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Better Than Bitcoin? Three Crypto-Currencies That Aren – t Just Copycats

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Bitcoin was here very first, but the open-source code meant copying it was effortless. Litecoins are now established as being the silver to Bitcoins gold, but there are literally hundreds of other copycat “alt coins”. Not all crypto-currencies are equal tho’: here are three that I believe will have a future.

We have a free eBook telling you all about BitCoin too.

Dogecoin

Technically speaking, Doge is nothing unique. It’s a standard copy-paste and tweak of Litecoin with a greater number of coins and a joke comic sans font on the interface. It grew out of love for the doge meme, a Japanese Shiba dog who greeted the world with virginal eyes and typically appalling grammar, as is the case with animals on the Internet.

And yet, the community embraced the coin like no other. r/dogecoin is welcoming and relaxed: a far sob from both the hostile and noob-intolerant Bitcoin communities. The welcoming “just have a go” attitude meant some people were joining the revolution by mining a few coins a day on their mobiles. It doesn’t matter that the coin is basically worthless at the moment: it’s a way of getting into the crypocurrency revolution without feeling stupid. The coins are so effortless to get and there’s so many of them that it feels good to have even a few hundred!

The rise of the doge “tipbot” quickly led to it being named the Internet tipping currency of choice; there are hopes that websites will adopt dogecoin as a micro transaction for thanking authors. There’s also the phat sense of charity: most recently, the dogecoin community raised $25,000 to help send the Jamaican bobbled team to the winter olympics in Sochi. Gravely.

Perhaps it’s the low value of the coins that makes people so blessed to part with them, but it’s clear that dogecoin has the potential to be the currency of choice for gifting – and that might just be exactly the currency that the Internet is looking for. To the moon, fellow shibes!

Peercoin

Presently sitting at 3rd place in terms of market-cap, Peercoin is named after it’s secondary peer-based mining system. Peercoin is unique in that graphics card or ASIC mining will step by step give way: the network will sustain itself through the clients that use it. This is significant for long term sustainability: the power consumption of crytocurrencies in general is insane. It’s a concept called “proof of stake” (as opposed to “proof of work”, the traditional model use in Bitcoin).

The basic idea is that anyone who holds Peercoin will get an automatic come back on those coins: hold them for longer, and get more – a bit like a savings account. Proof of Stake is programmed to give a 1% annual prize. This should ensure both the continuation of the network, and a ensured inflation – a mild inflationary rate generally considered to be good for an economy. The total number of Peercoins in circulation is infinite, but unlike other models the transaction fee (presently a immovable 0.1 PPC) is ruined – it doesn’t go to miners. In essence: save the coins, and you get inflation; spend, and you get deflation; with inflation comes enhanced desire to spend – so equilibrium is reached. That said, I’m no economist.

The Proof of Stake system also helps to protect against the so-called “51% attack”. With Bitcoin, or most other crypto-currencies, once a single person controls 51% or more of the computational mining power, they are able to break the system by dual spending or overlooking transactions – they would control the money supply, essentially. When the Proof of Stake system is fully in place, an attack would only be possible by wielding 51% of all the Peercoins in circulation, which is very improbable.

Primecoin

Created by Sunny King – who also made Peercoin – Primecoin is one of a few CPU-only coins. Bitcoin and its derivatives use SHA256 algorithm; there are now intensely powerful ASIC miners which make graphics card mining fully inefficient for that job. Litecoin and its derivatives use Scrypt – a more memory intensive algorithm, which restricts it to graphics cards and at of the time of writing, makes it ASIC-proof. Memory intensive is the crucial point here: memory costs a lot. An ASIC designed for Scrypt-based coins wouldn’t be much different to a graphics card, only more energy efficient. Unlike Bitcoin which was all of a sudden eclipsed by cheap USB ASICs, Scrypt derivatives will proceed to be viable on GPUs for a long time after any theoretical ASIC is released. It would also be very effortless to increase the memory requirements for Scrypt coins with a single code tweak, killing off any ASICs already made instantly.

Primecoin however uses a CPU to discovering special chains of prime number sequences, which are evidently of scientific importance. I won’t embarrass myself by pretending to understand exactly why, but it’s good to know that some scientific value can come from the coin, and miners aren’t simply wasting hashes for the sake of it.

The other defining factor is a more evenly spread difficulty increase, but its main attraction is being CPU-only: you can mine Primecoins at the same time as using your GPU for another coin, and everyone with a computer has a CPU.

You may think crypto currencies are a yam-sized scam with no real value, but it doesn’t indeed matter: Value is determined by those who use it. The only reason you think your dollar note has a value is because everyone else does too. The more people that believe in a currency, the greater its value – and that’s why I believe in these.

Anyway – I’m waiting for a coin that helps cure cancer. How about you?

Related video:

Best Tips for Where to Buy Bitcoins Instantly

Best Tips for Where to

Buy Bitcoins Instantly

I got an email the other day from a CPA asking how they can help a client buy lots of bitcoin right away. I instantly thought of three questions everyone should reaction in this screenplay.

1) How much bitcoin do you need?

Two) How quick do you indeed need the bitcoin?

Trio) What do you need it for?

The three questions are critical for determining the best way to buy bitcoin swift. Sometimes you can buy less than $1000 instantly, but if you need more it might take a few days. You may be asking what difference does it make what I need bitcoin for? CPA’s don’t ask erroneous questions and as the most trusted professionals we want to solve your challenge so we need all three answers to give you the best advice.

Golden Rule of Quick Bitcoins (the Very first Time)

The more bitcoin you need the longer it will take to get and the more you have to indentify yourself.

The less bitcoin you need the swifter it will take to get with more options and it can take more or less work.

Note: This statement is based on my definition of what work is and I have obtained bitcoins in almost everyway. Its also a rule to be generally applied as there are anomalies and the like that are beyond the scope of this blog.

Buy bitcoin in LARGE amounts:

1) Creating a bitcoin exchange account (or similar platform)

Two) KYC AML identity verification & document obedience

Three) WAIT for verification to accomplish

Four) Linking a bank account or credit card

Five) Accomplish a buy act for bitcoin

6) WAIT longer for the transaction to clear to get bitcoin

7) More systematic and less variable process

8) Usually involves a third party

Buy bitcoin in Petite amounts:

1) Using the same method above except for petite amounts which can done closest to the truest definition of instantly with the same bitcoin exchanges

1) Buy bitcoin online with or without an account

Two) Generally doesn’t have KYC AML verification

Trio) NO WAIT for verification

Four) NOT linking a bank account or credit card

Five) Finish a buy activity for bitcoin

6) WAIT less for the transaction to clear but could take as long

7) Have more options

8) Can be peer to peer

Urgency and Legacy Banking

Whether you’re a business or individual don’t wait until your need for bitcoin becomes urgent. You can lightly set up a fresh bitcoin wallet and receive bitcoin from another party within a few minutes, however if you need to buy bitcoin it’s another story. While buying bitcoin can still be done fairly lightly you have to keep in mind it’s usually tied into the legacy banking system and we all know what that means. You need cash, bank wires, checks or debit cards to purchase bitcoin so you’re temporarily joined at the hip with the banking system as you convert dollars into bitcoin.

Two Steps the Very first Time

There are generally two distinct steps for buying bitcoin if you’ve never done it before.

1) Create an account on a trading platform or bitcoin exchange. This part will seem like setting up a bank account as you provide individual identifying information and documents like driver license, passport, utility bills, corporate docs etc. The bitcoin platform has to obey with KYC and AML requirements regardless of country.

Two) After verification in #1 above, connect you bank account or buy bitcoin with credit card or debit card as instructed. Sometimes you can buy bitcoin instantly but in puny amounts and sometimes it takes several days the same way you have to wait for deposits and payments to clear. Some bitcoin exchanges have implemented amazing technology to speed up an approval process from a few minutes to less than an hour.

Alternatively, you can buy bitcoin peer to peer with someone you know or by using a platform like LocalBitcoins.com to connect with buyers and sellers in your area. These methods don’t require the KYC compliance mentioned above but they are not systematic and can be time intensive to meet someone in person considering the purpose is to get bitcoins swift.

Sites like Bitquick.co, whose tagline is buy bitcoins in less than three hours, suggest the speed but are coupled with inconvenience of going to a bank to make a cash deposit. This could involve a excursion to your back to withdraw cash and a journey to another bank to deposit the cash followed by a race back to your computer to upload the deposit slip before the 3-hour clock expires.

Purse.io offers 15%+ savings on Amazon purchases and a quick way of buying bitcoin without verification. If you want to buy bitcoin and stuff from Amazon you’ll be in heaven because other people are matched up to accomplish the transaction so everybody gets what they want.

Both of these methods will likely limit the amount of bitcoins you can buy to several hundred dollars. If you need several thousand dollars, a bitcoin exchange is the best method and can also be the best method for buying petite amounts instantly.

If you apply the Boy Scout Motto, Be Ready, then knowing where to buy bitcoins instantly won’t turn into an exercise in urgency. By the time you figure how to buy bitcoins in scare mode you could have already have them in your bitcoin wallet. The old telling borrow money when you don’t need it because when you need it you can’t borrow it can be adapted as goes after: Get setup to buy bitcoin when you don’t need it so you can buy it when you do.

You’ll Always Have Bitcoin

Also reminisce the best and easiest way to get bitcoin is to accept bitcoin as payment for your goods and services. Otherwise get setup with at least two bitcoin platforms in each category above. Once you embark the cycle of receiving, using and spending bitcoin you won’t have to worry about how to get it because you will always have it. I have never cashed out bitcoin to US dollars and I never will. I suggest you do the same so you can commence playing with 21st-century money.

