Blockchain explained in plain English, ZDNet

Blockchain explained in plain English

Understanding how blockchain works and identifying myths about its powers are the very first steps to developing blockchain technologies

Movie: Blockchain in sixty seconds

After spending two years researching blockchain and the evolution of advanced ledger technologies, I still find a fine 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 attempting to innovate on the very first generation public blockchains. Most of the best-selling blockchain books restrict themselves to Bitcoin, and extrapolate its apparent magic into a dizzying array of imagined use cases. And I’m continuously astonished 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 bashful to ask what blockchain is indeed all about.

special report

You can this executive guide as a PDF (free registration required).

Many blockchain primers and infographics dive into the cryptography, attempting 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 indeed 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 example 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 display 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 Dual Spend. Because unspoiled electronic money is just data, nothing stops a currency holder from attempting to spend it twice. Blockchain solves the Dual 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 knots to, in effect, vote on the order in which transactions occur. The network’s algorithm ensures that each transaction is unique.

Several thousand knots make up the Bitcoin network. Once a majority of knots reaches consensus that all transactions in the latest past are unique (that is, not dual spent), they are cryptographically sealed into a block. Each fresh 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 knots 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 ordinary majority (51 percent) of knots remains independent. Thus, the integrity of the blockchain requires a excellent many participants.

One of the Bitcoin blockchain’s most innovative aspects is how it incentivizes knots to participate in the intensive consensus-building process by randomly rewarding one knot with a stationary bounty (presently 12.Five BTC) every time a fresh block is lodged and committed to the chain. This accumulation of Bitcoin in exchange for participation is called “mining” and is how fresh currency is added to the total system afloat.

Before attempting to extend blockchain technology to fresh applications it is significant to understand the intent of blockchain’s developers. To learn more about this, common myths about blockchain’s powers, and why blockchain may not useful for much else beside digital currency you can download the report Blockchain Explained in Plain English.

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Blockchain Explained – Part Two

Blockchain Explained – Part two

By Jérôme Kehrli

The blockchain has tremendous potential for fraud prevention and cyber security. With this series of articles, we will explore how the blockchain will switch the cyber risk game.

In my very first article, I have introduced the blockchain concept, presents what it is in the light of its initial deployment in the Bitcoin project, key problems solved by blockchain, and the blockchain operation principle.

With this 2nd part, we dig into the technical aspects to accomplish our thorough introduction to blockchain. Concrete business applications and evolutions will be discussed in an article to go after in the coming weeks.

1. Technical aspects of a blockchain

In the Bitcoin system, a blockchain is a transaction database collective by all knots participating in a system based on the Bitcoin protocol.

A total copy of a currency’s block chain contains every transaction ever executed in the currency. With this information, one can find out how much value belonged to each address at any point in history.

1.1 The blockchain data structure

The blockchain data structure is an ordered, back-linked list of blocks of transactions. Every block contains a hash of the previous block. This has the effect of creating a chain of blocks from the genesis block to the current block. Each block is assured to come after the previous block chronologically because the previous block’s hash would otherwise not be known. Each block is also computationally impractical to modify once it has been in the chain for a while because every block after it would also have to be regenerated.

Transaction data is permanently recorded in these blocks as if they were files. These blocks can be thought of as the individual pages of a city recorder’s recordbook (where switches to title to real estate are recorded) or a stock transaction ledger. Over time, blocks are organized into a linear sequence, also known as a blockchain.

Fresh transactions are permanently being processed by miners into fresh blocks, which are then added to the end of the chain and can never be switched or eliminated once accepted by the network.

1.Two A very first view on a block structure

Each block contains, among other things, a record of some or all latest transactions, as well as a reference to the block that came instantly before it. It also contains an response to a difficult-to-solve mathematical puzzle known as the hash or proof of work—more on that later!

1.Trio A miner’s life

In the Bitcoin world, transactions are broadcast to the network by the sender, and all peers attempting to solve blocks collect the transaction records and add them to the block they are working to solve. This is called mining.

Mining is the process of adding transaction records to Bitcoin’s public ledger of past transactions. This ledger of past transactions is called the blockchain because, simply, it is a chain of blocks. The blockchain serves to confirm to the rest of the network that the transactions have taken place. Bitcoin knots use the block chain to distinguish legitimate Bitcoin transactions from attempts to re-spend bitcoins that have already been spent elsewhere.

Mining is intentionally designed to be resource-intensive and difficult so that the number of blocks found each day by miners remains sustained. Individual blocks must contain a proof-of-work to be considered valid. This proof of work is verified by other Bitcoin knots each time they receive a block. Bitcoin uses the hashcash proof-of-work function.

The primary purpose of mining is to permit Bitcoin knots to reach a secure, tamper-resistant consensus.

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.

Let’s simplify this problem for explanation purposes: The hash of a block must commence 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 fresh hash each round, a nonce is incremented.

Miners implement the following (simplified) algorithm:

1.Four Difficulty adjustment

The difficulty is the measure of how difficult it is to find a fresh block compared to the easiest it can ever be. It is recalculated every two thousand sixteen blocks to a value such that the previous two thousand sixteen 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 so that the rate of block creation is shoved 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.

Again, the difficulty of the mathematical problem is automatically adjusted by the network, such that it targets a aim of solving an average of six blocks per hour. The network comes to a consensus and automatically increases (or decreases) the difficulty of generating blocks.

1.Five Miner retribution (and Bitcoin creation)

Mining is also the mechanism used to introduce bitcoins into the system. Miners are paid transaction fees as well as a subsidy of freshly created coins. This both serves the purpose of disseminating fresh coins in a decentralized manner as well as motivating people to provide security for the system. In other words, the subsidy provides incentive for miners to put their computation power at the disposition of the blockchain network.

Because there is a prize of brand fresh bitcoins for solving each block, every block also contains a record of which Bitcoin addresses or scripts are entitled to receive the prize. This record is known as a generation transaction (or a coinbase transaction) and is always the very first transaction appearing in every block.

The number of bitcoins generated per block starts at fifty and is halved every 210,000 blocks (about four years).

In addition to the generation transaction, miners are motivated to include transactions in their blocks because of fastened transaction fees. A modest fee is received for every transaction in the freshly mined block.

1.6 Bitcoin supply thresholds

In the specific case of the Bitcoin, Satoshi had the idea of limiting the bitcoin supply early on. Of course, there is an significant reason behind this.

In a centralized economy, currency is issued by a central bank at a rate that is supposed to match the rate of goodsexchanged, so that these goods can be traded with stable prices. The monetary base is managed by a central bank. In the United States, the Fed increases the monetary base by issuing currency, enhancing the amount banks have on reserve, and, more recently, printing money electronically in a process called Quantitative Easing.

In a fully decentralized monetary system, there is no central authority that regulates the monetary base. Instead, currency is created by the knots of a peer-to-peer network. The Bitcoin generation algorithm defines, in advance, how currency will be created and at what rate. Any currency that is generated by a malicious user that does not go after the rules will be rejected by the network and thus is worthless.

Bitcoins are created each time a user detects a fresh block. As a reminder, the rate of block creation is adjusted every two thousand sixteen blocks to aim for a constant two week adjustment period (equivalent to six per hour.) The number of bitcoins generated per block is set to decrease geometrically, with a 50% reduction every 210,000 blocks, or approximately four years. As a result, the number of bitcoins in existence is not expected to exceed twenty one million.

But why twenty one million? Some speculate that twenty one million matches a 4-year prize halving schedule; or that the ultimate total number of Satoshis that will be mined is close to the maximum capacity of a 64-bit floating point number. Satoshi has never truly justified or explained many of these constants.

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BLOCKCHAIN BITCOIN WALLET REVIEW AND ANALYSIS, Dark Web News

BLOCKCHAIN BITCOIN WALLET REVIEW AND ANALYSIS

With the rise of bitcoin, we see that Blockchain is among the most used and recommended bitcoin platforms.

Therefore, the company ought to take measures to ensure that the security of their systems is top-notch and also, the reputation grows with time to attract more clientele.

The platform’s user base is cracked up into two types: there are those who use the website to transact, and there are those who choose to use mobile apps to transact.

Whichever the case, it depends on whether or not the platform is convenient to the user.

If you’ve created an account on the platform, your very first step should be to secure your account by all available means.Blockchain has taken fairly some measures to ensure that users’ funds are protected.

Apart from providing the user with a diversity of ways to protect their coins, it is up to them to ensure they make good use of the available methods.

Regardless, some users will avoid taking the necessary steps to beef up the security of their account.

In a world where cybercrime is rampant and attackers are ready to use any possible means to take control of significant documents and funds, it is crucial that the security of your system is solid.

In this case, the security measure taken by Blockchain must be enhanced by the account holder. So, there are three levels of security.

Level one is the most basic, and it is meant to prevent you from losing access to your funds.

At this level, the very first thing is to verify your email which will be used in the login process.

2nd, get a backup phrase in case you need to recover your bitcoins and lastly, create a password hint that you can reminisce in case you leave behind your password and need to access your account.

The backup phrase comprises of twelve letters, which is displayed on the screen. You can either write the words down, take a picture or print it.

Because it is essential in accessing your funds in the event of suspicious activities that might make your coins inaccessible.

To confirm this phrase, you will then come in a few words in the next page where you are to prove the phrase according to the numbers displayed

The 2nd level of security involves the prevention of non-authorized logins to your wallet.

With the rise of bitcoin, we see that Blockchain is among the most used and recommended bitcoin platforms.

In this case, one has to inject their mobile number, which will be used to send a verification code in the event any suspicious activities are ongoing.

So if someone is attempting to access your funds and they come to this step, the mission will fail. Also, the 2nd part of this is the two-factor authentication (2FA) is solely meant to verify the authenticity of the user by providing details that only they have in their possession.

The third level of security involves hardening your wallet. According to the site, they claim this process is to prevent all the IP addresses that are from Tor network from accessing your wallet.

If one is a Blockchain user, all these can be found on the top-left part of the web page. It is the third icon titled “Security Center.” It is very recommended that these not to be overlooked irrespective of the user’s balance or their work on the internet.

When one registers on the platform, they are assigned a unique wallet ID that comprises of both numbers and letters, which are separated by a hyphen after a specific number of characters.

So, this is more of like the username that you will use when you are logging into the platform.

Because one cannot use their email address, name or phone number to access their coins apart from the wallet ID.

After they inject the wallet ID, it is when they inject the password.

When logging into your account, you can also just search for the login link and inject the password, then wait for a confirmation link.

With this in mind, it makes it virtually unlikely for someone to guess the email you are using for your bitcoin wallet because there is no evidence whatsoever.

Now when one is using the mobile app, the process of synchronizing information with the wallet involves creating a pin and scanning a code at the setting section.

Without doing this, you cannot access your account using your phone. Therefore all due steps must go after.

Upon following the above processes, it will be lighter to access your wallet from your phone which is much more convenient than logging into the site using a desktop or laptop since it is just a matter of putting in your pin.

When one logs into their account using a desktop, they will have a confirmation link sent to their email.

