Economics of Bitcoin as a settlement network

As Bitcoin’s popularity continues to increase, its transaction fees rise as well, leading to the customary chorus of doom and gloom by those still stuck in stage 1 of dealing with Bitcoin grief. With average transaction fees exceeding $2, the doom-mongers assure us Bitcoin is doomed, because nobody wants to pay $2 to make a payment, when credit cards, paypal, and many other options charge far less transaction costs. The problem here, as usual, is not with Bitcoin, but with people’s misunderstanding of Bitcoin, and the first clue to that can be found in the sky-rocketing price: if Bitcoin is so doomed, why are people still buying it? The answer is that Bitcoin’s value proposition is not in making the small consumer purchases, but in making large and important payments, particularly across borders. Payments in person, for small amounts, can be conducted in a wide variety of options: physical cash, barter, favors, credit cards, bank checks, and so on. Payments across the world, however, are a very different story. There are only a few currencies that are accepted for payment worldwide, namely: the US Dollar, the Euro, gold, and the IMF’s SDR’s. The vast majority of international payments are denominated in one of these currencies, with only a tiny percentage shared by a few other major currencies. To send these currencies in values around thousands of dollars internationally costs dozens of dollars usually, and is subject to invasive forensic examination by financial institutions. Compared to these transactions, Bitcoin’s transaction fees of $2.5 are still a bargain. However, the volume of these international flows is far larger than what Bitcoin’s blockchain can handle, and if more such payments move to Bitcoin, fees will rise to limit the demand for them. Yet, that would also not spell doom for Bitcoin, because sending these individual payments is not the limit of Bitcoin’s capabilities. Bitcoin is money free of counter-party risk, and its network can offer final settlement of large volume payments within minutes. Bitcoin can thus best be compared to settlement payments between central banks and large financial institutions, and it compares favorably to them, being infinitely cheaper and more verifiable. The only other form of money in history which is free of counter-party risk is gold, and moving that around is incomparably more expensive. An interesting thought experiment is to imagine the shape of a global economic system built around settlement in Bitcoin. Bitcoin’s current capacity is to verify around 350,000 transactions per day. This number of transactions can allow a global network of 850 banks to each have one daily transaction with every other bank on the network. (The number of unique connections in a network equals n(n-1)/2, where n is the number of nodes.) Bitcoin can support an international network of 850 central banks capable of performing daily final settlement with one another. Such a network would have two major advantages over the current network of central banks: First, the finality of settlement on Bitcoin does not rely on any counter-party, and does not require any single bank to be the de facto arbiter, making it ideal for a network of global peers, rather than a global hegemonic centralized order. Second, the Bitcoin network is based on a form of money whose supply cannot be inflated by any single member bank, making it a more attractive store of value proposition than national currencies whose creation was precisely so their supply can be increased to finance governments. In a world in which no government can create more Bitcoin, these Bitcoin central banks would compete freely with one another in offering physical and digital Bitcoin-backed monetary instruments. Without a lender of last resort, fractional reserve banking becomes an extremely dangerous arrangement, and the only banks that’ll survive in the long-run would be sound money banks offering financial instruments 100% backed by Bitcoin. They would settle payments between their own customers off of Bitcoin’s blockchain, and then perform final daily settlement between each other over the blockchain. I am currently writing a book explaining Bitcoin’s main value proposition as a sound money, and elucidating the significance of this concept across history, which far exceeds the significance of small transaction costs on consumer payments. Sound money has been a necessary building block of human civilizations, and its demise has usually coincided with civilizational decline. The modern world was built in the 19th century on sound money, funded by investors with the low time preference engendered from a sound money. The consumerist culture of instant gratification of the twentieth century, on the other hand, was the culture of ever-devaluing fiat money, which discourages saving, and incentivizes short-term orientation. The obsession with consumer payments in the Bitcoin community is an unfortunate relic of the fiat money era. Generations that have only known monetary hot potatoes that need to be spent before they devalue have come to view life as a quest of mass consumption. In a world of sound money, people will still consume, of course, because they need to survive. But consumption will come at a high opportunity cost in the future, since savings appreciate. As result, consumption will stop being a compulsive part of life, and people will buy things they need, and things that last for a long time. Instead of wasting their money on plastic bullshit they don’t need and expensive sugary addictions, people will save their money for the future, and watching it appreciate, achieve financial independence. The number of transactions in a Bitcoin economy can still be as large as it is today, but the settlement of these transactions will not happen on Bitcoin’s ledger, whose immutability and trustlessness is far too valuable for individual consumer payments. The reality is that buying a coffee does not require the level of security and trustlessness that Bitcoin offers; it can be more than adequately handled on second layer solutions denominated in Bitcoin. Using Bitcoin for consumer purchases is akin to driving a Concorde jet down the street to pick up groceries: a ridiculously expensive waste of an astonishing tool. Consumer payments are a relatively trivial engineering problem which the modern banking system has largely solved with various forms of credit and debit arrangements. Whatever the limitations of current payment solutions, they will stand to benefit immensely from the introduction of free market competition into the field of banking and payments, the most sclerotic industry in the modern world economy, owing to its control by governments that can print the money on which it runs. If the consumer-payments view of Bitcoin were correct, the rise in transaction fees would hurt adoption of the network, leading to stalling in the price, or a drop, as the network is relegated to the status of a curiosity. On a day in which the price of a Bitcoin hit $2,000, this is becoming an increasingly untenable argument. From the settlement layer view, the growing adoption of Bitcoin is increasing its liquidity internationally, allowing it to compete with global reserve currencies for increasingly more valuable transactions, causing transaction fees to rise. As this processes continues in the future, expect much higher transaction fees, and a global Bitcoin settlement network to grow in importance.   Original article link: https://thesaifhouse.wordpress.com/2017/05/19/economics-of-bitcoin-as-a-settlement-network/

As Bitcoin’s popularity continues to increase, its transaction fees rise as well, leading to the customary chorus of doom and gloom by those still stuck in stage 1 of dealing with Bitcoin grief. With average transaction fees exceeding $2, the doom-mongers assure us Bitcoin is doomed, because nobody wants to pay $2 to make a payment, when credit cards, paypal, and many other options charge far less transaction costs.

