Understanding how blockchain works and identifying myths about its powers are the first steps to developing blockchain technologies
Video: Blockchain in 60 seconds
After spending two years researching blockchain and the evolution of advanced ledger technologies, I still find a great spectrum of understanding across my clients and business at large about blockchain. While ledger superpowers like Hyperledger, IBM, Microsoft and R3 are emerging, there remains a long tail of startups trying to innovate on the first generation public blockchains. Most of the best-selling blockchain books confine themselves to Bitcoin, and extrapolate its apparent magic into a dizzying array of imagined use cases. And I'm continuously surprised to find people who are only just hearing about blockchain now.
It can seem that everyone is talking about blockchain and ledger technologies, but the truth is most people are not yet up to speed. No one should be shy to ask what blockchain is really all about.
Many blockchain primers and infographics dive into the cryptography, trying to explain to lay people how "consensus algorithms", "hash functions" and digital signatures all work. In their enthusiasm, they can speed past the fundamental question of what blockchain was really designed to do. I've long been worried about a lack of critical thinking around blockchain and the activity it's inspired. If you want to develop blockchain applications you only need to know what blockchain does, and not how it does it.
So I've written a report that explains how the blockchain works. It examines the founding principles of blockchain, describes its properties, and dispels common myths about its powers. The explanation below is an abridged excerpt from the report.
WHAT IS BLOCKCHAIN?
Blockchain is an algorithm and distributed data structure for managing electronic cash without a central administrator among people who know nothing about one another. Originally designed for the crypto-currency Bitcoin, the blockchain architecture was driven by a radical rejection of at (government-guaranteed) money and bank-controlled payments.
Blockchain is a special instance of Distributed Ledger Technologies (DLTs), almost all of which have emerged in Bitcoin's wake.
HOW DOES BLOCKCHAIN WORK?
Blockchain is a Distributed Ledger Technology (DLT) that was invented to support the Bitcoin cryptocurrency. Bitcoin was motivated by an extreme rejection of government-guaranteed money and bank-controlled payments. The developer of Bitcoin, Satoshi Nakamoto envisioned people spending money without friction, intermediaries, regulation or the need to know or trust other parties.
Technically, the original blockchain is separable from Bitcoin, but this report will show that the blockchain design is so specific to Bitcoin that it's not a good fit for much else.
The central problem in electronic cash is Double Spend. Because pure electronic money is just data, nothing stops a currency holder from trying to spend it twice. Blockchain solves the Double Spend problem without a digital reserve fund or similar form of umpire.
Blockchain monitors and verifies Bitcoin transactions by calling upon a decentralized network of volunteer-run nodes to, in effect, vote on the order in which transactions occur. The network's algorithm ensures that each transaction is unique.
Several thousand nodes make up the Bitcoin network. Once a majority of nodes reaches consensus that all transactions in the recent past are unique (that is, not double spent), they are cryptographically sealed into a block. Each new block is linked to previously sealed blocks to create a chain of accepted history, thereby preserving a verified record of every spend.
The Bitcoin blockchain's functionality and security results from the network of thousands of nodes agreeing on the order of transactions. The diffuse nature of the network ensures transactions and balances are recorded without bias and are resistant to attack by even a relatively large number of bad actors. In fact, the record of transactions and balances remains secure as long as a simple majority (51 percent) of nodes remains independent. Thus, the integrity of the blockchain requires a great many participants.
One of the Bitcoin blockchain's most innovative aspects is how it incentivizes nodes to participate in the intensive consensus-building process by randomly rewarding one node with a fixed bounty (currently 12.5 BTC) every time a new block is settled and committed to the chain. This accumulation of Bitcoin in exchange for participation is called "mining" and is how new currency is added to the total system afloat.
Cryptocurrency Wallet Guide: A Step-By-Step Tutorial
Use this straightforward guide to learn what a cryptocurrency wallet is, how they work and discover which ones are the best on the market.
What is a Cryptocurrency Wallet?
A cryptocurrency wallet is a software program that stores private and public keys and interacts with various blockchain to enable users to send and receive digital currency and monitor their balance. If you want to use Bitcoin or any other cryptocurrency, you will need to have a digital wallet.
How do they work?
Millions of people use cryptocurrency wallets, but there is considerable misunderstanding about how they work. Unlike traditional ‘pocket’ wallets, digital wallets don’t store currency. In fact, currencies don’t get stored in any single location or exist anywhere in any physical form. All that exists are records of transactions stored on the blockchain.
Cryptocurrency wallets are software programs that store your public and private keys and interface with various Blockchain so users can monitor their balance, send money and conduct other operations. When a person sends you bitcoins or any other type of digital currency, they are essentially signing off ownership of the coins to your wallet’s address. To be able to spend those coins and unlock the funds, the private key stored in your wallet must match the public address the currency is assigned to. If public and private keys match, the balance in your digital wallet will increase, and the senders will decrease accordingly. There is no actual exchange of real coins. The transaction is signified merely by a transaction record on the blockchain and a change in balance in your cryptocurrency wallet.
What are the different types of Cryptocurrencywallets?
There are several types of wallets that provide different ways to store and access your digital currency. Wallets can be broken down into three distinct categories – software, hardware, and paper. Software wallets can be a desktop, mobile or online.
Desktop: wallets are downloaded and installed on a PC or laptop. They are only accessible from the single computer in which they are downloaded. Desktop wallets offer one of the highest levels of security however if your computer is hacked or gets a virus there is the possibility that you may lose all your funds.
Online: wallets run on the cloud and are accessible from any computing device in any location. While they are more convenient to access, online wallets store your private keys online and are controlled by a third party which makes them more vulnerable to hacking attacks and theft. Blockchain.info
Mobile: wallets run on an app on your phone and are useful because they can be used anywhere including retail stores. Mobile wallets are usually much smaller and simpler than desktop wallets because of the limited space available on a mobile. Mycelium
Hardware: wallets differ from software wallets in that they store a user’s private keys on a hardware device like a USB. Although hardware wallets make transactions online, they are stored offline which delivers increased security. Hardware wallets can be compatible with several web interfaces and can support different currencies; it just depends on which one you decide to use. What’s more, making a transaction is easy. Users simply plug in their device to any internet-enabled computer or device, enter a pin, send currency and confirm. Hardware wallets make it possible to easily transact while also keeping your money offline and away from danger. Ledger Nano S
Paper: wallets are easy to use and provide a very high level of security. While the term paper wallet can simply refer to a physical copy or printout of your public and private keys, it can also refer to a piece of software that is used to securely generate a pair of keys which are then printed. Using a paper wallet is relatively straightforward. Transferring Bitcoin or any other currency to your paper wallet is accomplished by the transfer of funds from your software wallet to the public address shown on your paper wallet. Alternatively, if you want to withdraw or spend currency, all you need to do is transfer funds from your paper wallet to your software wallet. This process, often referred to as ‘sweeping,’ can either be done manually by entering your private keys or by scanning the QR code on the paper wallet. Bitaddress.org
Are Cryptocurrency wallets secure?
Wallets are secure to varying degrees. The level of security depends on the type of wallet you use (desktop, mobile, online, paper, hardware) and the service provider. A web server is an intrinsically riskier environment to keep your currency compared to offline. Online wallets can expose users to possible vulnerabilities in the wallet platform which can be exploited by hackers to steal your funds. Offline wallets, on the other hand, cannot be hacked because they simply aren’t connected to an online network and don’t rely on a third party for security.