And if you have no access to the email, then it is not possible to access the wallet. Therefore, this can be considered an extra layer of security in the event someone has access to your password for one reason or another.

It is never advisable for one to use the same password for email and other accounts, as it makes it effortless for one to access your accounts and possibly even switch emails in the event they are after you.

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Blockchain Atomic Ledger experiment records twenty million timestamped stock trades

Blockchain ‘Atomic Ledger’ experiment records twenty million timestamped stock trades

A group of researchers from the National Physical Laboratory, the Toronto Stock Exchange (TMX), and UK-based consultancy Z/Yen have brought atomic clock timestamp precision to stock market trading over a blockchain-style database.

The “Atomic Ledger” project recorded over twenty million transactions, with Co-ordinated Universal Time (UTC) generated from atomic clocks, from three hours of trading to the ChainZy distributed ledger system. The results will be analysed by Strathclyde’s Centre of Financial Regulation and Innovation.

Distributed ledgers enable financial market counterparties to store financial assets in a collective ledger. The team created a timestamping engine using Z/Yen’s woven-broadcasting distributed ledger architecture to test the recording of high-frequency trading transactions.

Existing financial market “clock synchronisation and timestamp requirements” mandate that both trading venues and market participants synchronise their clocks to Co-ordinated Universal Time (UTC). That said, different processing speeds, server capabilities and execution code can result in digitally programmed orders arriving at a market place at different times.

The Markets in Financial Instruments Directive (MiFID II) EU legislation, which comes into force on three January 2018, mandates more accurate timestamping traceable to UTC to promote improved transparency and better deals for customers. Current regulatory guidance suggests that trades need to be recorded in microseconds (a millionth of a 2nd).

The test used nanosecond resolution high-frequency data from the TMX located in Interxions’s London Data Centre with support from cloud provider Hyperneph. The researchers timestamped digital orders of varying programing length written to execute a series of buy and sell instructions. These were either logged with NPLTime, using the atomic clocks at NPL, or logged with UTC plus a randomly generated time lag. The orders were then sent to a central clearinghouse also operating on UTC and written onto a ChainZy distributed ledger.

The experiment will analyse the importance of timing in how orders are “cleared”, and provide insights into the need for precision timestamping in financial transactions, preferably at the microsecond level. The results are expected to provide a benchmark to incorporate the concept of timing into financial asset price discovery, said a statement

The application of precise, traceable and certified timestamps, as applied to the knots of a distributed ledger system, will enable a trusted treatment to the transactions as having existed at that point in time, across all platforms, according to Leon Lobo, Strategic Business Development for Time and Quantum, National Physical Laboratory.

Professor Michael Mainelli, executive chairman, Z/Yen Group, said: “We have been working with distributed ledger technology since one thousand nine hundred ninety five and are delighted that our ChainZy architecture has been able to support these high-speed applications, with a capacity for some twenty five billion transactions per day on this test equipment, a trillion transactions per day is in view commercially. Using NPL’s atomic clocks is a major step forward in adding authority to distributed ledgers for time-stamping.”

Daniel Broby, director of the Centre for Financial Regulation and Innovation, Strathclyde Business School, said: “The role of distributed ledgers and precision timing is becoming ever more relevant as Fintech companies adopt blockchain as a financial transmission contraption. This is an titillating trial that will have real world policy influence.”

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Blockchain Archives – Pinguin App

Tag: Blockchain

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Come out for an awesome discussion about how to grow your mobile business and meet some cool people involved in apps. Register on our official registration page.

Marketing & PR in the Blockchain Industry

Kelley Weaver, Founder & CEO of Melrose PR will be presenting at the next Ethereum Meetup about how to market your company and yourself in the blockchain industry. Agenda

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Marketing & PR in the Blockchain Industry

Wednesday, Aug 23, 2017, 7:00 PM

Location details are available to members only.

40 Ethereals Attending

Kelley Weaver, Founder & CEO of Melrose PR will be presenting at the next Ethereum Meetup about how to market your company and yourself in the blockchain industry. Agenda – Melrose PR Background – Why Marketing & Public Relations for blockchain companies? – Melrose PR’s top four recommended marketing strategies – How to craft a pitch – Q&A Join us to …

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Blockchain: Any practices with NoSQL? Any suggestions for

Blockchain: Any practices with NoSQL? Any suggestions for alternatives?

We are working on a concept of blockchain an discuss about the set up technical architecture and choose stack. Since blockchain is a total decentralized solution we look for NoSQL(i.e Cassandra) or other implements, methods etc. We are fresh in the topic. Appreciate suggestions and insights. Thanks a lot!

Topics

All Answers (7)

I am using HBase on HIve so that I can take advantage of Hive Query language (HQL).

Note: On hadoop I have configured Hive on top of which HBase sits thus I can also perform MapReduce on my data.

Cassandra & Hbase are at the top of Blockchain others include accumulo http://accumulo.apache.org/ and Hypertable.

I agree with Devang Swami.

But why not also look to MongoDB?

I suggest to embark with investigation of suitability of different kinds of NoSQL solutions, such as:

All of them have their pros and cons.

Block – chain refers to those database systems which store each and every record and doesn’t delete them until a process called compaction is called. This way databases would store the history of all records.

For such applications, Key-value, DOcument-store, Graph and multi-model databases are not a candidate solution.

However, most databases under Column-oriented (aka wide-column store) are block-chains.

Dear friends, thanks for all your answers!

truly enlighten all of them 🙂

In general I believe the reason and value using blockchain is to have the posibility access the data + info in real time and in the latest version (independed of the format they have).

Lets say we have a heterogenous database system in a permissioned / private environment and we wannt apply blockchain.

It is possible thats fact.

The trick is to find the right infrastructure and define the context of sharing and accessibility of data + information.

The highest level and very first question comes in mind is:

– Do i need a platform or specific environement?

And the reaction is yes you need. (Please correct me if i am wrong 🙂 )

2nd question raises is:

– Are there any available platforms for blockchain?

Yes there are. But at this point iit s significant to understand that blockchain can be in the form of :

Depence on what one wants to do there are a bunch of the above categories to chooce.

For our case, – described above, permissioned + private environment- lets say we determine go for platform, following options could be applicable

  • Non-bitcoin currency + non-bitcoin blockchain: Ethereum, BitShares, Truthcoin, Litecoin, PayCoin.
  • Non-blockchain consensus: Ripple, Stellar, NXT, Hyperledger, Tendermint, Pebble, Open Transactions. These platforms implement decentralized consensus and decentralized trust without a blockchain construct as its nucleus.
  • Blockchain-neutral wise services: Eris Industries, PeerNova, Codius, SmartContract, SAE, Tezos, Tillit. This category will most likely need to be divided further, as it is still developing, but it includes a mix of decentralized platforms and interesting brainy contract services.

After choosing the right platform that fits on the business needs, other questions like programming language, implements, methods, abilities, people etc. raise.

Ms/Mrs Dimitra, very first block chain are builted on policy of availability & partition tolerance. Hence Transactions are not available as a build-in feature. This makes it necessary for designers & developers to design and implement a 2PC or 3PC for transactions. Other option include designing a database design that eliminates need for transaction which is usually difficult to achieve for banking systems.

Another aspect for block-chains is that they have been designed for Write-intensive tasks, and may be configured for read-write balanced workloads, if at all development team has that expertise.

So, I guess, very first task is to look for application workload type: read-intensive, write-intensive, or balanced workload. Once that is done, and u find block chain as a candidate solution you may leap to throughput requirements which would form background for h/w selection. Most block-chains have differences only in features, the concept remains same. Features may include geographic indexing, full-text search support, secondary indexes and others.

Albeit this write-up is fairly unconnected but is will bring more ideas, I guess.

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Blockchain: five Key Concepts, Fintech Finance

Blockchain: five Key Concepts

By Dinis Guarda

Bockchain technology seems to be the buzzword of the day. Governments, entrepreneurs business people and banks, all have been paying attention and even allocating resources and investment to better understand and develop what sounds like the data structural holy grail of the future.

Blockchain promises to produce a shift in the current computing paradigm because it has the potential to become the infrastructure catalyst for the creation of decentralised applications.Blockchain can be seen as the next-step evolution from distributed computing architectural constructs, to a global database of data and interfaces, integrating all kinds of machines and sources of data.

But what is Blochain after all? In this introductory guide we review five key concepts that explain what blockchain is and why it is so revolutionary.

Five Key Concepts

In order to understand well blockchain one needs to grip the following five key concepts, how they interrelate to one another, and how they might provide us with a fresh computing paradigm.

Blockchain- five key concepts Infographic by Intelligenthq

Those five concepts are:

  • Blockchain
  • Decentralized databases applications consensus
  • Brainy contracts
  • Proof of work/stake.
  • Trusted advanced computing

As we all know blockchain technology began with the bitcoin. Bitcoin is a a peer-to-peer electronic payments system, also known as a cryptocurrency, that permits people to make instant, anonymous transactions online.

The unique characteristic of bitcoin is that it records every single transaction made on its network in a public record. This is known as the “blockchain”. A fresh blockchain is created every ten minutes. That blockchain is afterwards collective via the network. The chain is permanently growing, because each ended “blocks” is added to the public ledger. There are an infinite number of blocks on the blockchain, because as soon as one block gets finished, another is automatically generated. Each block tho’, contains a “hash”, which is a unique fingerprint of the previous code.

Two. Decentralised Databases Applications Consensus

Blockchain’s potential for the development of decentralised database applications consensus is based on the unique characteristics of the technology, as outlined previously.

What is used to secure the authentication of the source of the transaction is cryptography, through the hash codes. There is never a duplicate recording of the same transaction. As such, the need for a central intermediary is not there any more. This cracks with the paradigm of centralised consensus ( when one central database is used to rule transaction validity). As John Reed, former chairman and CEO of Citibank acknowledges:

“A decentralised scheme, on which the bitcoin protocol is based, transfers authority and trust to a decentralized virtual network and enables its knots to continuously and sequentially record transactions on a public “block,” creating a unique “chain”: this is the inception and keywords genesis for blockchain.”

Another way to put it is to think of blockchain as a meta database where you store any data semi-publicly in a linear container space (the block). Anyone can verify that you’ve placed that information because the container has a given signature on it, but only the person that created that bloc or a program can unlock what’s inwards the container because only that person holds the private keys to that data, securely. So, the blockchain is sort of a database, except that part of the information stored — its “header” — is available to the public. Here the public, of course, means a computer scientist or software engineer, knowing how to use it and how to access its APIs and different flows.

Distributed ledger taxonomy Infographic by Intelligenthq

William Mougayar, who wrote the book “The Business Blockchain” explains this with a superb metaphor for Blockchain, which is how it is based on one’ s own home address. One can publish hers or his home address publicly, but that doesn’t give any information about what the home looks like on the inwards. You’ll need your private key to come in your private home, and since you have claimed that address as yours, no one else can claim the same address as theirs.

The value of decentralised databases applications consensus is enormous and it promises to disrupt the current ecosystem that tends to the monopoly. Companies like eBay, Facebook and Uber are very valuable because they benefit tremendously from the network effects that come from keeping all user information centralised in private silos and how they act as middle studs taking a cut of all the transactions.

