Tag: Digital Assets

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Cryptocurrencies

The History of Bitcoin

If you’ve never heard of Bitcoin before, you’ve either been living under a rock for the past few years, or you don’t keep up with the news. This cryptocurrency didn’t attract much attention in its early days, but it has become more recognized as a real currency and boasted upon as the price of Bitcoin […]

If you’ve never heard of Bitcoin before, you’ve either been living under a rock for the past few years, or you don’t keep up with the news. This cryptocurrency didn’t attract much attention in its early days, but it has become more recognized as a real currency and boasted upon as the price of Bitcoin […]

If you’ve never heard of Bitcoin before, you’ve either been living under a rock for the past few years, or you don’t keep up with the news. This cryptocurrency didn’t attract much attention in its early days, but it has become more recognized as a real currency and boasted upon as the price of Bitcoin has reached maximum highs in just the past few months. But what exactly is Bitcoin…and where did it come from? If you’re thinking of investing in this asset, you’ll need to know the history of the up and coming currency that might even become as accepted as the US Dollar someday. 

The Beginning 

Bitcoin was first introduced under the alias Satoshi Nakamoto back in October of 2008 as a “peer-to-peer cash system”. The idea was that Bitcoin would allow users to send and receive money online without dealing with a middleman (i.e., the central banks). This would save investors from paying high banking fees, relying on major payment systems, and trusting banks in general. It was also meant to provide the people with more privacy, as the government would not be able to trace the transactions or to know how much money someone had or withdrew through Bitcoin. 

A console developer named Hal Finley read about this interesting concept for a decentralized currency and offered to mine the first coins as a test. Many people accused Finley of actually being Satoshi Nakamoto, the original developer, but he swore that it was not him up until his death from ALS in 2014. To this day, the true identity of Satoshi remains a mystery. Finley even claimed that he never found out who the original Bitcoin creator was, despite working with him from the early days of Bitcoin’s launch. 

 Although Bitcoin was first mentioned in 2008, the first lines of code weren’t written until the following year. There was also an issue with the currency being worthless in the beginning, as it was literally worth $0. The coin was finally recognized as a form of currency by a small number of online merchants as early as 2010. Surprisingly, pizza was one of the first material assets that were purchased using Bitcoin. Today, the pizza would be worth around $100 million in value! 

Rising Popularity 

Cameron and Tyler Winklevoss purchased $10 million worth of Bitcoin in 2012. Their purchase paid off big time, as their investment’s value more than tripled within one year’s time. In addition to finding these influential investors, Bitcoin also received another big push towards popularity in 2011 once it was introduced as the main form of currency accepted on Silk Road.

For those that don’t know, Silk Road is an online marketplace that allows users to buy and sell illegal items. The list of black market items include drugs, medical supplies, illegal fireworks, stolen goods, and more. Since Bitcoin was traceless and eliminated the government and banks from transactions, it made sense for the site to want to use it in order to keep the identities of their consumers anonymous. 

Things continued to fall into place in 2011 as other cryptocurrencies like Litecoin and Ethereum were created. Even more, attention was drawn to cryptocurrencies and the option to trade them on exchanges was introduced, which made many of the formerly skeptical traders see Bitcoin as a real currency. It became easier to buy and sell Bitcoin and the price grew to be above $1 that year before reaching its first all-time high of $31. Although the price did die back down, this would be the first of many price bubbles that Bitcoin would experience. 

The Following Years

Bitcoin reached even more price peaks a couple of years later, rising from $200 to $1,000+ in 2013. A few years later in 2017, the price continued to rise to $10,000 before reaching a maximum peak of more than $19,000 that same year. Everyone was talking about Bitcoin.

Sadly, Bitcoin’s luck did not continue and prices crashed in 2018. This could be blamed on the fact that many investors still did not trust the currency and saw it as worthless. Some investors simply trusted the central bank more than they trusted the newer currency; others saw Bitcoin as fraudulent because it was being used to make illegal purchases. 