Although online wallets have proven the most vulnerable and prone to hacking attacks, diligent security precautions need to be implemented and followed when using any wallet. Remember that no matter which wallet you use, losing your private keys will lead you to lose your money. Similarly, if your wallet gets hacked, or you send money to a scammer, there is no way to reclaim lost currency or reverse the transaction. You must take precautions and be very careful!
Backup your wallet. Store only small amounts of currency for everyday use online, on your computer or mobile, keeping the vast majority of your funds in a high security environment. Cold or offline storage options for backup like Ledger Nano or paper or USB will protect you against computer failures and allow you to recover your wallet should it be lost or stolen. It will not, however, protect you against eager hackers. The reality is, if you choose to use an online wallet there are inherent risks that can’t always be protected against.
Update software. Keep your software up to date so that you have the latest security enhancements available. You should regularly update not only your wallet software but also the software on your computer or mobile.
Add extra security layers. The more layers of security, the better. Setting long and complex passwords and ensuring any withdrawal of funds requires a password is a start. Use wallets that have a good reputation and provide extra security layers like two-factor authentication and additional pin code requirements every time a wallet application gets opened. You may also want to consider a wallet that offers multisig transactions like Armory or Copay. A multisig or multi-signature wallet requires the permission of another user or users before a transaction can be made.
Multi-currency or single use?
Although Bitcoin is by far the most well-known and popular digital currency, hundreds of new cryptocurrencies(referred to as altcoins) have emerged, each with distinctive ecosystems and infrastructure. If you’re interested in using a variety of cryptocurrencies, the good news is, you don’t need set up a separate wallet for each currency. Instead of using a cryptocurrency wallet that supports a single currency, it may be more convenient to set up a multi-currency wallet which enables you to use several currencies from the same wallet.
Are there any transaction fees?
There is no straightforward answer here.
In general, transaction fees are a tiny fraction of traditional bank fees. Sometimes fees need to be paid for certain types of transactions to network miners as a processing fee, while some transactions don’t have any fee at all. It’s also possible to set your own fee. As a guide, the median transaction size of 226 bytes would result in a fee of 18,080 satoshis or $0.12. In some cases, if you choose to set a low fee, your transaction may get low priority, and you might have to wait hours or even days for the transaction to get confirmed. If you need your transaction completed and confirmed promptly, then you might need to increase the amount you’re willing to pay. Whatever wallet you end up using, transaction fees are not something you should worry about. You will either pay minuscule transaction fees, choose your own fees or pay no fees at all. A definite improvement from the past!
Are cryptocurrency wallets anonymous?
Kind of, but not really. Wallets are pseudonymous. While wallets aren’t tied to the actual identity of a user, all transactions are stored publicly and permanently on the blockchain. Your name or personal street address won’t be there, but data like your wallet address could be traced to your identity in a number of ways. While there are efforts underway to make anonymity and privacy easier to achieve, there are obvious downsides to full anonymity. Check out the DarkWallet project that is looking to beef up privacy and anonymity through stealth addresses and coin mixing.
Which Cryptocurrency wallet is the best?
There is an ever-growing list of options. Before picking a wallet, you should, however, consider how you intend to use it.
Do you need a wallet for everyday purchases or just buying and holding digital currency for an investment?
Do you plan to use several currencies or one single currency?
Do you require access to your digital wallet from anywhere or only from home?
Take some time to assess your requirements and then choose the most suitable wallet for you.
Paper Wallet
Bread Wallet
Bread Wallet is a simple mobile Bitcoin digital wallet that makes sending bitcoins as easy as sending an email. The wallet can be downloaded from the App Store or Google Play. Bread Wallet offers a standalone client, so there is no server to use when sending or receiving bitcoins. That means users can access their money and are in full control of their funds at all times. Overall, Bread Wallet’s clean interface, lightweight design and commitment to continually improve security, make the application safe, fast and a pleasure to use for both beginners and experienced users alike.
Pros: Good privacy & security, beginner friendly, simple & clean, open source software, free.
Cons: No web or desktop interface, lacks features, hot wallet.
Mycelium
Advanced users searching for a Bitcoin mobile digital wallet, should look no further than mycelium. The Mycelium mobile wallet allows iPhone and Android users to send and receive bitcoins and keep complete control over bitcoins. No third party can freeze or lose your funds! With enterprise-level security superior to most other apps and features like cold storage and encrypted PDF backups, an integrated QR-code scanner, a local trading marketplace and secure chat amongst others, you can understand why Mycelium has long been regarded as one of the best wallets on the market.
Pros: Good privacy, advanced security, feature-rich, open source software, free
Cons: No web or desktop interface, hot wallet, not for beginners
Exodus
Exodus is a relatively new and unknown digital wallet that is currently only available on the desktop. It enables the storage and trading of Bitcoin, Ether, Litecoins, Dogecoins and Dash through an incredibly easy to use, intuitive and beautiful interface. Exodus also offers a very simple guide to backup your wallet. One of the great things about Exodus is that it has a built-in shapeshift exchange that allows users to trade altcoins for bitcoins and vice versa without leaving the wallet.
Pros: Good privacy & security, beginner friendly, intuitive, easy to use, in-wallet trading, supports multiple currencies, open source software, free.
Cons: Hot wallet, no web interface or mobile app
Copay
Created by Bitpay, Copay is one of the best digital wallets on the market. If you’re looking for convenience, Copay is easily accessed through a user-friendly interface on desktop, mobile or online. One of the best things about Copay is that it’s a multi-signature wallet so friends or business partners can share funds. Overall, Copay has something for everyone. It’s simple enough for entry-level users but has plenty of additional geeky features that will impress more experienced players as well.
Pros: Good privacy & security, multisig transactions, multiple platforms & devices, multiple wallet storage, beginner friendly, open source software, free
Cons: Can be slow & unresponsive, limited user support
Jaxx
Jaxx is a multi-currency Ether, Ether Classic, Dash, DAO, Litecoin, REP, Zcash, Rootstock, Bitcoin wallet and user interface. Jaxx has been designed to deliver a smooth Bitcoin and Ethereum experience. It is available on a variety of platforms and devices (Windows, Linux, Chrome, Firefox, OSX, Android mobile & tablet, iOS mobile & tablet) and connects with websites through Firefox and Chrome extensions. Jaxx allows in wallet conversion between Bitcoin, Ether and DAO tokens via Shapeshift and the import of Ethereum paper wallets. With an array of features and the continual integration of new currencies, Jaxx is an excellent choice for those who require a multi-currency wallet.
Pros: Good privacy & security, Multi-currency, wallet linking across multiple platforms, great user support, feature rich, user-friendly, free.
Cons: Code is not open source, can be slow to load.
Armory
Armory is an open source Bitcoin desktop wallet perfect for experienced users that place emphasis on security. Some of Armory’s features include cold storage, multi-signature transactions, one-time printable backups, multiple wallets interface, GPU-resistant wallet encryption, key importing, key sweeping and more. Although Armory takes a little while to understand and use to it’s full potential, it’s a great option for more tech-savvy bitcoiners looking to keep their funds safe and secure.
Pros: Good privacy, great security features, multi-signature options, solid cold storage options, free.
Cons: Only accessible via the desktop client, not for beginners.