So I’m sure you’re asking how can I learn more, what are some other bitcoin platforms and how do I get set up? That’s why I wrote The Ultimate Bitcoin Business Guide available in paperback e-book and audiobook. Courses on the topic will be coming soon.

Related video:

Bargeld: Bitcoin statt Euro, ZEIT ONLINE

Bargeld : Bitcoin statt Euro

  1. Seite 1 — Bitcoin statt Euro
  2. Seite Two — Wie sicher die Digitalwährungen sind, ist umstritten

Auf einer Seite lesen

An U-Bahnhöfen und einigen Parkautomaten funktioniert es längst: Einfach Bankkarte einstecken, schon wird das Geld abgebucht und das Ticket ausgedruckt. Auch im Supermarkt oder im Klamottenshop wird bereits häufig mit Kreditkarte bezahlt. Nur beim Bäcker und beim Zeitungskiosk muss man noch nach Kleingeld kramen, und der Kellner im Café ärgert sich, wenn man nicht wenigstens ein paar Münzen für ihn liegen lässt. Ansonsten funktioniert unser Leben schon ganz gut ohne Bargeld. Und vielleicht werden wir uns schon bald daran gewöhnen müssen, dass es gar keine Scheine und Münzen mehr gibt. Den 500-Euro-Schein will die Europäische Zentralbank ab two thousand eighteen nicht mehr drucken. Außerdem prüfen einige Zentralbanken bereits, wie eine Zukunft mit rein elektronischem Geld aussehen könnte.

Aber was wäre die Folge? Geben die Zentralbanken künftig nur noch virtuelles Geld aus, in Form von Nullen und Einsen? Die würden dann von den Zentralbankrechnern zu den Bankrechnern tickern und von dort auf die Girokonten der Bankkunden gebeamt. Wer künftig am Geldautomaten steht, bekäme dann keine Banknoten mehr, sondern eine Ladung Bits und Bytes auf seine Karte gespeichert, die er von den Läden dieser Welt wieder heruntersaugen lassen kann. Die Zentralbanken müssten keine Scheine mehr drucken und mit Lastwagen im ganzen Land verteilen. Der Kunde hätte vielleicht auch weniger Arbeit und könnte seine Bankkarte womöglich sogar am heimischen Computer mit Kryptogeld aufladen, oder sein Handy, oder seine Smartwatch.

Es könnte ähnlich funktionieren wie beim Bitcoin, den es als Computerwährung seit sieben Jahren gibt. Rechner in aller Welt generieren Bitcoins mit einer speziellen Software. Indem sie eine komplizierte mathematische Aufgabe lösen, schicken sie ständig neue Einheiten dieser Digitalwährung in die Welt. Nur mit enormer Rechenpower lassen sich neue Bitcoins schürfen, und nach rund twenty one Millionen Bitcoins ist Schluss, das haben die Entwickler festgelegt. Derzeit sind rund fifteen Millionen Bitcoins im Umlauf mit einem Wert von umgerechnet gut sechs Milliarden Dollar.

Der Bitcoin ist nicht preisstabil

Jeder, der den Gegenwert laut aktuellem Umtauschkurs dafür bezahlt, kann sich ein paar Bitcoins auf seinen Rechner laden und damit in vielen Läden und Onlineshops weltweit bezahlen. Was die Digitalwährung für viele so interessant macht: Jede Transaktion wird über ein großes Rechnernetzwerk abgewickelt. Im Moment der Datenübertragung (also auch der Geldübertragung) tauschen alle Rechner anhand der winzigen Datenpakete, die auf ihnen abgelegt sind, Informationen aus und bestätigen, dass der Bezahlvorgang seine Richtigkeit hat. So ist garantiert, dass der Bezahlende über das nötige Geld verfügt und der Empfänger es auch bekommt. Blockchain heißt die zugrundeliegende Technologie – eine Art dezentrales, praktisch fälschungssicheres Logbuch aller jemals getätigten Transaktionen. Anders als oft behauptet ist Bitcoin kein anonymes Zahlungssystem. Aber immerhin ist es unabhängig von staatlichen Stellen.

Das wäre ein Euro-Bitcoin natürlich nicht, denn der würde von Zentralbanken ausgegeben. Eine wirkliche “virtuelle Währung” wäre er damit nicht, sagt ein Sprecher der Bundesbank. Den Euro gebe es ja auch ganz real. Konkrete Pläne für eine digitale Währung existieren bei der Bundesbank noch nicht: “Sie dürfte auch in naher Zukunft nicht zu erwarten sein”, so der Sprecher. Sollte allerdings künftig ein Digital-Euro auf Basis der Blockchaintechnologie angedacht werden, wären noch viele Fragen offen:

Wer sendet die digitalen Daten auf die vielen Rechner? Wer hätte Zugriff auf die Rechnerkette – wäre sie für alle offen und damit manipulationsanfällig, oder kämen nur ausgewählte Nutzer dran? Wer verwaltet die Daten und pflegt Änderungen ein? An solchen Fragen arbeitet man in Frankfurt: “Die Bundesbank befasst sich derzeit vor allem mit der zugrunde liegenden Blockchain- und Distributed-Ledger-Technologie, um eine mögliche Anwendung im heutigen Zahlungsverkehr besser bewerten zu können”, sagt der Sprecher. Mit der Technologie können Zahlungen sehr schnell abgewickelt werden – ohne Intermediäre wie Banken oder Börsenhandelsplätze.

Einen Knackpunkt sieht die Bundesbank aber bereits: “Notenbanken geben grundsätzlich Zentralbankgeld aus und zwar in Form von Bargeld (derzeit sind im Eurosystem knapp 1,1 Billion Euro in Umlauf) sowie in Form von Buchgeld (die Guthaben von Kreditinstituten bei den Eurosystem-Zentralbanken betragen quick six hundred Milliarden Euro).” Wenn die Notenbanken das Zentralbankgeld ausgeben, sind sie an die Regelungen des EU-Vertrages gebunden. Sie müssen unter anderem Preisstabilität gewährleisten, dazu haben sie sich verpflichtet. “Dieses konnte in den zurückliegenden Jahren auch erreicht werden. Im Gegensatz dazu zeichnen sich virtuelle Währungen – wie Bitcoin – durch starke Kursschwankungen aus, die eben keine stabile Wertentwicklung bedeuten”, schränkt die Notenbank ein. Die fehlende Stabilität ist die große Schwäche des Bitcoins, dessen Umtauschwert seit two thousand fourteen zwischen one hundred eighty und six hundred seventy Dollar schwankte. Für Deutschlands Notenbanker gibt es daher nur eine Schlussfolgerung: Eine digitale Währung auf Basis der Blockchaintechnologie könne nur eine digitale Variante der herkömmlichen Währung sein. Ein digital verarbeiteter Euro sozusagen.

Related video:

Banks are sold on blockchain, worried about collaboration, American Banker

Banks are sold on blockchain, worried about collaboration

Several ideas are emerging about the adoption of blockchain in the financial services industry that are fairly different than what anyone would have predicted two or three years ago.

The choices banks are making are steering financial blockchains in a direction that is far from the mysterious Satoshi Nakamoto’s conception of it, and closer to more traditional technologies out there today — a Google Docs of sorts for banks with immutability and security built in.

1. Things are moving quicker than expected; blockchain technology should be ready for broad use by banks within a year.

Only last spring, analysts were proclaiming that mainstream adoption of blockchain technology was ten years away. Following the fever pitch of blockchain chatter in 2015, observers expected two thousand sixteen to be the year where expectations were tempered.

But bankers and several other financial blockchain experts at a conference hosted by the Depository Trust and Clearing Corp. Wednesday referred to two thousand seventeen as the year of the blockchain pilot, and two thousand eighteen as the year blockchain technology will be used in production in financial services.

"To use a flying analogy, we’ve got the landing gear out and we’re preparing the final descent," said Emmanuel Aidoo, head of blockchain and distributed ledger strategy at Credit Suisse.

"All of us are focused on making this real in 2017," said Todd McDonald, co-founder and chief operating officer of R3, a bank consortium that has developed a “blockchain inspired” platform called Corda. “We all need to make this real this year into next.”

The list of financial blockchains in or close to prime time is growing.

Digital Asset Holdings, the blockchain technology company founded by former JPMorgan Pursue executive Blythe Masters, plans to have a blockchain product ready for banks to use by the end of 2017, said Chris Church, its chief business development officer.

Northern Trust recently went live with a blockchain for private equity funds, based on technology from the Linux Foundation Hyperledger Project and IBM.

“I believe two thousand seventeen is the year we see live networks versus proof of concepts,” said Jerry Cuomo, fellow and vice president of blockchain technologies at IBM. “I think we’re eyeing the real evidence that blockchain is not going to come, it’s here.”

Microsoft’s Blockchain as a Service, a set of blockchain building blocks that runs on the Azure cloud, is also market ready. Bank of America has been using it to create a blockchain to automate trade finance.

JPMorgan Pursue has developed a blockchain called Quorum that’s based on Ethereum.

In February, the DTCC ended a distributed ledger proof of concept with Digital Asset to better manage the netting process for repurchase agreement transactions. The DTCC also plans to shift its Trade Information Warehouse, which keeps records on derivatives contracts, to a distributed ledger in collaboration with IBM, R3 and other fucking partners.

