Tag: Technology

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Crypto Guides

Can ‘Discreet Log Contracts’ Potentially Gear Bitcoin for DeFi?

Introduction The term “DeFi” has gained significant popularity in the cryptocurrency space since the beginning of 2020. Over hundreds of projects have already been implemented on Ethereum based on the intersection of blockchain and decentralized financial systems. The appealing ones being collateralized stablecoins and derivatives products. Given that the ecosystem can be feasibly built on […]

Introduction The term “DeFi” has gained significant popularity in the cryptocurrency space since the beginning of 2020. Over hundreds of projects have already been implemented on Ethereum based on the intersection of blockchain and decentralized financial systems. The appealing ones being collateralized stablecoins and derivatives products. Given that the ecosystem can be feasibly built on […]

Introduction

The term “DeFi” has gained significant popularity in the cryptocurrency space since the beginning of 2020. Over hundreds of projects have already been implemented on Ethereum based on the intersection of blockchain and decentralized financial systems. The appealing ones being collateralized stablecoins and derivatives products.

Given that the ecosystem can be feasibly built on a smart contract using Ethereum, the concept of open finance cannot be excluded from Bitcoin. For instance, sidechains like RSK (rootstock) can upgrade their smart contract capabilities, enabling more advanced financial products to build on Bitcoin.

That said, there are some other enthralling ideas on extending the Bitcoin’s structure to more sophisticated financial applications. Out of which, one exciting proposal that is in the talks over a few years is the discreet log contracts.

Bitcoin for DeFi – A Sustainable Approach?

Developers are uncertain about bringing in DeFi applications on Bitcoin. People believe that the reason for its significant value to date is due to its simple, stripped-down reliable design.

Contrariwise, ideas such as the lightning network for Bitcoin has resulted in an entirely new design for it. With the feature of layered scaling, applications can be still be created without hindering the security model of bitcoin’s core protocol.

The success has hence opened doors for exploring applications that help leverage bitcoin without having to compromise on its existing design.

But limitations exist…

The most significant trade-off is the complexity of DeFi applications. RSK could no doubt prove to be a valuable sidechain for Bitcoin, but federated peg sidechain essentially requires trust in controlling the chain.

Additional improvements in the underlying technology can reduce trust even further. The compelling DeFi projects on the Ethereum protocol is not possible to incorporate on Bitcoin’s protocol without compromising trust.

Cutting through the interesting project ideas, let’s get our feet wet to understand and generalize the concept of Discreet Log Contracts.

What are Discreet Log Contracts?

Proposed by Thaddeus Dryja, discreet log contracts are an ecosystem for minimizing the trust in blockchain oracles – assimilating data from external sources to the blockchain. Discreet log contracts pivot using Schnorr signatures to disguise the agreed upon contract information from the oracles.

This creates a scenario where payouts on data (public) are possible between three parties. The advantages of it being better security and flexible contracts without having to compromise on the trust.

Useful Ecosystem?

When applied to DeFi, the two parties can maximize their discreet log contracts and unleash the potential of derivatives, futures, and several other financial instruments. More advanced financial products when knotted to bitcoin, institutional practices like hedging risk on assets can become viable through the Bitcoin’s network. With the reliance on oracle-sourced data for payouts, micro-insurance contracts are possible using the discreet log contracts.

Conclusion

The prevalence of DeFi systems built on the Ethereum is hindering the notion of open financial products for Bitcoin. But considering the robust security model and consensus rules, the Bitcoin network does put forth a captivating medium for decentralized finance. And discreet lot contracts are an appealing tool that can help developers develop a more advanced open finance ecosystem with Bitcoin.

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Crypto Daily Topic

Why the Blockchain Hype Should End

In the last few years, blockchain technology has been marketed as a game-changing innovation that could change traditional payment and information-recording systems. Indeed, blockchain technology offers tremendous promise to become a key driver of the digital economy. Still, over-the-top marketing of its capabilities is killing it even before any of its solutions materialize.  The best-known […]

In the last few years, blockchain technology has been marketed as a game-changing innovation that could change traditional payment and information-recording systems. Indeed, blockchain technology offers tremendous promise to become a key driver of the digital economy. Still, over-the-top marketing of its capabilities is killing it even before any of its solutions materialize.  The best-known […]

In the last few years, blockchain technology has been marketed as a game-changing innovation that could change traditional payment and information-recording systems. Indeed, blockchain technology offers tremendous promise to become a key driver of the digital economy. Still, over-the-top marketing of its capabilities is killing it even before any of its solutions materialize. 

The best-known example of blockchain technology in action is in cryptocurrency, particularly Bitcoin, which grabbed headlines for its rocketing prices and volatility. These price swings led to a bitcoin-buying frenzy and the proliferation of cryptocurrency scams, which resulted in the entire crypto-market losing almost 80% of its value in 2018. 