Trezor
Trezor is a hardware Bitcoin wallet that is ideal for storing large amounts of bitcoins. Trezor cannot be infected by malware and never exposes your private keys which make it as safe as holding traditional paper money. Trezor is open source and transparent, with all technical decisions benefiting from wider community consultation. It’s easy to use, has an intuitive interface and is Windows, OS X and Linux friendly. One of the few downsides of the Trezor wallet is that it must be with you to send bitcoins. This, therefore, makes Trezor best for inactive savers, investors or people who want to keep large amounts of Bitcoin highly secure.
Pros: Good security & privacy, cold storage, easy to use a web interface, in-built screen, open source software, beginner friendly.
Cons: Costs $99, must have device to send bitcoins
Ledger Nano
The Ledger Wallet Nano is a new hierarchical deterministic multisig hardware wallet for bitcoin users that aims to eliminate a number of attack vectors through the use of a second security layer. This tech-heavy description does not mean much to the average consumer, though, which is why I am going to explain it in plain language, describing what makes the Ledger Wallet Nano tick. In terms of hardware, the Ledger Wallet Nano is a compact USB device based on a smart card. It is roughly the size of a small flash drive, measuring 39 x 13 x 4mm (1.53 x 0.51 x 0.16in) and weighing in at just 5.9g.
Pros:
Screen/device protected by metal swivel cover
Multi-Currency support
3rd-Party apps can run from device
U2F support
When recovering wallet from seed, the whole process can be done from the device without even connecting it to a computer!
Fairly inexpensive (~$65 USD)
Cons:
Not as advanced wallet software (no transaction labeling)
No ability to create hidden accounts
No password manager
Green Address
Green Address is a user-friendly Bitcoin wallet that’s an excellent choice for beginners. Green Address is accessible via desktop, online or mobile with apps available for Chrome, iOS, and Android. Features include multi-signature addresses & two-factor authentications for enhanced security, paper wallet backup, and instant transaction confirmation. A downside is that Green Address is required to approve all payments, so you do not have full control over your spending.
Cons: Hot wallet, average privacy, the third party must approve payments.
Blockchain (dot) info
Blockchain is one of the most popular Bitcoin wallets. Accessing this wallet can be done from any browser or smartphone. Blockchain.info provides two different additional layers. For the browser version, users can enable two-factor authentication, while mobile users can activate a pin code requirement every time the wallet application is opened. Although your wallet will be stored online and all transactions will need to go through the company’s servers, Blockchain.info does not have access to your private keys. Overall, this is a well-established company that is trusted throughout the Bitcoin community and makes for a solid wallet to keep your currency.
Pros: Good security, easy to use web & mobile interface, well-known & trusted company, beginner friendly, free.
Cons: Hot wallet, weak privacy, third party trust required, has experienced outages.
Bitcoin Alt Coin Exchanges
Bitcoin exchanges are digital marketplaces where traders can buy and sell bitcoins and alt coins using different fiat currencies or altcoins. Exchanges also act as wallets.
After calling latest surge above $4,000, Standpoint's Ronnie Moas raises bitcoin forecast to $7,500
The stock researcher issued a $5,000 price target on bitcoin in late July, and raised that by $2,500 on Monday after the digital currency's surge to a record high over the weekend.
Moas expects the market value of digital currencies to jump from around $140 billion to $2 trillion, and bitcoin to rise alongside that increase.
Moas said he never held any of the stocks he issued reports on, but now all of his investments are in digital currencies.
Standpoint's Ronnie Moas raises bitcoin forecast to $7,500 Standpoint's Ronnie Moas raises bitcoin forecast to $7,500
1:14 PM ET Mon, 14 Aug 2017 | 00:50
Longtime stock researcher Ronnie Moas raised his price target on bitcoin by $2,500 on Monday after the digital currency hit all-time highs over the weekend.
"What's happening is the floodgates are opening," Moas, founder of Standpoint Research, said in a phone interview with CNBC on Monday. "I believe there are hedge funds and very deep-pocketed individuals going into this now, really hundreds of millions of dollars."
Moas first laid out his views on bitcoin's potential in early July and issued a formal report at the end of last month with a price target of $5,000 for next year.
He told clients Monday he now expects bitcoin to climb nearly 80 percent from the weekend's records to $7,500, and maintained the digital currency could surge to $50,000 in 2027 — representing a 28 percent annual compounded growth rate.
Bitcoin three-month performance
Source: CoinDesk
After bitcoin's uneventful split into bitcoin and bitcoin cash on Aug. 1, bitcoin has soared more than 40 percent to all-time highs.
Bitcoin climbed 5 percent Monday morning to a record high of $4,321.08, more than quadruple in value for the year, according to CoinDesk. At that price, the digital currency has gained about 50 percent in August.
As institutional investor interest in bitcoin grows, Moas expects digital currencies to become part of "strategic reserves" and "asset allocation models in the near future." He also said people in foreign countries will likely want to buy digital currencies as a more stable alternative to their national currencies.
"You can't look at this as a normal situation," he said. "We're in an industry that will probably go from $140 billion to $2 trillion and the bitcoin price will probably move with that."
The total market value of more than 800 digital coins listed on CoinMarketCap.com has climbed from around $20 billion at the start of this year to about $140 billion on Monday. Bitcoin accounts for about half of that value.
Year-to-date change in global value of digital currencies
Published by and fro
Source: CoinMarketCap
Another digital currency, ethereum, traded 1 percent higher near $307, according to CoinDesk. Ethereum has shot up more than 3,000 percent this year.
Bitcoin cash, an alternative version of bitcoin supported by a minority of developers, held steady near $300, according to CoinMarketCap.
Moas told CNBC that 100 percent of his investments are in digital currencies, with the majority in bitcoin and ethereum. He said he never invested in the stocks he issued reports on.
He added in his Monday note to clients:
"Any way that I look at these numbers, my forecasts are looking conservative. It looks to me as though we are at the same point in the adoption curve as we were in 1995 when we went from one million internet users to ten million. The following year the Netscape browser came online and we went from 10 million users to hundreds of millions of users overnight.
I expect that within a couple of years we will have between 50 and 100 million cryptocurrency users — up from approximately ~10 million today. We only have 0.15% market penetration right now — if that goes to 2% or 3% we will get to the $50,000 price target that I set at the beginning of July."
To be sure, many note that bitcoin remains like the Wild West compared with the established Wall Street market.
"People should understand they're not dealing with the NYSE right now. There's no regulation, there's no face that you can attach to these exchanges," Moas told CNBC, noting his digital currency holdings are spread across five exchanges.
Bitcoin lost more than half its value in 2014 as Mt.Gox, then the largest exchange by far, said it lost about 850,000 bitcoins (worth about half a billion U.S. dollars at the time) and filed for bankruptcy.
This July, the U.S. Department of Justice alleged in an indictment that a "sizeable portion" of the Mt.Gox losses were deposited in accounts controlled, owned and operated by an exchange called BTC-e and a Russian national named Alexander Vinnik. Vinnik was arrested in late July.
— Reuters contributed to this report.
WATCH: How practical is it to live on bitcoin in 2017? We tried it for a week
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Artificial Intelligence and Cryptocurrency Trading
Just because Grindelwald and Dumbledore had a deadly brawl during their quest to revolutionize magic doesn’t mean two great powers cannot be used in concert to change the world. This could be the worst way to start an important conversation about financial technology, but stick with me, it gets more interesting. We are speaking about the world-altering technology of Artificial Intelligence as the first superpower coupled with the financial system disruptive technology of cryptocurrency — a decentralized payment system that circumvents government manipulation of currency and is forcing us to redefine the concept of money. The question is: Can these two technologies be used together to change the way ordinary people like you and me invest our money — without expiring in a shower of blue sparks? “Avada Kedaura!”