In 2019, prices began to rise and fall once more. The currency reached a $10,000 value by June of that year but fell to $7,000 before the year was over. These highs and lows in value could be considered a normal factor for Bitcoin prices by this point, but investors still saw a lot of investment opportunities.

Then, in 2020, the COVID-19 pandemic helped Bitcoin to reach its highest price peak so far at $24,000 USD. This was due in part to the government’s efforts to reopen the economy and support spending by passing a stimulus aid package that caused inflation with the US dollar. This caused many investors and financial institutions to turn towards Bitcoin. 

Where is Bitcoin Today? 

Today, one Bitcoin is worth exactly $36,853 USD – a far cry from the $0 starting price back in 2009. The outlook for the next decade could go either way. Some investors expect to see a price of more than $500,000 per Bitcoin by the year 2030, while others think the price will crash to less than $1,000. Only time will tell where the true price is going. 

As time goes on, Bitcoin is expected by many to draw in even more investors and to potentially break its all-time high several times over. With so many perks, especially anonymity, Bitcoin will continue to offer something that draws in investors that are looking for privacy. Others will continue to discredit cryptocurrency as a whole and might never be convinced that Bitcoin is more trustworthy than using a traditional bank. Bitcoin’s critics still believe the bleaker predictions that state the value will drop dramatically. In the end, each investor will need to decide for themselves whether they think Bitcoin is the way of the future or just a fad that will be forgotten about over the next few years.

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Cryptocurrencies

Are Cryptocurrencies the New Global Currency?

The irresistible exaggeration surrounding crypto-madness cannot be denied. The digital currency has seduced the imagination of investors, journalists, and the general public, and today, some even take for granted that he is a worthy pretender to the throne that is occupied by fiduciary money. So what are the chances of cryptos melting down fiduciary money […]

The irresistible exaggeration surrounding crypto-madness cannot be denied. The digital currency has seduced the imagination of investors, journalists, and the general public, and today, some even take for granted that he is a worthy pretender to the throne that is occupied by fiduciary money. So what are the chances of cryptos melting down fiduciary money […]

The irresistible exaggeration surrounding crypto-madness cannot be denied. The digital currency has seduced the imagination of investors, journalists, and the general public, and today, some even take for granted that he is a worthy pretender to the throne that is occupied by fiduciary money. So what are the chances of cryptos melting down fiduciary money to become the dominant currency system?

It has been almost 50 years since the world economy shifted from commodity-backed currencies to the fiduciary money system. Preoccupied with the waning economic influence of the UUSS and the increase in expenses of the Vietnam War, the president of that time, Richard Nixon, untied the dollar from America’s gold reserves and ended the Bretton Woods Agreement.

Crypto enthusiasts would have us believe that the stratospheric rise of different digital currencies like Bitcoin, Ethereum, and Ripple sounds like a resounding death sentence for fiduciary money. It is argued that, after half a century of strict financial regulation by governments and central banks, it is time for people to regain full control of their money: a high objective that can be a reality if the digital currency finally becomes the economic status quo.

So what are the advantages offered by cryptocurrencies like Bitcoin fiduciary currencies? For starters, they’re very convenient. Cryptocurrencies have great potential and are able to save financial services and businesses a very important amount of money and time with the elimination of the intermediary from transactions; fees for these transactions tend to be significantly lower as well. And that is not all: a great the greatest criticism of the fiat system is that the value of a country’s currency can fluctuate much beyond national borders.

The Nigerian Naira is an excellent example of this: its value drops up to 30% at the time it is taken out of Nigeria. Cryptocurrencies, at least, for the most part, are not issued by any country and consequently are not subject to the same geography value variations.

Then there’s the best possible record and anonymity provided by the blockchain. A cryptographically safeguarded record of transactions in continuous growth, Blockchain was developed together with Bitcoin by its mysterious supposed creator Satoshi Nakamoto.