In 2019, as the crypto-craze subsidized, blockchain technology entered into what Gartner Inc. calls the ‘trough of disillusionment,’ meaning the technology is struggling to live up to its hype. Most industrial blockchain concepts are stuck in the experimental stages and may not become a business revolution as anticipated. If the hype dies down and interest in the technology wanes over time, it could perhaps be the best thing to happen to blockchain technology, as it will force people to focus on the value proposition blockchain brings to the table.

Examining The hype cycle 

The blockchain hype can be best described as a gimmick used by businesses looking to capture gullible investors. Although this is not to say blockchain lacks an inherent value, the technology’s oversold optimism is somewhat unwarranted. 

As a recent advertisement survey showed, the term “blockchain” was one of the most overrated words. The survey suggests that many companies abused the word ‘blockchain’ to get free media attention and perhaps attract investors/clients. This is hardly a surprise as a year before the survey, a NASDAQ listed company – Longfin Corp – saw it’s shares soar a whopping 2,000% after acquiring a blockchain-empowered microfinance provider. Sadly, even companies unrelated to the technology world have boarded the blockchain bandwagon without examining the business value it offers to their industry. Such unstructured experimentation of blockchain solutions with a minimal evaluation of value at stake means that enterprises will not see a return on their investment. 

According to Gartner’s hype cycle, blockchain is still a couple of years away from revolutionizing business ecosystems. This couldn’t be truer, considering that the technology is still immature with a nascent market that has not yet shown a clear recipe for success. In the meantime, there are gaps between blockchain opportunities, and it’s real-world use cases. These include: 

i) Energy inefficiency

One of the biggest stumbling blocks facing blockchain solutions is the sheer amount of computational power required to run these solutions. Recording data on blockchain involves solving complex cryptographical challenges, which ends up consuming a lot of electric power. This is evident from Bitcoin mining, which has been known to be resource-draining in terms of electricity cost and hardware.

Besides the high energy demand, blockchain solutions still require ample storage to keep all the data. This is a huge challenge to small enterprises that cannot afford enough computational storage for their data. 

ii) Speed and Efficiency 

Blockchain technology is inherently slower than some of the existing infrastructures that can handle more transactions within a shorter time. A classic comparison to ascertain this claim is between Ethereum and Visa systems. Ethereum blockchain can handle about 15 transactions per second, while Visa processes approximately 45,000 transactions per second. This means that it is wiser for enterprises to hold on to the existing infrastructure than jumping on the blockchain bandwagon; otherwise, they’ll have to deal with slowed business processes. 

iii) Interoperability

The rise of blockchain technology has inspired developers to develop various iterations of the same, in an attempt to design unique solutions that meet industry-specific needs. While this is a good thing by itself, it creates many networks that work in isolation. As such, lack of interoperability among various blockchain networks can force enterprises to operate independently, yet they belong in the same industry. For instance, a bank might be using one blockchain solution, while another microfinance institution uses a different solution. As a result, it is almost impossible for the two to efficiently collaborate, especially in transactions that require them to work together. 

Key Blockchain Takeaways

The challenges mentioned above notwithstanding, there are several core insights about blockchain’s value that businesses need to understand. 

The focus is on cost reduction 

What’s forcing most businesses to experiment with blockchain solutions is that they fear missing out, primarily if they operate in a competitive industry. Such an approach obscures the real enterprise value of blockchain technology, which is to increase operational efficiencies by removing intermediaries and administrative efforts of record keeping. This is why the financial industry is more primed for blockchain solutions than any other industry, as it is built on trust between intermediaries. 

The productivity paradox 

By eliminating intermediaries and increasing operational efficiencies, there is a common misconception that blockchain solutions will equally increase productivity. This idea can be likened to the time when computing was introduced into the business world. Although it helped improve business operations, productivity statistics didn’t increase in equal measure. Given the dynamic nature of the technology world, it is rare for a solution to mature to optimal efficiency since there will always be newer and more promising technologies emerging within a short period. 

Conclusion 

There is only a handful of successful blockchain solutions in the market, and this has aided in killing the blockchain hype. As the dust settles down on the broken dreams and the disillusionment fades away, blockchain technology will be weighed based on its value rather than the abstract ideology of what it can offer. Nonetheless, it’s not all doom and gloom, since it is likely that blockchain technology may have arrived ahead of its time. Such was the case with Artificial Intelligence (AI) and machine learning algorithms developed in the 50s, but have come to find their use in the 21st century.

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Blockchain and DLT

Top 4 Blockchain Trends to Look Out for in 2020

Blockchain technology has been around for about ten years now. But it was not until 2017 during the crypto-market bull run that this disruptive technology gained attention beyond crypto-space circles and into modern-day businesses. But even as of today, a good number of the general public and organizations have not yet fully understood what blockchain is all about. Those with a rough idea about this technology know it as just an underlying protocol that supports cryptocurrencies.

Blockchain technology has been around for about ten years now. But it was not until 2017 during the crypto-market bull run that this disruptive technology gained attention beyond crypto-space circles and into modern-day businesses. But even as of today, a good number of the general public and organizations have not yet fully understood what blockchain is all about. Those with a rough idea about this technology know it as just an underlying protocol that supports cryptocurrencies.