The problem here, as usual, is not with Bitcoin, but with people’s misunderstanding of Bitcoin, and the first clue to that can be found in the sky-rocketing price: if Bitcoin is so doomed, why are people still buying it? The answer is that Bitcoin’s value proposition is not in making the small consumer purchases, but in making large and important payments, particularly across borders. Payments in person, for small amounts, can be conducted in a wide variety of options: physical cash, barter, favors, credit cards, bank checks, and so on. Payments across the world, however, are a very different story.

There are only a few currencies that are accepted for payment worldwide, namely: the US Dollar, the Euro, gold, and the IMF’s SDR’s. The vast majority of international payments are denominated in one of these currencies, with only a tiny percentage shared by a few other major currencies. To send these currencies in values around thousands of dollars internationally costs dozens of dollars usually, and is subject to invasive forensic examination by financial institutions. Compared to these transactions, Bitcoin’s transaction fees of $2.5 are still a bargain.

However, the volume of these international flows is far larger than what Bitcoin’s blockchain can handle, and if more such payments move to Bitcoin, fees will rise to limit the demand for them. Yet, that would also not spell doom for Bitcoin, because sending these individual payments is not the limit of Bitcoin’s capabilities.

Bitcoin is money free of counter-party risk, and its network can offer final settlement of large volume payments within minutes. Bitcoin can thus best be compared to settlement payments between central banks and large financial institutions, and it compares favorably to them, being infinitely cheaper and more verifiable. The only other form of money in history which is free of counter-party risk is gold, and moving that around is incomparably more expensive.

An interesting thought experiment is to imagine the shape of a global economic system built around settlement in Bitcoin. Bitcoin’s current capacity is to verify around 350,000 transactions per day. This number of transactions can allow a global network of 850 banks to each have one daily transaction with every other bank on the network. (The number of unique connections in a network equals n(n-1)/2, where n is the number of nodes.)

Bitcoin can support an international network of 850 central banks capable of performing daily final settlement with one another. Such a network would have two major advantages over the current network of central banks: First, the finality of settlement on Bitcoin does not rely on any counter-party, and does not require any single bank to be the de facto arbiter, making it ideal for a network of global peers, rather than a global hegemonic centralized order. Second, the Bitcoin network is based on a form of money whose supply cannot be inflated by any single member bank, making it a more attractive store of value proposition than national currencies whose creation was precisely so their supply can be increased to finance governments.

In a world in which no government can create more Bitcoin, these Bitcoin central banks would compete freely with one another in offering physical and digital Bitcoin-backed monetary instruments. Without a lender of last resort, fractional reserve banking becomes an extremely dangerous arrangement, and the only banks that’ll survive in the long-run would be sound money banks offering financial instruments 100% backed by Bitcoin. They would settle payments between their own customers off of Bitcoin’s blockchain, and then perform final daily settlement between each other over the blockchain.

I am currently writing a book explaining Bitcoin’s main value proposition as a sound money, and elucidating the significance of this concept across history, which far exceeds the significance of small transaction costs on consumer payments. Sound money has been a necessary building block of human civilizations, and its demise has usually coincided with civilizational decline. The modern world was built in the 19th century on sound money, funded by investors with the low time preference engendered from a sound money. The consumerist culture of instant gratification of the twentieth century, on the other hand, was the culture of ever-devaluing fiat money, which discourages saving, and incentivizes short-term orientation.

The obsession with consumer payments in the Bitcoin community is an unfortunate relic of the fiat money era. Generations that have only known monetary hot potatoes that need to be spent before they devalue have come to view life as a quest of mass consumption. In a world of sound money, people will still consume, of course, because they need to survive. But consumption will come at a high opportunity cost in the future, since savings appreciate. As result, consumption will stop being a compulsive part of life, and people will buy things they need, and things that last for a long time. Instead of wasting their money on plastic bullshit they don’t need and expensive sugary addictions, people will save their money for the future, and watching it appreciate, achieve financial independence.

The number of transactions in a Bitcoin economy can still be as large as it is today, but the settlement of these transactions will not happen on Bitcoin’s ledger, whose immutability and trustlessness is far too valuable for individual consumer payments. The reality is that buying a coffee does not require the level of security and trustlessness that Bitcoin offers; it can be more than adequately handled on second layer solutions denominated in Bitcoin. Using Bitcoin for consumer purchases is akin to driving a Concorde jet down the street to pick up groceries: a ridiculously expensive waste of an astonishing tool. Consumer payments are a relatively trivial engineering problem which the modern banking system has largely solved with various forms of credit and debit arrangements. Whatever the limitations of current payment solutions, they will stand to benefit immensely from the introduction of free market competition into the field of banking and payments, the most sclerotic industry in the modern world economy, owing to its control by governments that can print the money on which it runs.

