conceived as a method of bypassing financial intermediaries, its underlying technology – blockchain, can also be used in the tourism industry. The technology will enable customers to interact directly with service providers making traveling less of a hassle while also safeguarding their privacy. 

Potential use cases of blockchain in travel 

Blockchain technology is lauded for its high data security, immutability, and decentralization. These are the fundamental properties most industries seek to leverage. Here’s how the tourism industry can make use of this revolutionary technology: 

1. Decentralized booking marketplaces

Although intermediaries in the tourism industry aim to make traveling less hectic, their services make traveling expensive. For instance, online travel agencies (OTAs), despite helping customers book flights and accommodation, usually charge a service fee, which adds to the overall cost of traveling. 

With the employment of blockchain technology, a decentralized booking marketplace is created where intermediaries become obsolete. Travelers are connected directly to flight companies, hotels, and other service providers, making traveling more affordable. Moreover, without intermediaries, customers’ experience is enhanced as they can make seamless transactions with minimal delays. 

Smart contracts could serve as automated intermediaries that utilize data oracles to source a range of relevant services like traditional OTAs. Smart contracts will hold funds in escrow as remotely executable agreements and release them when and if services are properly offered. 

2. Secure payment systems

The traveling process is characterized by numerous payments right from flight booking to accommodation and everything in between. Unfortunately, customers’ privacy of their financial details isn’t guaranteed, which means they are at risk of identity theft or even losing their funds to hackers. Also, to make these payments, travelers must carry debit cards or fiat cash, which can be cumbersome, not to mention the risk of theft. 

If the tourism industry was to integrate blockchain technology into their payment model, all transactions would be done using cryptocurrencies. As such, travelers’ financial details will be secured, protecting their privacy while minimizing fraud. What’s even better is that paying using cryptocurrencies eliminates the need to carry cash or use third-party payment processors such as Visa and MasterCard. With the intermediaries out of the way, payment transactions become more affordable, especially cross-border payments. 

Since blockchain technology can create a seamless inventory tracking mechanism, it can also be used to track payments. This will ensure flights are booked to a maximum capacity only, preventing overbooking, which can ruin an airline’s publicity. 

3. Identity management

Identification services play a crucial role in the tourism industry as it helps promote security. Immigration officials are always keen when verifying travelers’ identities in compliance with national security guidelines. However, identity verifications tend to be time-consuming and repetitive, resulting in long queues at airports and hotel check-ins. 

Blockchain can transform the current identity verification process by creating an immutable database containing the necessary details of a traveler. This way, identity verification will be reduced to a simple fingerprint or iris scan instead of the traditional document verification. As a result, there will be fewer check-in times and shorter or no queues in airports, facilitating a time-efficient experience. 

Relevant authorities can also share the necessary data required for identity verification without compromising travelers’ privacy. This is enabled by blockchain’s zero-knowledge protocol that allows parties in a peer-to-peer network to verify specific data’s accuracy without revealing it to each other. 

Also, if all governments were to use blockchain in identity verification, passports would be rendered obsolete. This would, in turn, reduce verification time and unite all nations in providing digital passports for efficient traveling experience. 

4. Baggage management

It is estimated that airlines lose about two bags for every 1,000 passengers. While the odds may seem almost negligible, it’s disappointing to lose your luggage, especially if it contains essential business documents or other valuables. In most cases, baggage mishandling and loss is as a result of human error since multiple parties are involved in the handling process throughout one’s journey.

Moreover, each of the involved entities in the baggage handling process, from the airline, security personnel to ground staff, all have different baggage tracking infrastructures that operate in isolation. As such, when reconciling their databases, discrepancies may occur, resulting in loss of luggage. 

In collaboration with AI and sensor technologies, blockchain can be used to monitor and track travelers’ luggage. Also, tracking data is recorded on a distributed database that can be shared among entities responsible for handling baggage, eliminating the baggage loss menace facing the tourism industry. 

5. Customer reward system

Airlines, travel agencies, and even hotels offer customer reward systems to win new customers and incentivize loyal ones. However, there have been complaints that these programs are too restrictive and limited to a small set of rewards. 

Moving the reward system to a blockchain network means that rewards will be issued in the form of digital tokens. This enhances transparency in the way rewards are issued, which then improves customers’ trust. The tokens can be exchanged or rather redeemed for a variety of products from different providers, unlike traditional loyalty programs, where the rewards are restricted to specific rewards. Various entities within the travel industry can also collaborate in offering digital token as rewards. This way, the tokens can be exchanged easily between the entities, allowing customers to compare the relative value of schemes and rewards they offer. 

6. Transparent business rating

Before traveling to new destinations, it’s common for one to read reviews of either the hotel or airline one will be using. There are even dedicated platforms where users share their experiences and rate destinations, airlines, and accommodation hotels. Although some of the reviews may be genuine, others are outright fake and fabricated by the service providers to attract more customers. These fraudulent activities have become rampant due to increased competition among service providers. If a user’s experience is different from what they read in online reviews, it breeds mistrust and ruins the reputation of the service provider. 

The transparency offered by blockchain technology could go a long way into ensuring that online reviews are genuine, therefore, restoring consumer trust. In this case, the reviews of customers are made public in a secure blockchain platform, ensuring everyone sees and verifies its accuracy. 

7. Travel insurance

Blockchain is best suited for application in travel insurance to ensure data integrity for fair compensation of claims. For instance, say, an insured customer loses their bag and makes a claim to the insurance company. A smart contract using data oracles within a decentralized network could validate a claim and ascertain if the agreed thresholds have been met. Upon verification, the claim is automatically settled through cash deposits or refunds in delayed flights. 

Conclusion 

The travel industry is a fertile ground for blockchain technology to thrive, given the wide network of intermediaries that create a tangled web of interaction in a travelers’ journey. That said, only the established industry players can lead to the adoption of blockchain in tourism. This is because they hold the resources needed to materialize proof of concept of blockchain solutions and advocate for their use. 

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Crypto Guides

What should we know about DEXs & its benefits?

Introduction A decentralized exchange or DEX is referred to as a platform that eliminates the middlemen and allows traders to trade with each other directly. This direct approach allows traders to control their funds instead of giving them to exchange providers where trades are performed via smart contracts. These exchanges are hosted on a collected […]

Introduction A decentralized exchange or DEX is referred to as a platform that eliminates the middlemen and allows traders to trade with each other directly. This direct approach allows traders to control their funds instead of giving them to exchange providers where trades are performed via smart contracts. These exchanges are hosted on a collected […]

Introduction

A decentralized exchange or DEX is referred to as a platform that eliminates the middlemen and allows traders to trade with each other directly. This direct approach allows traders to control their funds instead of giving them to exchange providers where trades are performed via smart contracts.

These exchanges are hosted on a collected ecosystem of distributed nodes. This not only reduces the hacking risk but also addresses the problem of downtime that limits the trading ability. These exchanges are designed to extend an open, transparent network that makes crypto trading accessible to all.

What Makes DEX Different from Centralized Exchanges?

A Centralized exchange is also an online platform where people can buy and sell digital currency, but they use a third-party to authenticate and execute the transactions. This needs the buyers and sellers to entrust their funds to exchanges and allow them to safely complete the transactions.