Blockchain technology has been around for about ten years now. But it was not until 2017 during the crypto-market bull run that this disruptive technology gained attention beyond crypto-space circles and into modern-day businesses. But even as of today, a good number of the general public and organizations have not yet fully understood what blockchain is all about. Those with a rough idea about this technology know it as just an underlying protocol that supports cryptocurrencies.

As much as this idea is true, blockchain has a lot more to offer, as evident from innovators and developers who are constantly pushing its capabilities by designing blockchain solutions for enterprises. In fact, it’s through the efforts of these developers and innovators that new blockchain trends or rather solutions are emerging every other year. 

Nonetheless, the journey to creating efficient blockchain solutions hasn’t been quite a smooth task. For the better part of the journey, it has been all about experimenting and trying to come up with solutions that fit the market. However, judging from last year (2019), it seems that businesses and institutions have had enough of ‘finger-dipping-exercises’ and now want to incorporate blockchain solutions into their processes. This spiked growth and interest in blockchain can be attributed to Facebook announcing that it’s working on a digital currency dubbed Libra. This incentivized organizations to experiment with blockchain solutions, especially after blue-chip companies such as Uber and Visa announced their support for the Libra coin. 

That said, the common sentiments expressed by the crypto-space is that this year, 2020, business and developers will design new and novel solutions giving rise to new blockchain trends. Some of these trends include: 

Use of Blockchain as a service (BaaS) 

The use of blockchain as service (Bass) had already gained traction spearheaded by Microsoft Azure with its partnership with ConsenSys – a reputable blockchain software company. Around April last year, Amazon, through its cloud service, Amazon Web Services (AWS), opened up its blockchain-enabled cloud service to the public – joining the likes of IBM, HP, and Oracle, who offer the same.

Essentially, Baas is designed to enable businesses and developers to create and deploy their own blockchain applications. This eliminates the need for expensive hardware infrastructure as a necessity for developing blockchain solutions. Now, with the tech giants offering a Baas platform, it creates an opportunity for small enterprises to experiment with blockchain and design solutions that fit perfectly into their needs.

Also, with AWS offering its Baas to the public, it’s anticipated that there will be an increase of lone developers designing blockchain applications on the cloud for use by the public as well as enterprises. So, this year the industry can expect several digital products such as novel smart contracts, decentralized apps (dApps), and other systems that don’t necessarily need blockchain-based infrastructure to function. This will lead to the maturation of blockchain technology prompting adoption in all major pillars of the economy. 

Rise of blockchain experts 

The availability of a platform where the public can develop blockchain solutions will incentivize an increase in the number of blockchain developers and investors. This is because Baas removes the infrastructure barrier making it affordable for innovative developers to create solutions.

Additionally, as the developers continue to create more solutions, it creates a demand for experts who are knowledgeable about implementing those solutions into their specific industry. This demand will be more prevalent in the financial industry, especially the accounting niche, where the role of accountants and auditors will be transformed into advisors who will guide institutions in integrating blockchain solutions into everyday operations. 

Indeed, new professionals joining the accounting and auditing sector may be required by their employer to pursue certification showing their expertise in working with blockchain solutions. Those who are already employed may be required to upgrade their skill set to keep up with blockchain’s entry in their respective field of work.

Interoperability of blockchain networks 

Currently, there exist several blockchain networks, including public, private, and consortium blockchains. Each of these networks has its own set of unique benefits that makes it more suitable for one use case than the other. For instance, a private blockchain is more affordable and faster than public blockchain. However, transactions on a private blockchain can be monitored by the custodians of the network, whereas a public blockchain completely eliminates the role of a custodian keeping all transactions secure. 

As the use of these networks accelerates, there will be a need for them to work in harmony to create an ultimate network that combines all advantages under one platform. With this interoperability, there will be efficient data sharing and easier execution of smart contracts across different blockchain networks.

Blockchain regulations will be reviewed 

In 2020, it’s expected that there will be an increase in the use of blockchain. As such, countries with discriminatory restrictions against the use of blockchain and digital assets will be forced to ease the regulations to accommodate the increased usage of blockchain. 

An ideal example is the European Blockchain Observatory Forum that was formed to accelerate blockchain development in Europe. The forum works by bringing European legislators and entrepreneurs together to help position Europe as a leader of this disruptive technology. At the end of last year, the European Commission chose a new partner, INTRASOFT, to head the operations of the forum. INTRASOFT is a leading information technology and communication provider with concrete expertise in blockchain technology. The company will work in collaboration with the University of Nicosia, which has made major strides in researching digital currencies and blockchain systems. Having been established in 2018, the forum has managed to create a vibrant community through workshops and events. As of 2020, the EU Blockchain Observatory Forum has garnered more than 9,000 followers on Twitter. Its community will only get bigger throughout this year as the forum continues to reinvent itself and organize more workshops. 

Conclusion 

Although it’s quite hard to accurately anticipate trends that will set the pace for technological advancements, blockchain technology sure does have a promising future not just for the remaining part of 2020 but also for years to come. Ultimately, the technology will live up to its hype, especially given its increasing adoption in various industries.

