We repeatedly read that the blockchain is very cool – it’s a breakthrough, it’s our future, and so forth. If you believe all this is true, you’re in for a disappointment. Important note: this article deals with the implementation of blockchain technology, which is used for the Bitcoin cryptocurrency. There are other applications and implementations of the blockchain and certain issues are resolved in some of them.
About BitcoinBitcoin creators had a task: to make it work without a central control point; no-one should trust anyone. The authors fulfilled the task, the resulting electronic money functioned as intended and its adoption has grown. However, the decisions they made are monstrous in their inefficiency. The purpose of this post is not to discredit the blockchain. It’s a useful technology that has many great applications. Despite its shortcomings, it has unique advantages. However, in the pursuit of sensationalism, many journalists concentrate on the advantages of blockchain technology and often forget to assess the real state of affairs. They ignore the disadvantages. Therefore, it’s useful to consider the blockchain from all angles.
Myth One: Blockchain Is a Giant, Distributed ComputerThose who don’t understand the basic principles of blockchain may be under the impression that it’s some kind of computer that performs distributed computing tasks, while its nodes around the world are gathering small bits of data to build something complicated and big. This is not the case. In fact, all the nodes that serve the blockchain are doing precisely the same thing. Millions of computers:
- Check the same transactions using the same rules. They perform an identical job.
- Add the same data to the blockchain.
- Store the whole history, which is the same and one for all.
Myth Two: Blockchain is Eternal – Everything Written There Will Remain ForeverThe entire history of all transactions already runs to over 130 gigabytes of data. This is the full capacity of a cheap laptop or a modern smartphone. The more transactions that occur in the Bitcoin network, the faster the volume grows. The growth in the capacity of hard disks is probably not keeping up with the growth of the size of the blockchain. In addition to the fact that it needs to be stored, the whole database must be downloaded from the very beginning. It now takes several days to do so. You may ask: “Is it possible to store just part of the blockchain, since it’s the same thing on every node of the network?” Yes, you could, but then it would be a traditional client-server architecture instead of a peer-to-peer blockchain. Also, clients will be forced to trust servers. Thus the idea of “not trusting anyone,” which is the cornerstone of the blockchain, disappears. For most users, this principle has already gone. Bitcoin users are divided into two groups: enthusiasts who “suffer” and store it locally, and ordinary people who use online exchange services and wallets. The latter are much more prominent. These people trust the server and don’t care how it works.
Myth Three: Blockchain is Effective and ScalableIf each node of the network does the same thing, it’s obvious that the bandwidth of the entire network is equal to the bandwidth of one node of the network. Bitcoin can process a maximum of seven transactions per second – that’s it. In addition, Bitcoin transactions are recorded only once every ten minutes. After the record appears, it’s agreed to wait another 50 minutes, because some records spontaneously roll back from time to time. Thus if you need to buy chewing gum, you may have to wait an hour or so in the store in order to complete the transaction! With such a transaction speed, it’s impossible to increase the number of active users substantially. For comparison, Visa processes thousands of operations per second. It can also quickly increase this rate, as traditional banking technologies are easily scalable.
Myth Four: Miners Provide Network SecurityYou’ve probably heard of miners, and of giant mining farms built next to power stations. What are they doing? They’re just wasting electricity! They “shake” the blocks until they become “beautiful” and can be included in the blockchain. Rewriting the financial history in this way takes as much time as creating it (provided you have the same total capacity). To build one block, you need the same amount of electricity as an average city consumes per 100,000 inhabitants. Add to that the costly equipment, which is suitable only for mining, and you can formulate the principle of mining (the so-called proof-of-work) as: “Burning the resources of mankind.” Blockchain optimists assert that miners ensure the stability and security of the network. The problem here is that the miners protect Bitcoin from other miners. If there were a thousand times fewer miners who burned a thousand times less electricity, Bitcoin would function just as well as now – the same one block every ten minutes, the same number of transactions, the same speed. With regard to most blockchain solutions, there’s a risk of the “51% attack.” The essence of the attack is that if someone controls more than half of all mining capacities, he can secretly write an alternative financial history, in which he doesn’t send his money to others. And then he may present his own version of the blockchain – which will become a new reality. Thus, he gets an opportunity to spend his money several times. It’s not possible to attack traditional payment systems in this way. Ultimately, Bitcoin is a hostage of its own ideology. “Superfluous” miners can’t stop mining because there will be a sharp increase in the likelihood that one entity will control more than half of the remaining capacity. As long as mining is profitable, the network is stable, but if the situation changes (for example, because electricity prices rise), the network may face massive double-counted transactions.
Myth Five: The Blockchain is Decentralized and Thus UnbreakableYou may think that since the blockchain is stored on each node of the network, the security services won’t be able to shut it down (since the blockchain doesn’t have a central server or something similar). This is just an illusion. In reality, all “independent” miners are united in pools, or rather, cartels. They have to unite because it’s better to receive a stable but small income than to wait 1,000 years to get a huge one. There are only about 20 large pools. The largest four of them control more than 50% of all Blockchain capacity. It’s enough to knock on just four doors and get access to four Command & Control servers to have the opportunity to spend the same BTC more than once. In fact, the threat is even more real. Most of the pools, along with their computing power, are located in one country – China – which simplifies the potential Bitcoin takeover.
Myth Six: Anonymity and Openness of the Blockchain is GoodWe know that the blockchain is open and everyone can see everything. Though Bitcoin doesn’t list your name, it’s not completely anonymous. For example, if a cybercriminal gets a ransomwarepayment to his wallet, then everyone understands that this wallet belongs to a bad guy. And since anyone can monitor and follow all the transactions from this wallet, it won’t be easy for the crook to take advantage of this money. It’s enough to make a small mistake and reveal your identity somewhere for law enforcement officials to catch you. This happens more often than you might think. These days, almost all Bitcoin exchanges require their users to go through identification procedures. Therefore, hackers have to use the so-called “mixer” services. Such services mix dirty BTC with lots of clean ones. Crooks pay large commissions for this and take a lot of risks, since the mixer is either anonymous (and could run away with the money) or is already under the control of law enforcement authorities. The pseudo-anonymity of Bitcoin may be bad for legitimate users too. Here’s a simple example: Someone transfers a small amount of BTC to his mother. After that, mother knows:
- How much money her son has at any given time
- What exactly he spent it on
Blockchain Myths: ConclusionYou have just read about the six main Bitcoin shortcomings. You may wonder why the media doesn’t cover these issues. Unfortunately, it’s simply not profitable for them to write about these matters. Many of those who bought Bitcoin began to advertise and promote it, as well as to profit from it. Why, then, would they write about the blockchain technology’s shortcomings? Bitcoin has many competitors, who have tried to solve certain problems. Although some ideas are very good, they’re all built around the same basic blockchain principles. Yes, there are other, non-monetary applications of blockchain technology, but the fundamental drawbacks of the blockchain apply there too. You can read the full article on BestVPN.com.