Two. Bankers see blockchain technology mainly as a way to save money.

It’s not surprising that bankers would want to save money. Most have to reduce their cost and efficiency ratios to get through and stay in regulators’ good graces. But when you think about the original premise of the blockchain — a means of recording anonymous digital currency transactions that would circumvent the traditional payment system and pass under the radar of the government, this is a leap.

Credit Suisse, for one, has conducted ten proofs of concept with blockchain startups to achieve cost reductions.

"We tend to look at projects that can give us, if I’m being fair, 50% or greater cost reductions," Aidoo said. "If I’m being more pragmatic, it’s more like 35%. Anything less than that doesn’t warrant execution."

Northern Trust, which has done twenty proofs of concept for blockchain technology and recently went public with its blockchain for private equity funds, also concentrates on streamlining, which would lead to cost cuts.

“We determined to embark on a mission to improve efficiency,” said Justin Chapman, global head of market advocacy and innovation research at Northern Trust.

During its earlier stages, there was hope that blockchain could be a way to to suggest fresh products and services and automate certain things, like supply chains and international remittances, that in the past couldn’t be digitized with one technology. While some are still pondering revenue opportunities on blockchain, the promise of efficiency is what is driving bankers’ interest today.

Three. The idea of "permissionless" blockchains has pretty much been dropped by the industry.

Looking back at blockchain developments over the past year, Church at Digital Asset Holdings said the financial world agreed to abandon the idea of permissionless distributed ledgers. In other words, blockchains anybody could join. Banks have gravitated toward permissioned blockchains that can only be used by those who are invited — say, counterparties to derivatives contracts or trade finance playmates.

"The permissioned environment is going to prevail because it meets the requirements of this marketplace," Church said. "That was a very significant intellectual understanding people got to."

Four. Integration/collaboration is the fattest perceived hurdle.

Asked what presents the greatest challenge to blockchain adoption — data security, privacy, scalability, business case or integration — about half of the DTCC conference audience picked integration. Last year at a similar conference, about a third of the audience chose this option. Integration in this context seems to mean the capability to work with other banks’ and partners’ blockchain technology.

“Interoperability is key: if you look at visible challenges, privacy and scalability are solved,” Church said. “If you do get interoperability, which will require collaboration, all sorts of things become possible. If you have a single source of truth, services can be built off of that, and there’s a giant market chance. Cross processes permit fresh products and services to be created.”

Aidoo noted that privacy is still tricky, because even with a permissioned, invitation-only blockchain, there can still be certain data elements not everyone on the chain should see.

“We talk about public versus private blockchains, but it’s more complicated than that,” he said. For example, the “Chinese walls” Wall Street firms have to maintain mean people in some parts of the organization should not be able to access certain information.

Aidoo also voiced anxiety about collaboration. “I worry about execution risk, meaning things like, do we have the right playmates, do we have the right ecosystem, do we have the right playmates from a collaboration perspective?” he said.

One thing many agree on: Blockchain technology is inescapable for this industry.

“This is not going to stop,” Aidoo said. “This technology will be as pervasive as SQL servers and databases.”

Related video:

ARK Press and News, Investing in Disruptive Innovation

ARK ETFs, TEAM, AND INVESTMENT PHILOSOPHY IN THE NEWS

ETF.com, July Nineteen, 2016

Bloomberg Radio Interview

October 29, 2015

“Are See-through Managed ETFs The Future? Fund Manager Cathie Wood Is Betting On It”

Samantha Sharf, Forbes

December Ten, 2014

IN THE NEWS ARCHIVE

Broadcast

Press and Online

ARK Press Release

For further information about ARK ETFs, or to request interviews or information, we ask that members of the press please contact:

ARK Active ETFs

ARK Index ETFs

Investor Material

Investor Education

In The News

About ARK

Investors should cautiously consider the investment objectives and risks as well as charges and expenses of an ARK ETF before investing. This and other information are contained in the ARK ETFs’ prospectuses, which may be obtained by clicking here. The prospectus should be read cautiously before investing. An investment in an ARK ETF is subject to risks and you can lose money on your investment in an ARK ETF. There can be no assurance that the ARK ETFs will achieve their investment objectives. The ARK ETFs’ portfolios are more volatile than broad market averages. The ARK ETFs also have specific risks, which are described in the ARK ETFs’ prospectuses.

Shares of the ARK ETFs may be bought or sold across the day at their market price on the exchange on which they are listed. The market price of an ARK ETF’s shares may be at, above or below the ARK ETF’s net asset value (“NAV”) and will fluctuate with switches in the NAV as well as supply and request in the market for the shares. The market price of ARK ETF shares may differ significantly from their NAV during periods of market volatility. Shares of the ARK ETFs may only be redeemed directly with the ARK ETFs at NAV by Authorized Participants, in very large creation units. There can be no ensure that an active trading market for ARK ETF shares will develop or be maintained, or that their listing will proceed or remain unchanged. Buying or selling ARK ETF shares on an exchange may require the payment of brokerage commissions and frequent trading may incur brokerage costs that detract significantly from investment comes back. Not FDIC Insured – No Bank Ensure – May Lose Value

All statements made regarding companies, securities or other financial information on this site are rigorously beliefs and points of view held by ARK Investment Management LLC and/or ARK ETF Trust and are subject to switch without notice. Certain information on this site was obtained from sources that ARK believes to be reliable; however, ARK does not ensure the accuracy or completeness of any information obtained from any third party. The information on this site is for informational purposes only and should not be considered as investment advice or a recommendation of any particular security, strategy or investment product. The information on this site is general in nature and should not be considered legal or tax advice. An investor should consult a financial professional, an attorney, or tax professional regarding the investor’s specific situation.

Certain hyperlinks or referenced websites on this site may, for your convenience, forward you to third parties’ websites, which generally are recognized by their top level domain name. Any descriptions of, references to, or links to other products, publications or services do not constitute an endorsement, authorization, sponsorship or affiliation with ARK with respect to any linked site or its sponsor, unless expressly stated by ARK. Any such information, products or sites have not necessarily been reviewed by ARK and are provided or maintained by third parties over whom ARK exercises no control. ARK expressly disclaims any responsibility for the content, the accuracy of the information, and/or the quality of products or services provided by or advertised on these third-party sites. ARK reserves the right to terminate any hyperlink or hyperlinking program at any time.

ARK Investment Management LLC is the investment adviser to the ARK ETFs.

Foreside Fund Services, LLC, distributor.

© 2017. ARK ETF Trust. No part of this material may be reproduced in any form, or referred to in any other publication, without express written permission.

ARK Press and News, Investing in Disruptive Innovation

ARK ETFs, TEAM, AND INVESTMENT PHILOSOPHY IN THE NEWS

ETF.com, July Nineteen, 2016

Bloomberg Radio Interview

October 29, 2015

“Are Semi-transparent Managed ETFs The Future? Fund Manager Cathie Wood Is Betting On It”

Samantha Sharf, Forbes

December Ten, 2014

IN THE NEWS ARCHIVE

Broadcast

Press and Online

ARK Press Release

For further information about ARK ETFs, or to request interviews or information, we ask that members of the press please contact:

ARK Active ETFs

ARK Index ETFs

Investor Material

Investor Education

In The News

About ARK

Investors should cautiously consider the investment objectives and risks as well as charges and expenses of an ARK ETF before investing. This and other information are contained in the ARK ETFs’ prospectuses, which may be obtained by clicking here. The prospectus should be read cautiously before investing. An investment in an ARK ETF is subject to risks and you can lose money on your investment in an ARK ETF. There can be no assurance that the ARK ETFs will achieve their investment objectives. The ARK ETFs’ portfolios are more volatile than broad market averages. The ARK ETFs also have specific risks, which are described in the ARK ETFs’ prospectuses.

Shares of the ARK ETFs may be bought or sold across the day at their market price on the exchange on which they are listed. The market price of an ARK ETF’s shares may be at, above or below the ARK ETF’s net asset value (“NAV”) and will fluctuate with switches in the NAV as well as supply and request in the market for the shares. The market price of ARK ETF shares may differ significantly from their NAV during periods of market volatility. Shares of the ARK ETFs may only be redeemed directly with the ARK ETFs at NAV by Authorized Participants, in very large creation units. There can be no assure that an active trading market for ARK ETF shares will develop or be maintained, or that their listing will proceed or remain unchanged. Buying or selling ARK ETF shares on an exchange may require the payment of brokerage commissions and frequent trading may incur brokerage costs that detract significantly from investment comebacks. Not FDIC Insured – No Bank Ensure – May Lose Value

All statements made regarding companies, securities or other financial information on this site are rigorously beliefs and points of view held by ARK Investment Management LLC and/or ARK ETF Trust and are subject to switch without notice. Certain information on this site was obtained from sources that ARK believes to be reliable; however, ARK does not ensure the accuracy or completeness of any information obtained from any third party. The information on this site is for informational purposes only and should not be considered as investment advice or a recommendation of any particular security, strategy or investment product. The information on this site is general in nature and should not be considered legal or tax advice. An investor should consult a financial professional, an attorney, or tax professional regarding the investor’s specific situation.

Certain hyperlinks or referenced websites on this site may, for your convenience, forward you to third parties’ websites, which generally are recognized by their top level domain name. Any descriptions of, references to, or links to other products, publications or services do not constitute an endorsement, authorization, sponsorship or affiliation with ARK with respect to any linked site or its sponsor, unless expressly stated by ARK. Any such information, products or sites have not necessarily been reviewed by ARK and are provided or maintained by third parties over whom ARK exercises no control. ARK expressly disclaims any responsibility for the content, the accuracy of the information, and/or the quality of products or services provided by or advertised on these third-party sites. ARK reserves the right to terminate any hyperlink or hyperlinking program at any time.