Decentralised protocols on top of the blockchain have the potential to undo every single part of the stacks that make these services valuable to consumers and investors. They can do this by, for example, creating common, decentralised data sets to which any one can buttplug into, and enabling peer-to-peer transactions powered by bitcoin and other cryptocurrencies.

A number of promising companies have already begun working on the protocols that will disrupt the business models of the companies above. One example is Lazooz, a protocol for real-time rail sharing and another is OpenBazaar, a protocol for free, decentralised peer-to-peer marketplaces.

Infographic by Intelligenthq

A scaled blockchain is something that starts proving a fresh global (somehow still science fiction) ecosystem. For this the clever contracts are the building blocks for decentralized applications.

Brainy contracts are contracts whose terms are recorded in a computer language instead of legal language. Wise contracts can be automatically executed by a computing system, such as a suitable distributed ledger system. The potential benefits of brainy contracts include low contracting, enforcement, and compliance costs; consequently it becomes economically viable to form contracts over numerous low-value transactions.

So the question behind Bitcoin and Blockchain is why depend on a central authority when two (or more) parties can agree inbetween themselves, and when they can bake the terms and implications of their agreement programmatically and conditionally, with automatic money releases when fulfilling services in a sequential manner, or incur in penalties if not fulfilled?

Clever contracts Infographic by Intelligenthq

Proof of stake (PoS) is a method by which a cryptocurrency blockchain network aims to achieve distributed consensus. While the proof of work (PoW) method asks users to repeatedly run hashing algorithms or other client puzzles to validate electronic transactions, proof-of-stake asks users to prove ownership of a certain amount of currency (their “stake” in the currency). Peercoin was the very first cryptocurrency to launch using proof-of-Stake. With Proof of Work, the probability of mining a block depends on the work done by the miner (e.g. CPU/GPU cycles spent checking hashes). With Proof of Stake, the resource that’s compared is the amount of Bitcoin a miner holds – someone holding 1% of the Bitcoin can mine 1% of the “Proof of Stake blocks”. According to Bitcoin wiki Proof of Stake is one way of switching the miner’s incentives in favour of higher network security.

Five. Trusted advanced computing

The integration of all the different concepts outlined here, namely, the blockchain, decentralised consensus and clever contracts, enables the spreading of the resources and transactions laterally, in a plane, peer to peer manner, and in doing that,they are enabling computers to trust one another at a deep level.

If institutions and central organizations are necessary nowadays as trusted authorities, in the future, a certain number of their central functions can be codified via clever contracts that are governed by decentralised consensus on a blockchain.

Namely, due to the blockchain’s role as the unequivocal validator of transactions, each peer can proceed and trust one another, because the rules of trust, compliance, authority, governance, contracts, law, and agreements live on top of the technology.

If you prompt forward to a not-too-distant future, wise contracts and wise property will be created, dispensed or executed routinely inbetween consenting parties, without either of them even knowing that blockchain technology was the trusted intermediary. “Trusted computing” on the Web seems to be a key tenet of the fresh crypto-driven paradigm.

Related video:

http://www.youtube.com/watch?v=ln2FmlRUrs8

Blockchain one hundred one for Lawyers Part one – Law Technology Today

Blockchain one hundred one for Lawyers Part 1

e-Filing and Legal Document Marketplace Sites

September 7, 2017

Artificial Intelligence Can Reduce 99% of Review Hours

September 6, 2017

Why Lawyers Shouldn’t Put a Fork in Bitcoin

September 1, 2017

“The very first generation of the digital revolution brought us the Internet of information. The 2nd generation — powered by blockchain technology — is bringing us the Internet of value: a fresh platform to reshape the world of business and convert the old order of human affairs for the better.

Blockchain is a vast, global distributed ledger or database running on millions of devices and open to anyone, where not just information but anything of value money, but also titles, deeds, identities, even votes can be moved, stored and managed securely and privately. Trust is established through mass collaboration and clever code rather than by powerful intermediaries like governments and banks.”

Dan Tapscott, author of Blockchain Revolution: How the Technology Behind Bitcoin Is Switching Money, Business and the World.

Dear fellow lawyers, there is yet another tech term we should become familiar with: blockchain. I know, it’s becoming staggering, all the technical terms legal professionals must add to our lexicon.

But if you want to sustain, or dare I say thrive, as a 21st century lawyer, you need to know at least three things about blockchain:

  1. What is it?
  2. How is it impacting your clients?
  3. How it may influence the legal profession?

What Is Blockchain

If you’ve heard of blockchain it’s most likely been in the context of the digital currency bitcoin — blockchain is the technology upon which bitcoin transactions are built. In essence, blockchain is a distributed ledger (or register) made up of digitally recorded and encrypted (cryptographically hashed) data in the form of blocks, which when connected via the distributed network of computers storing the blocks, form the blockchain.

Being distributed across a network of computers, the ledger is not under any single control and thus operates by consensus. This is fairly different from a traditional transaction ledger — one that is typically maintained by one entity (e.g. a bank) and audited by another entity (e.g. a trusted intermediary). In a blockchain, all parties have a copy of the ledger and can confirm in real time the status of the transaction.

What Lawyers Need To Understand

blockchain creates a real-time digital record verifying that a transaction containing certain data happened at a certain time and in a certain order.

Further, integrity of the transaction can be trusted due to two of blockchain’s fundamental characteristics: it is immutable and very hack-resistant. This translates into a very high level of data integrity — once data comes in the blockchain, it is resistant to alteration, hacking, or deletion. Let’s explore these two characteristics.

Blockchain Is Immutable

As each block of data is created in the blockchain, the block is time-stamped. A block of data in the chain can be added to the chain only after the time stamp is applied and verified by the distributed computers across the chain.

The practical effect of time-stamping is that a block of data can never be switched retrospectively. This means that each block in the chain creates an accurate, time-stamped record as to that block – when it was added, and in what order it was added. If an attempt is made to switch any data in a block already added to the chain, it is rejected by the network of computers connecting the blocks in the chain. The network won’t approve switches to data in a block that has already been verified as to content and timestamp, as this would have the effect of violating the chain. Thus, the blockchain is immutable.

Blockchain Is Very Hack-Resistant

To date, a blockchain itself has yet to be hacked. Recall that blockchain is the underlying technology. Systems built on top of blockchain (such as cryptocurrency exchanges) have been hacked. But the blockchain itself has not.

Understanding what makes blockchain resistant to hacking is significant from a legal perspective, so bear with me as we delve into just a bit more of the technical minutiae.

Recall that blockchain is a distributed ledger, meaning that the blocks of data comprising the ledger are spread across a network of computers that could be located anywhere in the world. Each computer (referred to as a knot) holds all or part of the entire blockchain, and applies the particular blockchain’s computational algorithm to verify a block and permit it to be added to the chain. This is happening at the same time across the network, making it (theoretically, at least) next to unlikely for hackers to attack the chain, since each example of the data is being held in many places all at one time, and a block may be verified and added to the chain by any number of knots.

Blockchain also is hack-resistant due to how the data in the chain is stored and transferred. Data added to the chain is cryptographically “hashed,” meaning that a brief digest of the data is created. It is this hash of data that is stored in a block and transferred in encrypted form via the blockchain — not the actual, underlying data itself. As a digest, the hashed data can’t be decrypted to reproduce the utter underlying document or transaction data. However, within the chain, the hash can verify a copy of the underlying document or transaction existing outside of the blockchain.

What does this mean, for practical purposes? Very first, if a hack to a block in the chain is attempted, it doesn’t expose the underlying data within the document or transaction because the hashed data is simply a digest and not a accomplish record of the data. Thus, the underlying data is not exposed to potential hacking.

2nd, because the transaction ledger is stored across a distributed network of computers, redundancy is created. The underlying, hashed data is stored at the same time across numerous machines, making it infinitely more difficult to hack.

These characteristics help ensure both the privacy and authenticity of the underlying data within the blockchain, two properties that are very relevant to legal transactions.

CLICK TO Increase

And it’s not just data that can be transferred via blockchain. Cryptocurrencies use blockchain to transfer economic value. How about transferring energy? Music? Real estate titles? It’s either happening, or about to. Time to discuss why lawyers should care about blockchain.

How Will Blockchain Influence Your Clients

It’s disrupting, or has the potential to disrupt, a number of industries that rely powerfully on lawyers’ counsel and advice. And this disruption will create opportunities for us to help, as industries wrangle with how disruption impacts everything from operations to regulatory and legal structures. I predict these disruptions will create niche practice areas for those lawyers who choose to understand blockchain (more on that in Part II of this series).

I suggest but a few examples of blockchain’s current and potential influence on business and industry:

Finance

One word: fintech. The financial industry is facing immense disruption thanks to fintech, which is the application of technological innovation to traditional activities of the financial industry – ranging from banking to investing to payment processing. Think Bitcoin, PayPal, Robinhood, Prosper, LearnVest — just to name but a very few examples.

There are dozens of blockchain-based fintech companies suggesting a range of products and services. A few examples of how blockchain in fintech is disrupting the status quo in finance: 21.co wants to build the machine-payable web with bitcoin. Skuchain is building a supply-chain network on a blockchain structure, to govern all phases of trade transactions. T Zero’s tagline is “the trade is the settlement” — it seeks to take the (considerable) friction out of lodging securities transactions using blockchain.

Blockchain is a natural fit for the financial services industry for evident reasons: it self-verifies and authenticates transactions, and it’s hack-resistant. Bitcoin and other cryptocurrencies are among the very first to use blockchain to support friction-less financial transactions, but they are far from the last.

Energy

Highly-regulated, the energy industry is being disrupted by startups using blockchain technology such as Transactive Grid, which created a peer-to-peer market for the buying and selling of energy. Other blockchain-based startups in the energy space include Grid Singularity and SolarCoin.

These disruptors will present a challenge for the current regulatory structure. And lawyers who understand blockchain will have the unique chance to form the future of the energy industry.

Music

In the near future, all transactions involving the creation and sale of music may very well take place on a blockchain structure. Consider Resonate, which uses blockchain to create a fresh kind of music streaming platform aiming to give artists greater control and a greater share of profit. Or Ujo Music, which seeks to build an “open music ecosystem” on the Ethereum blockchain. Pledge Music is a global direct-to-fan platform that permits artists to fully bypasses traditional “friction” in the music industry (record labels, publishers, distributors).

By its very nature, blockchain is uniquely suited to address the piracy, control and monetization issues of music that have become rampant in the digital age. To lawyers indicating traditional players in the music industry: your clients need you to understand how startups like Resonate, Ujo Music, and Pledge Music are switching the rules for how music is protected and monetized.

Real Estate

Real estate transactions are ripe for improvement: the mountains of paperwork, lack of transparency during and after transactions, and opportunities for error in public records – all can be addressed vis a vis blockchain. Inject Ubitquity, which is creating a blockchain-based platform to securely record, track, and transfer deeds, to help “real estate, title, and mortgage companies benefit from a clean record of ownership, reducing future title search time, enhanced confidence, and technology.”