This is the ultimate guide to Bitcoin Privacy. Learn how to buy bitcoins anonymously and securely! How to spend it without worrying, and more! Of course, we’ll show you how to buy the best VPN anonymously, however, the same process can be used to anonymously purchase pretty much any product that accepts Bitcoins. Do note, however, that physical products need to be delivered to a physical address and/or be collected in person. This is an updated version of a guide I originally published on this website back in 2013. Since then, many things have changed. The value of Bitcoin has shot through the roof, well-known trading websites such as Mt. Gox have closed down, and much more. In some places, you can now even buy Bitcoins from ATM machines!
What Is Bitcoin?Bitcoin is the original cryptocurrency. It is a decentralized and open source virtual currency that operates using peer-to-peer (P2P) technology (much as BitTorrent and Skype do). Like traditional money, you can trade Bitcoin for goods or services (such as a VPN subscription) and exchange it for other currencies. Unlike traditional currencies, however, there is no “middleman,” such as a state-controlled bank.Bitcoins are instead generated using a free computer program, at a predictable rate determined by the amount of processing power dedicated to their generation. This process is known as Bitcoin mining. In theory, anyone can do it. A Bitcoin is not a physical thing; it is a cryptographic algorithm consisting of a public key and private key. Some vendors do sell physical notes and coins denominated in Bitcoin, but what they are really selling is a private key (usually protected by a seal which you must break) together with a public key that you can use to verify the balance.
Bitcoin MiningIn practice, Bitcoin mining requires a large amount of processing power – so much so that mining is impractical for most individuals. However, it is possible to join a Bitcoin mining pool (or similar organization) to help spread the costs (and rewards). The prohibitive cost of Bitcoin mining is in part responsible for the current craze for mining alternative cryptocurrencies such as Ethereum, which has a much lower entry point than mining for Bitcoins. Bitcoin mining is not the focus of this article, but if you are interested in the subject then there is an excellent article here. You may also be interested in our .
Other CryptocurrenciesSince the release of Bitcoin in 2009, numerous other virtual cryptocurrencies have been developed. Many of these have features that offer distinct advantages over Bitcoin (including being more anonymous). None of these alternatives, however, have achieved anything near the popularity of Bitcoin. This limits their real-world usefulness when you want to buy things.
Bitcoin And AnonymityThere are two sides to the Bitcoin when it comes to anonymity. The first thing to stress is that Bitcoin is not inherently anonymous. However, it can be made so (at least to a high degree). Please always bear in mind that 100% anonymity can never be guaranteed. Central to the concept of Bitcoin is the . This is basically a public ledger that records Bitcoin transactions. Transactions in the form payer X sends Y bitcoins to payee Z are broadcast to the Bitcoin network for all the world to see. Thus, from this perspective, Bitcoin is much less anonymous than, say, good old cash. As Sergio Lerner, CEO of Argentinian company Certimix, notes, It is possible to purchase Bitcoins and hold a Bitcoin address without revealing your true identity. This only provides a form of pseudonymity, though. Interested parties can use advanced data analysis techniques to look for patterns to de-anonymize users. Such wide-scale and sophisticated data analysis is Google and Facebook’s entire business model. However… You can use Bitcoin mixing techniques to further confuse who did what with Bitcoins. By randomly switching the ownership of Bitcoins, such techniques make de-anonymization via data analysis very hard to achieve. If you purchase and hold them without revealing your identity, and then properly mix them, Bitcoins canafford a high level of anonymity when performing transactions. I discuss ways to mix Bitcoins later in this guide. To more fully understand how Bitcoin and the blockchain works, The ultimate, 3500-word, plain English guide to blockchain by Mohit Mamoria is a fantastic introduction, as is our own Blockchain Explained guide.
The Bitcoin Cash Hard ForkBecause nothing is ever easy, on 1 August 2017 Bitcoin split into two derivative currencies: Bitcoin Classic (BTC or XBT) and Bitcoin Cash (BCH or BCC). This split is known as the Bitcoin Cash hard fork and the reasons are highly technical.
Bitcoin Classic Vs. Bitcoin CashIf you had any Bitcoin in your wallet and have possession of the private keys, then you are now also entitled to claim an equal number of Bitcoin Cash coins. Thus, if on 1 August 2017 you had a wallet with one Bitcoin in it, you still have that Bitcoin and can nw also claim one Bitcoin Cash coin (BCH). If you are just starting with Bitcoins, then you’ll need to decide between purchasing Bitcoin Classic or Bitcoin Cash. Some points to bear in mind are:
- Bitcoin Classic is much better established and far more vendors accept it as a form of payment.
- Most Bitcoin wallets and many exchanges don’t accept Bitcoin Cash.
- However, Bitcoin Cash allows for more transactions per second. This translates to faster payments and lower fees.
- 1,500 more blocks were mined on the Bitcoin Cash chain than on the original one.
- The market price for Bitcoin Cash has fluctuated wildly over the last month, but in general it has seen steady growth.