These exchanges are known to be easy to use and enable traders to buy digital currencies with cryptocurrencies or fiat. They offer a streamlined entry point to the market and cover the majority of cryptocurrency trading.

Benefits of DEX

Following are the reasons we should think about trading in decentralized exchanges:

Control

In centralized exchanges, traders do not tend to have full control over their funds, limiting the trading potentials. Recently, the event known as Proof of Keys was run by centralized exchanges to ensure that exchanges could generate more profits on deposits, the same way a bank works.

This limited the users’ rights to withdraw all their funds in a single day.  The open nature of DEXs implies that our money remains in our control. Users get to withdraw their amount whenever they intend to.

Security

Centralized exchanges collect a massive amount of money from investors. This makes these exchanges the prime target of cybercriminals. Bitstamp and popular exchange based on Slovenia was hacked in 2015.

The hackers got access to the hot wallet and stole 19,000 Bitcoins, which was worth $5 million. And with the increasing number of trading in cryptocurrencies, centralized exchanges are becoming more vulnerable to hackers. Decentralized exchanges offer more security and, over the years, have become more common choices for crypto trading.

Privacy

Centralized exchanges are categorized as MSPs or Money Service Providers. This implies that users have to undergo certain anti-money laundering (AML) and Know-your-customer (KYC) processes. But people are often resistant to providing their personal information to third parties. This is because they end up having no control over what will happen to the data.

Decentralized exchanges, on the other hand, are not controlled by a central authority. Therefore, we do not need to register other than having a valid wallet address. Decentralized exchanges still remain a rather new concept in this ecosystem. But traders are rapidly comprehending its advantages over centralized exchanges.

Bottom line

Many new DEXs are coming in the market with better features, security options, and ease of use. When assessing these platforms, ensure to consider important factors such as security features, trading volume, currencies available, transaction fees, sign-up process, etc.

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Cryptocurrencies

What’s Bitcoin Gold? 

One of the bargaining points for Bitcoin is its decentralization. Which means it’s not controlled by a central authority such as a bank or government. On that front, Bitcoin has it covered. However, there’s another entirely different front that the cryptocurrency has in recent years struggled with. Powerful mining machines and entities have taken over mining in the Bitcoin network, effectively locking out miners of more modest means. This is hardly what Satoshi Nakamoto had in mind when he created the peer-to-peer, electronic, and decentralized currency system. 

One of the bargaining points for Bitcoin is its decentralization. Which means it’s not controlled by a central authority such as a bank or government. On that front, Bitcoin has it covered. However, there’s another entirely different front that the cryptocurrency has in recent years struggled with. Powerful mining machines and entities have taken over mining in the Bitcoin network, effectively locking out miners of more modest means. This is hardly what Satoshi Nakamoto had in mind when he created the peer-to-peer, electronic, and decentralized currency system. 

One of the bargaining points for Bitcoin is its decentralization. Which means it’s not controlled by a central authority such as a bank or government. On that front, Bitcoin has it covered. However, there’s another entirely different front that the cryptocurrency has in recent years struggled with. Powerful mining machines and entities have taken over mining in the Bitcoin network, effectively locking out miners of more modest means. This is hardly what Satoshi Nakamoto had in mind when he created the peer-to-peer, electronic, and decentralized currency system. 

Decentralized and peer-to-peer. It’s all in those two words. The ability for ordinary people to transact with each other, directly, on the Bitcoin blockchain. The ability for anyone to participate in maintaining and securing the network. But the current picture in which a few powerful companies dominate this function diminishes the decentralization principle of the network. 

Bitcoin Gold (BTG) is a Bitcoin fork that seeks to remedy this problem. The currency hard-forked from the Bitcoin blockchain on October 24, 2017, at block height 491407. Let’s find out what Bitcoin Gold has in store.

Understanding Bitcoin Gold

Bitcoin Gold is a cryptocurrency that forked off of the Bitcoin blockchain. The currency hopes to make Bitcoin mining truly decentralized, as was the original vision by Satoshi Nakamoto. The team behind Bitcoin Gold envisions a cryptocurrency that everyone gets to participate in, as opposed to that ability being concentrated in the hands of a few powerful companies. 

In Bitcoin Gold’s own words: “Bitcoin Gold is a community-led project to create an experimental hard fork of bitcoin to a new proof of work algorithm. Bitcoin Gold will provide an opportunity for countless new people around the world to participate in a mining process with widely-available consumer hardware that is manufactured and distributed by reputable mainstream corporations. A more decentralized, democratic mining infrastructure is more resilient and more in line with Satoshi’s original vision.” 

Bitcoin Gold: Decentralizing Bitcoin

In Bitcoin’s early days, the ordinary computer could perform the work needed to verify and add transactions on the blockchain (in a process called mining). But in recent years, mining difficulty has increased, leading to the advent of more powerful and effective mining equipment known as application-specific integrated circuits (ASICs). ASICs today perform nearly all the mining on the Bitcoin blockchain. 

ASICs are designed for the sole purpose of Bitcoin mining – a factor that makes them incredibly fast and effective for the task. The problem is, buying and operating an ASIC machine involves a large amount of money (with the average ASIC miner going for $1,000 or more). 

This is something that locks out the average user from participating in the Bitcoin network. It also leaves Bitcoin mining in the hands of the few with the financial wherewithal to afford to purchase, install, and run ASIC machines. The result? Bitcoin becomes more centralized. And that’s not the end. The huge majority of Bitcoin mining takes place in actual warehouses equipped with hundreds/thousands ASICs that run 24/7. In this kind of setup, even if you can afford an ASIC machine, you cannot possibly compete with an entire warehouse. 

Bitcoin Gold wants to change this. The end goal is to make Bitcoin mining attainable for the average person, making it a much more decentralized process. Or, as the project’s slogan goes – “Make Bitcoin decentralized again” – a tongue-in-cheek play on Donald Trump’s 2016 election campaign slogan. Of course, the underlying message is much soberer: make Bitcoin mining a more inclusive and equitable process. And to achieve this, Bitcoin Gold has to make major decisions, such as changing a Bitcoin mining algorithm to no longer support ASIC mining.

SHA-256 vs. Equihash

To stop Bitcoin mining’s dependence on ASICs, Bitcoin Gold has to make it difficult for the machines to perform the proof of work involved in transactions’ verification and addition to the public ledger. In view of this, the BTG blockchain employs a memory-hard (meaning dependent on RAM) hashing algorithm known as Equihash. By contrast, the ASIC-dependent Bitcoin blockchain uses the SHA-256. The requirement for more memory renders it more complicated for the processing power-focused ASICs. This means small-time GPU miners can get in the groove once again.

Replay Protection

The Bitcoin Gold blockchain has integrated ‘replay protection’ as a means to protect users from potential hacks and other malicious activity. Replay protection is a feature that prevents users from sending both Bitcoin Gold (BTG) and Bitcoin (BTC) during a transaction. This protection is meant to cushion against a replay attack, which is an attack that can occur in the context of two forked cryptocurrencies that share the same code. In the absence of replay protection, users might accidentally send funds via the wrong blockchain, losing them entirely. 

As explained by the developers in a blog: “In order to ensure the safety of the Bitcoin ecosystem, Bitcoin Gold has implemented full replay protection – an essential feature that protects users coins from being spent unintentionally.” 