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Crypto Daily Topic

Blockchain Meets Telecommunication Companies 

The telecommunications industry has enjoyed a front-row seat to some of the most exciting developments in the history of technology.

The telecommunications industry has enjoyed a front-row seat to some of the most exciting developments in the history of technology.

The telecommunications industry has enjoyed a front-row seat to some of the most exciting developments in the history of technology.

But, all that has changed in the current business environment where telco companies face stiff competition from newcomers in the market, particularly the internet-based communication services providers such as Whatsapp messenger, FaceTime, WeChat, Viber, and Facebook’s Messenger. 

As a result, telco enterprises have suffered revenue losses due to drop-offs in SMS users and roaming.

Currently, most of these enterprises have been reduced to just internet service providers. With this, they have managed to secure their position in the dynamic communication industry.

However, their position is at risk of being eroded further, especially given the gradual decrease in investment in the telecommunications industry after the infamous Dot-com bubble burst. 

To secure their place in the competitive market, increase revenue, and meet the new customer needs, telecommunications service providers will have to explore the disruptive potential of blockchain technology. Implementing blockchain solutions, however, isn’t as straightforward as it sounds as the telco companies run in a highly regulated industry. 

But according to a recent report, a good number of communications service providers – (CSPs) – are either considering or actively experimenting with blockchain.

So, despite the uncertainty, the pilot projects from these CSPs will lay the groundwork for others, showing them how future applications might work. 

Blockchain for communication service providers

As the industry anticipates full integration of blockchain solutions, let’s look into some of the opportunities resulting from this integration:

Inter-company collaboration

Telco enterprises are inherently complex in their architecture and demand significant amounts of investments. Case in point, billions of dollars have gone into designing and finally rolling out the 4G/LTE networks. Also, as the world anticipates the coming of the 5G network, telcos are under heavy pressure to invest in new resources, consequently intensifying the competition in the communication industry. Unfortunately, telcos aren’t guaranteed to reap returns on their investment even after moving their operations to the new generation network. 

As an alternative solution, telecom operators and service providers could come together under the decentralization of blockchain networks where they can share the cost of resources instead of doing it all alone. Decentralization would help create a sharing economy, bringing down the barriers of transparency while enhancing timely coordination among the telco stakeholders. 

Moreover, thanks to the transparency and immutability, all telecom companies, regardless of their size, can join the newfound cost-sharing economy, creating a level playing ground. This, in turn, promotes healthy competition in the industry.

Most importantly, returns on investment will be shared fairly among the participants using a consensus mechanism, which is basically a series of mathematical algorithms that reward participants according to their investment amount. 

With the cost of resources brought down to an affordable price range, telecommunications companies will be able to achieve wider network coverage and even offer high-quality services at a lower price than a single company would provide.

Additionally, smart contracts can also be introduced into the network to create new business models such as rentals and pay-as-you-go, which would increase returns to reasonable amounts. 

Roaming Fraud Prevention

Roaming fraud occurs when a subscriber uses the resources of the Home Public Mobile Network (HPMN) via the Visited Public Mobile Network (VPMN). Still, the home network can’t charge the subscriber yet is obliged to pay the VMN for the roaming service.

Usually, the fraud goes almost unnoticed, which causes the networks to take too long to respond.

The delays are majorly caused by slow data exchange between the home and visited networks.

There is also a lack of control over the systems in which the fraud has occurred, further contributing to delayed response time. 

By using a private blockchain network, roaming agreements will become more transparent. In this case, designated nodes from both telecom operators will verify each transaction broadcasted on the network.

The roaming agreement between the HPMN and the VPMN is settled by a smart contract which is generated while the transaction is broadcasted. So, anytime a subscriber is roaming, the VPMN broadcasts the transaction data to the HPMN.

In turn, the data triggers the smart contract to execute the terms of the roaming agreement. As such, the HPMN will automatically calculate the billing amount based on the cost of service provided and then send this information back to the VPMN. 

Identity management

Identity theft in the telecommunications industry is not only detrimental to the subscribers but also to the telecom companies.

When a subscriber falls victim to identity theft, the perpetrator ends up using the telecom services, yet it’s the victim who ends up paying the bill.

If well-executed, the perpetrator may go even to the extent of jeopardizing some of the services offered by the company leading to revenue losses. 

Blockchain can be used to secure subscribers’ identities and, in turn, cutting down the telecom revenue losses.

The subscriber will be required to register their device containing a carrier’s SIM card on the blockchain network, after which a private key is generated to safeguard the personal data contained in the device. Only the subscriber has the sole custody of the private keys meaning access to personal data is limited to the subscriber. 

Interoperability

There exist a plethora of messaging apps provided by the carrier and others by third-party communication services.

Unfortunately, these messaging apps can’t communicate directly with each other, rather a user from one app can’t send messages to another user in a different app.

This creates communication barriers, with some users resorting to downloading numerous messaging apps just to enjoy the convenience of communication with other users on different apps. 