If the consumer-payments view of Bitcoin were correct, the rise in transaction fees would hurt adoption of the network, leading to stalling in the price, or a drop, as the network is relegated to the status of a curiosity. On a day in which the price of a Bitcoin hit $2,000, this is becoming an increasingly untenable argument. From the settlement layer view, the growing adoption of Bitcoin is increasing its liquidity internationally, allowing it to compete with global reserve currencies for increasingly more valuable transactions, causing transaction fees to rise. As this processes continues in the future, expect much higher transaction fees, and a global Bitcoin settlement network to grow in importance.

 

Original article link: https://thesaifhouse.wordpress.com/2017/05/19/economics-of-bitcoin-as-a-settlement-network/

What is blockchain? 10 experts attempt to explain blockchain in 150 words or less

Blockchain is being touted around the world as a disruptive technology that could revolutionize finance, trade, legal systems, digital media, and much more. But blockchain tech has one big obstacle: it’s hard to wrap your head around.

To help laymen better understand blockchain, we reached out to Bitcoin experts around the globe. We issued each of them a challenge: explain blockchain in 150 words or less. As it turns out, even they can struggle to explain blockchain in simple terms.

Blockchain tech is fairly complex, so condensing it down into a one or two paragraphs is no easy task. Comparitech took a stab at the challenge as well, but in video form. Here is our animated explanation of blockchain in less than 150 seconds.


And here are 10 explainers from our gracious experts. We’ve ordered them as best we can from simple and plainly worded to complex and thorough.

Ron Hose, founder of Coins.ph

The Blockchain is a decentralized ledger. In the same way the internet facilitates direct exchange of information (think Skype, WhatsApp vs. traditional telco model), Blockchain facilitates direct exchange of value between parties, without the need for a trusted intermediary.

Drew Ivan, Healthcare Solution Strategist

Blockchain is an immutable, public, distributed ledger that anyone can read or write. Here’s a breakdown of what that means.

IMMUTABLE – data written to a blockchain can never be changed, so readers can be sure it was never altered.

PUBLIC – data on a blockchain is visible to everyone, which makes it perfect for storing public records like bitcoin transactions, land titles, and asset tags.

DISTRIBUTED – unlike a centralized ledger that is kept by a trusted institution, blockchain runs on an entire network of computers, meaning there is no single system that can fail or be compromised.

LEDGER – blockchain is suited to storing small transaction records, not large files.

Taken together, these characteristics allow two parties to trust one another based on the strength of the blockchain network without the need for a third party institution like a bank or government.

Jameson Lopp, Software Engineer at BitGo

A blockchain is a history of events (transactions or otherwise) that uses cryptography to link timestamped batches of events together in order to make it evident if tampering has occurred. This type of data structure enables the creation of new applications that use a blockchain as a trustworthy public database. The first major usage of a blockchain was in Bitcoin as a currency, but many non-payment applications are now being developed on top of Bitcoin and other systems such as Ethereum. Eventually you can expect blockchain-based systems to be used under the hood to power applications that enable users to prove and transfer ownership of digital and physical assets.

Andy Singleton, founder of MAXOS.ai

Bitcoin is a database or “ledger” that shows how much money you have in bitcoins. It simplifies a lot of things because the database is shared. You don’t have to make a special request to your bank to find out how much money you have. It’s all visible in the shared database. You can transfer this money with a digital signature – a sort of instant check. This is a lot faster than a wire transfer where multiple banks have to update multiple databases and then check or “reconcile” them over the course of several days. This type of shared database or “blockchain” will also greatly simplify stock records and trades, tracking and paying for goods, paying musicians for their music, and even medical records. We won’t have to call around to find out where the goods are, when the stock will arrive, or who played what music.

Anatoliy Okhotnikov, financial and cryptocurrencies expert at SoftJourn

Blockchain is an open decentralized database – a distributed ledger. Every participant on the network has a copy of the transaction ledger. Ledger entries are secured by strong cryptography and each transaction must be agreed to by the most of the participants in order to make it into the ledger. This allows for better security, transparency, and trust. Blockchain is a disruptive technology in a sense that it can be used to store any value information like money, goods, property, work, or even votes without the need of a central authority to verify or prove it. The authenticity is verified by the entire community, by everybody who has a copy of the ledger. Cryptography makes sure it is not possible for a single individual or minor group to tamper or forge the ledger records. The future economy is seen to be moving to a distributed and trusted environment and the possibilities with blockchain are endless.

George Harrap, founder of Bitspark.io

Blockchains are a ledger that keeps track of data and the owners of the data. One can use a blockchain to transact data between any connected participant using the blockchain and all participants have the most up to date version of that ledger, ensuring everyone is constantly up to date with the latest. Usually one needs to trust some third party to maintain records of events, but blockchains enable you to transact with people you don’t trust and yet still ensure that their inputs into the blockchain are true. Complex cryptography ensures nobody can falsify a record to try to include data which the other participants haven’t seen or agreed to. Blockchains are open for anyone to track the provenance of the data and simple to audit with no single point of failure by design.

Thomas Glucksmann, Head of Marketing at Gatecoin

Blockchain is an open source value transfer protocol that runs on a distributed peer to peer network and secures transaction records through cryptography. Blockchain was first conceptualized through the release of bitcoin, a decentralized cryptocurrency that stores and verifies transactions on a distributed ledger, known as “the blockchain” designed by a pseudonymous individual or group known as Satoshi Nakamoto.