Mining Bitcoin Gold

With Bitcoin Gold being a more attainable Bitcoin, so to speak, how do you get to mining? All you need is a GPU – as opposed to the expensive and complex setup of an ASIC machine. Next, you should join a mining pool. A mining pool allows miners to come together and combine processing power so as to mine blocks faster. At the successful mining of a block, full participants share the reward according to each miner’s contribution to their processing power. You’ve got several choices, including pool.gold, 2Miners, Minergare, BTGPool Pro. Next, you need to download the mining software for the pool you’ve joined. 

You’ll then need to have a BTG wallet. You’ve got options like BTGWallet.online, Bitcoin Gold Core, Ledger S, Freewallet, and so on. Every Polo has its own set of procedures, including integrating your wallet.

Controversy Surrounding Bitcoin Gold’s Launch

Like almost any prominent crypto hard fork, Bitcoin Gold’s launch was not short of controversy. The first controversy was the developer’s decision to conduct a “postmine” of 100, 000 coins after the launch. About 8000 blocks were mined in quick succession, with 5% of these going to the core developing team.

Coinbase, the largest crypto exchange in America and one of the largest in the world, was particularly skeptical of the crypto, stating that they “cannot support Bitcoin Gold because its developers have not made the code available to the public for review. This is a major security risk.” 

Also, just five days after launch, miners accused one of the developers of adding a 0.5% mining fee that had not been made transparent previously.

Tokenomics of Bitcoin Gold

As of 13th July 2020, BTG was trading at $9.75, while ranking at #57 in the market. It has a market cap of $170, 763, 243, 24-hour volume of $39, 395, 586, a circulating and total supply of 17, 513, 924, and a maximum supply of 21 million. In addition, the coin’s all-time high was $53 9.72 (Oct 23, 2017), while it’s all-time low was $4.31 (March 13, 2020). 

Buying and storing BTG

BTG is one of the popular cryptocurrencies, so you should have no trouble finding an exchange listing it. Options include big hitters like Binance, Bitfinex, Huobi, Livecoin, Gate.io, OKEx, P2PB2B, BitHumb, EXMO, Folgory, YoBit, and Coinone. 

When it comes to the coin’s storage, you have several options, including Trezor, Bitcoin Gold Core, Ledger Nano, Exodus, Coinomi, Bitpie, and Freewallet.

Conclusion

The idea of cryptocurrency is to hand back the power of finance to the people. The ordinary person gets to participate in the “minting” of new coins, as well as securing the source network. But this grand promise for the first-ever cryptocurrency got subdued along the way, with powerful specialized machines taking the whole stage. Bitcoin Gold is out there trying to steer things back to how they’re supposed to be. 

Right now, the currency is performing modestly in the market. It’s hard to tell, just like with any cryptocurrency, the prospects of the coin. But as the crypto industry becomes more inclined towards true decentralization, it’s not hard to fathom BTG climbing to the top of the ranks. 

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Crypto Guides

What Should You know About Web 3.0?

Introduction

Introduction

Introduction

World Wide Web, as we know, today has undergone a lot of changes. To dwell on Web 3.0, we need to understand what comprises Web 1.0 and Web 2.0. Web 1.0 is the first integration of the internet in the nineties. The visionary Sir Tim Berners-Lee led us to web 1.0. He wanted to decentralize the information so that there wouldn’t be any third-party intervention to access the information. Let’s look at the previous two versions briefly below:

Web 1.0

Web 1.0 comprises of mostly static information. It can be termed as a worldwide explosion of information or read the only web. Many big companies have come up with read-only websites. Many E-Commerce websites can be termed as Web 1.0 version as an example today. User interaction is very minimalistic.

Web 2.0

Web 2.0 can be termed as the web we know as of today. It is also said web of social media with many video streaming platforms. With the invention of Web 2.0, all of us got access to not only download available content but also to upload the content made by us. It has started becoming two ways, which started revolutionizing many business models. Let us look into Web 3.0 now.

Web 3.0

Web 3.0 is termed as the internet of value, and it has special significance in today’s world. We have already entered web 3.0, and it is not somewhere in the distant future. We consider it as the most advanced of all because it uses Machine Learning, Artificial Intelligence, and Blockchain technologies to offer us the best suit of experience.

One of the daily examples of Web 3.0 usage is when we shop on Amazon or any eCommerce website. Under a product we are looking to buy, there is another section which says people ‘who bought this has bought’ these items or what items people bought after buying this product. This is possible because of AI/ML. The user experience is maximized because of the suggestions.

Web 3.0 allows the acceleration of decentralized finance. We have business models available for many purposes rather than the one in the previous versions, where only big companies were used to make use of them for businesses. User privacy is hampered in a big way with the advent of so many apps and their usage.

Big multi corporations, even though they say that their laws pertaining to data privacy are simple, which prevents them from collecting data is not true in reality. With the advent of DAPPS with blockchain as the underlying technology, no user information can be collected and stored without users’ consent. Web 3.0 is a whole new experience without privacy concerns anymore.

The key technology in shaping up Web 3.0 is termed as blockchain. Blockchain provides the decentralized infrastructure for the internet, which fundamentally changes how the web operates. Blockchain allows a highly secure environment to exchange data generated by billions of IoT devices across the world. The decentralization of data allows users to control data rather than the big corporations controlling them single-handedly.

Conclusion

The big companies have treated us like products by collecting the information in the form of our tastes, need to target and sell their products in return to us. We lost control of our data privacy. Web 3.0 is essentially taking back the control from the corporations to our own hands using the decentralization of data using blockchain technology

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Cryptocurrencies

Centralized Vs Decentralized Storage: How Blockchain is Redefining Data Storage

Today, data is more valuable than ever before. Whether it’s individual or company data, we treasure our data because it contains memories, sensitive information, transaction records, and financial records, and so on. In some ways, data is more valuable than money itself. And everyone wants fast and secure access to their data.

Today, data is more valuable than ever before. Whether it’s individual or company data, we treasure our data because it contains memories, sensitive information, transaction records, and financial records, and so on. In some ways, data is more valuable than money itself. And everyone wants fast and secure access to their data.

Today, data is more valuable than ever before. Whether it’s individual or company data, we treasure our data because it contains memories, sensitive information, transaction records, and financial records, and so on. In some ways, data is more valuable than money itself. And everyone wants fast and secure access to their data.

Data storage is the recording of information in a medium such as a computer or another sort of an electronic system. And decentralized storage is the storage of data in multiple servers or computers where files are protected with blockchain and cryptography. Since data is stored across a network of multiple computers, no one authority can regulate or control it.

Centralized storage represents the existing model of storing data where your data is stored on third-party servers. While the centralized storage solution has served us well since the age of the internet, it has inherent weaknesses that make it less than ideal for fast-changing customer preferences on how and when they want their data.

This article prods a little on the evolution of the internet and how it changed the storage function and explores the fallibility of centralized storage in juxtaposition with decentralized storage. We’ll also look at some of the exciting decentralized storage projects that are using blockchain technology to offer more secure, effective, and easy-to-access storage services.

The Evolution of the Internet

In the early days of data storage, we stored and shared data thorough rather rudimentary devices such as floppy disks. Over the years, we progressed to CDs, hard disk drives, and so on. These had a larger space for storage, but the core concept didn’t change. You still had to move around with the data storage device, rendering your data susceptible to loss and damage.