For example, iMessenger users cannot communicate directly with Whatsapp or Viber users. As such, they’re forced to download the other messaging apps for efficient communication.

Blockchain can break communication barriers by integrating messaging apps to create a decentralized communication protocol that exists in an interoperable ecosystem. The newfound interoperability can be used to facilitate the Internet of Things (IoT), which requires seamless communication of various devices and apps.

Conclusion

The telecommunications industry is a fertile ground for blockchain technology to thrive and inspire innovative business models.

With telco giants such as Vodafone leading the way towards embracing blockchain in the industry, it is expected that new solutions will be designed, which will guide the other stakeholders in implementing blockchain solutions.

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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.

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Crypto Guides

Exploring The New Suite Features Of ‘CryptoNote’ Technology

Introduction

Introduction

Introduction

CryptoNote is an open-source protocol that essentially serves as an underlying technology for some cryptocurrency. Just like Blockchain technology, CryptoNote is also technology that is a backend for cryptocurrencies.

CryptoNote technology was primarily developed to provide extremely private features using advanced cryptography. What makes it unique is the egalitarian approach for making the network decentralized and censorship-resistance.

Origin of CryptoNote

The CryptoNote has had a history similar to that of Bitcoin, in terms of being mysterious. It emerged in 2012 and was published on Tor, and the author of the original whitepaper Nicolas Van Saberhagen is a pseudonym, which means that the identity of the author is still unknown. In fact, the identity of the author of the second edition of the whitepaper is also under the same pseudonym.

The original whitepaper discussed the privacy and flexibility that is deficient in Bitcoin. It also sheds light on the traceability and linking ability of transactions in Bitcoin’s “one-CPU-one-vote,” as explained by the creator of Bitcoin Satoshi Nakamoto. On the whitepaper, they claim to present more advanced features for decentralized cryptocurrency networks that are based on complicated mathematical analysis.

Entering the CryptoNote Technology

The CryptNote technology is similar to the blockchain technology, with few key differences. This technology is built under consideration of two features that make the payment network through this system fully anonymous. They are,

                        Untraceability & Unlinkability

Untraceability – For all the incoming transactions from the network, every sender is equally probable at the origin.

Unlinkability – A property where it is not possible to verify that two outgoing transactions are sent to one particular person.

When the proposal to launch the technology was made, there were many optimizations and improvements made to keep their technology stand apart from the crowd and hold its original principles along the way. The standard features that should be embedded in such technology are implemented as well. The following are the primary features CryptoNote has to offer.

  • Untraceability of payments
  • Unlinkability of Transactions
  • No Double-Spending
  • Blockchain Analysis Resistance
  • Egalitarian PoW

Cryptocurrencies backed by CryptoNote

There are several coins that are implemented using CryptoNote technology. All of the coins have this technology in them in some or the other way. In fact, there are even optimizations made to the current features that are then added to the cryptocurrency.

Bytecoin

Bytecoin is the first cryptocurrency that was created using CryptoNote technology in 2012. Being the first one, it was quite popular back then. This coin includes the exclusive CryptoNight mining algorithm along with the typical features of CryptoNote. Bytecoin was mainly developed to facilitate instant transactions with no fee for businesses, merchants, and customers in the inclusion of security, anonymity, and fast international payments.

Monero

Monero has been one of the most popular cryptocurrency when it comes to privacy. This open-source protocol and decentralized network community are highly dedicated to making Monero a powerful anonymous payment method. And not to mention, this coin is created under the assistance of CryptoNote.

Conclusion

Over the years, people are not completely satisfied with the features provided by the blockchain. Their focus has been on finding inefficiencies in this technology and coming up with other technologies satisfying those inefficiencies. And CryptoNote is one such technology that emphasizes on anonymity in cryptocurrency networks. This is a very broad property and will remain in development for long.

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Crypto Guides

The Fascinating Applications of Smart Contracts

Introduction

Introduction

Introduction

In the previous guide, we have understood what smart contracts are and what role they play in eliminating third parties. You can find that guide here if you didn’t get to read that yet. Smart Contracts have come out as one of the interesting applications of blockchain technology but it evolved so well that it has already been applied in most of the industries. Experts believe that these smart contracts do have significant applications in many other industries. Hence, in this article, let us see their usage in different industries.

Health Care and Medical Records

One primary application of smart contracts lies in the healthcare industry. Transferring and sharing patients’ electronic medical records (EMR) should be done in the most secure way. We are not saying that the current technology is not secure at all. We are just saying that using this technology will enhance the existing security.

Smart contracts enable multi-signature approval features enabling both patients and health care providers, allowing them to share the information securely as these are sensitive data. Patients can allow their data to be sent to research organizations for various studies and can be sent micropayments to the patients for participation using the same platform. We must not forget that a lot of infrastructure and technology should be built to achieve the same.