Blockchain is a good guarantee against fraud, as records cannot be modified once processed; it also allows for total decentralization, a feature of cryptocurrencies that is given more value than any other. Decentralization assumes that cryptos are not regulated by any financial or governmental authority and are therefore not subject to central bank policies and agendas. On the contrary, cryptocurrencies self-regulate through their own networks.

So far so good. But unfortunately for the legion of followers of cryptocurrencies, there is a lot of compelling reasons not to replace fiduciary money with digital currency. The main one is the current frenetic speculative enthusiasm driven by big-name currencies like Bitcoin and Ripple. It is too early to see whether the vertiginous highs achieved by Bitcoin at the end of 2017 constitute a real financial bubble, but there is no way to avoid the fact that BTC and cryptos, in general, enjoy an unprecedented level of exaggeration. Well, why don’t you? Cryptocurrencies are innovative, technological, and undeniably futuristic; qualities that make them irresistible to both the media and the general public. The problem with such an uproar is that it often leads to a ‘neglect’ of fundamental and practical concerns, which include:

Money laundering and decentralization: Anti-money laundering (AML) initiatives are a major concern of the financial services industry, as banks and businesses spend large amounts of money to ensure full compliance. If the digital coins were to replace fiat, the anonymity allowed by blockchain technology would make AML extremely difficult, costly, and slow. Many financial organizations and banks would be against adopting cryptograms for this reason. A similar problem arises from the highly acclaimed “decentralized” nature of digital currencies. Governments and financial authorities are unlikely to approve any currency over which they have no influence or control.

Security: While blockchain guarantees that cryptography transactions are recorded safely, the same security rarely applies to ‘coins’. Cryptos are vulnerable to piracy, power supply problems, software problems, and outdated human errors. Something as harmless as a cup of tea or a hard drive crash could result in the loss of millions of dollars in bitcoin. Too bad the investor who accidentally threw away a laptop containing 7,500 bitcoins and spends his days scouring the dumps (real story); losing his credit card does not make his account funds permanently inaccessible.

Scale: The market limit for the world’s various fiduciary currencies is approximately $81 billion. It could bring together all the cryptocurrencies in the world and combined market capitalization would not exceed $127.5 billion. Digital coins have a long way to go before the fiat system starts looking over its shoulder. The cost, time, and effort required to revise the trust system and replace it with a purely digital system is astronomical: national economies, businesses, financial institutions, and consumers would have to make a transition from the system they have used for almost half a century.

Ultimately, digital currencies are likely to become a sort of fiduciary money if they are to gain general acceptance. Financial institutions and governments are becoming aware of the proliferation of cryptocurrencies, and some, such as Sweden and Russia, are already in the process of development of their own altcoins. They seek to make the most of efficiency application of interest, the ease of taxation, and the cost savings offered by the digital currency, without security problems, money-laundering facilities, and the lack of central supervision. This means that cryptocurrencies with more future will surely persist in terms of financial institutions, central banks, and government agencies. Excuse the idealists: man strikes again!

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Blockchain and DLT

What Exactly is the Blockchain?

All cryptocurrencies operate using blockchain technology or Blockchain (BC). If you are considering a long-term investment in a cryptocurrency, we recommend that you first try to have basic knowledge about the blockchain technology, as well as about the technological platform on which your chosen cryptocurrency works. Even if you’re just poking around in short-term speculation […]

All cryptocurrencies operate using blockchain technology or Blockchain (BC). If you are considering a long-term investment in a cryptocurrency, we recommend that you first try to have basic knowledge about the blockchain technology, as well as about the technological platform on which your chosen cryptocurrency works. Even if you’re just poking around in short-term speculation […]

All cryptocurrencies operate using blockchain technology or Blockchain (BC). If you are considering a long-term investment in a cryptocurrency, we recommend that you first try to have basic knowledge about the blockchain technology, as well as about the technological platform on which your chosen cryptocurrency works. Even if you’re just poking around in short-term speculation or trade and not long-term investments, it’s an excellent idea to understand the basics of how blockchain technology works.