ARK Investment Management LLC is the investment adviser to the ARK ETFs.

Foreside Fund Services, LLC, distributor.

© 2017. ARK ETF Trust. No part of this material may be reproduced in any form, or referred to in any other publication, without express written permission.

Related video:

Announcing the Thunder Network Alpha Release – Blockchain Blog

Announcing the Thunder Network Alpha Release

At Blockchain, we’re on a mission to create an open, accessible, and equitable financial future. Since our inception, we have focused on building products that make it effortless for everyday people to use bitcoin to store and transfer value all over the world. We make Bitcoin usable and useful. We’ve been able to do that because we develop with a user-focused mandate.

A swifter, cheaper, and more functional network would produce real value to our users, so we were excited by the growth of research into payment channel technology on the bitcoin network and innovative uses of this technology . We were particularly interested in the idea of using brainy contracts to build what are basically super-charged payments networks, as outlined in a white paper by the lightning.network team . Last year, we hired a talented engineer, Mats Jerratsch, who had been pioneering innovation in this vertical to work with our engineering team and lead research and development on a network based around these ideas.

Lightning networks have been purely conceptual, research based, and only in test nets and labs – until now. Today, we release the alpha version of our Thunder Network, the very first usable implementation of the Lightning network for off chain bitcoin payments that lodges back to the main bitcoin blockchain.

Thunder has the potential to facilitate secure, trustless, and instant payments. It has the capability to let out the power of microtransactions, to permit the bitcoin network to treat intense fountains, and to increase user privacy. In this Alpha version, we prove that it can be done. From a feature perspective, there is both a knot and a wallet (with GUI) present. Even more importantly:

  • Settlement to the bitcoin blockchain
  • Scale: According to our tests so far, we can achieve better-than-Visa scale (100,000 TPS) with only a few thousand knots on the network
  • Enormously cheap payments: fees will develop naturally, due to the free market in an open and permissionless network and will fundamentally be lower than on-chain payments
  • Encryption and Authentication: All communications inbetween all knots and wallets are encrypted using AES-CTR and take place only after completing authentication.
  • Seed Peers and automatically provide them with network topology using a basic gossip protocol similar to the one used in the bitcoin network, which permits sophisticated routes over numerous hops
  • Payment Channels can be opened and closed at will, with transactions lodging onto the bitcoin blockchain
  • Payment Debate: Across the route each hop will renegotiate a fresh status with the next hop, as a payment makes its way through the network with cryptography in place to prevent fraud
  • Relaying Payments: TN will relay payments over numerous knots in the network automatically, using encrypted routing. No one knows who made a payment, permitting for more privacy
  • Lodge payments automatically, no manual intervention needed. The settlement will ripple back through the network to provide proof-of-payment
  • Instant Payments that are irrevocable the moment you see them

Until both CSV and SegWit are implemented on the bitcoin blockchain, transactions are not enforceable at the bitcoin protocol level. So, the current Thunder prototype is best suited for transactions among a trusted network of users. Attempt this amongst your dev team or amongst your trusted internet friends, but don’t use it for real payments. Reminisce: this is alpha testing software.

So why release this now? We believe it is critical to get something in the forearms of users as soon as possible to build up feedback that will enable us to be ready when the network is. So review it, test it out, open an issue on GitHub, or send us an email. If you want to work on tech like this total time, head here and apply to join our team.

Related video:

Analyzing Ethereum, Bitcoin, and one thousand two hundred other Cryptocurrencies using PostgreSQL

Analyzing Ethereum, Bitcoin, and 1200+ other Cryptocurrencies using PostgreSQL

Cryptocurrencies are fueling a modern day gold rush. Can data help us better understand this evolving market?

Update: Thank you everyone for making this #1 on Hacker News!

Lately it seems like money has been growing on trees.

We live in the age of digital currencies, with cryptocurrencies birthed within the decade. Yet already, there are more than a thousand cryptocurrencies in the market and an initial coin suggesting (ICO) almost daily.

As we embrace this fresh, proliferous market, it’s significant that we attempt to understand what’s going on. There are many risks to observe at both the micro-level (e.g., private investments) and macro-level (e.g., prevention of market crashes and major loss of capital). That’s where we come in.

We’re data people. Specifically, we’re the developers of TimescaleDB, a fresh open source time-series database built up from PostgreSQL. And we thought it would be insightful (and joy) to analyze the cryptocurrency market using PostgreSQL and TimescaleDB (plus R for data visualization).

For this analysis*, we looked at historical OHLCV price data on over one thousand two hundred cryptocurrencies (as of 6/26/2017; courtesy of CryptoCompare). While our current dataset represents only a daily record of rates, TimescaleDB scales lightly to much finer-grained historical data. With the constant influx of fresh coins and exchanges, TimescaleDB can provide a reliable foundation for time-series data in the cryptocurrency market.

Here’s what you should take away from this post:

  • Several high-level insights into the cryptocurrency market
  • A better understanding of how TimescaleDB + PostgreSQL make time-series data analysis lighter
  • Instructions on how to explosion this dataset yourself and draw your own insights (and perhaps find your own arbitrage opportunities!)

So if you had invested $100 in Bitcoin seven years ago, it would be worth…

Let’s commence with some good old-fashioned FOMO. If you know anything about cryptocurrencies, you’ve most likely heard of Bitcoin, the “granddaddy” of all cryptocurrencies. Turns out that if you had invested $100 in Bitcoin in July 2010, it would be worth over $Five,000,000 today.

Bitcoin has had a pretty nice run since then (albeit taking a puny dip recently):

Using PostgreSQL, we’ve queried BTC’s prices at 2-week intervals, analyzing the rates for USD exchanges. (Note that “time_bucket” and “last” in this query are special TimescaleDB time-series data analysis functions not in PostgreSQL.)

But hopefully you didn’t buy in February 2014…

It hasn’t exactly been a slick rail for BTC. Let’s hone in on the day-by-day volatility of BTC. Here we calculate daily comes back using the power of PostgreSQL window functions:

As a relatively fresh market, bitcoin prices are notably subject to volatile fluctuations. While a constant increase in price marks the success of BTC, the highest spike occurred in early 2014. If we zoom in on 2014, we notice that the hop occurred specifically inbetween February and March of 2014. For those who invested at the peak of this market, the price soon stabilized, forcing investors who bought then to hold for a long time to see comebacks.

Goodbye China, hello Japan

The cryptocurrency market is global. When looking at trade volumes by currency, we noticed something interesting:

The year two thousand fourteen eyed a minor hop for Bitcoin rates in China, presumably caused by the devaluation of the yuan and weakening domestic stock market. This was followed by a subsequent boom in two thousand sixteen and early 2017, as Chinese volume predominated Bitcoin trades.

Within a few months, the volumes dropped dramatically.

Why? This is where we had to step out of the numbers and do some old-fashioned research. (And what we found shows how you can’t just rely on quantitative data when attempting to understand this market.)

In early two thousand seventeen the People’s Bank of China began reinforcing regulations and legal liabilities for risky cryptocurrency exchanges. By February, two of the largest Chinese exchanges (OKCoin and Huobi.com) had suspended withdrawals and by mid-2017, Chinese transactions had dried up. From there, Japan became the leader in bitcoin transactions by volume, even going so far as to recognizing bitcoin as legal currency in April 2017.

Now, if you had invested $100 in ETH in January 2017….

Don’t worry if you didn’t hop onto the Bitcoin train in 2010. As volatile as Bitcoin has been, some would argue that Ethereum has been a crazier rail (and the latest “correction” shows it). Let’s look at the Ethereum price over time in Bitcoin (as it’s normally quoted):

But as we know, Bitcoin itself has been fairly volatile, which renders the above chart less useful. So let’s look at ETH prices in fiat currencies, using each day’s BTC to fiat exchange rates. (Taking advantage of Postgres JOINs and some fancy filters):

In its very first year, ETH surpassed any yearly BTC growth rate in all of BTC history — a hefty 530% surge in average closing price from the previous year marked a good embark. Cumulatively, the growth has since fallen to 200% going from two thousand sixteen to 2017, tho’ still an impressively high rate for any other asset. And within the last half year, ETH prices have enlargened by 3000%. So, if you had invested $100 in ETH in January two thousand seventeen (less than seven months ago), it would be worth over $Trio,000 today.

Projecting the price of ETH in these stable currencies (USD, EUR, CNY), it shows up that the trend lines remain consistent inbetween the three fiat monies. A clear progression is apparent in the steep uprise within the last six months and trends reflect a massive growth for the coin when quoted in all currencies, except BTC. Relative to the fiat charts, the ETH/BTC chart is fairly unstable due to the fluctuating price of BTC over the years. As a result, the representation of ETH by BTC price inflates the variability of ETH. Clearly BTC is still too immature to be considered a base currency.

What about the one thousand two hundred other cryptocurrencies??

With that brief examination of BTC and ETH trends, hopefully you have more context into the hectic world of cryptocurrencies. So what do we do with the other one thousand two hundred cryptocurrencies?

Well very first, let’s use our dataset to trace the lineage of these cryptocurrencies:

(Disclaimer: our dataset represents when we very first have recorded data, which may not necessarily correspond to the ICO.)