The Midasium Blockchain proposes to be the “blockchain of real estate,” with the objective of creating “a global collective distributed ledger system for securely executing and recording real estate financial transactions over the internet.”

As Midasium’s site notes, blockchain’s characteristics align fairly well with the requirements of real estate transactions: durability, transparency, immutability, longevity, and reliability and availability of data. This likely is why the country of Sweden is considering the placement of its entire land registry system on a blockchain.

If you do any legal work for clients involved in any aspect of real estate transactions, you need to understand that things are about to switch radically thanks to blockchain.

Healthcare

One clear application of blockchain is its use to manage patient medical data (electronic medical records or EMRs) — for one example see MedRec. Gem, Another blockchain startup, has created Gem Health, which seeks to apply blockchain to a host of healthcare use cases, including EMRs, wellness apps, global patient ID software, and medical inventory management.

The healthcare technology company Pokitdot has created DocChain, the company’s implementation of blockchain for healthcare data. DocChain creates a single and secure network that connects all the stakeholders in a patient’s care — from EMRs, to their medical device sensors, to the pharmacy packing their prescriptions.

Hashed Health, a Nashville-based startup, is creating a consortium of healthcare companies to leverage blockchain technology for the purpose of advancing innovation industry-wide. Hashed Health’s website identifies a number of reasons why blockchain is an ideal technological medium for the healthcare industry: blockchain reduces costs, increases speed, increases security, reduces fraud, and reduces risk. (Recall these five benefits – they are very relevant to blockchain’s influence on the legal profession, which I’ll cover in Part II of this series.)

These benefits clearly illustrate the disruptive influence that blockchain can have on the heretofore rigorously siloed maintenance and transfer of medical data. It’s an industry that has profited mightily from the friction created by middlemen and regulations. The benefits of blockchain clearly illustrate why lawyers serving the healthcare industry owe a duty to their clients to understand this technology and its import for the healthcare industry.

How May Blockchain Influence The Legal Services Industry?

I’m saving the legal industry, and how it will be disrupted by blockchain, for Part II of the blockchain for Lawyers one hundred one series. The future of blockchain and law is at once imminently disruptive and ripe for chance. Stay tuned.

Blockchain one hundred one for Lawyers Part one – Law Technology Today

Blockchain one hundred one for Lawyers Part 1

e-Filing and Legal Document Marketplace Sites

September 7, 2017

Artificial Intelligence Can Reduce 99% of Review Hours

September 6, 2017

Why Lawyers Shouldn’t Put a Fork in Bitcoin

September 1, 2017

“The very first generation of the digital revolution brought us the Internet of information. The 2nd generation — powered by blockchain technology — is bringing us the Internet of value: a fresh platform to reshape the world of business and convert the old order of human affairs for the better.

Blockchain is a vast, global distributed ledger or database running on millions of devices and open to anyone, where not just information but anything of value money, but also titles, deeds, identities, even votes can be moved, stored and managed securely and privately. Trust is established through mass collaboration and clever code rather than by powerful intermediaries like governments and banks.”

Dan Tapscott, author of Blockchain Revolution: How the Technology Behind Bitcoin Is Switching Money, Business and the World.

Dear fellow lawyers, there is yet another tech term we should become familiar with: blockchain. I know, it’s becoming breathtaking, all the technical terms legal professionals must add to our lexicon.

But if you want to sustain, or dare I say thrive, as a 21st century lawyer, you need to know at least three things about blockchain:

  1. What is it?
  2. How is it impacting your clients?
  3. How it may influence the legal profession?

What Is Blockchain

If you’ve heard of blockchain it’s most likely been in the context of the digital currency bitcoin — blockchain is the technology upon which bitcoin transactions are built. In essence, blockchain is a distributed ledger (or register) made up of digitally recorded and encrypted (cryptographically hashed) data in the form of blocks, which when connected via the distributed network of computers storing the blocks, form the blockchain.

Being distributed across a network of computers, the ledger is not under any single control and thus operates by consensus. This is fairly different from a traditional transaction ledger — one that is typically maintained by one entity (e.g. a bank) and audited by another entity (e.g. a trusted intermediary). In a blockchain, all parties have a copy of the ledger and can confirm in real time the status of the transaction.

What Lawyers Need To Understand

blockchain creates a real-time digital record verifying that a transaction containing certain data happened at a certain time and in a certain order.

Further, integrity of the transaction can be trusted due to two of blockchain’s fundamental characteristics: it is immutable and very hack-resistant. This translates into a very high level of data integrity — once data comes in the blockchain, it is resistant to alteration, hacking, or deletion. Let’s explore these two characteristics.

Blockchain Is Immutable

As each block of data is created in the blockchain, the block is time-stamped. A block of data in the chain can be added to the chain only after the time stamp is applied and verified by the distributed computers across the chain.

The practical effect of time-stamping is that a block of data can never be switched retrospectively. This means that each block in the chain creates an accurate, time-stamped record as to that block – when it was added, and in what order it was added. If an attempt is made to switch any data in a block already added to the chain, it is rejected by the network of computers connecting the blocks in the chain. The network won’t approve switches to data in a block that has already been verified as to content and timestamp, as this would have the effect of violating the chain. Thus, the blockchain is immutable.

Blockchain Is Very Hack-Resistant

To date, a blockchain itself has yet to be hacked. Recall that blockchain is the underlying technology. Systems built on top of blockchain (such as cryptocurrency exchanges) have been hacked. But the blockchain itself has not.

Understanding what makes blockchain resistant to hacking is significant from a legal perspective, so bear with me as we delve into just a bit more of the technical minutiae.

Recall that blockchain is a distributed ledger, meaning that the blocks of data comprising the ledger are spread across a network of computers that could be located anywhere in the world. Each computer (referred to as a knot) holds all or part of the entire blockchain, and applies the particular blockchain’s computational algorithm to verify a block and permit it to be added to the chain. This is happening at the same time across the network, making it (theoretically, at least) next to unlikely for hackers to attack the chain, since each example of the data is being held in many places all at one time, and a block may be verified and added to the chain by any number of knots.

Blockchain also is hack-resistant due to how the data in the chain is stored and transferred. Data added to the chain is cryptographically “hashed,” meaning that a brief digest of the data is created. It is this hash of data that is stored in a block and transferred in encrypted form via the blockchain — not the actual, underlying data itself. As a digest, the hashed data can’t be decrypted to reproduce the total underlying document or transaction data. However, within the chain, the hash can verify a copy of the underlying document or transaction existing outside of the blockchain.

What does this mean, for practical purposes? Very first, if a hack to a block in the chain is attempted, it doesn’t expose the underlying data within the document or transaction because the hashed data is simply a digest and not a accomplish record of the data. Thus, the underlying data is not exposed to potential hacking.

2nd, because the transaction ledger is stored across a distributed network of computers, redundancy is created. The underlying, hashed data is stored at the same time across numerous machines, making it infinitely more difficult to hack.

These characteristics help ensure both the privacy and authenticity of the underlying data within the blockchain, two properties that are very relevant to legal transactions.

CLICK TO Enhance

And it’s not just data that can be transferred via blockchain. Cryptocurrencies use blockchain to transfer economic value. How about transferring energy? Music? Real estate titles? It’s either happening, or about to. Time to discuss why lawyers should care about blockchain.

How Will Blockchain Influence Your Clients

It’s disrupting, or has the potential to disrupt, a number of industries that rely strongly on lawyers’ counsel and advice. And this disruption will create opportunities for us to help, as industries wrangle with how disruption impacts everything from operations to regulatory and legal structures. I predict these disruptions will create niche practice areas for those lawyers who choose to understand blockchain (more on that in Part II of this series).

I suggest but a few examples of blockchain’s current and potential influence on business and industry:

Finance

One word: fintech. The financial industry is facing immense disruption thanks to fintech, which is the application of technological innovation to traditional activities of the financial industry – ranging from banking to investing to payment processing. Think Bitcoin, PayPal, Robinhood, Prosper, LearnVest — just to name but a very few examples.

There are dozens of blockchain-based fintech companies suggesting a range of products and services. A few examples of how blockchain in fintech is disrupting the status quo in finance: 21.co wants to build the machine-payable web with bitcoin. Skuchain is building a supply-chain network on a blockchain structure, to govern all phases of trade transactions. T Zero’s tagline is “the trade is the settlement” — it seeks to take the (considerable) friction out of lodging securities transactions using blockchain.

Blockchain is a natural fit for the financial services industry for demonstrable reasons: it self-verifies and authenticates transactions, and it’s hack-resistant. Bitcoin and other cryptocurrencies are among the very first to use blockchain to support friction-less financial transactions, but they are far from the last.

Energy

Highly-regulated, the energy industry is being disrupted by startups using blockchain technology such as Transactive Grid, which created a peer-to-peer market for the buying and selling of energy. Other blockchain-based startups in the energy space include Grid Singularity and SolarCoin.

These disruptors will present a challenge for the current regulatory structure. And lawyers who understand blockchain will have the unique chance to form the future of the energy industry.

Music

In the near future, all transactions involving the creation and sale of music may very well take place on a blockchain structure. Consider Resonate, which uses blockchain to create a fresh kind of music streaming platform aiming to give artists greater control and a greater share of profit. Or Ujo Music, which seeks to build an “open music ecosystem” on the Ethereum blockchain. Pledge Music is a global direct-to-fan platform that permits artists to fully bypasses traditional “friction” in the music industry (record labels, publishers, distributors).

By its very nature, blockchain is uniquely suited to address the piracy, control and monetization issues of music that have become rampant in the digital age. To lawyers signifying traditional players in the music industry: your clients need you to understand how startups like Resonate, Ujo Music, and Pledge Music are switching the rules for how music is protected and monetized.

Real Estate

Real estate transactions are ripe for improvement: the mountains of paperwork, lack of transparency during and after transactions, and opportunities for error in public records – all can be addressed vis a vis blockchain. Inject Ubitquity, which is creating a blockchain-based platform to securely record, track, and transfer deeds, to help “real estate, title, and mortgage companies benefit from a clean record of ownership, reducing future title search time, enhanced confidence, and technology.”

The Midasium Blockchain proposes to be the “blockchain of real estate,” with the purpose of creating “a global collective distributed ledger system for securely executing and recording real estate financial transactions over the internet.”

As Midasium’s site notes, blockchain’s characteristics align fairly well with the requirements of real estate transactions: durability, transparency, immutability, longevity, and reliability and availability of data. This likely is why the country of Sweden is considering the placement of its entire land registry system on a blockchain.

If you do any legal work for clients involved in any aspect of real estate transactions, you need to understand that things are about to switch radically thanks to blockchain.

Healthcare

One clear application of blockchain is its use to manage patient medical data (electronic medical records or EMRs) — for one example see MedRec. Gem, Another blockchain startup, has created Gem Health, which seeks to apply blockchain to a host of healthcare use cases, including EMRs, wellness apps, global patient ID software, and medical inventory management.