But first, let’s take a step back and look into them as individual concepts, with respect to their relationships to investment and trading.
Artificial Intelligence
Artificial Intelligence (AI) means software that after its initial programming continues to improve its performance based on experience of the environment it has been set to ‘learn.’ Unlike in movies, where AI is characteristically portrayed as menacing, human-destroying droids, AI software has actually bettered our lives in fields as diverse as healthcare, education, safety, transportation and entertainment. In the field of financial trading, AI has been clandestinely used for two decades to generate profits for hedge funds, banks and other large trading companies.
In its early days, AI trading systems relied on human intervention to provide trade execution but since the rise of electronic exchanges, AI trading has probably changed the character of the world’s markets without the general public’s knowledge.
Today, it is the hedge funds, banks and major international corporations like Goldman Sachs that are reaping the benefits from AI-based trading of forex and stock markets. These companies harness “deep learning” — evolving mathematical and statistical models of prediction and probability — to forecast the short-and-long term outcomes of various financial markets. These models, because of their nature, should be able to track the changes in market condition and therefore continue to improve their performance over time.
Deep learning models aren’t concerned with the fundamentals of the underlying market. They work through pattern recognition, and like their human quantitative analyst counterparts seek the relationships between chart patterns and expected outcomes to generate a return. However, even the most disciplined human trader can be influenced by the fear of loss or greed which may change their trading behavior. AI Bots, however, execute trades consistently without emotion at lightning speed directly onto the exchange, placing and closing trades on behalf of their clients. They stick faithfully to limits, never lose discipline or waver from their assigned course based on the idiosyncrasies of emotion.
Digital Currency Trading
Digital currency trading, which until recently has been mostly centered on bitcoin, has gained momentum in recent years. Since Feb 2011, when bitcoin stood at parity with the US dollar, bitcoin has risen to where it is trading now some six years later at prices between $1,200 and $1,425. The reasons behind Bitcoin’s success are many. Coupled with its decentralized nature which protects it from all good and bad government policies; bitcoin is beginning to be seen as a viable alternative in certain countries where hyper-inflation or lack of confidence in government has rendered the local currency a less attractive alternative. Bitcoin is also becoming easier to manage, simpler to use, safer than carrying paper money and cheap enough to transact and carry, without needing an intermediary.
Despite the last 6 month’s remarkable price increase, bitcoin as an asset class has its share of ills, including periods of extreme market volatility. For example Bitcoin’s limited supply coupled with the inability of governments to intervene to counteract market forces means that bitcoin reacts quickly to market bias. Take for example, the very recent bitcoin ETF buzz: Bitcoin’s price trended northward comfortably ahead of the SEC’s ETF ruling amid growing optimism, hitting a peak of $1,327 a coin. But after the SEC shot down both the Gemini and SolidX bitcoin ETF projects, the price nosedived 20% before rallying within the month back to similar levels.
In addition, shorter term fluctuations can be seen if one looks at intraday bitcoin charts. On average an BTC/USD chart, Bitcoin’s value fluctuates between 10 and 15 USD every 4 hours and sometimes quite a bit higher. For many investors, such fluctuations make bitcoin an uncomfortable investment choice. However, there are day traders who use this volatility to take tidy profits out of the market on a daily basis. These are the traders who are fixed, glued to their computer monitors and mobile screens all day long, tracking the market to enter and exit positions.
So we return to the original question: “can a market as young and volatile as cryptocurrency be successfully partnered with Artificial Intelligence to produce a profitable outcome?
With market capitalizations in the low millions up to low billions, cryptocurrency markets present too small an opportunity to interest most trading banks and hedge funds. They use the power of their deep pockets coupled with AI to generate massive profits from high frequency trading where a few millisecond advantage over competitors can generate big returns.
This means, there is room while cryptocurrency markets are still in their infancy for AI developers to create systems that learn to identify profit opportunities in these young, highly volatile markets. And while a Goldman Sachs may snort at a market cap of 20 billion dollars, investors like you or me would be delighted with this kind of profit. We are starting to see young talent, like the people running the Our AI Bot blog out of the UK. These types of cryptocurrency enthusiasts are coupling their Deep Learning System knowledge with innovation, imagination and an understanding of the inputs that are relevant to predicting digital currency market movement to yield what look like fairly outstanding results.
But many within the cryptocurrency space feel the markets are moving towards mainstream and already there are players like Pantera Capital and banks like Santander and Citibank that are looking at how to generate profits from the cryptocurrency markets. So the window of opportunity for individuals to benefit from what AI can do in digital currency trading is probably limited. The time to look at this opportunity is now – “Expecto Patronum!”
The Bitclub Network is getting ready to launch CoinPay, which is a new smart payment app that has been in beta (Thailand, Hong Kong, Korea and Japan) for over 18 months now. This platform will allow merchants to easily accept Bitcoin, ClubCoin and more by generating invoices and setting up products within a shopping cart that can easily be paid and settled quickly.
Bitclub has created an entire business model around members getting merchants to sign up for the platform. These commissions are paid strategically through the BitClub compensation plan, and as the merchant network grows we believe this could become the most valuable piece of BitClub Network.
Do you want a piece of CoinPay?
Not only will BitClub members have an exclusive to sell the platform and earn commissions on any merchants using it, but CoinPay will also be giving away 60-70% of the company to BitClub Network members in the form of ownership shares! These shares are FREE! Just like we gave you ClubCoin free (and continue to give it) we will be giving you shares of CoinPay as well.
You cannot buy these shares, you have to earn them through your membership and we will have many different incentives for you to earn more as the platform launches. It’s just another way that we like to provide value to our membership and help you cash in.
CoinPay will be its own entity with 1 billion tokens (coins) of this 600-700 million tokens will be given away to members of BitClub for FREE and the other 300-400 million will belong to the CoinPay corporate team, investors, programmers, etc.
CoinPay will operate independently of BitClub and its main focus will be on merchant adoption and support! CoinPay has been working in a private Beta for the last year.
We are now moving to the next phase with a full Beta launch to our Founders and anyone at the Pro Builder rank or higher. This will also be a limited Beta as we test on a larger scale and get feedback before we launch it fully.
You will be hearing A LOT more about CoinPay as it moves forward… It’s finally here…
Some Bitcoin Unlimited supports will see this as a "push" for SegWit adoption.
The bitcoin network appears to be under attack once again. BitClub initiated a transaction malleability attack against the bitcoin network yesterday afternoon. Users are advised to exert caution when checking up on bitcoin transactions. It appears Jim Hilliard is the one responsible for this attack, albeit his motives remain unclear.
It seems odd to think a bitcoin mining pool would purposefully attack the network. BitClub owns 4.2% of the total hashrate, which makes them one of the largest in the world. For some reason, one of their members executed this transaction malleability attack since yesterday.All of the affected blocks were mined by the BitClub pool as well, which make it somewhat easier to find the culprit.
Network blocks 456545 and 456552 effectively halted block monitoring updates provided by popular platforms. A lot of bitcoin users had gotten concerned over this attack, albeit the motive remains unclear. It seems very likely this attack is a political move rather than a way to effectively harm the network. The tension between SegWit and Unlimited supporters has been heating up as of late.