Upon the advent of the internet, the storage and sharing of data got a new form. We can now connect with computers from all over the world and access information, pictures, and data and more anywhere and anytime. We’ve come far from the days when you had to own and maintain your own server to the current pay-as-you-use model, and then to cloud services like Amazon’s S3 that provide better scalability, security, and performance. However, despite all this progress, the current iteration of the internet is still problematic in a number of ways.

The Problems with Traditional Internet

Censorship

The current centralized model of the internet renders it vulnerable to the whims of authoritarianism. An example is China, in which the online encyclopedia – Wikipedia, is blocked. Or when governments of tyrannical countries shut down the internet during an uprising. With decentralized platforms, people from such countries can still access information.

Relinquishing Control of Data

With centralized storage, companies and users usually hand over data to third party services. From then on, the data is beyond their control, as are the privacy settings protecting that data. Also, the party that you’re entrusting to store your data is more than likely only incentivized by profit. As such, they’ll make decisions that advance their bottom-line without much regard for your business model. A good example is Google’s change in the algorithm, which has put many marketing companies out of business.

Mismanaging of Data

Everyone knows about the Facebook and Cambridge Analytical scandal. Due to negligence by the social media giant, the Cambridge Analytica was able to put its hands on the data of millions of Facebook users and use that data to manipulate elections in several countries. The data was so eerily detailed that the psychographic profiles the company created could accurately suggest what kind of advertisement would be persuasive enough for an individual in a given location for a certain political end.

Another mismanagement debacle is the Deep Roots Analytics case in which the data firm stored details of 198 million Americans on a cloud server for almost two weeks without password protection. The data included names, email, and telephone contacts, home addresses, voter IDs, etc.

Expensive

To put it mildly, centralized data storage is expensive. To begin with, renting cloud storage is expensive on its own. And when you access it over and over again, the bills pile on. Also, costs are arbitrarily determined by the hosting company with little or no say from clients, or no incentive to use the service at all.

Advantages of Centralized Storage

Advanced Security

With decentralized storage, users’ files are split across multiple nodes in the network. Since the data is stored in all those nodes, it’s more secure as there’s no single point of failure. 

Higher Liveness

Liveness is a computing term to describe the ability of a system to stay up and running, even if certain parts of that system are not functioning optimally. In a centralized system, once the server fails for any reason, it brings down the entire system with it.

Decentralized Storage Projects

Rootstock (RSK)

Rootstock is a smart contract platform connected to the bitcoin blockchain through a sidechain. It features a technology stack called Rootstock Infrastructure Framework Open Standard (RIFOS). RIFOS is currently working on a storage application called ‘RIF Storage.’ RIF will improve storage in the following ways:

  • It will feature a unified interface that will allow for the encrypted and decentralized storage and streaming of information
  • It will offer a variety of options for users – from decentralized swarm storage to cloud and physical storage

On the RIF platform, you will also access several decentralized storage services such as IPFS and Swarm.

The partnership between RIF and Swarm, a distributed storage platform and content distribution infrastructure, will see to the following:

  • An incentivization system for users, combined with  a settlement and payment mechanism
  • The building of accounting functionalities between nodes
  • Enhance interoperability and antifragility to strengthen Swarm as a multi-blockchain decentralized storage platform.

Sia

Sia is a decentralized, blockchain-based cloud storage platform. Here, users can interact with each other in a peer-to-peer (P2P), secure and censorship-resistant environment. The Sia model works this way: individuals with extra hard drive space can rent it out and earn money from it, and individuals who need storage space can lease it at little cost.

And unlike centralized storage platforms where you pay more when you access your files for more than a preset frequency, the Sia platform allows you to upload and download files however much you want, as long as the contract funds remain in place. Also, renters are protected from fraud thanks to Sia’s proof-of-storage concept that ensures hosts only receive payment when they present proof of storage.

In this peer-to-peer model, the hosts have the right to advertise their services and also turn down storage requests for data that’s too sensitive, ethically ambiguous, or illegal. On their part, renters have the right to split up their files between various hosts, increasing their safety. They can also pay extra to receive special treatment, such as faster upload speeds and other preferential treatment.

Storj

Storj is an open-source, decentralized storage solution built on Ethereum. It features a suite of decentralized applications that allow you to store and share data in a secure environment thanks to encryption, sharding, and a distributed hash table.

Sharding is a process that fragments the files so that they are shared between users in the network. Anytime you want to access a file, Storj locates all the shards and pieces them together using the hash tables. The files are encrypted before they are shared, and only the owner can access or view them. And even if one of the nodes sharing the files goes down, you can still access the file.

Concluding Thoughts

Decentralized storage could turn upside down the storage function as we know it, thanks to a P2P, a highly secure model, and the freedom to access info and data anywhere and anytime. These projects are some of the trailblazers in this space, and we can be assured of other projects with more amazing and user-interactive features. It will be fascinating to see how this space evolves in the coming years.

 

Categories
Cryptocurrencies

Decred Review: Is It the Ideal Cryptocurrency?

Cryptocurrency represents freedom of finance. Decentralized, censorship-resistant, and peer-to-peer are some of the words that we ascribe to it. But whether the vast majority of cryptocurrencies meet these criteria is a grey area.

Cryptocurrency represents freedom of finance. Decentralized, censorship-resistant, and peer-to-peer are some of the words that we ascribe to it. But whether the vast majority of cryptocurrencies meet these criteria is a grey area.

Cryptocurrency represents freedom of finance. Decentralized, censorship-resistant, and peer-to-peer are some of the words that we ascribe to it. But whether the vast majority of cryptocurrencies meet these criteria is a grey area.

Decred is a cryptocurrency launched in February 2016 that attempts to live up to these ideals. Its team of founding developers comprises of former developers of the notable btcsuite, a version of Bitcoin programmed in the Go language.

In this article, we’ll cover the exciting highlights of the Decred project and leave you to decide whether it’s the optimal currency or not. 

The Principles of Decred

Decred endeavors to live by these principles:

☑️ Free and Open Software – All software developed as part of Decred shall be free and open software

☑️ Free Speech and Consideration – Every member has the right to communicate opinions and ideas without fear of censorship, as long as it’s based on fact and reason. 

☑️ Multi-Stakeholder Inclusivity – A diverse set of views and users shall be represented and encouraged.

☑️ Incremental Privacy and Security – Privacy and security are priorities, and they shall be treated as such, and shall be incrementally implemented and on a continuing basis, both proactively and in direct response to attacks.

☑️ Fixed Finite Supply – Issuance of coins is finite, and the total issuance shall not exceed 20, 999,999.99800912 DCR, with a block subsidy that adjusts every 21.33 days by a reducing factor of 100/101.

☑️ Universal Fungibility – Universal fungibility is central to Decred as a store of value, and any attacks against it shall be met with countermeasures.

Breaking down Decred

Decred has a maximum supply of 21 million. The project never held an ICO, but an airdrop of 282.64 DCR was awarded to 2972 selected participants during the launch. Its all-time high was $99.74 on April 25, 2018, and its all-time low at $0. 394796 on December 28, 2016.

As of February 21 21, 2020, the price of Decred is $20.53 at a market rank of #37. Its 24-hour volume is $28, 260, 170, with a circulating supply of 10, 786, 831.