The healthcare technology company Pokitdot has created DocChain, the company’s implementation of blockchain for healthcare data. DocChain creates a single and secure network that connects all the stakeholders in a patient’s care — from EMRs, to their medical device sensors, to the pharmacy packing their prescriptions.

Hashed Health, a Nashville-based startup, is creating a consortium of healthcare companies to leverage blockchain technology for the purpose of advancing innovation industry-wide. Hashed Health’s website identifies a number of reasons why blockchain is an ideal technological medium for the healthcare industry: blockchain reduces costs, increases speed, increases security, reduces fraud, and reduces risk. (Recall these five benefits – they are very relevant to blockchain’s influence on the legal profession, which I’ll cover in Part II of this series.)

These benefits clearly illustrate the disruptive influence that blockchain can have on the heretofore stringently siloed maintenance and transfer of medical data. It’s an industry that has profited mightily from the friction created by middlemen and regulations. The benefits of blockchain clearly illustrate why lawyers serving the healthcare industry owe a duty to their clients to understand this technology and its import for the healthcare industry.

How May Blockchain Influence The Legal Services Industry?

I’m saving the legal industry, and how it will be disrupted by blockchain, for Part II of the blockchain for Lawyers one hundred one series. The future of blockchain and law is at once imminently disruptive and ripe for chance. Stay tuned.

Blockchain one hundred one for Lawyers Part one – Law Technology Today

Blockchain one hundred one for Lawyers Part 1

e-Filing and Legal Document Marketplace Sites

September 7, 2017

Artificial Intelligence Can Reduce 99% of Review Hours

September 6, 2017

Why Lawyers Shouldn’t Put a Fork in Bitcoin

September 1, 2017

“The very first generation of the digital revolution brought us the Internet of information. The 2nd generation — powered by blockchain technology — is bringing us the Internet of value: a fresh platform to reshape the world of business and convert the old order of human affairs for the better.

Blockchain is a vast, global distributed ledger or database running on millions of devices and open to anyone, where not just information but anything of value money, but also titles, deeds, identities, even votes can be moved, stored and managed securely and privately. Trust is established through mass collaboration and clever code rather than by powerful intermediaries like governments and banks.”

Dan Tapscott, author of Blockchain Revolution: How the Technology Behind Bitcoin Is Switching Money, Business and the World.

Dear fellow lawyers, there is yet another tech term we should become familiar with: blockchain. I know, it’s becoming breathtaking, all the technical terms legal professionals must add to our lexicon.

But if you want to get through, or dare I say thrive, as a 21st century lawyer, you need to know at least three things about blockchain:

  1. What is it?
  2. How is it impacting your clients?
  3. How it may influence the legal profession?

What Is Blockchain

If you’ve heard of blockchain it’s most likely been in the context of the digital currency bitcoin — blockchain is the technology upon which bitcoin transactions are built. In essence, blockchain is a distributed ledger (or register) made up of digitally recorded and encrypted (cryptographically hashed) data in the form of blocks, which when connected via the distributed network of computers storing the blocks, form the blockchain.

Being distributed across a network of computers, the ledger is not under any single control and thus operates by consensus. This is fairly different from a traditional transaction ledger — one that is typically maintained by one entity (e.g. a bank) and audited by another entity (e.g. a trusted intermediary). In a blockchain, all parties have a copy of the ledger and can confirm in real time the status of the transaction.

What Lawyers Need To Understand

blockchain creates a real-time digital record verifying that a transaction containing certain data happened at a certain time and in a certain order.

Further, integrity of the transaction can be trusted due to two of blockchain’s fundamental characteristics: it is immutable and very hack-resistant. This translates into a very high level of data integrity — once data comes in the blockchain, it is resistant to alteration, hacking, or deletion. Let’s explore these two characteristics.

Blockchain Is Immutable

As each block of data is created in the blockchain, the block is time-stamped. A block of data in the chain can be added to the chain only after the time stamp is applied and verified by the distributed computers across the chain.

The practical effect of time-stamping is that a block of data can never be switched retrospectively. This means that each block in the chain creates an accurate, time-stamped record as to that block – when it was added, and in what order it was added. If an attempt is made to switch any data in a block already added to the chain, it is rejected by the network of computers connecting the blocks in the chain. The network won’t approve switches to data in a block that has already been verified as to content and timestamp, as this would have the effect of cracking the chain. Thus, the blockchain is immutable.

Blockchain Is Very Hack-Resistant

To date, a blockchain itself has yet to be hacked. Recall that blockchain is the underlying technology. Systems built on top of blockchain (such as cryptocurrency exchanges) have been hacked. But the blockchain itself has not.

Understanding what makes blockchain resistant to hacking is significant from a legal perspective, so bear with me as we delve into just a bit more of the technical minutiae.

Recall that blockchain is a distributed ledger, meaning that the blocks of data comprising the ledger are spread across a network of computers that could be located anywhere in the world. Each computer (referred to as a knot) holds all or part of the entire blockchain, and applies the particular blockchain’s computational algorithm to verify a block and permit it to be added to the chain. This is happening at the same time across the network, making it (theoretically, at least) next to unlikely for hackers to attack the chain, since each example of the data is being held in many places all at one time, and a block may be verified and added to the chain by any number of knots.

Blockchain also is hack-resistant due to how the data in the chain is stored and transferred. Data added to the chain is cryptographically “hashed,” meaning that a brief digest of the data is created. It is this hash of data that is stored in a block and transferred in encrypted form via the blockchain — not the actual, underlying data itself. As a digest, the hashed data can’t be decrypted to reproduce the utter underlying document or transaction data. However, within the chain, the hash can verify a copy of the underlying document or transaction existing outside of the blockchain.

What does this mean, for practical purposes? Very first, if a hack to a block in the chain is attempted, it doesn’t expose the underlying data within the document or transaction because the hashed data is simply a digest and not a finish record of the data. Thus, the underlying data is not exposed to potential hacking.

2nd, because the transaction ledger is stored across a distributed network of computers, redundancy is created. The underlying, hashed data is stored at the same time across numerous machines, making it infinitely more difficult to hack.

These characteristics help ensure both the privacy and authenticity of the underlying data within the blockchain, two properties that are very relevant to legal transactions.

CLICK TO Enhance

And it’s not just data that can be transferred via blockchain. Cryptocurrencies use blockchain to transfer economic value. How about transferring energy? Music? Real estate titles? It’s either happening, or about to. Time to discuss why lawyers should care about blockchain.

How Will Blockchain Influence Your Clients

It’s disrupting, or has the potential to disrupt, a number of industries that rely strongly on lawyers’ counsel and advice. And this disruption will create opportunities for us to help, as industries wrangle with how disruption impacts everything from operations to regulatory and legal structures. I predict these disruptions will create niche practice areas for those lawyers who choose to understand blockchain (more on that in Part II of this series).

I suggest but a few examples of blockchain’s current and potential influence on business and industry:

Finance

One word: fintech. The financial industry is facing immense disruption thanks to fintech, which is the application of technological innovation to traditional activities of the financial industry – ranging from banking to investing to payment processing. Think Bitcoin, PayPal, Robinhood, Prosper, LearnVest — just to name but a very few examples.

There are dozens of blockchain-based fintech companies suggesting a range of products and services. A few examples of how blockchain in fintech is disrupting the status quo in finance: 21.co wants to build the machine-payable web with bitcoin. Skuchain is building a supply-chain network on a blockchain structure, to govern all phases of trade transactions. T Zero’s tagline is “the trade is the settlement” — it seeks to take the (considerable) friction out of lodging securities transactions using blockchain.

Blockchain is a natural fit for the financial services industry for demonstrable reasons: it self-verifies and authenticates transactions, and it’s hack-resistant. Bitcoin and other cryptocurrencies are among the very first to use blockchain to support friction-less financial transactions, but they are far from the last.

Energy

Highly-regulated, the energy industry is being disrupted by startups using blockchain technology such as Transactive Grid, which created a peer-to-peer market for the buying and selling of energy. Other blockchain-based startups in the energy space include Grid Singularity and SolarCoin.

These disruptors will present a challenge for the current regulatory structure. And lawyers who understand blockchain will have the unique chance to form the future of the energy industry.

Music

In the near future, all transactions involving the creation and sale of music may very well take place on a blockchain structure. Consider Resonate, which uses blockchain to create a fresh kind of music streaming platform aiming to give artists greater control and a greater share of profit. Or Ujo Music, which seeks to build an “open music ecosystem” on the Ethereum blockchain. Pledge Music is a global direct-to-fan platform that permits artists to totally bypasses traditional “friction” in the music industry (record labels, publishers, distributors).

By its very nature, blockchain is uniquely suited to address the piracy, control and monetization issues of music that have become rampant in the digital age. To lawyers indicating traditional players in the music industry: your clients need you to understand how startups like Resonate, Ujo Music, and Pledge Music are switching the rules for how music is protected and monetized.

Real Estate

Real estate transactions are ripe for improvement: the mountains of paperwork, lack of transparency during and after transactions, and opportunities for error in public records – all can be addressed vis a vis blockchain. Come in Ubitquity, which is creating a blockchain-based platform to securely record, track, and transfer deeds, to help “real estate, title, and mortgage companies benefit from a clean record of ownership, reducing future title search time, enhanced confidence, and technology.”

The Midasium Blockchain proposes to be the “blockchain of real estate,” with the objective of creating “a global collective distributed ledger system for securely executing and recording real estate financial transactions over the internet.”

As Midasium’s site notes, blockchain’s characteristics align fairly well with the requirements of real estate transactions: durability, transparency, immutability, longevity, and reliability and availability of data. This likely is why the country of Sweden is considering the placement of its entire land registry system on a blockchain.

If you do any legal work for clients involved in any aspect of real estate transactions, you need to understand that things are about to switch radically thanks to blockchain.

Healthcare

One clear application of blockchain is its use to manage patient medical data (electronic medical records or EMRs) — for one example see MedRec. Gem, Another blockchain startup, has created Gem Health, which seeks to apply blockchain to a host of healthcare use cases, including EMRs, wellness apps, global patient ID software, and medical inventory management.

The healthcare technology company Pokitdot has created DocChain, the company’s implementation of blockchain for healthcare data. DocChain creates a single and secure network that connects all the stakeholders in a patient’s care — from EMRs, to their medical device sensors, to the pharmacy packing their prescriptions.

Hashed Health, a Nashville-based startup, is creating a consortium of healthcare companies to leverage blockchain technology for the purpose of advancing innovation industry-wide. Hashed Health’s website identifies a number of reasons why blockchain is an ideal technological medium for the healthcare industry: blockchain reduces costs, increases speed, increases security, reduces fraud, and reduces risk. (Recall these five benefits – they are very relevant to blockchain’s influence on the legal profession, which I’ll cover in Part II of this series.)

These benefits clearly illustrate the disruptive influence that blockchain can have on the heretofore stringently siloed maintenance and transfer of medical data. It’s an industry that has profited mightily from the friction created by middlemen and regulations. The benefits of blockchain clearly illustrate why lawyers serving the healthcare industry owe a duty to their clients to understand this technology and its import for the healthcare industry.