A Successful Malleability Attack By BitClub
BitClub may try to influence developers and stakeholders to solve malleability issues. Segregated Witness is designed to address these problems once and for all, yet continues to be opposed by Bitcoin Unlimited supporters. There is a reason why companies and service providers all favor SegWit over BU, though. As a result of this BitClub-orchestrated malleability attack, a double-spend has been recorded. All transactions found within the two network blocks are double-spends.
An investigation has been launched to determine how this attack was performed. One thing is certain: malleability attacks need to be made impossible sooner rather than later. Rest assured this attack was unintentional by any means, as BitClub knew all too well what they were doing. Events like these always spark intriguing debates, even though this is a politically-tinted attack.
Some Bitcoin Unlimited supported will see this as a “push” for SegWit adoption. It is doubtful that is the case, even though BitClub identified a big flaw in the bitcoin ecosystem. If malleability persists, it will be impossible to tell which transactions are legitimate. Although it takes a lot of preparation to pull off such an attack, there is no reason to think it can’t happen again. Solving this problem needs to be the top priority right now. It appears we need SegWit for doing just that, regardless of how others may feel about this idea.
BitClub may try to influence developers and stakeholders to solve malleability issues. Segregated Witness is designed to address these problems once and for all, yet continues to be opposed by Bitcoin Unlimited supporters. There is a reason why companies and service providers all favor SegWit over BU, though. As a result of this BitClub-orchestrated malleability attack, a double-spend has been recorded. All transactions found within the two network blocks are double-spends.
An investigation has been launched to determine how this attack was performed. One thing is certain: malleability attacks need to be made impossible sooner rather than later. Rest assured this attack was unintentional by any means, as BitClub knew all too well what they were doing. Events like these always spark intriguing debates, even though this is a politically-tinted attack.
Some Bitcoin Unlimited supported will see this as a “push” for SegWit adoption. It is doubtful that is the case, even though BitClub identified a big flaw in the bitcoin ecosystem. If malleability persists, it will be impossible to tell which transactions are legitimate. Although it takes a lot of preparation to pull off such an attack, there is no reason to think it can’t happen again. Solving this problem needs to be the top priority right now. It appears we need SegWit for doing just that, regardless of how others may feel about this idea.
Published by JP Buntinx
JP is working hard to bring more credibility to the Bitcoin and blockchain news industry. Outside of being Europe Editor at Newsbtc, JP is also an active writer for the website, and does not shy away from letting his opinion be heard. View all posts by JP Buntinx
U.S. Signals Clampdown on Red-Hot Digital Coin Offerings
SEC says ICOs, cryptocurrency exchanges subject to U.S. law
Startups have raised hundreds of millions through ICOs
U.S. regulators said they have jurisdiction over one of the hottest new areas of finance: initial coin offerings of digital currencies.
Companies that raise money through the sale of digital assets must adhere to federal securities laws, the Securities and Exchange Commission said Tuesday. Issuers must register the deals with the government unless they have a valid excuse, as should exchanges that offer trading of cryptocurrencies like bitcoin and ether, the regulator said.
“It’s been a long time coming and this is a big deal,” said Angela Walch, associate professor at St. Mary’s University School of Law. “People have been waiting for some kind of signal from regulators on ICOs.” This is the most detailed the SEC has been about how digital currencies and the exchanges where they trade fit into financial markets, she said. “It’s a reminder that basic consumer protection principles still apply” in the digital asset world, she added. “The tech people coming in don’t necessarily realize they’re playing with fire.”
Startups have raised hundreds of millions of dollars selling such tokens in 2017, bypassing traditional initial public offerings of shares — a process overseen by the SEC — in favor of so-far mostly unregulated ICOs. The commission examined the sale of tokens to fund a startup known as the DAO last year, which raised about $150 million over four weeks, according to the SEC’s investigative report released Tuesday.
The agency’s enforcement division was asked to decide if the DAO token sales “violated federal securities laws with unregistered offers and sales of DAO Tokens in exchange for ‘Ether,’ a virtual currency,” the report said. The SEC decided not to bring charges in the DAO token sale case.
Instead, the SEC report said it wanted “to caution the industry and market participants: the federal securities laws apply to those who offer and sell securities in the United States, regardless whether the issuing entity is a traditional company or a decentralized autonomous organization, regardless whether those securities are purchased using U.S. dollars or virtual currencies, and regardless whether they are distributed in certificated form or through distributed ledger technology.”
One recent ICO was led by Gnosis, a prediction market application based on the Ethereum blockchain. It raised $12.5 million in 12 minutes on April 24, resulting in a market value of almost $300 million. It’s generated no revenue and has little more than a white paper describing what it intends to do. Yet its tokens, which would allow users to bet on things such as election outcomes, have soared 200 percent since early May, according to Coinmarketcap.com.
Open Question
An open question is whether the SEC will apply these new standards to coin offerings that have already happened, said Walch, who is also a research fellow at the Centre for Blockchain Technologies at University College London. And while the SEC won’t pursue action related to the DAO token sale, “I don’t see anything in here that says there won’t be enforcement actions against others,” she said. Some recent ICO have been “egregious,” she said. “I’d be very surprised if they were willing to shove them all under the rug.”
The SEC decision comes a day after the U.S. Commodity Futures Trading Commission gave LedgerX LLC approval to offer options trading based on bitcoin. That could help mature the business of bitcoin trading by helping traders offset risks with derivatives. But it also underscored the fact that digital currencies, decentralized technologies that appeal to the libertarian-minded, probably cannot escape governments.
ICOs offer an attractive deal to young companies: going directly to customers for funding, avoiding venture-capital firms and other professionals. SEC Chairman Jay Clayton addressed the balance he’s trying to strike, saying in the regulator’s statement that, “We seek to foster innovative and beneficial ways to raise capital, while ensuring — first and foremost — that investors and our markets are protected.”
“What the SEC did not say is that all tokens are securities. Rather, they suggest a facts-and-circumstances test,” Peter Van Valkenburgh, research director at Coin Center, said in an email. “We believe that applying the same facts-and-circumstances test to other tokens will mean that some do not fit into the definition of securities, particularly tokens with an underlying utility rather than a mere speculative investment value.”
Exchange Registration
Markets such as Coinbase Inc.’s GDAX and Gemini Trust Co. that offer trading in digital assets so far have dealt mostly with state, not federal, regulators. The SEC now says that will likely change. “Additionally, securities exchanges providing for trading in these securities must register unless they are exempt,” the agency said.
Calling that a “big deal,” Walch said, “Those in the crypto world have been acting as if they live in an alternate universe, and the SEC has delivered a reminder that they still live in the real world, with real investors and real people making decisions that they must be accountable for.”
Why Ethereum Could Become the Easiest Cryptocurrency to Mine
Why “the Easiest Cryptocurrency to Mine?” Is the Wrong Question
Easiest Cryptocurrency to Mine The cryptocurrency revolution has arrived. With Bitcoin <span data-recalc-dims=(BTC) hitting all-time highs, peaking at one point around $3,000 per unit" width="300" height="212" srcset="https://i0.wp.com/investorsbuz.com/wp-content/uploads/2017/07/Ethereum-300×212-Small.jpg?resize=300%2C212 300w, https://i0.wp.com/investorsbuz.com/wp-content/uploads/2017/07/Ethereum-300×212-Small.jpg?w=679 679w" sizes="(max-width: 300px) 100vw, 300px" />
FOREX INVESTORS BUZZ Easiest Cryptocurrency to Mine The cryptocurrency revolution has arrived. With Bitcoin (BTC) hitting all-time highs, peaking at one point around $3,000 per unit—and Ethereum (ETH) going from around $10.00 to over $400.00 in under a year—these two leaders in the cryptocurrency market are making the case that they are some of the most lucrative investments in 2017.