Each time DCR is mined, 60% is awarded to the PoW miner, 30% to PoS voters, and 10% held by Decred for future development.

How to Get Involved With Decred

Decred designates three ways through which you can interact with the platform:

The Wallet – Through the wallet, you can send and receive funds as well as take part in PoS voting.

Proof-of-Work Mining – You can use your computing power to validate transactions on the network and generate new tokens.

Proof-of-Stake Mining – Through ownership OF Decred tokens, you can vote on network development issues and validate transactions. 

All you need to send or receive Decred tokens is an address that you can easily generate from any Decred wallet. Once you own Decred, you’re eligible to join a staking pool and participate in PoS voting and earn rewards while at it.

What Problems Does Decred Intend to Solve?

Decred developers are huge blockchain and Bitcoin fans. However, they identified problems with how Bitcoin operates. As Bitcoin’s popularity has surged, the decision-making process seems to get more centralized by the day. This is evidenced by, for instance, the concentrated power in the hands of powerful mining companies.

In addition, almost any major upgrades to the Bitcoin software have to take place via a hard fork. This is what happened in 2017 when one section of the community proposed the SegWit2x hard fork on the chain. The two opposing sides got involved in hostile debates, peppered with name-calling and threats. The hard fork was finally called off, but not before leaving sharp divides in the Bitcoin community.

According to Decred, such divisions and the power that a particular section of the community might have over the cryptocurrency is counterproductive to the ideals, spirit, and the world of blockchain and cryptocurrency.

We’ve all seen what happens when two opposing sides do not arrive at a consensus. Factions can decide at any time to create a hard fork off the open-source Bitcoin code. Cryptocurrencies like Bitcoin Cash, Bitcoin Gold, Bitcoin Satoshi’s Vision, and Bitcoin Diamond are all offshoots of the original Bitcoin blockchain.

The Problem with Hard Forks

Forking is never the ideal outcome for cryptocurrency. Let’s see below why:

Repeated hard forks are bad for investor sentiment. After the Bitcoin Cash hard fork, Bitcoin prices took a tumble.

Hard forks fracture the Bitcoin community. The flared up tensions, and hard-line stances do no good for the community and the cryptocurrency sphere as a whole.

New hard forks are susceptible to attacks. So far, the biggest public blockchain to succumb to a 51% attack is, you guessed it, a hard fork. This blockchain is Bitcoin gold, and the attack happened in May 2018. The attacker made away with roughly 388,000 BTG worth $17.8 million then.

Hard forking undercuts the economic aspect of cryptocurrencies. For instance, the Bitcoin hard forks are confusing to users and undermine Bitcoin’s principle of a capped supply.

Decred presents a vision and cryptocurrency that’s free of hard forks, especially ones that fracture the community. While a hard fork is possible on Decred, its voting protocol is designed so that users can democratically vote on changes before activation.

Let’s look at the various mechanisms that Decred employ that will help it realize fair, smooth, and efficient governance.

Decred’s Hybrid PoS and PoW System

Decred’s voting system utilizes a hybrid of the two best-known consensus mechanisms: proof of work and proof of stake. 

These are the basics of how these two interact:

  • Miners mine for a block using PoW
  • Five token holders are randomly chosen to verify the block
  • If three of these validators confirm the validity of the block, it is recorded on the blockchain
  • 60% of the block rewards go to the miners, 30% to the validators, and 10% to the Decred project for future development.

With PoS, anyone who holds Decred tokens can participate in the staking system in this way:

  • DCR holders can purchase tickets with their tokens. The tickets give them pass to be part of the system
  • Only 20 tickets can go to any one block at any time. You may have to wait to get mined, but if you wish to get mined faster, you’ll need to pay some fees.
  • Once mined, your ticket is “immature” and will be held outside the random draw pool until 256 blocks have been mined, which is in approximately 20 hours.
  • After your ticket enters the draw pool, you will have to hold out for your chance to be chosen as one of the five validators that are randomly picked to verify the block
  • Your ticket has a 50% chance of being selected within 28 days and a 99.5% chance of being selected before it expires (after around four months).
  • Once your ticket’s chosen, you’ll help validate a block and be rewarded with a price for the ticket and also a staking reward.

The Decred system is also fair in that validators can participate in staking pools. As such, if a validator can’t make it to be part of the validation process, they can simply have their pool validate a block on their behalf.  

So far, you can see that Decred gives the power of participation to both users and miners. Unlike the Bitcoin system, miners do not possess disproportionate power over the network. If, for instance, a miner decides to mine a malicious block i.e., a transaction unrelated to the chain, validators can simply decline to verify the block. As you know already, PoW takes a lot of computational power, and for that, miners have very little incentive to do something that won’t pass with the validators.

How Safe Is the PoW/PoS Hybrid?

Just HOW safe is the PoW/PoS hybrid mechanism? A crypto analyst named Zubair Zia made it his mission to test the security of Decred’s chain vs. Bitcoin’s or a PoW/PoS model vs. a pure PoW model. He wanted to see which chain would more easily succumb to a 51% attack.

He used BITMAIN’s Antminer s9i’s, which has a rate of 14 tera-hashes per second. His calculations demonstrated that it was 22 times as expensive to hit Decred as compared to Bitcoin as of June 2, 2018.

In short, the hybrid system is 22 times more secure than a purely PoW system.

Lightning Network for Transactions

Decred has also implemented the Lightning Network.  The Lightning Network (LN) is an off-chain technology that has been explored by multiple cryptocurrencies to improve scalability. LN helps to settle payments outside of the blockchain so as to reduce traffic and backlog on the main chain.

LN works by having two users set up a payment channel on the network and depositing an equal amount of funds. Any time one user wishes to transact, they simply send a promissory note to the other user indicating a change of the total sum in the shared channel.

Since transactions happen off the chain, users also pay fewer fees since there’s no queue. Transactions are also instant, and there’s even added privacy thanks to a Tor-like routing algorithm for transactions. 

Decred’s Politeia

Thanks to a decision-making system called Politeia, Decred has managed to achieve decentralization more than any other existing cryptocurrency project.

Politeia is an ancient Greek word employed in Greek political writings, especially that of Plato and Aristotle. The term has many senses, from meaning “rights of citizens” to “form of government.”

Decred’s Politeia is designed to be the ultimate form of self-governance and community autonomy over a cryptocurrency project. Users can vote to accept or reject proposals, including budgets, software upgrades, marketing plans, constitutional amendments, and so on. When launching the system, project lead Jake Yocom-Piatt noted: “The direction of Decred now lies with the collective intelligence and creativity of its stakeholders.

We look forward to the exciting projects our community will propose.”

Where to Buy and Store DCR

You can purchase DCR from several exchanges, including Binance, Bittrex, Coinswitch, Changelly, Kucoin, Huobi, and so on by trading Bitcoin for it.

As for storage, the best wallet so far is the Decrediton wallet that’s available for Mac, Linux, Windows, and so on.

Great third party options also include Exodus, Coinomi, Atomic, Ledger Nano, etc.

Final Words

Decred has undoubtedly broken the mold, especially with its first of the kind governance system. Even though not as well-known as of yet, it’s one that has modeled cryptocurrency ideals better than perhaps the whole cryptocurrency pool right now.