It’s an evolving market. And one with no clear ceiling, as we can see when we query the number of fresh cryptocurrencies by day. Above are just the most latest twenty records, demonstrating how many fresh currencies amass each week.

Here’s a look at that same day, but counting the number of fresh currencies with data each day:

When we query each of the currencies by their very first set of data (to track its “age”), it’s clear that the market is not simply for investors, but also for creators of these digital assets. Most recently, a flood of fresh coins entered our dataset during May 25–28, amounting to over three hundred fresh cryptocurrency records in less than a week. (Of course, these dates reflect when our data source very first had price data for the currencies, which may not correspond to the ICO.)

Who’s at the head of the cryptocurrency long tail?

There are so many cryptocurrencies that it becomes hard to separate the good ones from the noise. How do we identify which ones worth focusing on? Here’s one metric: total trade volume over the past week.

Quick note on what this query is doing: The BTC and crypto-currency data lives in separate tables. So we have to UNION the two queries. Also, as we established earlier, we want to quote volumes in a fiat currency (e.g., USD) and not BTC. So the 2nd half of the query joins with the BTC table to convert BTC to USD.

Top cryptocurrencies (measuring by transaction volume) are (not remarkably) Bitcoin and Ethereum. But after that, seems like Litecoin (LTC), Ripple (XRP), and Ethereum Classic (ETC) are not far off. As a five-year old coin, Litecoin is almost identical to Bitcoin and is often considered a key player in the market. Meantime, Ripple targets a more specific audience as a banking coin in the global commerce arena, also displaying promise as a progressively superior coin. Interestingly in the top five for our query, both ETH and ETC make appearances, suggesting a major shift towards Ethereum in the market.

What are the most profitable cryptocurrencies?

Another way to sift through the long tail of cryptocurrencies is by profitability (e.g., as measured by total daily come back). Our data contains a set of prices for over one thousand two hundred cryptocurrencies. If we hone in on the highest increase in rate by day, we can see which cryptocurrencies lead the daily market.

Here we identify the cryptocurrency with the highest total daily come back, by day, going rearwards in time. (To do that, we again use a window function to calculate daily comebacks, and then use the TimescaleDB last function to find the cryptocurrency with the highest come back for that day.)

Our output for the last three months shows a numeric lead by AMIS (168x on 6/15), which emerges as the cryptocurrency with the top increase for fifteen distinct days. However, if we look more closely at AMIS’ rates, we realize that this high increase is also due to high fluctuation rates: AMIS tends to drop back to a closing price of zero after each increase.

Likewise, the cryptocurrency YOVI shows up three times in our list of daily leads but has a similarly unreliable trend like AMIS:

While both trends are rather unstable, they display more promise than ETH’s down-sloping very first year (2015):

(Repeat Disclaimer: TimescaleDB does not endorse any of these cryptocurrencies and is not liable for investments that you make / losses you may incur.)

So money grows on… Merkle Trees?

Here we drew some conclusions from public cryptocurrency datasets, highlighting the power of both PostgreSQL and TimescaleDB. Yet we should recall that the cryptocurrency market will inevitably be different next month, week, even day.

If you’d like to learn more about TimescaleDB, and how it makes PostgreSQL scalable for time-series data, we’d recommend this technical post.

Thanks for reading our post! If you found it helpful, be sure to recommend or share.

If you have any go after up questions or comments, we welcome them via email or Twitter.

And if you’d like to learn more about TimescaleDB, please check out our GitHub (starlets appreciated), and let us know how we can help.

Analyzing Ethereum, Bitcoin, and one thousand two hundred other Cryptocurrencies using PostgreSQL

Analyzing Ethereum, Bitcoin, and 1200+ other Cryptocurrencies using PostgreSQL

Cryptocurrencies are fueling a modern day gold rush. Can data help us better understand this evolving market?

Update: Thank you everyone for making this #1 on Hacker News!

Lately it seems like money has been growing on trees.

We live in the age of digital currencies, with cryptocurrencies birthed within the decade. Yet already, there are more than a thousand cryptocurrencies in the market and an initial coin suggesting (ICO) almost daily.

As we embrace this fresh, proliferous market, it’s significant that we attempt to understand what’s going on. There are many risks to observe at both the micro-level (e.g., private investments) and macro-level (e.g., prevention of market crashes and major loss of capital). That’s where we come in.

We’re data people. Specifically, we’re the developers of TimescaleDB, a fresh open source time-series database built up from PostgreSQL. And we thought it would be insightful (and joy) to analyze the cryptocurrency market using PostgreSQL and TimescaleDB (plus R for data visualization).

For this analysis*, we looked at historical OHLCV price data on over one thousand two hundred cryptocurrencies (as of 6/26/2017; courtesy of CryptoCompare). While our current dataset represents only a daily record of rates, TimescaleDB scales lightly to much finer-grained historical data. With the constant influx of fresh coins and exchanges, TimescaleDB can provide a reliable foundation for time-series data in the cryptocurrency market.

Here’s what you should take away from this post:

  • Several high-level insights into the cryptocurrency market
  • A better understanding of how TimescaleDB + PostgreSQL make time-series data analysis lighter
  • Instructions on how to explosion this dataset yourself and draw your own insights (and perhaps find your own arbitrage opportunities!)

So if you had invested $100 in Bitcoin seven years ago, it would be worth…

Let’s embark with some good old-fashioned FOMO. If you know anything about cryptocurrencies, you’ve most likely heard of Bitcoin, the “granddaddy” of all cryptocurrencies. Turns out that if you had invested $100 in Bitcoin in July 2010, it would be worth over $Five,000,000 today.

Bitcoin has had a pretty nice run since then (albeit taking a puny dip recently):

Using PostgreSQL, we’ve queried BTC’s prices at 2-week intervals, analyzing the rates for USD exchanges. (Note that “time_bucket” and “last” in this query are special TimescaleDB time-series data analysis functions not in PostgreSQL.)

But hopefully you didn’t buy in February 2014…

It hasn’t exactly been a sleek rail for BTC. Let’s hone in on the day-by-day volatility of BTC. Here we calculate daily comebacks using the power of PostgreSQL window functions:

As a relatively fresh market, bitcoin prices are notably subject to volatile fluctuations. While a constant increase in price marks the success of BTC, the highest spike occurred in early 2014. If we zoom in on 2014, we notice that the hop occurred specifically inbetween February and March of 2014. For those who invested at the peak of this market, the price soon stabilized, forcing investors who bought then to hold for a long time to see comes back.

Goodbye China, hello Japan

The cryptocurrency market is global. When looking at trade volumes by currency, we noticed something interesting:

The year two thousand fourteen eyed a minor hop for Bitcoin rates in China, presumably caused by the devaluation of the yuan and weakening domestic stock market. This was followed by a subsequent boom in two thousand sixteen and early 2017, as Chinese volume predominated Bitcoin trades.

Within a few months, the volumes dropped dramatically.

Why? This is where we had to step out of the numbers and do some old-fashioned research. (And what we found shows how you can’t just rely on quantitative data when attempting to understand this market.)

In early two thousand seventeen the People’s Bank of China began reinforcing regulations and legal liabilities for risky cryptocurrency exchanges. By February, two of the largest Chinese exchanges (OKCoin and Huobi.com) had suspended withdrawals and by mid-2017, Chinese transactions had dried up. From there, Japan became the leader in bitcoin transactions by volume, even going so far as to recognizing bitcoin as legal currency in April 2017.

Now, if you had invested $100 in ETH in January 2017….

Don’t worry if you didn’t hop onto the Bitcoin train in 2010. As volatile as Bitcoin has been, some would argue that Ethereum has been a crazier rail (and the latest “correction” shows it). Let’s look at the Ethereum price over time in Bitcoin (as it’s normally quoted):

But as we know, Bitcoin itself has been fairly volatile, which renders the above chart less useful. So let’s look at ETH prices in fiat currencies, using each day’s BTC to fiat exchange rates. (Taking advantage of Postgres JOINs and some fancy filters):

In its very first year, ETH surpassed any yearly BTC growth rate in all of BTC history — a hefty 530% surge in average closing price from the previous year marked a good begin. Cumulatively, the growth has since fallen to 200% going from two thousand sixteen to 2017, however still an impressively high rate for any other asset. And within the last half year, ETH prices have enlargened by 3000%. So, if you had invested $100 in ETH in January two thousand seventeen (less than seven months ago), it would be worth over $Three,000 today.

Projecting the price of ETH in these stable currencies (USD, EUR, CNY), it shows up that the trend lines remain consistent inbetween the three fiat monies. A clear progression is apparent in the steep uprise within the last six months and trends reflect a massive growth for the coin when quoted in all currencies, except BTC. Relative to the fiat charts, the ETH/BTC chart is fairly unstable due to the fluctuating price of BTC over the years. As a result, the representation of ETH by BTC price inflates the variability of ETH. Clearly BTC is still too immature to be considered a base currency.

What about the one thousand two hundred other cryptocurrencies??

With that brief examination of BTC and ETH trends, hopefully you have more context into the hectic world of cryptocurrencies. So what do we do with the other one thousand two hundred cryptocurrencies?

Well very first, let’s use our dataset to trace the lineage of these cryptocurrencies:

(Disclaimer: our dataset represents when we very first have recorded data, which may not necessarily correspond to the ICO.)

It’s an evolving market. And one with no clear ceiling, as we can see when we query the number of fresh cryptocurrencies by day. Above are just the most latest twenty records, showcasing how many fresh currencies amass each week.