Cryptocurrency is the bipolar of the trading world. The volatility is insane; you’ll see major swings from 12% to 300% in a single day! With movement like this, it can be hard for anyone, let alone a newcomer to the cryptocurrency exchange, to make heads or tails of the market. Good news is there are a lot of people doing research on this exact topic (like us!) who can help you figure out the best way to turn a profit when cryptocurrency trading. So, if you’re in the mood to make some money but can’t make sense of all the cryptomarket lingo, check out some of these cryptocurrency trading hacks (spoiler, there are hacks for novices and experienced traders, so skip the first few if this isn’t your first rodeo). Cryptocurrency Trading Hack #1: Start at the beginning If you’re a newbie to the world of cryptocurrency trading, then the first and most important hack you can hear about is to learn! Jumping in without knowing what you’re talking about is a guaranteed recipe for disaster. So, before you put your money where your mouth is, get educated. Understand the market, terms, and trends. Know what terms like falls, rises, volatility, and swing trading mean. Understand what blockchain is and how it helps. Learn the different trading strategies and when to use which. Dylan from Six-Figure Marketers Club put out one of the best beginner’s cryptocurrency trading strategy videos. It starts at the beginning and proceeds to walk you through all the basics you’ll need to start trading bitcoin. The best part of this video (and all his videos, really) is that he speaks English clearly! You’d be surprised how difficult it is to find a good cryptocurrency video tutorial by a native English-speaker, so Dylan’s stuff is really golden. What’s more, Dylan explains everything clearly, so you will really walk away from this video understanding the ABC’s of cryptocurrency trading. As they say, knowledge is power! Cryptocurrency Trading Hack #2: Only invest what you can afford to lose Ok, this one doesn’t seem like a pro tip, but if you’ve ever lost money in any investment platform, you know that sticking to this rule is key. Picture this: You invest a large sum of money, probably more than you can really afford, but it’s ok because your broker ensures you that this is a solid bet. Lo and behold, the market swings the other way, and you lose everything you’ve invested. You’re devastated, heartbroken, and what’s more, you’re broke. Now, what do you do? The smart investor walks away, but that’s not everyone. Too many people get the itch. I’ve come this far, I’ve invested so much. I can’t turn back now. So, they invest more and more and keep sinking in deeper and deeper. This is a dangerous game you don’t ever want to play, so make sure you don’t even start your game strategy this way. Set a certain amount of money you’re willing to invest, and make sure that is only money you can responsibly afford to lose. This way, if you lose it all, you’ll still be able to pay your bills, make rent, and take care of your regular obligations without feeling any pressure. If you make a profit, that’s great! Go ahead and invest some of that too. Cryptocurrency Trading Hack #3: Use the right software/tool/trading platform Up there with knowing what you’re doing is knowing which platform to do it on. The right platform will give you the best advantages when trading cryptocurrencies. You’d be amazed at what a difference a convenient and smooth mobile app makes. Other features to look out for when scouting platforms include what type of security the exchange offers, the exchange, trade, and deposit-withdrawal fees charged. Cryptocurrency Trading Hack #4: Using the MACD Indicator for buy and sell signs I think this is one of the best beginner’s strategies. MACD aka moving average convergence divergence scale is an indicator that follows the momentum of an asset based on the movement of two averages of the security’s price. It sounds much more complicated than it really is (and if you’ve never used it before, let B from Your Altcoins show you exactly how it’s done), but once you play around with it, you’ll see just how simple it is. Basically, following the MACD indicator will show you when is the best time to sell your investments (it can also show you when is a good time to enter or not enter into an investment). There are different settings like you can micromanage down to every five minutes or let it go for days, so play around with it to see which ones you like best and which are most successful for you. Toggle the different timeframes, how often it displays, etc. until you find the groove that works for you. Regardless of which settings you use, the MACD indicator will show you two lines, one showing rise and one showing fall. If you follow these two trends, you’ll be able to see clearly when to sell to make the most profit. Try it out, you’ll be amazed at how easy this one is. Cryptocurrency Trading Hack #5: Use Momentum Momentum is a pretty simple concept: if things start going up, they keep going up. And when things start going down, they continue in that direction too. In general, the strategy works using this logic. Momentum says to buy a week after a currency experiences an upward trend (20% or more), and then sell a week or so later. Of course, this isn’t always the case (see the next few hacks for a solution to this strategy loophole), there are plenty of times that assets will keep climbing and you’ll kick yourself for having sold, but at least you’ll make some profit off of the currency using this strategy. Plus, you’ll be really happy if the asset drops suddenly since you won’t have lost everything in one fell swoop. I thought this was a great video for clarifying momentum. It’s only 15 minutes, but it explains the strategy pretty clearly. What’s more, this video is solidly backed by real research done by Yale University studies and findings. So, the information is really something you can take to the bank. Cryptocurrency Trading Hack #6: Take profits… One of the biggest mistakes that investors can make is not taking profits when they see a rise. It’s natural for you to want to hold out for a bigger gain, and that’s fine. But with such a volatile market and such rapidly moving changes, it’s just a bad idea to keep everything in for the big payout. If you want to see just how far you can ride the gravy train, by all means, go for it. Just do yourself a favor and take your profits out first. If you’ve invested $1,000 and you see a rise, and your investment is now worth $1,200, take that $200 gain as your profit. Then if you want to leave the initial $1,000, you haven’t lost anything more than what you originally knew you could lose anyway. Either way, you’re still up $200! Cryptocurrency Trading Hack #7: …But don’t take out everything Ok, so you want to make sure you take out your profit before the asset loses its value, BUT you don’t want to take out everything, and that’s the next cryptocurrency trading hack. Basically, you want to take out your profit and leave the rest. Why? Because when an asset goes up in value, it’s the time to make your profit. Yay! But there are so many times when a currency rises…and then continues to rise for quite some time. If you sold early on, you’ll be kicking yourself for months or even years that you didn’t hold out for a bigger slice of the pie. This CryptoLand video explains this concept really well, so if you want to learn more about it, check it out. Cryptocurrency Trading Hack #8: Use MTP Properly Modern Portfolio Theory (MPT) basically posits that you set aside a certain amount of money that you are willing to invest (i.e., lose) and buy an assortment of assets consistently regardless of the price. The reason this works is because the assets aren’t directly correlated, so you aren’t going to feel the pressure of all your assets moving in the same direction at one time. A good spread of assets could yield an excellent return over time. The real hack here is to use MPT properly. That means diversifying your assets across markets, not just sticking to cryptomarkets. Why? Because all cryptocurrencies are too highly correlated right now to be considered varied enough to protect you against the risks. Cryptocurrency Trading Hack #9: Breakouts Breakouts are one of the most popular investment strategies (whether you’re buying low or selling high), and here’s a quick video that’ll tell you everything you need to know about it. Chris just has a personable air to him, but more importantly, he tells you all the right information in simple terms that anyone can understand. Plus, Chris actually makes trading sound like fun, so check it out! Cryptocurrency Trading Hack #10: Make sure you’re secure This last one also seems like a no-brainer, but you’d be amazed at how many people operate in this mode (scared face emoji!) Cryptocurrency trading is somewhat of a wild wild west of exchanges, and that means there are a lot of people looking to take advantage of you. There are plenty of built-in security features, but you’ve got to do your part to keep yourself and your investments safe too. When trading, make sure:
- You have two-step authentication enabled
- You’ve read up and are aware of phishing and email scams
- You keep your cryptocurrency keys available (you forget your passwords, you’re screwed!)