Blockchain’s technology is an encrypted, decentralized, peer-to-peer database. Its virtue lies in the fact that it is decentralized. For example, let us say that a stock exchange has a single database with all the owners of each share that is exchanged in it, and that is constantly updated. The entire database is stored in a single physical location: a server. What happens if the database is hacked, destroyed, or corrupted by a computer virus or a natural disaster? Of course, the database is likely to be at least backed up at another location, but it remains relatively vulnerable and can be easily manipulated.

Block strings, however, are decentralized databases “peer-to-peer” (Peer-to-Peer or P2P), where content files are divided, encrypt and store differentially on thousands of nodes around the world that communicate with each other to produce a seamless array. This makes fraud or piracy extremely difficult, as changes in transaction and ownership records must be agreed by a majority of all parts (blocks) to be valid. This is why cryptocurrency transactions take some time to process, as any changes to the Ledger or Ledger, which is publicly distributed, must be agreed upon and verified on all sides. This solves the problem of “double spending” which could naturally affect any digital currency. There is not a single central authority or server that can manipulate this.

Blockchain technology is considered a potentially “disruptive” technology, with the power to change the world. It has many potential applications and, if implemented, should replace the power of any central authority with rules that cannot be ignored: there will be a government, but a government where abuse, embezzlement, or bribery cannot be accommodated. There may be “forks” (forks), an issue that we will see a little later. They actually change the rules, but at least they are open and transparent to everyone.

Exciting Cryptocurrencies Why Should I Get Excited About Cryptocurrencies?

Cryptocurrencies, cryptodivisas, or simply cryptos (and blockchain technology in general) is new and has the potential to significantly change the way the world works economically. Early investors or speculators in new, successful, and disruptive technology can get spectacular returns, but not without risk. For example, $10,000 invested in Microsoft shares in 1986 would have been worth more than $3 million in 25 years. The same amount invested in Apple shares in 1980 would now be worth approximately 4 million. Then, in the medium to long term, even relatively small investments could yield significant sums that could change our lives.

Looking at a shorter time frame, the most important cryptocurrencies fluctuate dramatically in value, as they are subject to an enormous amount of speculative short-term interest. There has been considerable buying and selling by investors during 2017, maintaining high price volatility in cryptocurrency markets. It is statistically likely that, if a financial asset has gone up a lot, it will soon continue to rise or fall by a similar amount due to “clusters” or clusters of volatility. If today’s volatility is high, It’s also very likely to be bigger tomorrow. This means for sure that there is likely to be opportunities to speculate on cryptocurrencies during 2020, either by purchase or by sale.

At the beginning of this section, we have said that cryptocurrency is something new and potentially disturbing. The disturbing potential lies in the fact that cryptocurrency could completely replace national currencies, such as the euro and the dollar, as cornerstones of the global financial system. Central banks and governments have the capacity to devalue, thereby reducing our savings, eliminating their ability to act as a “reserve of value” and forcing us to become speculators until we are old. If cryptocurrency is safe and fully interchangeable, who wouldn’t rather save money on cryptocurrencies?

Politically, cryptodivisa is a libertarian and monetarist dream, so if you like those political philosophies, you’ll surely appreciate what cryptocurrencies can offer. If national governments cannot or do not want to stop cryptocurrencies, it seems likely that the global financial system will change back to something like the gold standard, which would probably eliminate the worst excesses of inflation and manipulation. However, many economists argue that the gold standard caused its own problems of excessive deflation, unnecessarily prolonging economic depressions.

You may have heard of the War on Cash, which refers to the growing shift away from cash to debit and credit cards, which has been promoted by many governments because restricting or replacing cash transactions makes life difficult for criminals and terrorists. Governments must also see another potential advantage: without cash, it will be easy to force negative interest rates on their populations, if they so desire, either openly (as in Switzerland and Japan now) or covertly, through bank charges. As cryptocurrency is truly private, its full acceptance should eliminate the concept of negative interest rates.