But one of the most important developments in the cryptocurrency trade right now is finding the easiest coins to mine. In fact, the easiest cryptocurrency to mine is going to be a game-changer, because whichever online currency can manage that will ultimately become the cryptocurrency of choice for the world at large.
In the case of Bitcoin mining, for instance, the process involves a third party helping a transaction go through by interacting with the blockchain. In order to do that, they need their computers to solve a complex set of math problems that increase in difficulty depending on how many miners are currently working, and decrease in difficulty if there is a dearth of miners working.
While the process is time-consuming and costly, the reward for helping that transaction go through is a Bitcoin. Not a bad trade, all things considered. Except that mining is by no means a cheap endeavor. Cryptocurrency mining takes a very strong computer, as well as a large amount of energy to power said computer.
One projection argues that Bitcoin transactions may consume as much electricity by the year 2020 as the entire nation of Denmark. (Source: “Proof of Work vs Proof of Stake: Basic Mining Guide,” BlockGeeks, last accessed July 12, 2017.)
Cryptocurrency Mining Hardware
As explained, there is a high barrier to entry when trying to mine for BTC and ETH, as well as severe energy costs. They are not the easiest coins to mine, but they are your best bets if you’re dead-set on going that route.
But a better alternative may be to look at what Ethereum is doing. The company has mentioned that it is looking into changing the way it handles mining from a proof-of-work model to a proof-of-stake model.
Essentially, instead of having miners compete, a third-party peer would be selected to help the process along. They will make a security deposit so the exchange would be done in good faith, and the process will be many magnitudes more efficient, cost-effective, and speedy.
At that point, Ethereum would become the easiest cryptocurrency to mine. With ETH becoming the easiest coin to mine, expect the value of ETH to rise accordingly.
This all makes Ethereum potentially one of the best investment opportunities in the cryptocurrency market, with huge growth on the horizon if this mining process switch is implemented correctly.
With the Ethereum changeover expected to happen sometime in 2017, that would make ETH a good cryptocurrency to mine in 2017. Not only will the cost of production of a ETH be lowered, and therefore make the mining process more profitable overall, it will be streamlined and simplified, making this one of the best potential cryptocurrency mining opportunities out there.
With Ethereum, you get a rising cryptocurrency with a decent amount of support already in the market, where ETH is one of the more trusted options available.
One of the Largest Cryptocurrency Exchange Hacked, People Lost Bitcoin And Ethereum
According to local media reports and confirmed in an official blog post, an unidentified hacker(s) managed to steal an unknown (or probably undisclosed) amount of cryptocurrency from Bithumb. It is the world’s fourth largest cryptocurrency exchange. Bitcoin and Ethereum are main currencies found on the platform.
The worst affected are people based in South Korea which makes a huge chunk of Bithumb’s userbase. Bithumb has announced reimbursement of 100,000 won ($897) worth of cryptocurrency to all the users affected till July 5. Surprisingly, some users have even reported about losing as high as 10 million won ($8700) worth of cryptocurrency.
According to the reports, the attack happened on June 29 (22:00 local time), and the hacker managed to compromise the personal computer of a Bithumb employee and stole personal details of 31,800 members, around three percent of the user base. It is being said that the stolen data didn’t contain the passwords of any of the users, but how the hacker managed to drain the currency is still a mystery.
The issue came to light when the affected users complained about their loss on social media, starting Thursday last week.
In an official statement made on Monday, Bithumb has said that it would reimburse all the lost money to users when they confirm the approximate damages.
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As shopping patterns continue to evolve, so does the Payment Platform And Payment Gateway Industry that propels the former. Mobile Point Of Sales Machines have of course existed for a long time. Mobile wallet is a new concept in India that has been surpassing credit card usage and is slowly beginning to replace the traditional payment methods.
A mobile wallet, in simple terms, is a virtual mobile-based wallet where one can store cash for making mobile, online or offline payments. There are various types of mobile wallets in India, such as open, semi-open, semi-closed and closed – depending on the type of usage and payments that can be made. Wallets are growing rapidly as they help in Increasing The Speed Of Transaction, Especially For Ecommerce Companies and all Ecommerce Marketplaces have integrated with such mobile wallets too.
Here are some of the top 10 mobile wallet companies in India and what they offer to their customers.
PayTM is one of the largest mobile commerce platforms in India, offering its customers a digital wallet to store money and make quick payments.
Launched in 2010, PayTM works on a semi-closed model and has a mobile market, where a customer can load money and make payments to merchants who have operational tie-ups with the company. Apart from making e-commerce transactions, PayTM wallet can also be used to make bill payments, transfer money and avail services from merchants from travel, entertainment and retail industry.
Capitalizing on the scope and growth of India’s education market segment, they recently partnered with premium educational institutions in India to introduce cashless payments for fees, bills and other expenses.
Momoe is a Bengaluru based mobile payments startup that focuses on changing how customers pay while eating out, travel and shop. Using the Momoe app, one can store their credit card details and make mobile payments at various restaurants, grocery stores, apparel, salons and other retail outlets.
The app’s initial foray was into restaurants which attracted many installs due to the ease of payment options. The users were able to see live tabs, split bills and pay directly, without having to wait for a physical bill to arrive. Even though its services are currently available only in Bangalore, due to the growing popularity of the app and investment funds they will soon be expanding their services to six new cities.
PayUMoney, a Gurgaon-based company that provides online payment solutions launched its wallet service last year. This e-wallet by PayUMoney enables the user to store cash and pay for various services and transactions.
In order to differentiate themselves from other players, they provide a wide range of benefits that include one-touch check out and discounts / cashback offers on every transaction made. This e-wallet also provides instant refunds on order cancellations and buyer protect to ensure the right purchase and customer satisfaction.
MobiKwik is an independent mobile payment network that supposedly connects 25 million users with 50,000 retailers and more. This mobile wallet lets its users add money using debit, credit card, net banking and even doorstep cash collection service, which can in turn be used to recharge, pay utility bills and shop at marketplaces.
Owing to the growing need for convenience, MobiKwik has also recently tied up with large and small time grocery, restaurants and other offline merchants.
Citrus Pay is a popular e-wallet app for cash storage, payments and money transfers. Besides tying up with online service providers from varied sectors, they are now collaborating with Woohoo, a gifting and shopping portal to let its customers shop at more than 5000 offline stores listed with them.
This mobile wallet application was launched by State Bank of India to let users transfer money to other users and bank accounts, pay bills, recharge, book for movies, hotels, shopping as well as travel.
This semi-closed prepaid wallet offers its services in 13 languages and is available for non-SBI customers as well. This app also allows its customers to set reminders for dues, money transfers and view the mini-statement for the transactions carried out.
Citi Bank India and MasterCard recently launched ‘Citi MasterPass’, India’s first global digital wallet for faster and secure online shopping.
By using this, Citi Bank Debit And Credit Card Customers become the first in this country to be able to shop at more than 250,000 e-commerce merchants. It ensures faster checkout with a single click or touch and stores all your credit, debit, prepaid, loyalty cards and shipping details in one place.