How May Blockchain Influence The Legal Services Industry?

I’m saving the legal industry, and how it will be disrupted by blockchain, for Part II of the blockchain for Lawyers one hundred one series. The future of blockchain and law is at once imminently disruptive and ripe for chance. Stay tuned.

Related video:

Block Chain Two

Block Chain Two.0: The Renaissance of Money

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Block Chain Two.0: The Renaissance of Money

From two thousand eight to date, no other technology has been the subject of such fervent debate. Irrespective of your opinion, the rise in popularity of cryptocurrencies cannot be disregarded. Today, there are a number of billion dollar businesses that accept Bitcoin as a form of payment. These include Dell, Reddit, Expedia, PayPal, and most recently, Microsoft. So for the uninitiated who have not yet seized what Bitcoin and other cryptocurrencies are, you ought to catch up. This is not something that should be disregarded and there is a vast array of resources that explain the concept. In this post I’ll attempt to make sense of the Block Chain Protocol and the emerging ecosystem that is growing on it.

Elements of Protocol Commonality: TCP/IP and the Block Chain

In December 1974, Vint Cerf and Robert Kahn designed something revolutionary: the TCP/IP Internet network protocol.

A protocol is like manners. When we say “Thank you’ to someone, the normal response we expect to hear is “You’re welcome.” There is no actual rule that states that someone has to do this. But it remains a formal protocol of communication that is commonly followed.

In a similar way, TCP/IP was very first developed as a way for any computer to connect and communicate with the ARPANET. Since then, the project mutated exponentially to permit any computer to communicate with any other computer, ultimately metamorphosing today into the Internet of Everything.

But the base technologies have remained unchanged. The IP address still acts like a unique postal address that enables any phone, tablet or computer to identify itself on the internet, while the TCP technology ensures delivery of the data packets by dividing them into segments. TCP and IP are used in conjunction to increase the probability of the data packet to get from origin to destination.

Leveraging on this mode of functioning, Tim Berners-Lee created the Hyper Text Transfer Protocol or HTTP, which became a way for Web browsers to communicate with Web Servers. Today, along with HTTP, a entire suite of protocols like DNS and ARP, work together to provide us with the network practice we are used to. Email, Search Engines, Web pages, API’s and other Internet Services (SaaS, PaaS, IaaS) are all products that have evolved on this framework providing us today’s digital economy.

Just as the TCP/IP-based internet led to a revolution in the way businesses functioned, the Block Chain protocol is repeating the same process all over again. Pundits even go so far as to say it is like watching the birth of the internet all over again.

So how does this all work? A Bitcoin network is a decentralized network. Hence, every time a transaction occurs inbetween the members of this network, it needs to be verified and validated so as to ensure that every transaction occurring within the network is inbetween two individual accounts and that there is no risk of dual spending.

This process of verification is carried out by some members of the network called miners. The miners use specialized and lightly available software along with the processing power of their computers to verify the transactions. This sounds ordinary enough, but the processing power required to do so is fairly herculean. And since the miners are using their bandwidth and electric current to do the verification process, they need to be compensated.

This is where the Block Chain begin to take form. Every few minutes a ‘block’ of all the transactions occurring over the Bitcoin network is created by a miner. Essentially the miner has created a verified transaction file which holds a copied record of all the transactions that have occurred in the network over the past ten minutes. The word to highlight here is verified. The miner uses the computational power of his computer to assure all members of the network that each transaction is inbetween two parties only and that there is no problem of dual spending.

For his efforts, the miner is compensated in Bitcoins. This is where the math’s of the currency and the way that it differs from the normal fractional banking system kicks in. The total amount of Bitcoins that can ever exist is stationary at twenty one million. As the quantity of money is stationary, the payment made to the miner is much like mining currency out of a reservoir.

As each transaction in every block is made at a specific time, each block is linked to the previous block of transactions. By grouping these blocks we get what is referred to as the Block Chain. And since this grouping of blocks occurs as per the protocol dictated by the algorithm underpinning the creation of Bitcoins, this protocol is defined as the Block Chain protocol.

This is where the TCP/IP and Block Chain protocols differ: TCP/IP is a COMMUNICATIONS protocol, whilst the Block Chain is a VALUE-EXCHANGE protocol.

Bitcoin, Altcoin, Dodgecoin… Who Cares? Only the Block Chain Matters

Since Satoshi’s White paper came online, other cryptocurrenies have proliferated the market. But irrespective of the currency and the frequently debated deflation issues, the underlying Block Chain protocol and the distributed computing architecture used to achieve its value remain the same.

Just as the open communications protocol created profitable business services by catapulting innovation, the Block-chain protocol offers a similar foundation on which businesses can create value-added chains. Using the integrity lattice of the transactions, a entire suite of value trading innovations are beginning to inject the market.

The payments systems used today were designed in the 1950’s and there’s a immovable minimum cost for every transaction. As a result sending petite payments of say, $Five, is not feasible using this system. (Albeit companies like DWOLLA have begun suggesting such services). The reason this hasn’t switched is fairly elementary; Remittances in two thousand thirteen were made at an average rate of 8.9% resulting in $48 billion in revenue. That’s a clean revenue stream.

Just as TCP/IP permitted information to be transmitted instantly, today, the Block Chain Protocol permits the instant transfer of value irrespective of size. One company that is making use of this concept is ChangeCoin.

ChangeCoin offers a micropayment Infrastructure for the Web. Say you read an article on a popular website, but the freemium version only lets you read quarter of the article and requires a minimum subscription to access the entire article. With micropayments, the user can now pay just a few cents to read the entire article without engaging in an à la carte form of subscription. A good way forward based on this concept would be to cable TV subscriptions, where consumers can pay for the four or five channels that they regularly see rather than paying for a suite of 200. Another application is for WiFi hotspots where users pay exactly their data consumption. A user could pre-allocate a connectivity budget and micropayment software could take care of paying for the data connection with no user intervention.

ChangeCoin has also created a boon for content creators and bloggers in the form of ChangeTip. Consumers can now use Bitcoin to peak a content creator with a puny sum (even five cents) instead of just liking an article. Not only is this an innovative way to demonstrate appreciation but it will switch the business model of content creation and curation.

Companies such as CHAIN, now permit developers to build API’s on the Block Chain Protocol such as:

  • API’s to allocate digital resources such as energy, bandwidth, storage, and computation to the connected devices / services that need them.Eg; FileCoin
  • API’s for Oculus Rift- With access to the virtual world now becoming TROM-esque, developers are looking at creating API’s that can be used in the virtual space to make transactions, blurring the lines inbetween virtual and real economies.
  • Micropayment API’s tailored to the type of transaction being undertaken. i.e: Tipping a blog versus Tipping a car share driver. Very useful in a collective economy where consumers increasingly become prosumers.

Clever Contracts and Programmable Money

This relatively fresh concept involves the development of programs that can be entrusted with money. Wise contracts are programs that encode certain conditions and outcomes. When a transaction inbetween two parties occurs, the program can verify if the product/service has been sent by the supplier. Only after verification is the sum transmitted to the suppliers account. By developing ready to use programs that function on predetermined conditions inbetween the supplier and the client, brainy programs ensure a secure escrow service in real time at near zero marginal cost. One company that is making dramatic foray here is Codius which offers an ecosystem for Brainy Contracts.

Apart from Financial transactions, wise contracts are now coming in the Legal System. Companies like Empowered Law use the public distributed ledger of transactions that makes up the Block Chain to provide Multi-Signature account services for asset protection, estate planning, dispute resolution, leasing and corporate governance. A prime example of this transition is seen ins a procedure referred to as ‘Coloring’ a Coin, in which a house can be sold in the form of a Bitcoin payment with the same ease and speed.

Digital Assets and Wise Property

Building up on colored coins, digital assets are assets whose ownership is recorded digitally. Bitcoins are of digital assets, but since the Block Chain is a decentralized asset registry, it can also be used to register ownership and transfer of any digital asset besides bitcoins. In this way, a digital bond could pay coupons and redeem the principal to the address holding the digital bond, without the need of custodians.

Taking this concept one step further is in the form of Wise Properties. A Clever Property is a property that has access to the Block Chain, and can take deeds based on the information published there. Another way to look at it is that wise property can be managed via the Block Chain. Eg: A car whose ownership is represented by a digital asset in the Block Chain. The physical car is connected to the internet and can read the Block Chain. Therefore it can keep track of the status of the digital asset indicating it. As the digital asset is transferred from one address to another, the physical car can see this status update in the Block Chain and take necessary deeds, i.e. switch its owner… It’s a way of Automating the Internet of Everything.

What to Keep Your Eyes Peeled For in 2015

Ethereum and the MIST browser – Ethereum intends to bring together both a crypto ledger and a Turing-complete programming language, which is a language can be used to simulate any other computer language (not just its own). They intend to make a browser that is a Swiss-army knife of Block Chain and encryption implements that permit non-technical users to truly leverage the web.

Parallel block chains and side chains – Some developers have begun looking at the creation of different Block Chains as they do not believe on depending on a single Block Chain. Parallel Block Chains and Side Chains permit for tradeoffs and improved scalability using alternative, entirely independent Block Chains thus permitting for more innovation.

The Philippines intends to put its Peso put on the block chain – Just as Africa leapfrogged wired telecommunications and skipped right to wireless, the Philippines intends to improve its financial services by integrating the Peso to the Block Chain. A dramatic initiative.

In Dec 2014, Don Tapscott, a leading authority on technology and innovation as well as a LinkedIn Influencer, did something characteristic of fine guys. He admitted he was wrong, noting: “Bitcoin… I used to think it would never fly. Now I think not only will it fly as a currency, but the underlying Block Chain technology of crypto currencies is a core part of the next generation of the internet that is radically going to convert not just commerce and the nature of the corporation, but many of our institutions in society and everyone needs to pay attention to this.”

For those who remain apprehensive, this could be partly due to my poor scribbling’s. But could it also be our inborn resistance to switch? After all, to quote Thomas R. Lounsbury: “We must view with profound respect the infinite capacity of the human mind to stand against the introduction of useful skill.”

Kariappa Bheemaiah is a Quantitative Research Analyst at Grenoble Ecole de Management.

Block Chain two

Block Chain Two.0: The Renaissance of Money

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  • 11 hours

Measuring how quickly machines are getting smarter could help us prepare for the consequences wrd.cm/2wDA4BT

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Block Chain Two.0: The Renaissance of Money

From two thousand eight to date, no other technology has been the subject of such fervent debate. Irrespective of your opinion, the rise in popularity of cryptocurrencies cannot be disregarded. Today, there are a number of billion dollar businesses that accept Bitcoin as a form of payment. These include Dell, Reddit, Expedia, PayPal, and most recently, Microsoft. So for the uninitiated who have not yet gripped what Bitcoin and other cryptocurrencies are, you ought to catch up. This is not something that should be disregarded and there is a vast array of resources that explain the concept. In this post I’ll attempt to make sense of the Block Chain Protocol and the emerging ecosystem that is growing on it.