Banking

Banking systems have undergone a lot of changes proportional to technology adoption by the people. Smart contracts can play a crucial role in the mortgages provided by banks or any non-banking financial institutions. Banks spend a lot of money to check if the property that is being mortgaged currently is already mortgaged or not. To check if the property does indeed belong to the person applying for the mortgage or not. If the documents of the property are placed in blockchain with the help of smart contracts, this can be verified in a click. This saves a lot of money to both consumers and banking, reportedly in billions.

KYC

These days we have to provide our KYC documents at various places like to open a bank account, to take a sim card, driving license, registering property to name some. If the KYC documents are stored in a blockchain, with the help of smart contracts, the right people can be given proper authority to access them. Also, if any changes required from our side, we need to make a change at one single repository instead of making changes at every entity where we have given the documents.

Supply Chain

Supply Chain is one major area that can benefit hugely using blockchain adaptability and thereby using smart contracts. There are various documents throughout the supply chain cycle which can be misplaced and tough to authenticate at and every area required. If smart contracts are used to share and verify these documents, a lot of time and money can be saved to clear the goods at national highways, significant seaports, etc. Provenance tracking can also be done, thus increasing the bar of trust among consumers.

Voting

Voting can be achieved relatively and transparently using blockchain and smart contracts. With blockchain involved, no one can tamper with the election process, and with the smart contracts, it is possible to ensure the correct person is voting instead of the duplicity of votes.

Insurance

We all know it takes time for the insurance industries to clear the claims as it takes time to check the claims for its authenticity. With the adoption of smart contracts, the respective authorities can easily fact check the claims. For example, for travel insurance, we can easily verify whether the flight is a delay or canceled, thus passing the request.

However, all these industries can actively adapt and grow using blockchain only in the ideal world where blockchain is integrated throughout all sectors and government institutions. Active engagement and development are only possible when adoption is at a high rate. The blockchain technology is still growing, and a lot of innovation and growth is yet required to use the full potential of blockchain and thereby smart contracts as well.

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Forex Fundamental Analysis

‘Productivity’ as a Fundamental Indicator & Its Impact On The Forex Price Charts

Introduction

Introduction

Introduction

Productivity is an important fundamental indicator that talks about the levels of the industrial output of a country. It is one of the leading indicators in the Forex market, which has a long-term impact on the currency’s value. The industrial output is linked to the theory of demand and supply, which means the availability of raw material and policies set by the monetary policy committee directly affects the overall output. Let us understand this concept in depth by looking at the definition of Productivity first.

What is Productivity?

Productivity is defined as the ratio of total output volume to the total input volume. The ratio is mentioned in the form of an average, which expresses the total output of a category of goods divided by the total input, say raw materials or labor. In simple words, Productivity measures how efficiently the inputs such as labor and capital are being used in a country to produce a given level of output.

Productivity determines economic growth and competitiveness and hence is the basic source of information for many international organizations for measuring and assessing a country’s performance. Analysts use ‘Productivity’ data to also determine capacity utilization, which in turn allows one to assess the position of the economy in the business cycle and to forecast economic growth.

Measuring Productivity

Before we see how Productivity is analyzed, we need to consider various methods of measuring the output and input components of Productivity and the limitation of using each of these estimates.

Output

When we are talking about output, the number of units produced of each category of commodity or service should be counted in successive time periods and aggregated for the company, industry, and the whole economy. This output should be measured in comparison to some other indicator of equal importance, usually cost or price per unit in a period. The changes in the price of the goods produced are observed for two or more periods that are said to influence the aggregate output volumes. Price deflation is usually employed to get the estimation of the real gross product by sector and industry. The obtained estimates will be used as numerators in the productivity ratios.

The limitation of using the above methods is that quantities and prices for many outputs of finance and service industries are deficient.

Input

Labor input is easy to measure, as it only involves counting the heads of persons engaged in production. But in fact, the number of hours worked is preferable to just the number of people. This dimension, too, is related to the compensation received per hour of work, also known as wage. The official estimates, however, do not differentiate among various categories of labor where they measure labor inputs by occupation, industry, and other categories.

The drawback of using this method for estimating the labor input is that it is difficult to find the relation between the number of hours worked and hours paid for during paid holidays and leaves.

Determinants of Productivity

Technology determines the maximum level of output that can be reached and the quality of output that is required. In this age of technological advancement, innovations and automates systems play a major role in carrying out the production activity. Technological changes are happening very fast in some industries while it is gradual in others.

The Skills of the workers matter a lot when determining Productivity on an individual level. For example, if an unskilled worker tries to carry out a task, he might make more mistakes and will not be able to optimize the time to work, whereas a skilled worker will need less time to do the same job.

Some other methods of attaining high Productivity are through adequate levels of earnings, high job security, quality education and training, good and safe working conditions, and an appropriate work-life balance.

The Economic Reports

The economic reports of Productivity are published every month for most of the countries. There is also the collective data that combines the monthly statistics of a country which is published on a yearly basis. The productivity data is maintained and provided by two big OECD (Organisation for Economic Cooperation and Development) databases, which are ISDB (International Sectoral DataBase) and STAN (Structural Analysis DataBase). At these sources, we can find the data from 1970 for countries like the United States, Japan, and other European countries.