Pockets by ICICI is a digital bank that offers a mobile wallet for its customers. It provides the convenience of using any bank account in India to fund your mobile wallet and pay for transactions.
With Pockets, one can transfer money, recharge, book tickets, send gifts and split expenses with friends. This wallet uses a virtual VISA card that enables its users to transact on any website or mobile application in India and provides exclusive deals or packages from associated brands.
Chillr is an instant money transfer app created by HDFC to simplify money transfer and payment process for its customers.
Using this mobile payment app, one can transfer money to anyone in their phone book, thereby cutting out on the hassles of adding a beneficiary. It is currently available only for HDFC Bank customers and can be used to send money, recharge, split bills, request funds or transfer and will soon be able to pay at online & offline stores.
Axis Bank, the third-largest private sector bank launched ‘LIME’, an application that offers a mobile wallet, payments, shopping and banking facilities.
This mobile wallet is available for both account & non-account holders and lets a user add money using his or her credit, debit and net banking details. One can also share the wallet with their loved ones or pool in funds into a shared wallet for a particular purpose (Example: Gifts, vacations, etc.)
Number of installs: 10,000+
Data on digital payments in India
And here are some interesting findings on digital payment adoption from the recent ACI Survey:
While these numbers indicate the growing need for secure, faster and efficient payment methods for online marketplace, efforts to make payments to individual or brick & mortar stores is also increasing. Start-ups and huge corporates are constantly on the lookout for customer-friendly technology, thereby giving more power to the customer.
Thus, the day you will walk around without a physical wallet and pay your local dhobi and kirana store uncle using a mobile wallet is not so far.
They are plastic cards, similar to your everyday bank card, but you can deposit cryptocurrencies on them.
Cryptocurrency debit cards are a relatively recent development in the Blockchain world. They were invented to solve the problem of using digital coins for day-to-day expenses. Obviously, you can’t just go to your nearest grocery store and pay for your shopping list with Bitcoins, not yet at least.
This is very inconvenient because it introduces an additional difficulty of searching for a place to exchange your cryptocurrencies to fiat money before you can actually start spending them. There have been several proposed ways to make cryptocurrency spending a more direct process and plastic cards are one of them.
2. What are the solutions for cryptocurrency spending?
The primary two are point-of-sale terminals and plastic cards.
Point-of-sale terminals are one of the proposed solutions. This is a piece of hardware installed at a shop, which interacts with a mobile wallet app on your phone and withdraws your cryptocurrency to make a purchase. However, they require a merchant to actively take interest in accepting digital currency payments and pay some money upfront for installing a terminal. As such, this approach is not easy to scale.
Plastic cards are a different, arguably better, solution. They take advantage of the existing Visa/MasterCard infrastructure – bank card terminals are already an available payment option in millions of shops around the world. Such cards don’t require the merchant to do anything. In fact, the cashier might not even know that you’re paying with a cryptocurrency because it’s seamlessly converted into the respective fiat currency by the card provider.
3. What types of cards are there?
Prepaid cards and debit cards, mainly.
The first option is a bit outdated by today’s standards. You pay a provider a certain amount of Bitcoins or some other cryptocurrency, and they send you a prepaid Visa/MasterCard with the equivalent amount of fiat money. After that, it works like any old debit card you can get at the nearest bank.
A more recent development is a debit card with an automated exchange system in the background. They allow you to deposit your cryptocurrency directly, via a web app. When the time of purchase comes, the card provider handles the process of converting your digital coins into the necessary fiat currency on the spot. From the merchant’s point of view, these are the same as prepaid or regular bank cards. However, they spare the user the need to exchange money – you simply deposit your Bitcoins or Ether and you’re good to go.
4. Where can I get one?
The providers of cryptocurrency debit cards are online companies with different backgrounds.
A simple online search will net you several key providers of cryptocurrency debit cards. By going to their websites, you will be able to order yourself one. This technology is on the verge of the digital and real world and is heavily regulated by governments worldwide.
Because of that, they almost always require you to undergo some sort of identity verification, submitting some sort of ID proof. Other than that, in addition to a small upfront payment, they are really easy to get.
5. If they’re so good, why aren’t they immensely popular?
It has more to do with the technology of cryptocurrency itself – confirmation times and transaction fees, in particular.
It’s true that the technology of cryptocurrency debit cards has been here for a while. You might be thinking: “if they make digital currencies so easy to spend and can be easily bought, why aren’t they much more popular?”
One of the primary, if not the main barriers to higher adoption is cryptocurrencies themselves. Bitcoin transactions have a 10 minute confirmation period on average. The fees are also significant, unlike in the old times, and are only getting higher. These two factors combined make Bitcoin payments barely suitable for small, everyday purchases – plastic card or not.
Some other currencies, such as Ethereum, have faster confirmation times and lower fees, but they’ve started getting popular quite recently. In fact, some of the cards were released before Ethereum entered the market.
6. Are there cards that support altcoins?
Yes, recently some cards have started appearing on the market and they allow you to deposit currencies other than Bitcoin.
TenX, for example, is a young project with an already working card that can be topped up with Ethereum and Dash, in addition to Bitcoin. Both these coins have much faster confirmation times and much lower transaction fees than BTC does.
In fact, TenX’s own technology COMIT (Cryptographically-secure Off-chain Multi-asset Instant Transaction) makes the system capable of accepting deposits in any cryptocurrency tokens that conform to a small number of requirements, such as having double-spend protection and multisig wallets.
With technologies like this, paying for a Big Mac at any McDonald’s using a cryptocurrency of your choice may actually be easier than you think:
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Where do bitcoins come from? With paper money, a government decides when to print and distribute money. Bitcoin doesn't have a central government.
With Bitcoin, miners use special software to solve math problems and are issued a certain number of bitcoins in exchange. This provides a smart way to issue the currency and also creates an incentive for more people to mine.
Bitcoin is Secure
Bitcoin miners help keep the Bitcoin network secure by approving transactions. Mining is an important and integral part of Bitcoin that ensures fairness while keeping the Bitcoin network stable, safe and secure.
Bitcoin mining is the process of adding transaction records to Bitcoin's public ledger of past transactions or blockchain. This ledger of past transactions is called the block chain as it is a chain of blocks. The block chain serves to confirm transactions to the rest of the network as having taken place.
Bitcoin nodes use the block chain to distinguish legitimate Bitcoin transactions from attempts to re-spend coins that have already been spent elsewhere.
What is Bitcoin Mining?
What is Proof of Work?
What is Mining Difficulty?
What is Bitcoin Cloud Mining?
What is the Blockchain?
Bitcoin mining is intentionally designed to be resource-intensive and difficult so that the number of blocks found each day by miners remains steady. Individual blocks must contain a proof of work to be considered valid. This proof of work is verified by other Bitcoin nodes each time they receive a block. Bitcoin uses the hashcash proof-of-work function.
The primary purpose of mining is to allow Bitcoin nodes to reach a secure, tamper-resistant consensus. Mining is also the mechanism used to introduce Bitcoins into the system: Miners are paid any transaction fees as well as a "subsidy" of newly created coins.
This both serves the purpose of disseminating new coins in a decentralized manner as well as motivating people to provide security for the system.
Bitcoin mining is so called because it resembles the mining of other commodities: it requires exertion and it slowly makes new currency available at a rate that resembles the rate at which commodities like gold are mined from the ground.