By now, you will probably understand why cryptocurrencies are highly controversial and why their widespread adoption as a means of change will face severe opposition from governments (as we see now in China). It is possible that governments try to take control of the dominant cryptocurrencies, or even create their own versions! Governments are likely to say that they need to maintain control over currencies in order to prevent tax evasion and crime, which, realistically, are valid concerns.

The best question remains whether governments will have the ability to stop or block the use of cryptocurrencies within their borders. If they can’t, then this is likely to be a large long-term investment. If the world’s governments can find how to block or restrict the use of cryptocurrencies, in that case, the investment potential, of course, decreases. 

Categories
Crypto Guides

Brief Introduction To The Revolutionary ‘Neo’ Blockchain

Introduction

Introduction

Introduction

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

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

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

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

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

Digital Assets

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

Two forms of digital assets

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

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

Digital Identity

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

Smart Contracts

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

Key Characteristics of Neo

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

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

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

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

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

Categories
Crypto Guides

What are Sidechains & What is their Purpose?

Introduction

Introduction

Introduction

Sidechains are mechanisms that enable the transfer of existing tokens or digital assets from a blockchain platform to another blockchain platform. The tokens or digital assets can be transferred back to the original blockchain if required. The primary platform from which we transfer the assets is called the parent chain or main chain, while the other platform is called sidechain. Ardor blockchain calls the sidechain as childchain.

Sidechains have enormous potential to transform the existing issues of scalability in the blockchain platforms. The transfer need not be only digital assets or tokens, but we may transfer computing or for speeding purposes as well, depending on the processing requirements. We can have many sidechains for a single parent chain.

How do they work?

Sidechain is indeed a separate blockchain platform connected with the leading blockchain platform using a two-way peg. The two-way peg is a method to convert one digital token to another type of token like BTC to ETH. The two-way peg facilitates the transfer of digital assets at a predetermined rate. A user on the parent chain first sends coins to an output address so that they can be blocked.

To ensure that these coins aren’t spent elsewhere, a protocol is followed. Once the transaction is complete, the information is sent to all the chains. Some extra period is used to wait as well to increase security. Once this is done, the same number of coins are released in the sidechain for user access and spending. The same process can be repeated when the tokens are to be sent from sidechain to the main chain. Some other entities come into the picture to run the sidechains seamlessly. They are as below.

Federations

A federation can be called as a group or server which acts between the main chain and a side chain. The sidechain creators can decide federation members. They decide on when to lock the coins and release the coins for spending and vice versa.

Security

The core reason for anyone to move to the blockchain platform is security. So, one may question what about the security aspects in the sidechains. Even though they are connected, they are on their own in terms of security. Both platforms are individual blockchain platforms and are very secure individually.

Further, if there is any disturbance in one platform, the disturbance will not be carried out to the other. The sidechains use separate miners from the main chain. They are incentivized using merged mining. Merged mining refers to the mechanism of mining two or more cryptocurrencies at the same time based on the same algorithm.

Platforms using Sidechains 

Rootstock or RSK

RSK has two-way peg connectivity with the Bitcoin platform. RSK’s vision is to enable smart contracts functionality for bitcoin blockchain, increase scalability, thus faster transactions. Miners are rewarded through merged mining. As of now, the platform supports 100 TPS.

Liquid

Liquid sidechain proposes instant movement of funds between exchanges without waiting for the delay in confirmation from the bitcoin blockchain. This is the first commercial sidechain developed by Blockstream.

Advantages of Sidechains

  • Enhances the scalability of the mainchain, thus increasing the number of transactions per second.
  • Need not create a sidechain again and again; once created, they can be used for any purpose.
  • They enable the communication between two different coins, which helps in the testing of beta coins in the sidechain before the official launch.

Conclusion

The scalability issues of blockchain technology are addressed in different ways, but sidechains are very promising. The communication between two different cryptocurrencies paves ways to multiple features. Transactions costs and time will be reduced as the burden is less for the mainchain. The concept is going to create a massive change in the blockchain technology in the upcoming future.