Analyzing The Data

From a trading perspective, Productivity plays a vital role in the fundamental analysis of a currency pair. The productivity data shows the production capacity of a country. Using this data, various agencies decide which goods need to be imported and exported from the country. By comparing the data of two countries, one can determine which economy is stronger and has the potential to grow.

One thing to keep in mind when analyzing the data is to compare similar economies as different countries will have a different level of development. When looking at developed countries, it is fair to expect the productivity ratios to be in triple digits, and for developing economies, it could be in two digits.

Impact on the currency

The impact due to Productivity on the currency is split into two different categories, i.e., the ‘traded’ and the ‘non-traded’ sector of the economy. The ‘traded’ sector is made up of industries that manufacture goods for import to foreign countries and hence have a presence in the foreign exchange market. The ‘non-traded’ sector is comprised of industries that produce goods for the domestic market only.

So, as the prices of goods of the ‘traded’ increase, the currency of that country is set to appreciate and thereby increasing the inflow of funds into the country. In the case of ‘non-traded’ sector goods, an increase in the price of such goods is not good for the economy as this would make the products costlier and people will have to spend more to purchase them. This would negatively impact the currency, and institutions will not be willing to invest in such countries.

Sources of information on Productivity

Productivity data is available on the most prominent economic websites that provide a detailed analysis with a comparison chart of previous data. Using this information, a trader can analyze and predict the future data of the economy. Here is a list of major countries of the world with their productivity stats.

GBP | AUD | USD | EUR | CHF | CAD | NZD | JPY  

Higher Productivity has an impact on the profit of a company and the wages of the employees. High profits due to high Productivity generate cash flow, increase loan provision from banks, and, most importantly, attract investment from foreign investors. Due to this, companies can afford to pay more wages to their employees without losing market share.

Impact Of Productivity News Release On The Price Charts 

Productivity is one of the most important economic indicators that measure the annualized change in the labor efficiency of the manufacturing sector. As Productivity plays a major role in an economy, it is necessary to analyze the impact of the same on the currency. The below image shows that Productivity is not a crucial factor for forex traders, which means the Productivity data might not have a long-lasting effect on the currency. However, one should not forget the data that affects the manufacturing sector and hence indirectly impacts the GDP. Therefore, we should not underestimate the figures.  

To explain the impact, we have considered the NonFarm Productivity of the US, which is released by the Bureau of Labor Statistics of the US Department of Labor. A ‘higher than expected’ reading should take the currency higher and is said to be positive for the economy, while a lower than expected reading is considered to be negative for the economy and should take the currency lower. The latest figures show that there has been a 1.4% rise in Productivity levels from the previous quarter. Let us find out the impact on the US dollar.

NZD/USD | Before the announcement | 5th March 2020

The above chart is of the NZD/USD currency pair before the Productivity numbers are announced. What we essentially see is a strong down move that has resulted in a reversal of the uptrend. The volatility is high even before the news release. The reason behind this move is much greater expectations of Productivity than before, which is making traders buy US dollars. Now, if the Productivity numbers were to be lower than before, we can expect a reversal of the downtrend, but it might not be sustainable as it is not a high impactful event.

NZD/USD | After the announcement | 5th March 2020

After the Productivity data is announced, volatility further increases on the downside, and the market moves much lower. What we need to observe is that even though the market goes lower, it fails to make a ‘lower low.’ This is because the productivity data is not of much importance to traders, and hence the impact will not last long. Therefore, the market respects the news for just a couple of candles and later takes support at the lowest point and goes higher. From a trading point of view, the only way to trade Productivity news release in this pair is by going ‘short’ after the news outcome and exit at the nearest opposing point.

GBP/USD | Before the announcement | 5th March 2020

GBP/USD | After the announcement | 5th March 2020

The above images represent the GBP/USD currency pair, where the characteristics of the chart are totally opposite to that of the NZD/USD chart. Here, the uptrend seems to be dominating, which is also confirmed by the moving average indicator. The forecasted productivity data is not having any impact on the pair before the news announcement, which means the data is relatively weak against British Pound. After the announcement is made, we see the market moves up as the data was no better than the forecasted data. The ‘news candle’ leaves a wick on the top since the data was mildly positive for the US dollar but has no significance. Therefore, the volatility increases on the upside with a minor impact, and the market continues its uptrend. In this pair, we don’t really see a point of ‘entry’ as we don’t have technical factors supporting the trade and hence should be avoided.

USD/CHF | Before the announcement | 5th March 2020

USD/CHF | After the announcement | 5th March 2020

The above chart of USD/CHF is similar to that of GBP/USD pair, but since the US dollar is on the left-hand side, the chart is in a downtrend. Here too, the US dollar is showing a great amount of weakness before the news announcement, which means even a positive Productivity data is less likely to result in a reversal of the trend. After the news announcement, we see that the price suddenly shoots up, and the price closes as a bullish candle. As the impact of Productivity data is less, the sudden rise in volatility shouldn’t last, and hence this could provide an opportunity for joining the trend. When volatility increases on the downside, we can take ‘short’ positions in the market with a stop loss above the ‘news candle.’ This is how we need to analyze such news outcomes.