The team behind it is also very well-regarded in the blockchain and crypto space, which is just the icing on the cake. With such a sound philosophy and a fantastic team, Decred is poised for success. But this will depend on the community. One can only hope it will mobilize for better and more exciting features for the platform before newer projects arrive and overtake the platform. 

Categories
Crypto Guides

What Problems Do Stable (cryptocurrency) Coins Solve?

Introduction

Introduction

Introduction

We have learnt a lot about cryptocurrencies and their properties in our previous guides. Even though this financial instrument has gone through a lot of up & down in the last three years of the past decade, many financial experts believe that this asset class can still be considered a potential investment. Some experienced crypto traders believe that Bitcoin, at its peak (~$18,000 in Dec 2017), is still undervalued. This is because of the strong fundaments Bitcoin possesses. Not just Bitcoin, the entire crypto market has enormous investment potential in this decade.

The Need for Stable Coins

But there is one thing that concerns both short-term and long-term crypto investors – which is undoubtfully the volatility. Most of the cryptos currently present in the market possess huge volatility. This is one crucial reason why most of the investors are not confident enough to invest in this space. This volatility is also the reason why cryptos cannot be used as a standard medium of exchange. Hence the need for a Stable Currency or Stable Coin has risen.

A Stable Coin is a currency that has all the critical properties of typical crypto while achieving price stability. This stability in price is achieved by pegging their value to the major fiat currencies like USD & Euro in a 1:1 ratio. One of the very first and famous stable coins is Tether, and its value is pegged to USD. So the value of one Tether (₮) is always equal to one US Dollar ($). The main goal of any stable coin is to achieve maximum decentralization while maintaining price stability. But in the case of Tether, even though it has most of the properties of crypto, it is highly scrutinized ever since it is pegged with the USD.

Significance of Stable Currency

Stable Currency, as the name suggests, provides both short-term & long-term stability for the traders and investors. Short-term stability allows users to make day to day transactions just like fiat currencies. While the long-term stability provides confidence for the investors to include these stable coins in their portfolio. For instance, in the case of extreme bear markets, crypto traders and investors must need some stable storage where they can protect their portfolio from significant losses. The only other way is to convert all these cryptos to desired fiat currencies and convert back to crypto again once the downtrend is over. This sounds redundant. Isn’t it?

But with the help of stable coins in their portfolio, investors can just trade the cryptos that are bleeding for stable coins and hold them without having to worry about the volatility. Apart from the investment point of view, stable coins can also help short-term crypto traders to confidently keep their profits that they have gained within the exchange wallets (in the form of stable coins). But in the absence of stable coins, they will have to continuously worry about them losing their profit value due to the high volatility.

If you are interested in adding stable coins to your portfolio, we have mentioned some of the most promising ones below.

Tether | MakerDAO | True USD | Carbon

Many stable currency projects like these have come to existence after Tether, and some of them showed promising results. However, a completely decentralized stable coin that can be used for day-to-day transactions securely is yet to come.

Categories
Crypto Guides

Architecture and Operation of Blockchain Technology

Introduction

Introduction

Introduction

We can obtain the definition of Blockchain by dissecting it into its two words: block and chain. Hence, Blockchain is a chain of blocks having some information in it. Using a blockchain is a way of time-stamping digital documents so that it’s not possible to backdate or tamper them. This secure technology can be used for the transfer of various items such as digital currency, property, contracts, etc. And the primary feature of any blockchain is its decentralized nature. There is no central authority or banks to control the transactions.

Blockchain Architecture and Operation

The architecture and functioning of blockchain go hand in hand. As already mentioned, blockchain is a chain of blocks containing some valuable information. The type of blockchain depends on the data that is present inside a block. For example, a block in a Bitcoin blockchain contains information on who is sending how many bitcoins to whom. Another essential piece in the blockchain is the hash.

Understanding Hash

In simple terms, the hash is the fingerprint of a block. It is unique to each block and is mainly used for the identification of a block. If the content in the block changes, the hash of block changes as well. So, a block has three components:

  1. Data (Sender, Receiver & Amount)
  2. Hash
  3. Hash of the previous block

In technical terms, blockchain is designed using the principles of a linked list. Blocks containing a hash of the previous blocks is what makes blockchain so secure.

Proof of Work

Hashes are an excellent way to avoid tampering of data. But, computers today are fast enough to calculate hundreds of thousands of hashes per second. This makes it pretty convenient for a hacker to tamper a block, and recalculate all the hashes of other blocks and the blockchain valid.

To avoid the occurrence of this situation, Bitcoin blockchains use the concept of Proof-of-Work. This concept is a computational problem that takes efforts to solve. In the case of Bitcoin, it typically takes 10 minutes to calculate the required proof-of-work and add a block to the blockchain. So, this makes it extremely time consuming and challenging for hackers to tamper a block.

Distributed P2P Network

Blockchain is known for its distributed peer to peer network. Anyone is allowed to enter the network. When someone enters the network, he will get a full copy of the network.

When a new block is created, it is broadcasted to all the nodes in the network. Each node verifies this block and makes sure it hasn’t tampered. After verification, each node adds this block to its blockchain. Later, all the nodes create a consensus. They agree about the legitimacy of the blocks and accept or reject it. If the block is verified successfully by consensus, it is added to the main blockchain. This is when the block gets its first confirmation. And when around four confirmations are received, the transaction is said to be completed successfully.

Summary

  1. There are four steps involved in the working of a blockchain.
  2. Some person makes a cryptocurrency transaction.
  3. The transaction is broadcasted to a distributed P2P network.
  4. The nodes in the network validate the transaction with the help of some algorithms.
  5. Once the transaction is verified, the new block is added to the existing blockchain.

This is how the blockchain technology works. Let us know if you have any questions below. Cheers.

Categories
Crypto Guides

Understanding The Fundamentals Of Blockchain

Introduction

Introduction

Introduction

We have understood the basics of DLT in the previous guide. In this article, let’s see one of the most popular applications of DLT, which is known as the blockchain. Many say that the blockchain technology is the new internet. By allowing information to be distributed not copied and tampered, blockchain did create the backbone of a new type of internet. Initially, blockchain found its application only in digital currencies, but today’s tech has now found other potential uses for the technology.

Blockchain, a distributed ledger, is a time-stamped series of immutable records of data that is controlled by different nodes in the network and not owned by any single entity. The records are stored in blocks that are secured and bound to each other by cryptographic principles.

The blockchain technology is completely decentralized. There is no central regulatory body on the blockchain network. The ledger on the blockchain is shared and immutable. The information in it is open to anyone to access. Hence, the blockchain is transparent in nature, and everyone involved in the network is accountable for their actions.

How does the Blockchain function?

In a blockchain, information is passed from one source to another in a fully automated and secure manner. When a party makes a transaction via blockchain, the peers in the network create a block for this transaction, which is secured using cryptography. This block is verified by several nodes (computers) distributed across the network. Once the block is successfully verified, it is added to the chain. Each block in the chain has a unique record with a unique history. Falsifying a single record means to falsify millions of instances in the chain. This is virtually impossible.

Features that hold Blockchain Strong

There are three properties of blockchain technology, which have helped it gain widespread applause.