Since the emergence of bitcoin, many technology and financial institutions have worked to improve upon bitcoin’s blockchain resulting in the development of public and private blockchains, which provide different levels of read and write access to network participants.

Blockchain applications are helping financial institutions to improve the efficiency of many back-office processes through automatic verification, transaction execution and settlement. The technology’s utility extends far beyond finance with use cases for industries as diverse as supply chain to creative rights management that can be disrupted with secure, self-executing trustless value transfers.

Jad Mubaslat, founder and former CEO of BitQuick.co

In 2009, a first-of-its-kind decentralized digital currency program, called “Bitcoin”, was released. Bitcoin utilizes an ongoing immutable cryptographic chain of transactions that acts as a decentralized peer-to-peer ledger. This underlying distributed database has been referred to as “blockchain” technology. All the participants in a blockchain system retain a copy of the ledger, so that if there are any inconsistencies, they will be consolidated against the other copies retained by other participants in the network. In this manner, trust is no longer needed between the entities.

Blockchain can be applied to a variety of use cases where the exchange of value or information is needed between separate entities; this could be the exchange of information in a supply chain, medical information, financial transactions, land ownership and more. Blockchain technology may enable solutions where data can be shared in a distributed manner that increases interoperability, security, immutability and privacy.

Andrew Hinkes, Esq., Partner at Berger Singerman LLP

The Bitcoin Blockchain is a decentralized peer-to-peer network operated over the Internet that relies upon cryptography (called “proof of work”) instead of a trusted third party to confirm transactions of bitcoins between network participants, and that tracks confirmations of those transactions on by circulating constant updates to a chronological ledger of transactions among its participants. A “blockchain” (also called private blockchain, or distributed ledger) is a version of Bitcoin’s blockchain used to control and track transactions of other data. Private blockchains typically rely on a trusted third party or other method of confirmation instead of participant consensus to confirm a transaction. Although both Bitcoin’s Blockchain and private blockchains share may attributes (both are relational databases), the Bitcoin Blockchain’s consensus mechanism makes it economically infeasible to retroactively change the ledger, while private blockchains typically use different confirmation mechanisms that do not offer the same protection.

Marc Kenigsberg, founder of BitcoinChaser

A distributed database composed of a network of interconnected computers that are used to keep a distributed ledger of information. Information exchanges between computers in this kind of database, take on the characteristics of a transaction. These computers use the connection between them to validate these transactions according to a set of parameters, using different kinds of encryption to protect them. As a result, information security on these databases depends on validating data on various computers simultaneously.

This type of decentralized database allows for the programming of smart contracts, essentially complex conditional statement that allow the network to react to predetermined inputs in an autonomous nature without the need for human intervention. The parameters that govern this type of network, will determine the degree to which information is publicly accessible, and the speed at which it travels between computers.

 

Original article link: https://www.comparitech.com/blog/information-security/what-is-blockchain-experts-explain/

Dubai’s Largest Bank Will See Customer Cheques on a Blockchain This Year

UAE retail banking giant Emirates NBD will introduce blockchain technology into cheques to minimize fraud and strengthen their authenticity.

Announced this week, the banking group has launched the pilot phase of its initiative titled ‘Cheque Chain’. According to the bank, the ‘initiative is the beginning of a significant strategy by Emirates NBD to integrate blockchain technology into existing products and services.’

This sweeping adoption of blockchain technology, the bank adds, is to implement the best digital security systems available. Blockchain technology enables an immutable timestamped record of data stored on a decentralized ledger that can be accessed by multiple participants at the same time. The technology does not rely on a single central database, negating fears of a single point of failure and altogether making for a quantum leap in digitized security.

“[I]n exploring the potential of blockchain technology, we are delighted to be the first bank in the country to utilize this remarkable new technology to strengthen and upgrade our internal processes,” stated Emirates NBD Group CEO Abdulla Qassem.

Cheques over a Blockchain

The initial phase of the initiative will see unique QR (Quick Response) codes on every leaflet of a cheque book which immediately makes it harder to forge cheques. Subsequently, the QR code will register every cheque on to the bank’s blockchain .

This allows the bank to validate the cheque’s authenticity at all times, with access to its source even after the cheque is received and cleared.

While details remain scarce, the banking group’s chief executive added:

Cheque Chain will bring an added layer of security to our cheque clearing system, and ensure that each cheque issued will be verified under the bank’s system with its own unique QR code providing significant improvement in cheque security.

In its pilot phase, the bank will push the new cheque books on to its own employhees to assess the technology. A customer rollout will follow later this year.

The effort follows another notable endeavor by the Bank of Tokyo-Mitsubishi UFJ, Japan’s largest bank, which is also testing digitized checks on a blockchain.

In October last year, Emirates NBD became the first UAE private sector bank to trial blockchain-based real-time international money transfer and trade finance transactions with Indian partner bank ICICI. The first transaction aimed for a low-cost, near-instant international remittance transaction. The second, facilitated an international trade finance transaction to import shredded steel melting scrap from Dubai to Mumbai, India. Both pilots proved successful.

Emirates NBD is quick to point out that it is a member of the Dubai Future Foundation’s Global Blockchain Council, which launched in February 2016. Dubai’s largest bank adds that its binge coincides with the Dubai Blockchain Strategy, an sweeping initiative that began with the government’s announcement to see all of its documents on a blockchain by the year 2020.