What is Proof of Work?
A proof of work is a piece of data which was difficult (costly, time-consuming) to produce so as to satisfy certain requirements. It must be trivial to check whether data satisfies said requirements.
Producing a proof of work can be a random process with low probability, so that a lot of trial and error is required on average before a valid proof of work is generated. Bitcoin uses the Hashcash proof of work.
What is Bitcoin Mining Difficulty?
The Computationally-Difficult Problem
Bitcoin mining a block is difficult because the SHA-256 hash of a block's header must be lower than or equal to the target in order for the block to be accepted by the network.
This problem can be simplified for explanation purposes: The hash of a block must start with a certain number of zeros. The probability of calculating a hash that starts with many zeros is very low, therefore many attempts must be made. In order to generate a new hash each round, a nonce is incremented. See Proof of work for more information.
The Bitcoin Network Difficulty Metric
The Bitcoin mining network difficulty is the measure of how difficult it is to find a new block compared to the easiest it can ever be. It is recalculated every 2016 blocks to a value such that the previous 2016 blocks would have been generated in exactly two weeks had everyone been mining at this difficulty. This will yield, on average, one block every ten minutes.
As more miners join, the rate of block creation will go up. As the rate of block generation goes up, the difficulty rises to compensate which will push the rate of block creation back down. Any blocks released by malicious miners that do not meet the required difficulty target will simply be rejected by everyone on the network and thus will be worthless.
The Block Reward
When a block is discovered, the discoverer may award themselves a certain number of bitcoins, which is agreed-upon by everyone in the network. Currently this bounty is 25 bitcoins; this value will halve every 210,000 blocks. See Controlled Currency Supply.
Additionally, the miner is awarded the fees paid by users sending transactions. The fee is an incentive for the miner to include the transaction in their block. In the future, as the number of new bitcoins miners are allowed to create in each block dwindles, the fees will make up a much more important percentage of mining income.
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Last Stage of Bitcoin Bubble Yet to Occur, Says Economic Professor
The professor explained that every bubble has the same attributes
According to Panos Mourdoukoutas, Professor and Chair of the Department of Economics at LIU Post in New York who is also contributing to several professional journals and magazines, such as Forbes and The New York Times, when the bitcoin bubble will burst, there will be a final stage, which he calls “mania”. The professor explained that every bubble has the same attributes, which is often confused with healthy bull markets. The pattern starts with investor hype over a popular topic. This theme can be an exotic product or an emerging industry, which promises a major change to the world while making the investors rich during the process, Mourdoukoutas wrote. Comparing the 12-month performance of Bitcoin Investment Trust Shares (GBTC) and SPDR Gold Shares (GLD), we will see a major difference. While GLD increased its value by 3.93 percent in one year, bitcoin surged by 390 percent in the same period of time.
According to the professor, accommodative central banks often finance the bubbles to grow bigger. In addition, market experts can also help prices double or triple by posting their predictions on social media creating buzz for the bubble. This phase of the bubble is called mania. Mourdoukoutas explained that, at this point, the theme reaches a cascade where no investor wants to be left behind. The burst of the bubble can be expected when the early investors have already cashed out, and there are no new investors joining the club, the professor said.
Mourdoukoutas stated that the current run up of bitcoin and other cryptocurrencies has mostly the same as a bubble. He described BTC as an exotic asset, which has great and unique advantages. One of the most important is the attribute of bitcoin, which makes it a better hedge against global uncertainties than conventional hedges, such as gold. In addition, the cryptocurrency is a convenient form of payment, which can be used globally, however, has a limited supply of 21 million, the professor explained. According to the economics professor, there is investor hype surrounding bitcoin. Many investors had become familiar with the cryptocurrency, who can use investment trusts, such as GBTC, to participate in the market holding a good position. In addition, there is an “ultra-low interest rate environment” associated with bitcoin, the professor states.
However, Mourdoukoutas explained that only one thing is missing from bitcoin’s transformation from bubble to mania: “a broad participation beyond the ‘pioneers’ and the ‘early adopters,’ to ‘early majority'”. That’s the point where the demand for bitcoin “reaches a cascade” and the mania starts. At this phase, according to the professor, the key majority of the investors rush to invest in the cryptocurrency for the “promise it holds, rather than the fundamentals it displays.” If investment promises are not met with the end of bubbles and manias, money will be lost faster than it was made, according to Mourdoukoutas.
The 2x9BitMax global peer-to-peer donation network
is a way for you to help others like yourself, and in exchange they will help you. We are a community of people looking for financial backing in the projects that will fulfill us and bring more joy to the world. If you want to experience the success of turning your dreams into reality, then pay attention. We have a system that works for everyone. It's a 2x9BitMax.
Become an active member of our community
Start by signing up and getting your acccount set up. You'll need a bitcoin wallet in order to participate. You can get a free wallet at https://blockchain.info. Once you have your wallet input it into the form on the "Bitcoin Wallet" page. Next, you need to upgrade your account by providing a small donation to the person who referred you, or someone else they referred. Follow these simple steps:
Click the upgrade button
Get the wallet address and the amount forthe donation.
Go to your wallet website and send the amount of bitcoin to the wallet address from step 2.
Get the transaction hash id from the site you sent the bitcoins.
Copy and paste the transaction hash id into the payment verification form on the upgrade page from step 2.
Enter the amount paid, and click submit.
That's it! You just made your first donation!
Your bitcoin donations are verified and confirmed automatically within minutes.
Now you can get referrals of your own and start receiving funds from them just like you just funded your upline. If we all work together we'll all succeed to the highest levels. Find your link on the "My Link" page. Share the banners with your referral link wherever you advertise. Tell your friends! This is an incredible opportunity.
The donation sharing network
When you join, you will get a sponsor. It may be the person who referred you, or it will be someone in their downline – someone else they referred or someone one of their referrals referred. So, you'll make your first donation to your sponsor. That allows you to get referrals and receive donations.
The first 2 people who you sponsor will donate the 1st Grade amount to you.
The 2 people they each sponsor (4 total) will each donate the 2nd Grade amount to you.
The next level down – level 3 – (8 total) will each donate the 3rd Grade amount to you.
Getting the hang of it? This goes on for 8 levels growing each time in total by a factor of 2.
Now, the people you sponsor on your 1st level will donate the 2nd Grade amount to your sponsor.
Then they will donate the 3rd Grade amount to your sponsor's sponsor (3 levels up).
And on up the lineit goes to 9 levels.
Donation Rules:
You must maintain an active membership to receive donations.
You must have made the grade donation within the specified period in order to receive that grade donation from others.
If you do not have the required grade active then donations at that grade which are due to you will pass up to your sponsor or someone else in your upline who is eligible.
Spillover
You will be able to have a maximum of 2 active referrals on your 1st level. Those are called your front line, or direct referrals. You may refer many more people who sign up with your referral link. If you have no active referrals on your front line, then no members you refer will spillover because no one in your downline is eligible yet. So, you may see that you have many more than 2 referrals on your front line if none are active.
Once the members in your front line make their first donations then they can have referrals placed under them. And once you have 2 active members on your front line the next ones who make a donation will spillover before doing so. They will be assigned to someone in your downline as their sponsor. The reset of your referrals will spillover when they register for an account.
Feel free to call me for any questions and/or guidance…
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Some Bitcoin Unlimited supports will see this as a "push" for SegWit adoption.
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