You might be somewhat familiar with the idea of blockchains, or you might have only heard of the phrase in passing (or you might not have any idea what a blockchain is but thought the article title sounded more interesting than the topic currently being discussed in the meeting your supervisor is making you sit through…). Either way, there are still a lot of questions that you probably have. What is a blockchain? How does a blockchain actually work? Are blockchains really as secure as they claim to be? Can you invest in blockchain itself? What is the advantage of blockchain? Maybe you’re getting more involved and want to delve deeper into the exciting and fascinating world of blockchains. In that case, your questions might be more advanced like: What programming language is used for blockchains? Is blockchain open source? Is blockchain hackable? Are there other use cases for blockchain beyond bitcoin storage? Will blockchain change the world? No matter what your string of queries, the best place to find the answers is always the internet. There are thousands and thousands of videos out there explaining the definition, uses, and inner workings of the blockchain. I know what you’re thinking. Great! Let’s sift through thousands of videos to find the ones that actually make sense, answer your questions, and give over the information you want in an appealing manner. If that doesn’t sound as much fun as a barrel of monkeys (why would a barrel of monkeys be fun anyway?!), then you’re in luck. Since we know how interested our readers are in the topic, we’ve aggregated the best videos from across the web that talk about blockchains. From the straight-up definition to the more advanced jargon that most of us will never really understand, check out the 5 most useful blockchain videos out there to help you get started down the path of blockchain wisdom. Great Blockchain Video #1: What is blockchain? CNBC Explains by Tom Chitty And here’s why: It gives you all the important information you want to know, starts from the beginning, and explains the entire concept well There are a lot of blockchain for beginners videos. You’ll recognize them by the names like, what is a blockchain, blockchain explained, or blockchain for beginners. The truth is, though, that most of these videos take a lot for granted, assume you know more than you actually do about the topic, or don’t really explain the concept in a practical way. And that’s why this CNBC exclusive done by Tom Chitty is our first recommendation for anyone who is just starting out on the learning journey to blockchain technology. If you can understand the accent and overlook the poor wardrobe choices, then you can actually learn a ton from this explanation video. Chitty goes through the ABCs of blockchains, showing the negatives alongside the positive uses for blockchains. He also shows you exactly how it works, why it is so secure, and what future applications might be possible for this technology. The CNBC video also takes you through the benefits and possible financial ramifications that are involved in embracing this technology. All in all, Chitty does a great job of explaining a complex topic and gives you a lot of food for thought. Great Blockchain Video #2: New Kids on the Blockchain by Lorne Lantz And here’s why: Practical ways people are currently putting blockchain to good use and how they will even more so in the future Aside from the fact that this is a TED talk, which automatically makes it amazing, Lorne Lantz explains exactly how blockchain works quickly and eloquently. He then moves on to break down how blockchain works within the bitcoin universe, something that most people are curious about. Finally, Lantz illustrates how blockchain can be used in other instances. This is not only fascinating, but it is a great way to educate the public about how this brilliant technology can be utilized in the future and within our day-to-day interactions. Great Blockchain Video #3: Understand the blockchain in two minutes by Institute for the Future (IFTF) And here’s why: It’s fast and easy to watch but surprisingly thorough for a two-minute video We all want to know more about various topics like cybersecurity, the effect of drug and alcohol combinations, or depression and prevention. But let’s face it, we’re lazy! And what’s more, our attention spans are shorter than Michael Jordan’s laughable attempt at becoming a baseball star. For this reason, I am highlighting this video from IFTF. The Institute for the Future does snapshots of interesting topics, trending concepts, and technological advancements that they deem worthy of a closer look. This video on blockchain is just two minutes long, but somehow it manages to explain everything you really need for a cursory understanding of the topic (and even a little more). So, if you’re already antsy just from reading this intro, check out the IFTF blockchain video (you can watch it double speed if you’re that strapped for time!). Great Blockchain Video #4: How the blockchain will radically transform the economy by Bettina Warburg And here’s why: Food for thought on a more advanced technology that is offering a safer and more reliable forum for value exchange Whether you’re a conspiracy theorist, a budding financial mogul, or just someone who thinks it’s really cool to see entire empires brought to their knees by the unlikely underdog (think David and Goliath or Spartans against the Persians), this is a must watch video. Bettina Warburg explains briefly how throughout history we have used various methods to exchange values within our societies. From protection to fish and coins and now to the more advanced banks and digital currencies, the world has always had its way of trading valuables for desired goods. In this video (yep, another TED talk), Warburg takes us through the process of how blockchain is the next chain in the evolution of value exchange. She expertly breaks it down, so you can see how this makes sense on a sociological, economic, and technological level. What’s more, she demonstrates how blockchain is the safest, easiest, and most reliable method we have come up with yet. So basically, Warburg’s video shows viewers how blockchain is like a solid, unbreakable safe, which makes it more trustworthy and evergreen than any other transaction method that came before it. I don’t want to spoil the video for you, so just watch it for yourself. Great Blockchain Video #5: Blockchain: Massively Simplified Richie Etwaru And here’s why: A fabulous twist This video starts off seemingly like all other beginner’s guides to blockchain. It talks about the early days of the internet (those dark times of dial-up modems and even earlier ARPAnet packet switching technologies) and quickly fast forwards to show you how kickass technology has become (as if we needed a video to tell us that). All very interesting stuff, but nothing new. And then Etwaru does something that nobody else we’ve seen so far attempt. He takes blockchain and explains how it can bridge a gap that no other technology has been able to traverse, a gap that is so fundamental to human interactions and our society as a whole that it’s truly a marvel that we’ve gotten this far in history without having a more reliable failsafe for it. In this video, Etwaru explains that inventions are all about bridging gaps in our society, world, and lives. He then continues on illustrating how blockchain bridges the gap of trust, one of the most core and necessary element of our society, one that holds trillions of dollars on its wobbly shoulders. With his mesmerizing voice, witty personality, and mind-blowing revelation, Etwaru really blows the top off of this simplified concept. And that’s what makes his video on blockchain really stand out. Blockchain Explained, Expanded, and Explored So, there you have it. Sure, you could sit there for hours and hours watching video after video, sifting through the crap and suffering through the clunky terminology, but why bother? We’ve rounded up the cream of the crop, the best videos out there, the ones that’ll give you the biggest bang for your buck. In fact, if you just watch these five videos, you’ll: • Know all the basic information about what blockchain is, how it works, and what it’s used for • Be able to hold your own in a conversation that is arguing the different sides of blockchain • Have some interesting ideas to help stir up controversy when everyone’s talking about this technology at the office water cooler, at your next family barbecue, or this Thursday night at the bar • Just generally sound like a smartass because you know more about an interesting topic than almost anyone else in the room Of course, if you are a real newbie to the blockchain concept, then here’s some quick information to warm you up to the subject and to ensure you don’t sound like a complete idiot the next time the subject comes up. • Blockchain is an online database that can be accessed by anyone and from anywhere in the world (provided you have an internet connection) • Blockchain is decentralized, which means its ledger is shared on every computer around the world, so it has no single central location • Blockchain can be added to by anyone, but once a record (or block of information) is created, it cannot be tampered with, changed, or deleted • Bitcoin is NOT the only use case for blockchain technology. In fact, it’s just the beginning baby! From banking to cybersecurity, crowdfunding, Internet of Things, and healthcare, blockchain has so many real-life applications. Now that you’ve got all this information in your head, knowledge is power. So, get out there and do the best thing anyone can do with a boatload of interesting information; flaunt it in front of your friends. This article was originally published at YouTubetoMP3Shark.