  • Decentralization
  • Transparency
  • Immutability

📌 Decentralization

Before the appearance of Bitcoin, the public was used to only the centralized systems. And the idea of centralized systems was simple. There is a centralized entity that stores user’s information. To get this information, the user must interact solely with this entity. The main drawback of centralized systems is the absence of transparency.

Imagine if the centralized system was taken out. Everyone in the network can now view the data. It simply eliminates the existence of a third party. The data now can be shared one to one without any intermediary. This will eradicate the costs to be paid to the intermediaries as well. And this system is referred to as a decentralized network, making it a great property of the blockchain.

📌 Transparency

Transparency is another property that makes blockchain much appealing. Some say that blockchain is transparent, while some say it is private. Though it may sound counter-productive, blockchain is both transparent and private. When a transaction is made between two parties, one cannot see ‘who’ has sent it to ‘whom.’ Instead, we will be able to see something called the hash of a transaction. And this will be visible to everyone. Hence, this brings both transparency and privacy in the blockchain.

📌 Immutability

The blocks in the blockchain are immutable. It is impossible to tamper with. Technically speaking, blockchain is a linked list whose structure contains data and a hash pointer to the next block, hence creating a chain. This chain makes blockchain immutable.

For instance, let’s say a hacker hacks block 3 in the chain and tries to change the data. But, a slight change in the block will affect the other blocks drastically. That is, a change in block 3 will change the hash stored in block 2. This continues up to block 1. This will change the entire blockchain, which is impossible. Hence, making blockchain immutable.

Above are just the primary properties of the blockchain. There are other beneficial properties too, which is the reason blockchain has still sustained and is developing at a rapid pace.

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Crypto Videos

What You Don’t Know About Decentralised Exchanges In Under Four Minutes

https://youtu.be/co7bMojkLEE
Decentralized exchanges explained
Bitcoin was designed to be a peer-to-peer system that allows its users to transfer funds or information without central authority or third party getting involved.

https://youtu.be/co7bMojkLEE
Decentralized exchanges explained
Bitcoin was designed to be a peer-to-peer system that allows its users to transfer funds or information without central authority or third party getting involved.

Decentralized exchanges explained

Bitcoin was designed to be a peer-to-peer system that allows its users to transfer funds or information without central authority or third party getting involved. By using Bitcoin, users fix the problems of censorship, fraud, and many others. On top of that, the automated issuance mechanism of Bitcoin through mining removes the control that central and private banks had.
The primary goal of Bitcoin’s creation was to return the control of money to its owners. However, these same fund owners entrust their funds to third-party services on a daily basis. The most popular service providers in this industry are cryptocurrency exchanges. These centralized exchanges are easy to use and access. On top of that, they are a great option when it comes to using advanced trading features such as margin trading.
However, these exchanges represent a security risk for the users’ funds. Not only that, but they go against everything that Bitcoin and cryptocurrencies in general stand for. While some exchanges have better security features than others, security breaches are not rare in this industry. Exchanges got hacked, and people lost their crypto holdings in a matter of seconds.

So what’s the alternative?

With all that being said, users still need to exchange their funds somewhere. Bitcoin is not yet an accepted payment method in most places, and people need places where they can sell it for fiat currency. Also, obtaining some altcoins can only be done in exchanges where people can exchange major cryptocurrencies for smaller ones. So how can people not compromise their security while still being able to exchange cryptocurrency? The answer lies with decentralized exchanges (better known as DEXs).

Decentralized exchanges

Decentralized exchanges are exchange markets that don’t require a third-party service to hold the customer’s funds. The exchange trades occur directly between users through an automated process, which greatly increases the decentralization aspect of DEXs. The decentralized exchange system opposes the centralized model in which users deposit their funds while the exchange issues them an ‘IOU’ that can is then traded on the platform. These funds are converted back into the cryptocurrency once a withdrawal is asked for.

Pros and cons of DEXs

Decentralized exchanges are a safer option to traditional centralized exchanges as they do not own their users’ keys. On top of that, users are not required to trust the security of the exchange as their funds are held in their wallet rather than the third party.
Decentralized exchanges also value the privacy they provide. Users are not disclosing their details to anyone on the network, which keeps them safe from any type of government intervention.
On the other hand, there are always downsides when it comes to decentralized exchanges. Most DEXs have very complicated user interfaces, which are challenging even to seasoned traders. On top of that, most decentralized exchanges have far lower liquidity than their centralized counterparts. On top of that, margin trading, lending, and stop-loss are currently unavailable on many DEXs.

Summary

Decentralized exchanges provide a unique way of transacting cryptocurrencies. However, there are still many obstacles to tackle before DEXs become what they are intended to be. With low liquidity and non-user-friendly interfaces, DEXs are just another tool for people that want to exchange their crypto assets safely. However, to mass adoption, DEXs have a long way to go.

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Crypto Daily Topic

Is Ripple a Cryptocurrency?

Ripple has long generated a lot of debate as to whether it’s even a cryptocurrency after all. Crypto enthusiasts and experts have always been at loggerheads on whether Ripple meets

Ripple has long generated a lot of debate as to whether it’s even a cryptocurrency after all. Crypto enthusiasts and experts have always been at loggerheads on whether Ripple meets

Ripple has long generated a lot of debate as to whether it’s even a cryptocurrency after all. Crypto enthusiasts and experts have always been at loggerheads on whether Ripple meets the tenets of a “real” cryptocurrency. One of these people is Anatoly Castella, CEO of Elpis Investments, who has gone on record to say Ripple’s XRP is “neither a digital fiat nor a real cryptocurrency,” and that it does not fall under the “purest interpretation of cryptocurrency.”

A crypto exchange – Coinmotion, even warned users about XRP not being a real cryptocurrency. “What one needs to know about XRP is that it is not a cryptocurrency in the strict meaning of the word…What differentiates XRP from other cryptocurrencies is that it is not based on blockchain, it is not mined and it is heavily centralized.”

The 2000+ cryptocurrencies out there all derive inspiration from Bitcoin, the world’s first Bitcoin. Some of these cryptocurrencies strive to remain “true” to what exemplifies Bitcoin, e.g., running on a decentralized blockchain ledger, using cryptography to secure the network, transactions being carried out via mining, a finite supply of coins, etc.  But should a cryptocurrency take after each of bitcoin’s traits to be labeled as such? 

Let’s begin by understanding Ripple

Ripple was released in 2012 as a payment settlement, currency exchange, and money transfer network. Ripple’s goal was to circumvent the lengthy waiting processes and expenses involved in the traditional banking model.

XRP is the native currency for the Ripple platform. The company has issued 100 billion XRP tokens, which the company promises to be the maximum number to ever be in existence, although some in the crypto community think Ripple may not adhere to this vow in the future. The XRP token is meant to be the bridge between currencies. It treats all currencies the same way –from fiat currency to gold to even airline miles, which makes it easier to exchange any currency for another.

As a cryptocurrency, Ripple has only recently achieved “mainstream” popularity. Traders and investors have long kept it at arm’s length, mostly due to its traditional makeup that reconciles crypto with fiat currency. For this reason, among others, some in cryptoverse have refused to recognize it as a real cryptocurrency. The question is, are they right? Let’s review some aspects of XRP that will help us answer this question.