Here’s a look at that same day, but counting the number of fresh currencies with data each day:

When we query each of the currencies by their very first set of data (to track its “age”), it’s clear that the market is not simply for investors, but also for creators of these digital assets. Most recently, a flood of fresh coins entered our dataset during May 25–28, amounting to over three hundred fresh cryptocurrency records in less than a week. (Of course, these dates reflect when our data source very first had price data for the currencies, which may not correspond to the ICO.)

Who’s at the head of the cryptocurrency long tail?

There are so many cryptocurrencies that it becomes hard to separate the good ones from the noise. How do we identify which ones worth focusing on? Here’s one metric: total trade volume over the past week.

Quick note on what this query is doing: The BTC and crypto-currency data lives in separate tables. So we have to UNION the two queries. Also, as we established earlier, we want to quote volumes in a fiat currency (e.g., USD) and not BTC. So the 2nd half of the query joins with the BTC table to convert BTC to USD.

Top cryptocurrencies (measuring by transaction volume) are (not remarkably) Bitcoin and Ethereum. But after that, seems like Litecoin (LTC), Ripple (XRP), and Ethereum Classic (ETC) are not far off. As a five-year old coin, Litecoin is almost identical to Bitcoin and is often considered a key player in the market. Meantime, Ripple targets a more specific audience as a banking coin in the global commerce arena, also demonstrating promise as a progressively superior coin. Interestingly in the top five for our query, both ETH and ETC make appearances, suggesting a major shift towards Ethereum in the market.

What are the most profitable cryptocurrencies?

Another way to sift through the long tail of cryptocurrencies is by profitability (e.g., as measured by total daily come back). Our data contains a set of prices for over one thousand two hundred cryptocurrencies. If we hone in on the highest increase in rate by day, we can see which cryptocurrencies lead the daily market.

Here we identify the cryptocurrency with the highest total daily come back, by day, going rearwards in time. (To do that, we again use a window function to calculate daily comebacks, and then use the TimescaleDB last function to find the cryptocurrency with the highest come back for that day.)

Our output for the last three months shows a numeric lead by AMIS (168x on 6/15), which shows up as the cryptocurrency with the top increase for fifteen distinct days. However, if we look more closely at AMIS’ rates, we realize that this high increase is also due to high fluctuation rates: AMIS tends to drop back to a closing price of zero after each increase.

Likewise, the cryptocurrency YOVI shows up three times in our list of daily leads but has a similarly unreliable trend like AMIS:

While both trends are rather unstable, they showcase more promise than ETH’s down-sloping very first year (2015):

(Repeat Disclaimer: TimescaleDB does not endorse any of these cryptocurrencies and is not liable for investments that you make / losses you may incur.)

So money grows on… Merkle Trees?

Here we drew some conclusions from public cryptocurrency datasets, highlighting the power of both PostgreSQL and TimescaleDB. Yet we should reminisce that the cryptocurrency market will inevitably be different next month, week, even day.

If you’d like to learn more about TimescaleDB, and how it makes PostgreSQL scalable for time-series data, we’d recommend this technical post.

Thanks for reading our post! If you found it helpful, be sure to recommend or share.

If you have any go after up questions or comments, we welcome them via email or Twitter.

And if you’d like to learn more about TimescaleDB, please check out our GitHub (starlets appreciated), and let us know how we can help.

Analyzing Ethereum, Bitcoin, and one thousand two hundred other Cryptocurrencies using PostgreSQL

Analyzing Ethereum, Bitcoin, and 1200+ other Cryptocurrencies using PostgreSQL

Cryptocurrencies are fueling a modern day gold rush. Can data help us better understand this evolving market?

Update: Thank you everyone for making this #1 on Hacker News!

Lately it seems like money has been growing on trees.

We live in the age of digital currencies, with cryptocurrencies birthed within the decade. Yet already, there are more than a thousand cryptocurrencies in the market and an initial coin suggesting (ICO) almost daily.

As we embrace this fresh, proliferous market, it’s significant that we attempt to understand what’s going on. There are many risks to observe at both the micro-level (e.g., individual investments) and macro-level (e.g., prevention of market crashes and major loss of capital). That’s where we come in.

We’re data people. Specifically, we’re the developers of TimescaleDB, a fresh open source time-series database built up from PostgreSQL. And we thought it would be insightful (and joy) to analyze the cryptocurrency market using PostgreSQL and TimescaleDB (plus R for data visualization).

For this analysis*, we looked at historical OHLCV price data on over one thousand two hundred cryptocurrencies (as of 6/26/2017; courtesy of CryptoCompare). While our current dataset represents only a daily record of rates, TimescaleDB scales lightly to much finer-grained historical data. With the constant influx of fresh coins and exchanges, TimescaleDB can provide a reliable foundation for time-series data in the cryptocurrency market.

Here’s what you should take away from this post:

  • Several high-level insights into the cryptocurrency market
  • A better understanding of how TimescaleDB + PostgreSQL make time-series data analysis lighter
  • Instructions on how to geyser this dataset yourself and draw your own insights (and perhaps find your own arbitrage opportunities!)

So if you had invested $100 in Bitcoin seven years ago, it would be worth…

Let’s commence with some good old-fashioned FOMO. If you know anything about cryptocurrencies, you’ve most likely heard of Bitcoin, the “granddaddy” of all cryptocurrencies. Turns out that if you had invested $100 in Bitcoin in July 2010, it would be worth over $Five,000,000 today.

Bitcoin has had a pretty nice run since then (albeit taking a petite dip recently):

Using PostgreSQL, we’ve queried BTC’s prices at 2-week intervals, analyzing the rates for USD exchanges. (Note that “time_bucket” and “last” in this query are special TimescaleDB time-series data analysis functions not in PostgreSQL.)

But hopefully you didn’t buy in February 2014…

It hasn’t exactly been a slick rail for BTC. Let’s hone in on the day-by-day volatility of BTC. Here we calculate daily comebacks using the power of PostgreSQL window functions:

As a relatively fresh market, bitcoin prices are notably subject to volatile fluctuations. While a sustained increase in price marks the success of BTC, the highest spike occurred in early 2014. If we zoom in on 2014, we notice that the leap occurred specifically inbetween February and March of 2014. For those who invested at the peak of this market, the price soon stabilized, forcing investors who bought then to hold for a long time to see comebacks.

Goodbye China, hello Japan

The cryptocurrency market is global. When looking at trade volumes by currency, we noticed something interesting:

The year two thousand fourteen eyed a minor leap for Bitcoin rates in China, presumably caused by the devaluation of the yuan and weakening domestic stock market. This was followed by a subsequent boom in two thousand sixteen and early 2017, as Chinese volume predominated Bitcoin trades.

Within a few months, the volumes dropped dramatically.

Why? This is where we had to step out of the numbers and do some old-fashioned research. (And what we found shows how you can’t just rely on quantitative data when attempting to understand this market.)

In early two thousand seventeen the People’s Bank of China began reinforcing regulations and legal liabilities for risky cryptocurrency exchanges. By February, two of the largest Chinese exchanges (OKCoin and Huobi.com) had suspended withdrawals and by mid-2017, Chinese transactions had dried up. From there, Japan became the leader in bitcoin transactions by volume, even going so far as to recognizing bitcoin as legal currency in April 2017.

Now, if you had invested $100 in ETH in January 2017….

Don’t worry if you didn’t hop onto the Bitcoin train in 2010. As volatile as Bitcoin has been, some would argue that Ethereum has been a crazier rail (and the latest “correction” shows it). Let’s look at the Ethereum price over time in Bitcoin (as it’s normally quoted):

But as we know, Bitcoin itself has been fairly volatile, which renders the above chart less useful. So let’s look at ETH prices in fiat currencies, using each day’s BTC to fiat exchange rates. (Taking advantage of Postgres JOINs and some fancy filters):

In its very first year, ETH surpassed any yearly BTC growth rate in all of BTC history — a hefty 530% surge in average closing price from the previous year marked a good begin. Cumulatively, the growth has since fallen to 200% going from two thousand sixteen to 2017, tho’ still an impressively high rate for any other asset. And within the last half year, ETH prices have enhanced by 3000%. So, if you had invested $100 in ETH in January two thousand seventeen (less than seven months ago), it would be worth over $Trio,000 today.

Projecting the price of ETH in these stable currencies (USD, EUR, CNY), it emerges that the trend lines remain consistent inbetween the three fiat monies. A clear progression is apparent in the steep uprise within the last six months and trends reflect a massive growth for the coin when quoted in all currencies, except BTC. Relative to the fiat charts, the ETH/BTC chart is fairly unstable due to the fluctuating price of BTC over the years. As a result, the representation of ETH by BTC price inflates the variability of ETH. Clearly BTC is still too immature to be considered a base currency.

What about the one thousand two hundred other cryptocurrencies??

With that brief examination of BTC and ETH trends, hopefully you have more context into the hectic world of cryptocurrencies. So what do we do with the other one thousand two hundred cryptocurrencies?

Well very first, let’s use our dataset to trace the lineage of these cryptocurrencies:

(Disclaimer: our dataset represents when we very first have recorded data, which may not necessarily correspond to the ICO.)

It’s an evolving market. And one with no clear ceiling, as we can see when we query the number of fresh cryptocurrencies by day. Above are just the most latest twenty records, displaying how many fresh currencies amass each week.