Why Crypto Payments in India?India tops the list of countries with the highest volume of cash remittances from abroad. Figures from 2017 stand at about $69 million, according to a recent World Bank report. This was a 9.9 percent increase from the previous year. Total global remittance figures reached $613 billion in 2017. Facebook is thought to be targeting this market with its WhatsApp crypto application. India currently has over 200 million WhatsApp users. The application also has a market penetration of about 28 percent, according to data from Statista.
WhatsApp Has Been Pushing for a Payment Service ApprovalWhatsApp CEO, Chris Daniels, was recently reported to have sent a letter to the Reserve Bank of India requesting to extend payment services to its users in the country. The letter, which is dated November 5, sought for the approval of a BHIM UPI (Unified Payments Interface). The company is reportedly also working with the National Payments Corporation of India (NPCI) to fulfill regulatory requirements and has already started to implement recommendations from the RBI. They include data storage requirements that oblige the company to provide unfettered access of payments info to the RBI. The proposal is still awaiting approval. In February, WhatsApp began testing its payment platform in India. The project was undertaken in conjunction with ICICI Bank. Around 700,000 users reportedly took part in the program. The rollout was postponed after the Cambridge Analytica scandal exploded. It led to serious privacy concerns that prompted the Reserve Bank of India to issue a new directive targeting data storage and access requirements forcing the company to remodel the project. A crypto-payments system approval from the Indian government would make WhatsApp a leading funds transfer platform in the country.
The Impact on the Remittances Market in IndiaA cryptocurrency remittance feature is likely to lead to reduced costs in transactions, as well as, faster processing as opposed to conventional modes of money transfer. Regular cash transfer platforms charge transaction fees that can reach and exceed 5 percent of the total figure transacted. Making cross-border payments can attract a currency conversion fee. In many cases, the process can take a few days for the funds to reach the recipient. On the other hand, cryptocurrency transaction fees are usually extremely low. TRON transactions, for example, only lead to a fee of about $0.0000901, while Monero trades cost about $0.01. This is according to data obtained from Bitinfo Charts. Tether, which is the most popular stablecoin by market trade volume, does not charge any rates for transfers but applies withdrawal charges. This article was originally published at CoinCentral.com.
On May 22, 2018, the U.S. Securities and Exchange Commission (SEC) filed a complaint against Titanium Blockchain, an Israeli start up in the middle of its ICO at the time. According to the SEC, the firm had violated the commission’s registration and anti-fraud regulations in the process of raising funding from investors. Charged with securities fraud, company founder, Michael Stollaire stands accused of falsifying information. Allegedly, the company was caught claiming false ties to large firms like Boeing, Disney, and PayPal.
WHAT IS TITANIUM BLOCKCHAIN?According to their official website, Titanium Blockchain is a research, development and consulting company that offers full-scale blockchain development services to enterprises in several industries. They are focused on exposing corporations to the applications of blockchain technology for benefits such as increased efficiency and speed. The firm claims that it delivers deep insights to its clients, based on a wealth of experience within the field. They follow a comprehensive roadmap which encompasses every stage of operation, from elaborate planning and product architecture to selecting the best technical solutions, product definition, outlining R&D processes and final execution. Their main services include consulting, private and public blockchain development as well as ICO services. The Tel Aviv-based firm makes use of several existing blockchain applications including Hyperledger, NEO, Ripple, Waves, Cardano, Quorum, AION, Wanchain, Blockchain as a Service (BaaS), and Ethereum-based decentralized applications among others. In September 2018, Titanium blockchain announced that it officially became a technology partner of WLTH, a health blockchain platform which rewards users for achieving health goals. Some other significant partnerships include:
- Gaby, a community management tool
- Millentrix, a cryptocurrency management service
- Verv, a smart home energy assistance that provides information on electricity usage
- Bidipass, an ID verification solution
- The ICO platform
WHAT WAS THE TITANIUM BLOCKCHAIN INFRASTRUCTURE SCAM?According to a statement by Robert Cohen, head of the SEC Enforcement Division’s Cyber Unit: “This ICO was based on a social media marketing blitz that allegedly deceived investors with purely fictional claims of business prospects. Having filed multiple cases involving allegedly fraudulent ICOs, we again encourage investors to be especially cautious when considering these as investments.” In detail, the Titanium fraud involved an inflation scheme that allowed it to profit from deceiving investors. It entailed orchestrating a social media campaign, using fake testimonials and false claims of corporate relationships with over thirty well-known companies, to create the illusion of credibility and expertise to unsuspecting investors. This generated a high demand for their digital asset during the ICO stage since the brands that were falsely named gave the firm an extra layer of credibility. They also offered incentives and created a sense of urgency leading to FOMO (fear of missing out) which prompted investors to buy into their tokens without analyzing the project properly.
SEC COMPLAINTIn its complaint against Titanium Blockchain, the SEC has also sued the firm for evading a valid offering exemption and registration. EHI Internetwork and Systems Management Inc., another company linked to Stollaire, was also mentioned in the complaint. Following the initial complaint, regulatory officials successfully obtained an emergency asset freeze which applied to the Titanium ICO in which over $21 million was raised. The SEC is focused on the retrieval of investor funds with interest and several penalties. The regulator also has plans to ban company founder, Stollaire, from any further participation in future digital offerings. Following the issuance of a temporary restraining order by the SEC, all involved parties have agreed to a preliminary injunction for the status of the firm to become a permanent receivership. This case can be linked to the recent focus on cracking down on fraudulent misrepresentation within the industry. The North American Securities Administrators Association (NASAA) has also increased its efforts to dismantle fraudulent activity carried out by cryptocurrency firms. To this effect, operation Crypto Sweep was launched in April 2018 and is currently investigating more than 50 firms. This is not the first time an ICO has been deemed fraudulent. In September 2017, the SEC filed charges against Maksim Zaslavskiy when it was revealed that fraudulent blockchain projects, REcoin and Diamond Reserve Coin ICOs only existed on paper. Through aggressive marketing tactics, Zaslavskiy was able to con about 100 investors out of $300,000. Neither coin issued investors’ tokens nor developed blockchain infrastructure as advertised. Recently, Centra, another budding blockchain startup, along with its three co-founders were accused of a similar case of misrepresentation in which they claimed strong ties to card network giants, Visa and Mastercard.