Original article link: https://www.cryptocoinsnews.com/dubais-largest-bank-will-integrate-blockchain-customer-cheques-year/

Rise of Ethereum: A New Blockchain Juggernaut

The price of Ether is skyrocketing.

Investors who bought Ether at the start of the year are seeing 900% ROI. Since my previous blogpost, Ethereum had another leg up, sending the entire crypto market cap close to 40 billion.

What are the factors behind the rise of this blockchain stock?

Where does it go from here?

In this post, we shall explore in depth the possible contributors to Ethereum’s success.

Designed for Something Greater

Before Ethereum even existed, there was Bitcoin. Bitcoin, since its inception in 2008, has been hailed as the most radical development in currency. On 2nd March 2017, and for the first time in history, a digital asset with no intrinsic value climbed above the price of gold. As Bitcoin’s price took the limelight over the years, it was easy to overlook Bitcoin’s underlying blockchain technology—blockchain as a tool of distributed consensus. Vitalik Buterin, however, was one of the early few who saw the potential of blockchain development, and thus Ethereum was born.

Ethereum was not made to compete with Bitcoin. For the most part, Ethereum is a blockchain-based decentralised platform for apps that run smart contracts, and is aimed at solving issues associated with censorship, fraud and third party interference. Ether, also known as ‘gas’, comes in as a necessary element for operating the distributed application distribution platform, Ethereum.

In short, Ethereum does everything that Bitcoin can do, and more. If Bitcoin warrants a market cap of 23.6 billion USD, how much further can the price of Ether go, with Ethereum market cap standing at a mere 7 billion USD?

The Bitcoin Hard Fork Contention

Part of Ethereum’s rise in price and interest could be attributed to the instability of Bitcoin in March, which has quite a bit of a backstory. Due to increasing Bitcoin usage, an increasing number of transactions are getting backlogged. As Bitcoin scurries to resolve this, two solutions surfaced: activate Segregated Witness or increase the block size. Both options tackle the Bitcoin network congestion, but unfortunately, the bigger miners have an interest in the latter: increasing the block size makes it harder for smaller miners to run a node on the network, which encourages centralization. Till now, the Bitcoin scaling issue is still present without a clear plan. Investors who were unsure of Bitcoin’s direction would have hedged into Ethereum, driving up demand for Ether.

The DAO Attack

Bitcoin is not the only cryptocurrency with issues; Ethereum has had its fair share of problems to deal with as well. ‘The DAO’ is a decentralized autonomous organization that raised over 150 million USD, making it the largest crowdfunding in history. On 18th June, a hacker managed to drain 3.6 million Ether from the fund into a ‘child DAO’ by exploiting a loop hole in smart contract terms. Following the incident, price of Ether dropped from 20 USD to 13 USD and below, reflecting the confidence of investors in the Ethereum network. That put the Ethereum Foundation in a tough spot. They do not wish for the smart contracts platform to be viewed as a failure, but if they do intervene to save the funds, they risk a possible reputation damage by not upholding their social contract with their network of independent nodes. In the end, the foundation handled the hack decisively with a swift and clean hard fork that created ETH (Ethereum) and ETC (Ethereum Classic). Nevertheless, the incident left a mark on Ethereum’s once untainted reputation.

The DAO hack might have set back the price of Ether a few months. The dent in the public’s confidence in Ethereum translated into a supressed Ether price much like a coiled spring, until the end of February when the Enterprise Ethereum Alliance (EEA) was announced.

Forming of the Enterprise Ethereum Alliance

The intense bull run of Ether in March is triggered by the announcement of EEA partners. The EEA initiative connects Fortune 500 enterprises and academics to support the development of enterprise-grade revolutionary software based on blockchain technology. The EEA launch saw big names such as Accenture, Microsoft, Intel, JP Morgan and UBS. It was jaw dropping; no one expected a cryptocurrency to receive that level of institutional support. Given that the companies were largely interested in Ethereum as a blockchain technology development platform and not Ether per se, this public display of confidence in Ethereum as the leading blockchain for future businesses was enough to send the price of Ether on a relentless climb.

Empowering Developers

Ethereum has built a community around developers who are devoted to bringing smart contracts mainstream. Ethereum has its very own language, Solidity, for writing smart contracts with the Ethereum Virtual Machine (EVM). The EVM is the primary innovation of the Ethereum project and can run code in a quasi-Turing complete manner. The Learning resources and code repositories are well documented and easily available on the web. By encouraging knowledge exchange, Ethereum makes developing decentralized apps (Dapps) enjoyable and exciting.

Currently, Ethereum has a huge lead in blockchain development and innovation. With a fast expanding developer base, it is only a matter of time before Ethereum-based Dapps crowd the top crypto scene.

Ethereum-based Dapps

Unlike that of Bitcoin and its clones, the relationship between Ethereum and its Dapps is symbiotic. Dapps such as Golem, which creates a decentralized sharing economy of computing power; Augur, which creates a decentralized prediction market; Melonport, which removes third parties and decentralizes asset management. Instead of in-fighting for a piece of market share in the crypto space, these Dapps seek to add value to our world by having real usage cases, expanding the Ethereum network and reach in the process. It is no wonder that the price of Ether, which acts as the fuel for the network, increases with the proliferation of its Dapps.