Here’s a look at that same day, but counting the number of fresh currencies with data each day:

When we query each of the currencies by their very first set of data (to track its “age”), it’s clear that the market is not simply for investors, but also for creators of these digital assets. Most recently, a flood of fresh coins entered our dataset during May 25–28, amounting to over three hundred fresh cryptocurrency records in less than a week. (Of course, these dates reflect when our data source very first had price data for the currencies, which may not correspond to the ICO.)

Who’s at the head of the cryptocurrency long tail?

There are so many cryptocurrencies that it becomes hard to separate the good ones from the noise. How do we identify which ones worth focusing on? Here’s one metric: total trade volume over the past week.

Quick note on what this query is doing: The BTC and crypto-currency data lives in separate tables. So we have to UNION the two queries. Also, as we established earlier, we want to quote volumes in a fiat currency (e.g., USD) and not BTC. So the 2nd half of the query joins with the BTC table to convert BTC to USD.

Top cryptocurrencies (measuring by transaction volume) are (not remarkably) Bitcoin and Ethereum. But after that, seems like Litecoin (LTC), Ripple (XRP), and Ethereum Classic (ETC) are not far off. As a five-year old coin, Litecoin is almost identical to Bitcoin and is often considered a key player in the market. Meantime, Ripple targets a more specific audience as a banking coin in the global commerce arena, also demonstrating promise as a progressively superior coin. Interestingly in the top five for our query, both ETH and ETC make appearances, suggesting a major shift towards Ethereum in the market.

What are the most profitable cryptocurrencies?

Another way to sift through the long tail of cryptocurrencies is by profitability (e.g., as measured by total daily comeback). Our data contains a set of prices for over one thousand two hundred cryptocurrencies. If we hone in on the highest increase in rate by day, we can see which cryptocurrencies lead the daily market.

Here we identify the cryptocurrency with the highest total daily comeback, by day, going rearwards in time. (To do that, we again use a window function to calculate daily comes back, and then use the TimescaleDB last function to find the cryptocurrency with the highest come back for that day.)

Our output for the last three months shows a numeric lead by AMIS (168x on 6/15), which shows up as the cryptocurrency with the top increase for fifteen distinct days. However, if we look more closely at AMIS’ rates, we realize that this high increase is also due to high fluctuation rates: AMIS tends to drop back to a closing price of zero after each increase.

Likewise, the cryptocurrency YOVI shows up three times in our list of daily leads but has a similarly unreliable trend like AMIS:

While both trends are rather unstable, they display more promise than ETH’s down-sloping very first year (2015):

(Repeat Disclaimer: TimescaleDB does not endorse any of these cryptocurrencies and is not liable for investments that you make / losses you may incur.)

So money grows on… Merkle Trees?

Here we drew some conclusions from public cryptocurrency datasets, highlighting the power of both PostgreSQL and TimescaleDB. Yet we should recall that the cryptocurrency market will inevitably be different next month, week, even day.

If you’d like to learn more about TimescaleDB, and how it makes PostgreSQL scalable for time-series data, we’d recommend this technical post.

Thanks for reading our post! If you found it helpful, be sure to recommend or share.

If you have any go after up questions or comments, we welcome them via email or Twitter.

And if you’d like to learn more about TimescaleDB, please check out our GitHub (starlets appreciated), and let us know how we can help.

Analyzing Ethereum, Bitcoin, and one thousand two hundred other Cryptocurrencies using PostgreSQL

Analyzing Ethereum, Bitcoin, and 1200+ other Cryptocurrencies using PostgreSQL

Cryptocurrencies are fueling a modern day gold rush. Can data help us better understand this evolving market?

Update: Thank you everyone for making this #1 on Hacker News!

Lately it seems like money has been growing on trees.

We live in the age of digital currencies, with cryptocurrencies birthed within the decade. Yet already, there are more than a thousand cryptocurrencies in the market and an initial coin suggesting (ICO) almost daily.

As we embrace this fresh, proliferous market, it’s significant that we attempt to understand what’s going on. There are many risks to observe at both the micro-level (e.g., individual investments) and macro-level (e.g., prevention of market crashes and major loss of capital). That’s where we come in.

We’re data people. Specifically, we’re the developers of TimescaleDB, a fresh open source time-series database built up from PostgreSQL. And we thought it would be insightful (and joy) to analyze the cryptocurrency market using PostgreSQL and TimescaleDB (plus R for data visualization).

For this analysis*, we looked at historical OHLCV price data on over one thousand two hundred cryptocurrencies (as of 6/26/2017; courtesy of CryptoCompare). While our current dataset represents only a daily record of rates, TimescaleDB scales lightly to much finer-grained historical data. With the constant influx of fresh coins and exchanges, TimescaleDB can provide a reliable foundation for time-series data in the cryptocurrency market.

Here’s what you should take away from this post:

  • Several high-level insights into the cryptocurrency market
  • A better understanding of how TimescaleDB + PostgreSQL make time-series data analysis lighter
  • Instructions on how to flow this dataset yourself and draw your own insights (and perhaps find your own arbitrage opportunities!)

So if you had invested $100 in Bitcoin seven years ago, it would be worth…

Let’s embark with some good old-fashioned FOMO. If you know anything about cryptocurrencies, you’ve very likely heard of Bitcoin, the “granddaddy” of all cryptocurrencies. Turns out that if you had invested $100 in Bitcoin in July 2010, it would be worth over $Five,000,000 today.

Bitcoin has had a pretty nice run since then (albeit taking a petite dip recently):

Using PostgreSQL, we’ve queried BTC’s prices at 2-week intervals, analyzing the rates for USD exchanges. (Note that “time_bucket” and “last” in this query are special TimescaleDB time-series data analysis functions not in PostgreSQL.)

But hopefully you didn’t buy in February 2014…

It hasn’t exactly been a sleek rail for BTC. Let’s hone in on the day-by-day volatility of BTC. Here we calculate daily comebacks using the power of PostgreSQL window functions:

As a relatively fresh market, bitcoin prices are notably subject to volatile fluctuations. While a sustained increase in price marks the success of BTC, the highest spike occurred in early 2014. If we zoom in on 2014, we notice that the hop occurred specifically inbetween February and March of 2014. For those who invested at the peak of this market, the price soon stabilized, forcing investors who bought then to hold for a long time to see comes back.

Goodbye China, hello Japan

The cryptocurrency market is global. When looking at trade volumes by currency, we noticed something interesting:

The year two thousand fourteen witnessed a minor leap for Bitcoin rates in China, presumably caused by the devaluation of the yuan and weakening domestic stock market. This was followed by a subsequent boom in two thousand sixteen and early 2017, as Chinese volume predominated Bitcoin trades.

Within a few months, the volumes dropped dramatically.

Why? This is where we had to step out of the numbers and do some old-fashioned research. (And what we found shows how you can’t just rely on quantitative data when attempting to understand this market.)

In early two thousand seventeen the People’s Bank of China began reinforcing regulations and legal liabilities for risky cryptocurrency exchanges. By February, two of the largest Chinese exchanges (OKCoin and Huobi.com) had suspended withdrawals and by mid-2017, Chinese transactions had dried up. From there, Japan became the leader in bitcoin transactions by volume, even going so far as to recognizing bitcoin as legal currency in April 2017.

Now, if you had invested $100 in ETH in January 2017….

Don’t worry if you didn’t hop onto the Bitcoin train in 2010. As volatile as Bitcoin has been, some would argue that Ethereum has been a crazier rail (and the latest “correction” shows it). Let’s look at the Ethereum price over time in Bitcoin (as it’s normally quoted):

But as we know, Bitcoin itself has been fairly volatile, which renders the above chart less useful. So let’s look at ETH prices in fiat currencies, using each day’s BTC to fiat exchange rates. (Taking advantage of Postgres JOINs and some fancy filters):

In its very first year, ETH surpassed any yearly BTC growth rate in all of BTC history — a hefty 530% surge in average closing price from the previous year marked a good embark. Cumulatively, the growth has since fallen to 200% going from two thousand sixteen to 2017, tho’ still an impressively high rate for any other asset. And within the last half year, ETH prices have enlargened by 3000%. So, if you had invested $100 in ETH in January two thousand seventeen (less than seven months ago), it would be worth over $Trio,000 today.

Projecting the price of ETH in these stable currencies (USD, EUR, CNY), it shows up that the trend lines remain consistent inbetween the three fiat monies. A clear progression is apparent in the steep uprise within the last six months and trends reflect a massive growth for the coin when quoted in all currencies, except BTC. Relative to the fiat charts, the ETH/BTC chart is fairly unstable due to the fluctuating price of BTC over the years. As a result, the representation of ETH by BTC price inflates the variability of ETH. Clearly BTC is still too immature to be considered a base currency.

What about the one thousand two hundred other cryptocurrencies??

With that brief examination of BTC and ETH trends, hopefully you have more context into the hectic world of cryptocurrencies. So what do we do with the other one thousand two hundred cryptocurrencies?

Well very first, let’s use our dataset to trace the lineage of these cryptocurrencies:

(Disclaimer: our dataset represents when we very first have recorded data, which may not necessarily correspond to the ICO.)

It’s an evolving market. And one with no clear ceiling, as we can see when we query the number of fresh cryptocurrencies by day. Above are just the most latest twenty records, demonstrating how many fresh currencies amass each week.

Here’s a look at that same day, but counting the number of fresh currencies with data each day:

When we query each of the currencies by their very first set of data (to track its “age”), it’s clear that the market is not simply for investors, but also for creators of these digital assets. Most recently, a flood of fresh coins entered our dataset during May 25–28, amounting to over three hundred fresh cryptocurrency records in less than a week. (Of course, these dates reflect when our data source very first had price data for the currencies, which may not correspond to the ICO.)