WHAT LESSONS CAN BE LEARNED FROM THIS SCANDAL?Now that the cryptocurrency regulatory atmosphere is becoming stricter by the day due to new initiatives by regulators, there will likely be a reduction in fraudulent cases like that of Titanium Blockchain. If one thing is clear, it is that there is a lesson for both firms and investors within the space who either perpetrate fraud or fall prey to it. Firstly, in any ICO, issuers must adhere to publishing only truthful representations of their business model, promises, and operations in their whitepapers, press releases and any other documents that can be classed as marketing material. This also applies to social media use, since there is a large audience on several platforms who can become investors in future. Issuers must also check with regulators to see if their marketing tactics are legal and properly placed in a way that does not mislead the public on the nature of products or services being offered. This should be done before any marketing campaign begins, to avoid any problems. Generally, for issuers who use testimonials as a way to boost credibility and gain trust, extra care should be taken to ensure that they do not contain any misrepresentation, whether intentionally or not. Misrepresentation may lead to complaints and accusations from investors who feel that they have been defrauded. It goes without saying that the use of information, including logos and names from other companies without permission, attracts a legal consequence. The same thing goes for falsifying records such as certificates and degrees to show a high level of expertise. Any of these acts can invite regulatory scrutiny. The Howey Test may also be carried out, to determine the contract nature of the asset being offered. Investors who are looking to buy tokens from an issuer must be careful to carry out checks on such companies. These checks should typically include the background information of the company team members, their past companies, and performance. It is also imperative that investors confirm if such a firm is licensed to offer its tokens and which regulator issued the license. As for issuers who use testimonials from companies, investors could contact some of them to find out whether such claims are true.
FINAL THOUGHTSRegulatory issues have plagued the cryptocurrency scene for a long time and have acted as a blockade for future development. If users are too scared to invest in blockchain projects because they are afraid of being scammed, how is the ecosystem supposed to move forward? Firms such as Titanium Blockchain, while under the guise of building the blockchain industry, have inadvertently contributed to tearing it down. Blockchain investment can be highly rewarding. However, due to fraudulent parties, it can also be disappointing. While regulators combat these parties and bring them to book, investors must be shrewd when deciding which projects to put any amount of money into. This article was originally published at MinDice.com.
What Is SALT Lending?SALT lending is a platform that provides Blockchain-Backed Loans. SALT (Secured Automated Lending Platform) enables you to put up your crypto as collateral in exchange for a cash loan. This strategy is ideal if you need to pay-off an unexpected expense or want to make a big purchase without having to sell-off your blockchain assets.
- How Does SALT Lending Work?
- SALT Lending Team & Progress
- SALT Token
- Where to Buy SALT
- Where to Store SALT
- Additional SALT Lending Resources
How Does SALT Lending Work?SALT revolves around the company’s trademarked Blockchain-Backed Loans. Blockchain-Backed Loans are simply loans in which you hand over a blockchain asset, like Bitcoin, as collateral in exchange for traditional currencies. Unlike traditional auto or home loans, you can use these loans for any personal or business expense.
Membership (UPDATED)Originally, to use the SALT lending platform, you first needed to pay to become a member. There were three tiers of membership:
- Base (1 SALT/year)
- Premier (10 SALT/year)
- Enterprise (100 SALT/year)
LendersOn the other side of SALT are the lenders. Lenders have previously avoided dealing with cryptocurrencies because of the oftentimes complicated nature of the assets. SALT provides lenders with the infrastructure, compliance, and security they need to accept crypto collateral without adding additional costs to their current processes. In exchange for these services, lenders must also pay for a SALT membership.
Loan ProcessOnce again differing from traditional finance, SALT never inquires your credit score. Instead, the platform only uses the value of your crypto collateral to determine the terms of your loan. Lenders kick-off the loan process by posting the terms in which they’re willing to lend. As a borrower, you can look through the various terms and choose the one that’s best suited for you. Once you pick a loan, the loaners commit the cash funds while you provide collateral to a smart contract. The cash funds are sent directly to your bank account. You then pay monthly installments based on the loan terms, and when your loan is paid-off, SALT releases your collateral from the smart contract and returns it back to you.
SALT OracleThe SALT Oracle creates the smart contracts for each loan and triggers the events of the loan. To lower the risk of default, the Oracle also records loan payments and monitors the changing value of the crypto collateral. Every loan starts with a loan-to-value ratio that’s calculated from the terms of the loan. This ratio is effectively the amount of the loan divided by the amount of collateral. For example, a $100,000 loan secured by $125,000 worth of Ethereum would have an original loan-to-value ratio of: $100,000 / $125,000 = 80.0% As you pay off the loan, this ratio decreases because the amount of the outstanding loan decreases. However, if the value of your collateral decreases due to a decline in the market price, this ratio will increase. If the ratio ever increases beyond the initial loan-to-value ratio, you’ll be required to either:
- provide more collateral, or
- pay-off an additional amount of the loan
SALT Lending Team & ProgressThe SALT team is over 15 members strong and was led by Shawn Owen as CEO. Owen is a serial entrepreneur with years of experience in hospitality operations. In July 2018, Owen left the company leaving CTO Bill Sinclair to take his place. The most notable member of the SALT team is one of their advisors, Erik Voorhees. Voorhees is the founder and CEO of ShapeShift – one of the most popular crypto-to-crypto exchanges. SALT reached a big milestone in January 2018 by officially beginning to provide loans for top-tier members. The platform already has over 70,000 loans and has funded over $50,000,000 in those loans. Plans for 2018 included launching credit cards, creating loan funds, and expanding collateralization to other alternative coins as well. The team only hit some of those milestones. The company expanded support, adding Litecoin and Dogecoin loans. But, it looks as if credit cards and developer tools are still some time out.
CompetitionSALT is the current leader in blockchain-based loans; however, there are a few other competitors popping up in the space. ETHLend and Elix are two younger competitors that provide decentralized lending on the Ethereum blockchain. SALT differentiates itself by focusing on institutional cash loans that are backed by cryptocurrency while the other two projects appear to have taken a peer-to-peer approach. Both use-cases should have a solid place in the market. Additionally, SALT is competing with more traditional platforms that provide crypto-backed loans but aren’t using a specific token.
SALT TokenSALT tokens, also known as membership tokens, are ERC20 tokens that you spend to become a member of the SALT lending platform. Furthermore, you can redeem these tokens to pay down loan interest, receive better rates on loans, and purchase items from SALT’s online store. At one point, these tokens held a different value on the lending platform than what they were trading for in the market. They used to be worth exactly $27.50 on the lending platform while trading at a value below that price. You could also previously pay-down the capital of your loans with SALT tokens. So, this created an interesting arbitrage opportunity. If you had the bankroll, you could technically get an Enterprise membership for $1200 and take out a $1M loan backed by $1.25M of Bitcoin. You could then turn around and buy $1M worth of SALT tokens from the market (~83,333 SALT). Because the SALT tokens were worth $27.50 on the platform you would only need to spend ~45,455 SALT tokens to pay back your loan. This would leave you with a little under 40,000 SALT tokens plus the original Bitcoin you put up as collateral – about a 40% return. The SALT team must have caught on to this scheme because they’ve since removed the opportunity.