Elements of Protocol Commonality: TCP/IP and the Block Chain

In December 1974, Vint Cerf and Robert Kahn designed something revolutionary: the TCP/IP Internet network protocol.

A protocol is like manners. When we say “Thank you’ to someone, the normal response we expect to hear is “You’re welcome.” There is no actual rule that states that someone has to do this. But it remains a formal protocol of communication that is commonly followed.

In a similar way, TCP/IP was very first developed as a way for any computer to connect and communicate with the ARPANET. Since then, the project mutated exponentially to permit any computer to communicate with any other computer, ultimately metamorphosing today into the Internet of Everything.

But the base technologies have remained unchanged. The IP address still acts like a unique postal address that enables any phone, tablet or computer to identify itself on the internet, while the TCP technology ensures delivery of the data packets by dividing them into segments. TCP and IP are used in conjunction to increase the probability of the data packet to get from origin to destination.

Leveraging on this mode of functioning, Tim Berners-Lee created the Hyper Text Transfer Protocol or HTTP, which became a way for Web browsers to communicate with Web Servers. Today, along with HTTP, a entire suite of protocols like DNS and ARP, work together to provide us with the network practice we are used to. Email, Search Engines, Web pages, API’s and other Internet Services (SaaS, PaaS, IaaS) are all products that have evolved on this framework providing us today’s digital economy.

Just as the TCP/IP-based internet led to a revolution in the way businesses functioned, the Block Chain protocol is repeating the same process all over again. Pundits even go so far as to say it is like watching the birth of the internet all over again.

So how does this all work? A Bitcoin network is a decentralized network. Hence, every time a transaction occurs inbetween the members of this network, it needs to be verified and validated so as to ensure that every transaction occurring within the network is inbetween two individual accounts and that there is no risk of dual spending.

This process of verification is carried out by some members of the network called miners. The miners use specialized and lightly available software along with the processing power of their computers to verify the transactions. This sounds ordinary enough, but the processing power required to do so is fairly herculean. And since the miners are using their bandwidth and electro-stimulation to do the verification process, they need to be compensated.

This is where the Block Chain begin to take form. Every few minutes a ‘block’ of all the transactions occurring over the Bitcoin network is created by a miner. Essentially the miner has created a verified transaction file which holds a copied record of all the transactions that have occurred in the network over the past ten minutes. The word to highlight here is verified. The miner uses the computational power of his computer to assure all members of the network that each transaction is inbetween two parties only and that there is no problem of dual spending.

For his efforts, the miner is compensated in Bitcoins. This is where the math’s of the currency and the way that it differs from the normal fractional banking system kicks in. The total amount of Bitcoins that can ever exist is stationary at twenty one million. As the quantity of money is immobile, the payment made to the miner is much like mining currency out of a reservoir.

As each transaction in every block is made at a specific time, each block is linked to the previous block of transactions. By grouping these blocks we get what is referred to as the Block Chain. And since this grouping of blocks occurs as per the protocol dictated by the algorithm underpinning the creation of Bitcoins, this protocol is defined as the Block Chain protocol.

This is where the TCP/IP and Block Chain protocols differ: TCP/IP is a COMMUNICATIONS protocol, whilst the Block Chain is a VALUE-EXCHANGE protocol.

Bitcoin, Altcoin, Dodgecoin… Who Cares? Only the Block Chain Matters

Since Satoshi’s White paper came online, other cryptocurrenies have proliferated the market. But irrespective of the currency and the frequently debated deflation issues, the underlying Block Chain protocol and the distributed computing architecture used to achieve its value remain the same.

Just as the open communications protocol created profitable business services by catapulting innovation, the Block-chain protocol offers a similar foundation on which businesses can create value-added chains. Using the integrity lattice of the transactions, a entire suite of value trading innovations are beginning to inject the market.

The payments systems used today were designed in the 1950’s and there’s a immobile minimum cost for every transaction. As a result sending petite payments of say, $Five, is not feasible using this system. (Albeit companies like DWOLLA have begun suggesting such services). The reason this hasn’t switched is fairly plain; Remittances in two thousand thirteen were made at an average rate of 8.9% resulting in $48 billion in revenue. That’s a neat revenue stream.

Just as TCP/IP permitted information to be transmitted instantly, today, the Block Chain Protocol permits the instant transfer of value irrespective of size. One company that is making use of this concept is ChangeCoin.

ChangeCoin offers a micropayment Infrastructure for the Web. Say you read an article on a popular website, but the freemium version only lets you read quarter of the article and requires a minimum subscription to access the entire article. With micropayments, the user can now pay just a few cents to read the entire article without engaging in an à la carte form of subscription. A good way forward based on this concept would be to cable TV subscriptions, where consumers can pay for the four or five channels that they regularly witness rather than paying for a suite of 200. Another application is for WiFi hotspots where users pay exactly their data consumption. A user could pre-allocate a connectivity budget and micropayment software could take care of paying for the data connection with no user intervention.

ChangeCoin has also created a boon for content creators and bloggers in the form of ChangeTip. Consumers can now use Bitcoin to peak a content creator with a puny sum (even five cents) instead of just liking an article. Not only is this an innovative way to demonstrate appreciation but it will switch the business model of content creation and curation.

Companies such as CHAIN, now permit developers to build API’s on the Block Chain Protocol such as:

  • API’s to allocate digital resources such as energy, bandwidth, storage, and computation to the connected devices / services that need them.Eg; FileCoin
  • API’s for Oculus Rift- With access to the virtual world now becoming TROM-esque, developers are looking at creating API’s that can be used in the virtual space to make transactions, blurring the lines inbetween virtual and real economies.
  • Micropayment API’s tailored to the type of transaction being undertaken. i.e: Tipping a blog versus Tipping a car share driver. Very useful in a collective economy where consumers increasingly become prosumers.

Clever Contracts and Programmable Money

This relatively fresh concept involves the development of programs that can be entrusted with money. Wise contracts are programs that encode certain conditions and outcomes. When a transaction inbetween two parties occurs, the program can verify if the product/service has been sent by the supplier. Only after verification is the sum transmitted to the suppliers account. By developing ready to use programs that function on predetermined conditions inbetween the supplier and the client, wise programs ensure a secure escrow service in real time at near zero marginal cost. One company that is making dramatic foray here is Codius which offers an ecosystem for Brainy Contracts.

Apart from Financial transactions, clever contracts are now coming in the Legal System. Companies like Empowered Law use the public distributed ledger of transactions that makes up the Block Chain to provide Multi-Signature account services for asset protection, estate planning, dispute resolution, leasing and corporate governance. A prime example of this transition is seen ins a procedure referred to as ‘Coloring’ a Coin, in which a house can be sold in the form of a Bitcoin payment with the same ease and speed.

Digital Assets and Brainy Property

Building up on colored coins, digital assets are assets whose ownership is recorded digitally. Bitcoins are of digital assets, but since the Block Chain is a decentralized asset registry, it can also be used to register ownership and transfer of any digital asset besides bitcoins. In this way, a digital bond could pay coupons and redeem the principal to the address holding the digital bond, without the need of custodians.

Taking this concept one step further is in the form of Clever Properties. A Wise Property is a property that has access to the Block Chain, and can take deeds based on the information published there. Another way to look at it is that brainy property can be managed via the Block Chain. Eg: A car whose ownership is represented by a digital asset in the Block Chain. The physical car is connected to the internet and can read the Block Chain. Therefore it can keep track of the status of the digital asset indicating it. As the digital asset is transferred from one address to another, the physical car can see this status update in the Block Chain and take necessary deeds, i.e. switch its owner… It’s a way of Automating the Internet of Everything.

What to Keep Your Eyes Peeled For in 2015

Ethereum and the MIST browser – Ethereum intends to bring together both a crypto ledger and a Turing-complete programming language, which is a language can be used to simulate any other computer language (not just its own). They intend to make a browser that is a Swiss-army knife of Block Chain and encryption contraptions that permit non-technical users to truly leverage the web.

Parallel block chains and side chains – Some developers have begun looking at the creation of different Block Chains as they do not believe on depending on a single Block Chain. Parallel Block Chains and Side Chains permit for tradeoffs and improved scalability using alternative, fully independent Block Chains thus permitting for more innovation.

The Philippines intends to put its Peso put on the block chain – Just as Africa leapfrogged wired telecommunications and skipped right to wireless, the Philippines intends to improve its financial services by integrating the Peso to the Block Chain. A dramatic initiative.

In Dec 2014, Don Tapscott, a leading authority on technology and innovation as well as a LinkedIn Influencer, did something characteristic of fine boys. He admitted he was wrong, noting: “Bitcoin… I used to think it would never fly. Now I think not only will it fly as a currency, but the underlying Block Chain technology of crypto currencies is a core part of the next generation of the internet that is radically going to convert not just commerce and the nature of the corporation, but many of our institutions in society and everyone needs to pay attention to this.”

For those who remain apprehensive, this could be partly due to my poor scribbling’s. But could it also be our congenital resistance to switch? After all, to quote Thomas R. Lounsbury: “We must view with profound respect the infinite capacity of the human mind to fight back the introduction of useful skill.”

Kariappa Bheemaiah is a Quantitative Research Analyst at Grenoble Ecole de Management.

Block Chain two

Block Chain Two.0: The Renaissance of Money

Get The

6 months for $Five – plus a FREE Portable

WIRED’s largest stories, delivered to your inbox.
  • 8 hours

Measuring how quickly machines are getting smarter could help us prepare for the consequences wrd.cm/2wDA4BT

Go after Us

Don’t miss our latest news, features and movies.

We’re On

See what’s inspiring us.

Go after Us

Don’t miss out on WIRED’s latest movies.

Block Chain Two.0: The Renaissance of Money

From two thousand eight to date, no other technology has been the subject of such fervent debate. Irrespective of your opinion, the rise in popularity of cryptocurrencies cannot be disregarded. Today, there are a number of billion dollar businesses that accept Bitcoin as a form of payment. These include Dell, Reddit, Expedia, PayPal, and most recently, Microsoft. So for the uninitiated who have not yet took hold of what Bitcoin and other cryptocurrencies are, you ought to catch up. This is not something that should be disregarded and there is a vast array of resources that explain the concept. In this post I’ll attempt to make sense of the Block Chain Protocol and the emerging ecosystem that is growing on it.

Elements of Protocol Commonality: TCP/IP and the Block Chain

In December 1974, Vint Cerf and Robert Kahn designed something revolutionary: the TCP/IP Internet network protocol.

A protocol is like manners. When we say “Thank you’ to someone, the normal response we expect to hear is “You’re welcome.” There is no actual rule that states that someone has to do this. But it remains a formal protocol of communication that is commonly followed.

In a similar way, TCP/IP was very first developed as a way for any computer to connect and communicate with the ARPANET. Since then, the project mutated exponentially to permit any computer to communicate with any other computer, eventually metamorphosing today into the Internet of Everything.

But the base technologies have remained unchanged. The IP address still acts like a unique postal address that enables any phone, tablet or computer to identify itself on the internet, while the TCP technology assures delivery of the data packets by dividing them into segments. TCP and IP are used in conjunction to increase the probability of the data packet to get from origin to destination.