XRP is More Premium on Blockchain

XRP was not designed to be a coin, at least in the sense of Bitcoin, Litecoin, etc. While Bitcoin, for instance, accords the cryptocurrency and the network both equal importance in security, speed, availability to all, and applicability, Ripple does not place too much weight on XRP as an investment-worthy security. Instead, it focusses on making the blockchain as robust and scalable as possible. This enables Ripple to enable seamless processes with its client organizations, e.g., the American Express and Santander Bank.

Ripple doesn’t support mining

Unlike Bitcoin and other comparable cryptocurrencies, there is no mining or miners with Ripple. Most other cryptocurrencies utilize different mechanisms which accord varying levels of power to the miners. Proof-of-Work, Proof-of-Capacity, Proof-of-Stake are just some of the many consensus mechanisms used by cryptos to power transactions. However, Ripple transactions are powered via a “centralized” blockchain. The idea behind the centralized network is to make it more reliable and quick.

Again, with most cryptocurrencies, miners are motivated to conduct network transactions by being rewarded with the currency of the network. For Ripple, however, this is unsustainable. In a service built for the benefit of the banking establishment, it makes no sense to have a separate group with different incentives for running/maintaining the network. 

The idea of mining and making the network open for any interested miners is to aid other cryptocurrencies to remain decentralized – with no central authority making the rules. While this has helped them stay true to the “spirit” of censorship-resistance, freedom from interference by corporates and governments, it also slows them down. This is something Ripple cannot afford. The no-mining aspect bleeds into other Ripple features as well, taking it further apart the standard.

Can XRP Be Minted on Demand?

In the majority of cryptos, miners are rewarded with cryptocurrency. This pretty much sums up how new crypto coins are released: by mining. Ripple has created 100 billion XRP already in circulation, which makes it nonvolatile for its clients.

This has led to some people in the crypto community to conclude the currency can be minted anytime – which is against the deflationary nature of cryptocurrencies. But this has been refuted by David Schwartz – one of the original architects of XRP ledger. In a Twitter post in November 2017, Schwartz stressed: “There was never any way to create additional XRP.”

He noted that the original code was prone to a malicious act that would conceivably allow someone to “violate system invariants” and add more XRP. But, they’ve since added an “invariant checker” that seals this loophole.

In other words, there is currently no functionality of adding XRP in the code. If, for any reason, new XRP needed to be printed, it would require a major amendment to the code and adoption into the whole network of validators.

Centralized Blockchain?

Users have access to a Ripple wallet, but accessing the Ripple network is another matter altogether. In the case of Bitcoin, the blockchain network is controlled by Bitcoin users all over the world. By contrast, the Ripple blockchain is not open for all, because that would create risk for the otherwise sensitive environment.

And while XRP uses cryptography to protect participants, in essence, it’s protecting “trusted” parties registered on the network. This way, the cryptocurrency has the benefits of a blockchain ledger, but in a safer and walled ecosystem that lends it more efficiency and control. We could say Bitcoin is maintained by participants who have an incentive to continue doing so, but still, they could decide to shut off their computers and walk away. This event would put Bitcoin in a sort of a precarious position, something which Ripple has avoided.

Conclusion

Ripple is not a “real” cryptocurrency, at least by the standard definition. It is more of a solution than an asset. While other cryptos may fit in the asset mold – complete with the deflationary qualities of mining and volatility, which makes them attractive to investors – Ripple offers a platform that may, technically, be a “cryptocurrency,” but one which cannot be regarded as such by crypto hardliners.

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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.

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Crypto Guides

The Evolution & Properties Of Cryptocurrency!

Introduction
We could say that the type of currencies we use today is employed as a medium of exchange for goods and services. In the olden days, transactions used to

Introduction
We could say that the type of currencies we use today is employed as a medium of exchange for goods and services. In the olden days, transactions used to

Introduction

We could say that the type of currencies we use today is employed as a medium of exchange for goods and services. In the olden days, transactions used to happen in the barter system. Barter system implies that goods are exchanged for goods. With this system, it took time to trade products and services as it is challenging to find people to accept their goods for the goods they want. Hence came the era of coins in gold or some other metal with a denomination printed on it. As some standard is associated with it, the trading of goods and services has become easy. Then came the paper notes making it easy to carry large amounts of cash, which was not possible with coins. We are this point where these paper notes are known as currencies. Each country has its respective currency (The US Dollar, Japanese Yen, Indian Rupee, etc.)

Evolution Of Cryptocurrency

Even though the purpose of the money didn’t change much, the way we use it kept changing throughout history. Banks came into existence to ease out the financial transactions. They played a significant role in global trade in terms of transferring money across different countries, thus improving the economy of each country. Physically minted cash would be less than 10% of the entire currency in the world. Remaining exists in the form of virtual currency as electronic money in online accounts. Central banks in each country control these accounts. Since power is vested within these financial institutions, the entire banking process is centralized. Hence the necessity of an alternative currency has emerged. These are termed as cryptocurrencies, and the primary purpose of their invention is to create a decentralized currency system where the entire network is not controlled by anyone at all.

What Are Cryptocurrencies?

Cryptocurrencies are digital or virtual currencies where cryptographic techniques are used to generate the units of currency and monitor the transfer of funds without a central bank. Thus, making it a decentralized way of producing and using money.

Cryptocurrencies are generated by using a blockchain platform that uses distributed ledger technology. The first-ever cryptocurrency that has come into existence is The Bitcoin in 2009, though the white paper related to this concept was released in October of 2008. Thus, 2009 signals the beginning of the era of cryptocurrency. There has been no looking back since then.

Properties Of Cryptocurrency

The three fundamental features of cryptocurrencies are Trustlessness, Immutability, and Decentralization. Let us understand these properties using the example of Bitcoin.

Trustless

Though the word trustless creates confusion to the readers, it merely means there is no need not trust anyone or anything to send or accept a cryptocurrency. If we say an environment is trustless, that means there is no need for you to trust anyone in the network. The Bitcoin network is a trustless environment. There was no currency before Bitcoin that was not monitored by a central bank. Every node in the blockchain network has a copy of the ledger; thus, there is no need to trust any authority.

Immutability

Immutability means that it cannot be undone. It is highly improbable to rewrite the history of the transactions in Bitcoin blockchain. Since all the transactions are recorded in the blockchain, the cryptographic techniques make it highly impossible to change any transactions. If any fraudulent transactions happen in the case of our bank accounts, the banks have the authority to change the transaction. But in the case of cryptocurrency, it is not possible. Thus, removing the concept of centralization and trust from these digital currencies.

Decentralization

It is the keyword when it comes to cryptocurrencies. Decentralization offers different types of tolerances. Tolerance concerning the infrastructure, component failures, hacking, and collusions. In the Bitcoin network, the ledger where the transactions are recorded is distributed among every node in the network. Any component failures don’t cause any problem to the functioning of the network. Hacking the blockchain is extremely difficult and a costly process. When it comes to traditional banking, individual entities can collide with each other to make profits at the expense of loss to others. This plot is not possible in the case of a cryptocurrency network, thus offering tolerance to collusion. Apart from all of these, there are many more advantages of a decentralized system over a centralized banking network.

Bottom Line

Therefore, Cryptocurrencies offer plenty of opportunities in today’s digital world, which traditional currency couldn’t provide. We will be further discussing the purpose of cryptocurrency and more properties of cryptocurrency in our upcoming articles. Stay Tuned. Cheers!