TradingSALT held their ICO in Q3 2017 in which you could purchase a membership token for $3.00 – $7.00 depending on the time that you bought it. There are a total of 120M SALT tokens, and just over 80M are currently circulating in the market. The SALT price briefly experienced the common “post-ICO” dip before spiking back up to a little over $7 in October 2017. Shortly after, the price fell to the $2-$4 (0.0003-0.0005 BTC) range and stayed there until December 2017.
Where to Buy SALTThe most popular exchanges to purchase SALT are Binance and Bittrex. To trade for SALT on one of these exchanges you need to first have Bitcoin or Ethereum. If you don’t have either, you can purchase them with traditional currency on an exchange like Gemini and then transfer them over. For a full list of exchanges where you can buy SALT, check out CoinMarketCap.
Where to Store SALTBecause SALT is an ERC20 token, you have a few different options on where to store it. A popular online option is MyEtherWallet. The SALT website recommends that you use the Jaxx wallet and even provides instructions here. Jaxx is available on Android, iOS, Mac, Windows, Linux, and as a Chrome extension. The most secure way to store your tokens is by using a hardware wallet like Trezor or the Ledger Nano S. Using hardware wallets keeps your funds offline and out of the reach of hackers and ill-intended software.
ConclusionThe SALT lending platform is a great option if you want/need to make some real-world expenses and don’t want to lose the potential gains from your crypto holdings. Beyond that, the project works to solve a major problem of blockchain assets – illiquidity. By opening up an entirely new form of loans, the project brings more liquidity to the cryptocurrency market. The team has a solid foundation of blockchain experience and is advised by a leader in the industry. With a working platform in the market already, SALT is ahead of many other blockchain projects. That being said, there’s no requirement to use SALT tokens on the platform. So, it should make you wonder why the company has a specific token in the first place. Hopefully, the new membership tiers will make this more obvious. Editor’s Note: This article was updated by Steven Buchko on 12.04.2018 to reflect the recent changes of the project. This article was originally published at CoinCentral.com.
TRON CRYPTOCURRENCY is a digital currency created by controversial figure Justin Sun that aims to expand the area of decentralized applications (DApps) by making the tools for their creation and management more accessible to users.
Despite the fact that over 1000 DApps currently exist (mostly on the Ethereum blockchain), creating them is still a huge challenge for developers. This in turn limits blockchain adoption since the technology is best used in applications that normal people interact with.
One main challenge faced by developers is the complex protocols associated with blockchain technology. Since the technology is fairly new, developers have a problem figuring out how to fit their applications into the system.
This is where TRON comes in. It eases the transition, allowing developers to turn otherwise centralized applications into decentralized ones and create new DApps from scratch. TRON does this by simplifying the distribution of data without restrictions. Users can easily upload and store data in various content formats, including videos and audio files through content-enabled channels.
The TRON platform also rewards users with its asset known as TRX for uploading digital content. Usually, the user receives rewards proportional to the number of uploads they’ve done on the network. This sustains the platform by incentivizing users to upload even more files in the DApp creation process.
The most important value that TRON presents is its unflinching focus on people rather than enterprise. Using TRON cryptocurrency, users now have a cheap, secure and efficient way to keep their digital footprints intact. This way, it will be more difficult for them to fall prey to phishing ads on the internet.
The TRON transaction system also bears a huge advantage for users. They are all carried out on a public ledger, allowing anyone to trace transactions even without giving up user data. This system, known as the TRONix transaction system, uses a model UTXO, which unlocks preset amounts of TRON that users send using a defined set of rules.
HOW IS TRON DIFFERENT FROM OTHER CRYPTOCURRENCIES?
Apart from the fact that it cannot be mined, TRON bears even more differences to its peers. One of them is that it is mostly entertainment-focused. While the platform retains its decentralized use of blockchain, it is aimed at the global content and entertainment sector through its foundation.
The entertainment industry is rife with agents and other middlemen that make it difficult for creators to make and keep enough of their profits. TRON cuts out these middlemen, allowing digital content creators to receive money directly from their customers.
Traffic dependency on larger platforms like Twitter and Facebook are also greatly reduced since the process becomes more streamlined for creators. They are able to reach customers directly on the TRON platform, without the problem of filtering out a niche-specific target audience.
Other applications of TRON that set it apart from other cryptocurrencies include:
Providing a solution to the issue of data privacy and centralization, which limits content creators by streamlining them into a few companies. Such companies collect data from the general population to be implemented in their own operations. All monetary support for the TRON foundation is derived from the TRONix system.
Using a UTXO model to monetize content to allow its creators to reap the benefits of their hard work.
Guaranteeing privacy by eliminating the need for social ads so that the bigger social platforms have less access to user data.
HOW DOES IT WORK?
TRON is capitalizing on the peer-based systems in existence to ensure that creators aren’t cheated out of their work. The platform is achieving this by creating a bridge between them and their consumers. Like any other content-focused system, for the TRON ecosystem to work, several things must happen:
- Creators have to create content which they want to distribute and be rewarded for.
- Consumers have purchased this content, allowing the revenue to go directly to its creators.
- DApps are built on the same principles that govern the entire system.
- Code on the network is executed, and with time, determines the value of TRX cryptocurrency.
- Another way that TRON is achieving better content distribution is by pushing decentralization, as opposed to the use of centralized servers.
HOW TO GET TRON:
Getting TRON is quite easy as long as users follow these steps:
Set up a TRON wallet which supports TRX tokens. Since TRX initially used the Ethereum ERC20 standard, it was compatible with Ether wallets. However, ever since its huge move to its main net in May 2018, there are dedicated wallets that are compatible with TRX now. Some of these wallets include TRON wallet (mobile & web), TRONscan wallet (web), Cobo wallet (mobile), Altcoin.io wallet (desktop client & web) and Ledger Nano wallet (hardware). These wallets are available for iOS, Android, Windows, and chrome.
As soon as the wallet is downloaded, users can now be issued public and private keys. The public key acts as a wallet address to be given to those who would like to send money to it. The private key, on the other hand, acts as a password and must never be disclosed to other parties.
TRX can be bought on exchanges like Binance, OKEXx, and HitBTC. This means that a user must buy another cryptocurrency such as Ethereum on an exchange like Coinbase first. After, the ETH can be exchanged for TRX.
MARKET PERFORMANCE & PROMINENT FIGURES WHO ARE BACKING TRON:
Comparing the price of TRX now ($0.0138) to what it was in June 2018, it is easy to see that the currency is currently underperforming in a pattern shared with other major digital currencies such as Bitcoin.