Leveraging on this mode of functioning, Tim Berners-Lee created the Hyper Text Transfer Protocol or HTTP, which became a way for Web browsers to communicate with Web Servers. Today, along with HTTP, a entire suite of protocols like DNS and ARP, work together to provide us with the network practice we are used to. Email, Search Engines, Web pages, API’s and other Internet Services (SaaS, PaaS, IaaS) are all products that have evolved on this framework providing us today’s digital economy.

Just as the TCP/IP-based internet led to a revolution in the way businesses functioned, the Block Chain protocol is repeating the same process all over again. Pundits even go so far as to say it is like watching the birth of the internet all over again.

So how does this all work? A Bitcoin network is a decentralized network. Hence, every time a transaction occurs inbetween the members of this network, it needs to be verified and validated so as to ensure that every transaction occurring within the network is inbetween two individual accounts and that there is no risk of dual spending.

This process of verification is carried out by some members of the network called miners. The miners use specialized and lightly available software along with the processing power of their computers to verify the transactions. This sounds ordinary enough, but the processing power required to do so is fairly herculean. And since the miners are using their bandwidth and tens unit to do the verification process, they need to be compensated.

This is where the Block Chain begin to take form. Every few minutes a ‘block’ of all the transactions occurring over the Bitcoin network is created by a miner. Essentially the miner has created a verified transaction file which holds a copied record of all the transactions that have occurred in the network over the past ten minutes. The word to highlight here is verified. The miner uses the computational power of his computer to assure all members of the network that each transaction is inbetween two parties only and that there is no problem of dual spending.

For his efforts, the miner is compensated in Bitcoins. This is where the math’s of the currency and the way that it differs from the normal fractional banking system kicks in. The total amount of Bitcoins that can ever exist is motionless at twenty one million. As the quantity of money is immobile, the payment made to the miner is much like mining currency out of a reservoir.

As each transaction in every block is made at a specific time, each block is linked to the previous block of transactions. By grouping these blocks we get what is referred to as the Block Chain. And since this grouping of blocks occurs as per the protocol dictated by the algorithm underpinning the creation of Bitcoins, this protocol is defined as the Block Chain protocol.

This is where the TCP/IP and Block Chain protocols differ: TCP/IP is a COMMUNICATIONS protocol, whilst the Block Chain is a VALUE-EXCHANGE protocol.

Bitcoin, Altcoin, Dodgecoin… Who Cares? Only the Block Chain Matters

Since Satoshi’s White paper came online, other cryptocurrenies have proliferated the market. But irrespective of the currency and the frequently debated deflation issues, the underlying Block Chain protocol and the distributed computing architecture used to achieve its value remain the same.

Just as the open communications protocol created profitable business services by catapulting innovation, the Block-chain protocol offers a similar foundation on which businesses can create value-added chains. Using the integrity lattice of the transactions, a entire suite of value trading innovations are beginning to inject the market.

The payments systems used today were designed in the 1950’s and there’s a stationary minimum cost for every transaction. As a result sending puny payments of say, $Five, is not feasible using this system. (Albeit companies like DWOLLA have begun suggesting such services). The reason this hasn’t switched is fairly plain; Remittances in two thousand thirteen were made at an average rate of 8.9% resulting in $48 billion in revenue. That’s a neat revenue stream.

Just as TCP/IP permitted information to be transmitted instantly, today, the Block Chain Protocol permits the instant transfer of value irrespective of size. One company that is making use of this concept is ChangeCoin.

ChangeCoin offers a micropayment Infrastructure for the Web. Say you read an article on a popular website, but the freemium version only lets you read quarter of the article and requires a minimum subscription to access the entire article. With micropayments, the user can now pay just a few cents to read the entire article without engaging in an à la carte form of subscription. A good way forward based on this concept would be to cable TV subscriptions, where consumers can pay for the four or five channels that they regularly see rather than paying for a suite of 200. Another application is for WiFi hotspots where users pay exactly their data consumption. A user could pre-allocate a connectivity budget and micropayment software could take care of paying for the data connection with no user intervention.

ChangeCoin has also created a boon for content creators and bloggers in the form of ChangeTip. Consumers can now use Bitcoin to peak a content creator with a petite sum (even five cents) instead of just liking an article. Not only is this an innovative way to demonstrate appreciation but it will switch the business model of content creation and curation.

Companies such as CHAIN, now permit developers to build API’s on the Block Chain Protocol such as:

  • API’s to allocate digital resources such as energy, bandwidth, storage, and computation to the connected devices / services that need them.Eg; FileCoin
  • API’s for Oculus Rift- With access to the virtual world now becoming TROM-esque, developers are looking at creating API’s that can be used in the virtual space to make transactions, blurring the lines inbetween virtual and real economies.
  • Micropayment API’s tailored to the type of transaction being undertaken. i.e: Tipping a blog versus Tipping a car share driver. Very useful in a collective economy where consumers increasingly become prosumers.

Clever Contracts and Programmable Money

This relatively fresh concept involves the development of programs that can be entrusted with money. Wise contracts are programs that encode certain conditions and outcomes. When a transaction inbetween two parties occurs, the program can verify if the product/service has been sent by the supplier. Only after verification is the sum transmitted to the suppliers account. By developing ready to use programs that function on predetermined conditions inbetween the supplier and the client, clever programs ensure a secure escrow service in real time at near zero marginal cost. One company that is making dramatic foray here is Codius which offers an ecosystem for Brainy Contracts.

Apart from Financial transactions, brainy contracts are now coming in the Legal System. Companies like Empowered Law use the public distributed ledger of transactions that makes up the Block Chain to provide Multi-Signature account services for asset protection, estate planning, dispute resolution, leasing and corporate governance. A prime example of this transition is seen ins a procedure referred to as ‘Coloring’ a Coin, in which a house can be sold in the form of a Bitcoin payment with the same ease and speed.

Digital Assets and Brainy Property

Building up on colored coins, digital assets are assets whose ownership is recorded digitally. Bitcoins are of digital assets, but since the Block Chain is a decentralized asset registry, it can also be used to register ownership and transfer of any digital asset besides bitcoins. In this way, a digital bond could pay coupons and redeem the principal to the address holding the digital bond, without the need of custodians.

Taking this concept one step further is in the form of Wise Properties. A Wise Property is a property that has access to the Block Chain, and can take deeds based on the information published there. Another way to look at it is that clever property can be managed via the Block Chain. Eg: A car whose ownership is represented by a digital asset in the Block Chain. The physical car is connected to the internet and can read the Block Chain. Therefore it can keep track of the status of the digital asset indicating it. As the digital asset is transferred from one address to another, the physical car can see this status update in the Block Chain and take necessary deeds, i.e. switch its owner… It’s a way of Automating the Internet of Everything.

What to Keep Your Eyes Peeled For in 2015

Ethereum and the MIST browser – Ethereum intends to bring together both a crypto ledger and a Turing-complete programming language, which is a language can be used to simulate any other computer language (not just its own). They intend to make a browser that is a Swiss-army knife of Block Chain and encryption instruments that permit non-technical users to truly leverage the web.

Parallel block chains and side chains – Some developers have begun looking at the creation of different Block Chains as they do not believe on depending on a single Block Chain. Parallel Block Chains and Side Chains permit for tradeoffs and improved scalability using alternative, downright independent Block Chains thus permitting for more innovation.

The Philippines intends to put its Peso put on the block chain – Just as Africa leapfrogged wired telecommunications and skipped right to wireless, the Philippines intends to improve its financial services by integrating the Peso to the Block Chain. A dramatic initiative.

In Dec 2014, Don Tapscott, a leading authority on technology and innovation as well as a LinkedIn Influencer, did something characteristic of fine boys. He admitted he was wrong, noting: “Bitcoin… I used to think it would never fly. Now I think not only will it fly as a currency, but the underlying Block Chain technology of crypto currencies is a core part of the next generation of the internet that is radically going to convert not just commerce and the nature of the corporation, but many of our institutions in society and everyone needs to pay attention to this.”

For those who remain apprehensive, this could be partly due to my poor scribbling’s. But could it also be our congenital resistance to switch? After all, to quote Thomas R. Lounsbury: “We must view with profound respect the infinite capacity of the human mind to fight back the introduction of useful skill.”

Kariappa Bheemaiah is a Quantitative Research Analyst at Grenoble Ecole de Management.

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BitMoney Welcomes Everybody Looking to buy Bitcoins With Sofort – The Merkle

BitMoney Welcomes Everybody Looking to buy Bitcoins With Sofort

There are many different ways to purchase Bitcoin through traditional payments, especially when using the Internet to do so. BitMoney, a European platform where people can lightly buy Bitcoin with relative ease, is one of those companies worth checking out. In fact, the platform does not require any KYC verification for purchases under the US$200 limit.

BitMoney Makes Buying Bitcoins With Sofort Very Effortless

Companies such as BitMoney will be widely successful due to the convenience they provide to consumers all over the world. The platform supports transactions both denominated in US Dollar and Euro, which makes them fairly convenient to work with. Moreover, they accept a broad range of payment methods which will appease to consumers looking to inject into the world of cryptocurrency.

Speaking of the payment solutions provided by BitMoney, the list is fairly epic. Credit cards, iDeal, Sofort, and Bancontact are all supported. For people living in European this means there is a supported payment method for whichever type of transaction they are acquainted to. It is good to see such a large selection of payment methods, as it will improve the platform’s visibility.

It is worth mentioning BitMoney lets you buy bitcoins with Sofort to ensure transactions are finished quickly. One of the main advantages of the Sofort ecosystem is how bank transfers are authorized instantly, permitting merchants to release the goods in question. In this case, that means the ordered bitcoins will arrive into your wallet very quickly. Speed and convenience are significant when dealing with cryptocurrency, that much is certain.

Even if the customer does not have a Bitcoin wallet set up, the Bitmoney team will provide one for you. The company is working together with Spectrocoin to provide bitcoin wallet son behalf of customers automatically. The purchased bitcoins will automatically be sent to this wallet, after which the user is free to do with them as he or she pleases. Once again, a convenient solution provided by the Bitmoney platform at no extra cost.

Given the current Bitcoin price rally, buying BTC is something a lot of people are looking into. However, traditional exchanges are not convenient to use, and they instantaneously require users to go through a Know-Your-Customer procedure. BitMoney lets users buy up to US$200 worth of Bitcoin without going through such a procedure. This makes the platform a very powerful solution for people who are not convenient with the idea of a third-party controlling sensitive documents.

In the end, there is no valid reason not to give BitMoney a attempt. The company provides a quick and convenient solution to be yBitcoin without any prep needed. Their affordable rates, a broad range of payment solutions, and automated wallet generation are all major selling points for the platform. Anyone looking to buy bitcoins with Sofort should take a closer look at what BitMoney has to suggest.

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About The Author

Jdebunt

JP Buntinx is a FinTech and Bitcoin enthusiast living in Belgium. His passion for finance and technology made him one of the world’s leading freelance Bitcoin writers, and he aims to achieve the same level of respect in the FinTech sector.

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