All the Pieces Coming Together

It is an exciting year to be holding Ether in your investments. On May 4th, we have Ethereum Naming Service coming online, which will let us bid for URL addresses ending with .eth soon. Next, we have the highly-anticipated EEA conference to announce new corporations coming on board. Then we have the Raiden release, which will make payment in Ethereum fast, scalable, confidential and interoperable. Lastly, we have Metropolitan and Serenity updates, not forgetting the Casper update that will change Ethereum’s protocol from Proof of Work (Pow) to Proof of Stake (PoS) or hybrid PoS/PoW.

If the technical jargon is too much to handle at this point, just remember that lots of good news about Ethereum is coming, all of which will undoubtedly increase the value perception of Ether. Ultimately, remember that the crypto space is still predominantly running on speculation. Ethereum’s road map looks promising and personally, that is enough for me to take an interest in and invest in ETH.

Be it up or down, the crypto investing journey has always been wild and violent.

You have been warned, buckle up and hold on tight. :)

 

Original article link: http://www.huffingtonpost.com/entry/rise-of-ethereum-a-new-blockchain-juggernaut_us_590b1229e4b05279d4edc304 

Russia May Recognize Bitcoin In 2018

Only a year ago Russia’s Finance Ministry was threatening jail time to anyone using digital currencies.

In a major U-turn, it’s now edging closer to their acceptance as a legitimate financial instrument to open a new line of attack on money laundering.

The authorities hope to recognize bitcoin and other cryptocurrencies in 2018 as they seek to enforce rules against illegal transfers, Deputy Finance Minister Alexey Moiseev said in an interview. The central bank is developing a joint position together with the government on digital currencies, according to its press service.

“The state needs to know who at every moment of time stands on both sides of the financial chain,” Moiseev said. “If there’s a transaction, the people who facilitate it should understand from whom they bought and to whom they were selling, just like with bank operations.”

While bitcoin isn’t regulated by any government, it has come under increasing scrutiny in some countries as a way to shelter assets from the authorities or launder ill-gotten gains. In China, which has occupied a central role in trading and mining bitcoin in recent years, the three largest exchanges imposed a moratorium on all coin withdrawals in March as the central bank issued new guidelines on their use.

Tracking cryptocurrencies could become the latest tool enlisted in the Bank of Russia’s battle against money laundering, which has seen hundreds of lenders lose their licenses over the last three years. The plan to legalize and monitor bitcoin is taking shape as traditional schemes are drying up, with dubious operations such as fake trades and loans used to move money abroad dropping by half to $771 million last year, according to central bank data.

Bank of Russia Deputy Governor Olga Skorobogatova said in February that the authorities would decide if digital currencies can be considered as asset, cash or security by mid-2017.

Initially, cryptocurrencies in Russia are most likely to be bought via bank accounts in order to make online purchases, with some also acquired as a speculative investment, Alfa-Bank Vice President Oleg Legostev said in comments emailed by the lender’s press service.

Bitcoin rose 1.1 percent to $1,215.85 at 10:09 a.m. in New York on Tuesday. It has gained 28 percent since the start of the year.

Foreign banks have sometimes been swept up in investigations of Russian schemes. Royal Bank of Scotland Group Plc received information requests from the U.K. in March in relation to an alleged money laundering ring that moved money through Moldova and Latvia between 2010 and 2014.

Deutsche Bank AG in January was fined $629 million by U.K. and U.S. authorities for compliance failures that saw the bank help wealthy Russians move about $10 billion abroad using transactions that may have covered up financial crime.

Crime, corruption, and tax evasion spawned at least $211.5 billion in illicit Russian outflows between 1994 and 2011, with illegal transfers reaching $552.9 billion, according to Washington-based Global Financial Integrity.  
 
Bitcoin was the first digital currency to achieve a measure of popularity, thanks to its use of blockchain, an online ledger that tracks and verifies every time the virtual money is used. It’s faced some criticism from those who say the software it relies on is too rigid to gain widespread acceptance, with hipper investors moving on to the more sophisticated record book used by Ethereum.

Original article link: https://www.bloomberg.com/news/articles/2017-04-10/russia-caves-in-on-bitcoin-to-open-new-front-on-money-laundering