Initially, there was some speculation on whether or not TRX would be able to hit $1 before the end of 2018. While that currently seems unlikely, the cryptocurrency markets have continuously shown that a few days can make a huge difference. This is especially evident in the case of Bitcoin, which began December 2017 at a price point of $10,839 and reached its peak of more than $20,000 less than nine days later.
TRX was not left out of the bullish December with a 750% price increase at the end of December 2017 and a 12255% increase in January 2018.
Apart from the influential Justin Sun, TRON is supported by BITMAIN Co-founder, Jihan Wu, who has shown eagerness to purchase it in the past. Although Wu is a controversial figure in the industry, his endorsement has been a huge defining factor for the platform, which raised about $70,000,000 in its crowdfunding efforts.
Another big name backing TRON is Dai Wei, one of the most successful transport executives and TRON investors, as well as the founder of Ofo. BTCC.com founder Yang Linke and popular business magnate Yin Mingshan are also backing the project
TRON is working to solve one of the biggest problems that accompanied global acceptance of the internet: fair content distribution. The decentralization of the entire process reduces the overall cost incurred and ensures the longevity of the distribution system.
TRON is moving closer to its grand vision every day, along with TRX, its digital asset. Maybe eventually, the centralized model of content delivery will be eradicated completely, giving rise to a fairer, decentralized ecosystem.
This article was originally published at MinDice.com.
To understand cryptocurrency, you first need to understand the history of the virtual coin. Virtual coin, or digital currency, differs from traditional fiat currency in that there is no physical representation to accompany each unit of value. Long before the crypto craze of 2017, there were the pioneers of electronic cash.
These early financial freethinkers shaped the market and prepared the world for the digitization of the economy. Fast forward to today’s crypto market, and thanks to the efficiency of blockchain technology, you now see digital money experiencing increased adoption globally.
Virtual Coin Before Bitcoin
Over the last twenty years, virtual currency payment systems have flourished. These systems existed long before the advanced blockchain technology of today made virtual coins, such as Bitcoin, a household name.
Virtual currencies are not considered a legal tender in most countries for many reasons. Governments do not issue these coins. Instead, virtual currencies are issued by the platform’s developers. Today, there are many ways in which companies release virtual coins. Before cryptocurrencies, bonuses were the most popular form of issuing digital currency.
Problems with Early Virtual Coin
The problem with these early virtual coins was that they were too susceptible to attack from hackers or scammers. Additionally, the lack of any form of material confirmation left many businesses skeptical of the true value behind these concepts. Remember, this was 20 years prior to the emergence of blockchain technology. Many people didn’t even own a computer at this time.
One of the first examples of an attempt to create a digital cash comes from the Netherlands in the late 1980s. Gas station owners were fed up with their businesses being robbed. The problem got so bad that someone decided it would be safer to find a way to place money onto smart cards. Trucking company owners could load these cards and give them to their drivers. The drivers would then use the cards at the participating gas stations.
Another example of virtual coin usage before cryptocurrency is the internet currency Flooz. Flooz.com issued these virtual coins in 1998 as part of a marketing campaign. Each Flooz equaled one dollar in value.
Users would receive Flooz coin for purchases made on the Flooz.com website. Users could then spend their Flooz on more products on the site, or they could take their bonus earnings and shop at numerous other participating vendors.
The concept was well before its time, and despite a multi-million dollar advertising campaign, Flooz never achieved the level of adoption required to sustain the project. The platform also took heavy losses after a combination of Russian and Filipino hackers made purchases using stolen credit cards. The company is now defunct, but the inspiration of their project lives on in the digital currencies of today.
In 1981, an American cryptographer by the name of David Chaum released his now famous paper titled Untraceable Electronic Mail, Return Addresses, and Digital Pseudonyms. Chaum described an anonymous digital currency system. In 1989, Chaum developed his protocol into a working virtual coin known as DigiCash.
The protocol was revolutionary and introduced the world to the concept of blind signatures. Blind signatures disguise the content of a message and utilize a combination of a public and private password to verify the validity of the participants. Today, this concept is used in major cryptocurrencies in the form of public keys.
A decade after DigiCash entered the market, a developer by the name of Wei Dai made waves in the cryptographic community after publishing a paper called B-Money Anonymous, Distributed Electronic Cash System. This virtual coin concept utilized a decentralized network, which included private sending capabilities and auto-enforceable contracts. While the technical aspects of this virtual coin were far from blockchain technology, and the project never gained enough momentum to take flight, the concept greatly influenced the future cryptocurrency market.
Longtime virtual coin advocate, Nick Szabo, pioneered the proof-of-work system used today by cryptocurrencies such as Bitcoin with his Bit Gold protocol. Bit Gold helped to cement the concept of a decentralized network and the elimination of third-party verification systems. Satoshi borrowed many of Bit Gold’s concepts. So much so, that many people believed Satoshi Nakamoto to be Nick Szabo. It took a public denial by Szabo to finally convince people otherwise.
Many crypto enthusiasts consider HashCash to be the direct inspiration for Bitcoin. HashCash was introduced in 1997 by cryptographer Adam Beck. Beck incorporated a proof-of-work protocol to verify the validity of a transaction. HashCash’s proof-of-work protocol previously saw use as a spam reduction technique before being adapted for virtual coins. The concept impacted Nakamoto to the point that he cites Beck in the Bitcoin white paper. However, HashCash lost relevance after suffering scalability issues due to increased network congestion.
Enter Bitcoin and the Wonders of Blockchain
Satoshi Nakamoto, the anonymous creator of Bitcoin, labels the world’s most successful cryptocurrency as “a peer-to-peer electronic cash system.” Unlike the virtual coins before Bitcoin, Satoshi had the backing of powerful new technology, blockchain.
Blockchain technology stores information in duplicate over a vast network of computers. Prior to any changes to the blockchain, fifty-one percent of the nodes must agree on the validity of the chain. This validation process references the previous blocks. The longest verifiable chain of transactions remains the valid chain. In this manner, blockchain technology eliminates the need for third-party verification systems such as banks.
Advantages of Virtual Coins
The advent of blockchain technology increased the benefits of virtual coins significantly. Users can transfer cryptocurrency in near instant time, and at a much cheaper rate than the traditional methods of global money transfer. Cryptocurrencies eliminate the need for verification systems, which saves you big time.
To put the level of savings experienced by crypto users into perspective, look at the traditional international money transfer methods. Today, your funds require verification from potentially thirty-six different third-party organizations when sent globally. And, each organization tacks on a fee for their services.
Virtual Coins Are Here to Stay
Now, the world has multiple legitimate virtual currency options to consider. These digital currencies continue to shape the economics of the future. Today, virtual coins are more common than ever, and for the first time in history, digital money receives recognition from traditional financial firms.