That’s about Productivity and its impact on the Forex market. If you have any doubts, please let us know in the comments below. Cheers.

Categories
Forex Market Analysis

Opposing forces drive the markets in the upcoming week

Weekly Update

Regarding fundamentals, we are expecting opposing forces drive the markets in the upcoming week. Volatility has sparked bearing in mind the recent intervention of the USA in Syria. However, stock futures are up, and oil is down on hopes Syria attack a one-off.

Thus, we’ll focus on the most foreseeable variables. There are three variables that are mainly moving the markets

  • Protectionism
    • A less negative pressure in the short term as fears erase
    • Recent formal declarations by Chinese president rise expectations of a friendlier trade
    • There are still two months until Trump takes in action any tariff measure
  • Technology
    • Recent testimony by Mark Zuckerberg leaves good feelings and calms the markets
    • Relieves pressure on technology companies
  • Quarterly results
    • 2018 benefits are revised downwards
    • However, 1st quarter is expected to be robust with strong corporate volumes and margins which will be positive in the short term
Macro Data

This week there is no major macroeconomic event that will affect considerably the markets.

On Monday we have American Retail Sales which are expected to increase to 0.4% from the last- 0.1%. This can benefit the US Dollar. On Tuesday, the German ZEW Economic Sentiment can have some impact on the Euro and DAX. It is expected to decrease to -0.8 from 5.1. Finally, on Thursday, the American Manufacturing Index is released, and it is expected to decrease around one point.

In general, the macro outlook is more pessimist than positive. However, the previous three variables provide a more positive outlook and provide a better understanding than the macroeconomics events on how the markets will act this week. So that, we could expect a stabilization phase in the markets after the recent volatility. In general, slightly more positive than negative.

 

 USD Index

Weekly Chart

 

In the weekly chart, it is possible to appreciate how the USD Index is not only below the 200 EMA but also broke below the weekly support that has been retesting in the recent weeks and which has not been successful so far. In the short term is facing a bearish trend line caused by its recent devaluation.

During the first half of this week, there are not big news. However, on Wednesday, American Inflation numbers come out. It is forecasted that the core CPI will increase to 2.1% from previous 1.8%. Furthermore, on Friday, Moody’s published its USA rating, which right now has the highest rating possible with stable perspective. Hence, recent controversial policies from the American government making protectionism and a trade war a reality can alter the expectations for the mention economic events. In case the forecast does not vary the USD should not be hurt. However, an unexpected increase in the Core CPI and a rating downgrade from Moody’s can really hurt the Dollar.

Daily Chart 

The daily chart is similar to the weekly chart. The retest cannot break above the recently broken support and is facing more bearish pressure ahead. Nevertheless, it just formed double bottom pattern followed by a short-term bullish trendline. This week will be critical to know whether the bearish support is strong enough or it holds on to the current bullish trend.

EURUSD

Daily Chart

Regarding the EURUSD, it has been flat since February. Last month it broke its monthly bullish trend, and the consequently retest it.  From there, it has remained flat with no major fluctuations. However, with the recent uncertainties facing both the Eurozone and the USA it will not be surprising to see the EURUSD leaning towards a side. For now, it is holding at a strong resistance that dates back to September of 2017.  It is facing a couple of support and resistance which will help to know towards what side it will lean and leave the rectangle it is in now.

USDJPY

Daily Chart

Moving into the USDJPY, it has just bounced from a monthly bullish trend after doing a fake breakout and consequently bouncing back. A bullish trend could be considered since there are not big resistances ahead part from the 200 EMA and the recent bearish monthly trend. In the short term, there are two resistances not very strong, but that may cause a small retracement. However, the monthly support is stronger than the resistance it is locked up between.

GBPUSD

Daily Chart

GBPUSD seems to have no limits. At the beginning of the year, the Pound broke an important bearish trendline holding to its current bullish trendline. Moreover, last week just broke another key resistance. With no more important resistance ahead it has a clear path to keep up with the current upward trend. Maybe it is possible to do small retest as we saw with the previous one.

Crude Oil

Daily Chart

Recent political events, like the recent issue of the missile attack against Syria, have created volatility in the markets and consequently, the price of oil has been on the rise. After holding to the trendline and breaking above $65 it is possible to see a retest of the recent resistances it just broke above. Without more resistances ahead, analyst set that next target is $70 per barrel.

DAX

Daily Chart

Regarding technical, it is within a bearish trend that can be prolonged as there is still uncertainty in terms of politics and the recent macroeconomics event have not been reaching the forecasted ones. However, an improvement in the economic sentiment and political stability can help the DAX to break the ahead resistance and enter a bullish trend, leaving the current flat to bearish trend it is involved in now.

As commented at the beginning, on Tuesday the German ZEW Economic Sentiment is released. Hence, it can major point to decide whether it breaks the recent resistance and follows the daily bearish trend.

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