How blockchain is impacting clean energy

by Ameer Rosic

No one enjoys paying their electricity bill. It keeps going up and up, with a bunch of new nonsense fees thrown on top every few years. What’s worse is that many parts of the world still rely on dirty fossil fuels to produce this energy. By now we have all heard about the potential of solar and other renewables to shake up the energy market, but you might not know that blockchain technology also has its place in the mix. Several startups are developing projects that integrate blockchain and solar energy. Their ideas range from developing alt-coins for trading and incentivizing power production to using smart contracts for administering energy transactions. SolarCoin SolarCoin is an eco-minded cryptocurrency that aims to incentivize solar power production. The coin was launched in 2014 and hopes to drive the generation of 97,500 terawatt hours worth of solar power over 40 years. It originally used a proof-of-work system for verification but has since switched over to a proof-of-stake-time system because it is more environmentally friendly. Anyone can mine the coins, from individuals to solar farms. For every 1 MWh of electricity generated (and verified by a third party), the producer recieves one SolarCoin. Solar farms wanting to earn extra income by generating SolarCoin coins for the power they produce don’t have to pay anything to participate, and SolarCoin does not take any of the power; it merely provides the coins as an incentive to produce clean energy. Granted, one SolarCoin is worth under 7 cents at the time of writing, but then Bitcoin was only worth about 30 cents when it was the same age. The hope is that enough people will have confidence in the coin to give it real value and allow it to be used in transactions. While Bitcoin famously takes large amounts of electricity to mine, SolarCoin incentivizes a responsible use of energy. ElectricChain, an affiliate of SolarCoin, is also working on a number of blockchain- and solar-based projects. Its main aim is to “build the world’s largest open scientific solar monitoring device with the SolarCoin blockchain.” It plans to use this system for various scientific and financial purposes. One of its current projects is to integrate current solar panel investors into the ElectricChain and SolarCoin. It hopes this program will speed up the transition to cleaner energy. Smart Solar Back in 2002, Renewable Energy Certificates (RECs) were created to incentivize investment in renewable energy. An REC is a certificate that proves 1 megawatt hour of electricity has been produced by renewable sources. Solar farms and other renewable electricity providers issue RECs to represent the amount of clean energy they have generated. They then sell them to utility companies, which are required to use certain levels of renewable power. The problem with this system is that the amount of renewable energy produced is calculated by estimates and projections. This then leads to some very creative accounting practices, and the reality is that less renewable energy is being made and used than the certificates might say. IDEO CoLab, along with Nazdaq and Filament, have partnered up to solve this problem. Smart Solar is their collaborative project. It uses blockchain technology and the Internet of Things to allow solar panels to calculate their own levels of energy production and then issue RECs to the owner. They have already constructed a prototype, which proves it is possible to incentivize solar energy without such a convoluted system.     Brooklyn Microgrid Traditional grids are a logistical nightmare. Transferring power from where it is generated to where it is needed and accommodating the peaks and troughs is immensely complex. The other downside is that citywide grids are vulnerable. In an event like Hurricane Sandy, a whole network can go down, bringing an entire city to a halt and endangering people’s lives. Microgrids are a new option for delivering electricity. They aim to promote cost-effective, secure, sustainable energy production and distribution in a local area. Brooklyn Microgrid is just one such project that is testing the waters, and it’s doing so with blockchain. The system will use Ethereum, a public blockchain platform with a smart contract functionality that permits microgrid users to commit to contracts that cannot be falsified or misrepresented. The service will automatically update transactions and energy use in real-time using a cryptographically secure list. Brooklyn Microgrid also hopes to boost the amount of clean energy that is produced within its local community. It can manage energy production and distribution throughout emergencies and blackouts, helping to keep the community safe and the economy running. Brooklyn Microgrid also offers financial incentives for investment in clean energy, which assists in keep the community green and helps to provide more environmentally friendly jobs. Blockchain and solar: Just the beginning of a clean energy partnership With the continued push towards renewable resources, blockchain technology provides a way to further incentivize and account for clean energy production. There are many startups currently experimenting with combining the two in innovative ways. Now is just the beginning, but there is potential for blockchain and solar to contribute to the world in numerous ways, from the local community to the globe on a grand scale.

No one enjoys paying their electricity bill. It keeps going up and up, with a bunch of new nonsense fees thrown on top every few years. What’s worse is that many parts of the world still rely on dirty fossil fuels to produce this energy. By now we have all heard about the potential of solar and other renewables to shake up the energy market, but you might not know that blockchain technology also has its place in the mix.

Several startups are developing projects that integrate blockchain and solar energy. Their ideas range from developing alt-coins for trading and incentivizing power production to using smart contracts for administering energy transactions.

SolarCoin

SolarCoin is an eco-minded cryptocurrency that aims to incentivize solar power production. The coin was launched in 2014 and hopes to drive the generation of 97,500 terawatt hours worth of solar power over 40 years. It originally used a proof-of-work system for verification but has since switched over to a proof-of-stake-time system because it is more environmentally friendly. Anyone can mine the coins, from individuals to solar farms. For every 1 MWh of electricity generated (and verified by a third party), the producer recieves one SolarCoin. Solar farms wanting to earn extra income by generating SolarCoin coins for the power they produce don’t have to pay anything to participate, and SolarCoin does not take any of the power; it merely provides the coins as an incentive to produce clean energy.

Granted, one SolarCoin is worth under 7 cents at the time of writing, but then Bitcoin was only worth about 30 cents when it was the same age. The hope is that enough people will have confidence in the coin to give it real value and allow it to be used in transactions. While Bitcoin famously takes large amounts of electricity to mine, SolarCoin incentivizes a responsible use of energy.

ElectricChain, an affiliate of SolarCoin, is also working on a number of blockchain- and solar-based projects. Its main aim is to “build the world’s largest open scientific solar monitoring device with the SolarCoin blockchain.” It plans to use this system for various scientific and financial purposes. One of its current projects is to integrate current solar panel investors into the ElectricChain and SolarCoin. It hopes this program will speed up the transition to cleaner energy.

Smart Solar

Back in 2002, Renewable Energy Certificates (RECs) were created to incentivize investment in renewable energy. An REC is a certificate that proves 1 megawatt hour of electricity has been produced by renewable sources. Solar farms and other renewable electricity providers issue RECs to represent the amount of clean energy they have generated. They then sell them to utility companies, which are required to use certain levels of renewable power.

The problem with this system is that the amount of renewable energy produced is calculated by estimates and projections. This then leads to some very creative accounting practices, and the reality is that less renewable energy is being made and used than the certificates might say.

IDEO CoLab, along with Nazdaq and Filament, have partnered up to solve this problem. Smart Solar is their collaborative project. It uses blockchain technology and the Internet of Things to allow solar panels to calculate their own levels of energy production and then issue RECs to the owner. They have already constructed a prototype, which proves it is possible to incentivize solar energy without such a convoluted system.

 

 

Brooklyn Microgrid

Traditional grids are a logistical nightmare. Transferring power from where it is generated to where it is needed and accommodating the peaks and troughs is immensely complex. The other downside is that citywide grids are vulnerable. In an event like Hurricane Sandy, a whole network can go down, bringing an entire city to a halt and endangering people’s lives.

Microgrids are a new option for delivering electricity. They aim to promote cost-effective, secure, sustainable energy production and distribution in a local area. Brooklyn Microgrid is just one such project that is testing the waters, and it’s doing so with blockchain.

The system will use Ethereum, a public blockchain platform with a smart contract functionality that permits microgrid users to commit to contracts that cannot be falsified or misrepresented. The service will automatically update transactions and energy use in real-time using a cryptographically secure list.

Brooklyn Microgrid also hopes to boost the amount of clean energy that is produced within its local community. It can manage energy production and distribution throughout emergencies and blackouts, helping to keep the community safe and the economy running. Brooklyn Microgrid also offers financial incentives for investment in clean energy, which assists in keep the community green and helps to provide more environmentally friendly jobs.

Blockchain and solar: Just the beginning of a clean energy partnership

With the continued push towards renewable resources, blockchain technology provides a way to further incentivize and account for clean energy production. There are many startups currently experimenting with combining the two in innovative ways. Now is just the beginning, but there is potential for blockchain and solar to contribute to the world in numerous ways, from the local community to the globe on a grand scale.

Original article link: http://venturebeat.com/2017/01/08/how-blockchain-is-impacting-clean-energy/

Dutch team pushes blockchain technology for logistics data

$2.3 million initiative would use security protocol to protect supply chain records.

By DC Velocity Staff

A team of Dutch supply chain firms and industry players has launched a $2.3 million push to apply blockchain technology to the country's logistics sector and use the popular computer security protocol to ease the flow of data between trading partners. First announced Nov. 8, the project will be led by the public-private technology incubator TKI Dinalog and its partners, the national research organizations TNO and NWO. Together, they will work with a consortium of 16 partner companies to develop the contours of a new information infrastructure based on blockchain technology, uniting operational information, financial flows, and contracts. Most famously used as the underpinnings of the global, virtual financial currency Bitcoin, the technology has been finding new applications in recent years, particularly in the financial sector. The announcement echoes recent U.S. initiatives to apply blockchain security to logistics data, such as Wal-Mart Stores Inc.'s announcement in October 2016 that it would partner with IBM Corp. to use the technology to improve its track and trace capabilities on food shipments in China. Blockchain technology could be an important addition to IT practices in logistics because it creates a secure, digital record of transactions that preserves the chain of custody as goods or data flow through the supply chain. Also known as "distributed ledger" technology, it records an immutable software record of everyone who has touched or read an item as it moves between partners. The Dutch group says its effort is unique because it unites various partners in the logistics chain in adopting blockchain together. Additional major support will come from a complementary effort, the public-private initiative to establish a national research institute for blockchain, previously initiated by the Netherlands' Ministry of Economic Affairs. The new effort will feature input from a wide range of Dutch supply chain firms, banks, and colleges, including the Delft University of Technology, Windesheim University of Applied Sciences, Amsterdam-based bank ABN AMRO, the International Supply Chain Finance (SCF) Community, the Port of Rotterdam, and the national florists conglomerate Royal FloraHolland. Corporate partners also include: mining firm FBBasic, tech firms Cirmar, BeScope Solutions, and TransFollow, and financial services firms NBK and Innopay.

A team of Dutch supply chain firms and industry players has launched a $2.3 million push to apply blockchain technology to the country's logistics sector and use the popular computer security protocol to ease the flow of data between trading partners.

First announced Nov. 8, the project will be led by the public-private technology incubator TKI Dinalog and its partners, the national research organizations TNO and NWO. Together, they will work with a consortium of 16 partner companies to develop the contours of a new information infrastructure based on blockchain technology, uniting operational information, financial flows, and contracts.

Most famously used as the underpinnings of the global, virtual financial currency Bitcoin, the technology has been finding new applications in recent years, particularly in the financial sector.

The announcement echoes recent U.S. initiatives to apply blockchain security to logistics data, such as Wal-Mart Stores Inc.'s announcement in October 2016 that it would partner with IBM Corp. to use the technology to improve its track and trace capabilities on food shipments in China.

Blockchain technology could be an important addition to IT practices in logistics because it creates a secure, digital record of transactions that preserves the chain of custody as goods or data flow through the supply chain. Also known as "distributed ledger" technology, it records an immutable software record of everyone who has touched or read an item as it moves between partners.

The Dutch group says its effort is unique because it unites various partners in the logistics chain in adopting blockchain together. Additional major support will come from a complementary effort, the public-private initiative to establish a national research institute for blockchain, previously initiated by the Netherlands' Ministry of Economic Affairs.

The new effort will feature input from a wide range of Dutch supply chain firms, banks, and colleges, including the Delft University of TechnologyWindesheim University of Applied Sciences, Amsterdam-based bank ABN AMRO, the International Supply Chain Finance (SCF) Community, the Port of Rotterdam, and the national florists conglomerate Royal FloraHolland. Corporate partners also include: mining firm FBBasic, tech firms Cirmar, BeScope Solutions, and TransFollow, and financial services firms NBK and Innopay.

Original article link: http://www.dcvelocity.com/articles/20160104-dutch-team-pushes-blockchain-technology-for-logistics-data/