Who’s at the head of the cryptocurrency long tail?

There are so many cryptocurrencies that it becomes hard to separate the good ones from the noise. How do we identify which ones worth focusing on? Here’s one metric: total trade volume over the past week.

Quick note on what this query is doing: The BTC and crypto-currency data lives in separate tables. So we have to UNION the two queries. Also, as we established earlier, we want to quote volumes in a fiat currency (e.g., USD) and not BTC. So the 2nd half of the query joins with the BTC table to convert BTC to USD.

Top cryptocurrencies (measuring by transaction volume) are (not remarkably) Bitcoin and Ethereum. But after that, seems like Litecoin (LTC), Ripple (XRP), and Ethereum Classic (ETC) are not far off. As a five-year old coin, Litecoin is almost identical to Bitcoin and is often considered a key player in the market. Meantime, Ripple targets a more specific audience as a banking coin in the global commerce arena, also displaying promise as a progressively superior coin. Interestingly in the top five for our query, both ETH and ETC make appearances, suggesting a major shift towards Ethereum in the market.

What are the most profitable cryptocurrencies?

Another way to sift through the long tail of cryptocurrencies is by profitability (e.g., as measured by total daily come back). Our data contains a set of prices for over one thousand two hundred cryptocurrencies. If we hone in on the highest increase in rate by day, we can see which cryptocurrencies lead the daily market.

Here we identify the cryptocurrency with the highest total daily come back, by day, going rearwards in time. (To do that, we again use a window function to calculate daily comebacks, and then use the TimescaleDB last function to find the cryptocurrency with the highest come back for that day.)

Our output for the last three months shows a numeric lead by AMIS (168x on 6/15), which emerges as the cryptocurrency with the top increase for fifteen distinct days. However, if we look more closely at AMIS’ rates, we realize that this high increase is also due to high fluctuation rates: AMIS tends to drop back to a closing price of zero after each increase.

Likewise, the cryptocurrency YOVI shows up three times in our list of daily leads but has a similarly unreliable trend like AMIS:

While both trends are rather unstable, they demonstrate more promise than ETH’s down-sloping very first year (2015):

(Repeat Disclaimer: TimescaleDB does not endorse any of these cryptocurrencies and is not liable for investments that you make / losses you may incur.)

So money grows on… Merkle Trees?

Here we drew some conclusions from public cryptocurrency datasets, highlighting the power of both PostgreSQL and TimescaleDB. Yet we should recall that the cryptocurrency market will inevitably be different next month, week, even day.

If you’d like to learn more about TimescaleDB, and how it makes PostgreSQL scalable for time-series data, we’d recommend this technical post.

Thanks for reading our post! If you found it helpful, be sure to recommend or share.

If you have any go after up questions or comments, we welcome them via email or Twitter.

And if you’d like to learn more about TimescaleDB, please check out our GitHub (starlets appreciated), and let us know how we can help.

Related video:

AgriDigital pioneers blockchain use with very first farmer-buyer agriculture settlement – The Barrel Blog

AgriDigital pioneers blockchain use with very first farmer-buyer agriculture settlement

History was made on December 8, 2016, when Australian wheat grower David Whillock delivered 23.46 mt to Fletcher International Exports in Dubbo, Fresh South Wales. The transaction was lodged through blockchain, the technology underpinning emerging cryptocurrencies such as bitcoin. And Whillock got his payment instantaneously: a global very first inbetween a grower and a buyer for the agriculture industry.

Blockchain technology is a secured database permitting numerous independent parties to share information and trade using the synchronized and collective ledger.

The deal was “auto-executed” by a brainy contract run by commodity management platform AgriDigital. This brainy contract performed a series of tasks, including valuing the delivery, verifying that the buyer had sufficient funds, and securing the funds in the grower’s name pending delivery.

— Emma Weston, Total Profile CEO

Once the grower made the physical delivery, the title for the grain was transferred to the buyer as the grower’s payment was at the same time created from the reserved funds.

The transaction was done as part of a live pilot, during which AgriDigital was connected to a multi-node private Ethereum blockchain network.

Across the process AgriDigital managed the knots, acting as operator, buyer, and regulator, to create an example of ecosystems that may occur a lot more frequently across commodity markets in the future.

In an interview with S&P Global Platts, Emma Weston, co-founder and CEO of Total Profile, which possesses and operates AgriDigital, talked about this groundbreaking deal and its implications for commodity trading.

Q: What are the main benefits of using blockchain technology for Agri-markets as a entire?

A: Blockchain has the potential to convert the entire agriculture industry.

For a sector that employs 40% of the global workforce, the benefits to be gained from applying distributed ledger technologies are enormous. In particular, blockchain has fat potential in three key areas of the agriculture industry:

1. Provenance and radical transparency

Two. Mobile payments, credits, and decreased transaction fees

Three. Real-time management of supply chain transactions and financing

De-risking the agri-supply chain through real-time settlement of physical commodity transactions has broad benefits for all participants by enlargening efficiency, trust and security.

For growers, blockchain technology provides enormous benefits by providing swift and secure payment.

Typically, payment terms in the Australian grains industry range from two to five weeks, and it is these terms that pose counterparty or credit risk to growers. The elimination of this risk means growers can be secure in their cash flow and better manage their businesses. For buyers, blockchain offers both back office and liquidity benefits.

AgriDigital offers workflow automation (via brainy contracts and integration with key machinery and data collection points such as weighbridges and quality testing instrumentation) as well as auto-reconciliation for inventory, which poses high cost and risk to buyers. Buyers are also reliant on various supply chain finance forms to ease their working capital needs, particularly in high transactions periods like harvest. Blockchain enables more limber supply chain finance options that operate in real-time.

Automation of accessing finance and instant payments are vast improvement on current manual processes and slow turnaround times. An extra benefit of the distributed ledger model is improved access for regulators, quasi-regulators and authorities. Levy and royalty collection and remittance with transparency to the relevant data in respect of those payments is a significant problem that we are now able to solve.

Ultimately, the entire agri-supply chain will have access to verified data on each commodity, meaning consumers can trust where their food comes from.

Q: Can these benefits be repeated in other global commodity markets?

A: While we are presently focused on the grains industry, we have designed our solution to be both cross-commodity and cross-geography. We have instantaneous request from the grain and livestock industries and we are also observing request from aquaculture, horticulture, cotton and wool sectors — the request is global.

We are going to see more and more novel applications of blockchain and blockchain-inspired technologies in the agricultural sector from both incumbents and startups. In 2017, it is likely we will practice the rise of the supply chain use case more generally with enlargened experimentation in this area. We have already seen a lot of concentrate from banks and technology providers in this space and we believe this will increase.

Q: Can you see any obstacles to its deployment across commodity markets?

A: The practical application of blockchain technologies presently relies on integration with existing commodity management software to facilitate the transactions and provide user interface.

Presently, many participants rely on older, legacy software with limited functionality and inter-operability.

Innovative commodity management software solutions are critical to deploying blockchain technologies. We are focused on developing user-friendly interface for ease of adoption, minimizing any need for switch in behavior and mapping our technology solutions to the physical environment — for example with existing infrastructure and commodity life cycles.

More generally, but of critical importance is the influence of regulatory and other market uncertainty. We are committed to continuing our stakeholder engagement in an effort to address these uncertainties and to build pathways for mutual understanding and cooperation around technology standards, governance models and cross-border compliance.

Q: How does your business interact with physical supply chain operators?

A: AgriDigital is designed as a platform for all supply chain participants, and site operators such as bulk treating companies are already able to act on the platform. Freight and inspection services will be incorporated in the future.

Q: Are transactions lodged via blockchain confidential?

A: While the transactions happen in plain glance, each counterparty’s data is encrypted so the content and meaning of it can be downright obfuscated.

Confidentiality of certain transactional data is significant to many of our users and so this is an area we proceed to investigate. There are also blockchain technologies that permit only counterparties to view the information.

Q: Are counterparties required to use bitcoin to trade?

A: For the AgriDigital pilot, however transaction settlement occurred via a distributed ledger, ultimately the grower received payment in local currency (in this case Australian dollar) to its nominated bank account. The settlement on the distributed ledger created a message file to the bank to make the payment using traditional methods on a same-day basis. The initial treatment we have taken, permits for ease of adoption and there is no need for users to hold a cryptocurrency. With the advent of digital currencies that are fiat backed or issued by central banks, we anticipate that smoother settlement and payment methods will be built out in AgriDigital.

Q: What are your plans for expansion?

A: We plan to execute a similar pilot in the Canadian grains industry in two thousand seventeen and expand into other commodities. We have deliberately commenced at the beginning of the supply chain with our farmers. It is crucial that the primary transaction in the supply chain be accurate and validated to ensure informational integrity as the commodity passes through the chain.

Our concentrate in two thousand seventeen is on expanding AgriDigital in the Australian and Canadian grain markets, building our financing platform, and, commercializing the blockchain component of our solution. Beyond this, we will be investing our efforts in provenance, coming in the global markets and other commodities.

Applications for blockchain are becoming clearer as use cases and tailored solutions begin to emerge around the world, with the aim of helping trade become quicker, cheaper and more efficient.

The highest profile case is Swiss trader Mercuria, which is working on the settlement of a large oil transaction with ING and Societe Generale, Reuters quoted Mercuria CEO Marco Dunand in Davos last month.

Cotton trading platform The Seam announced in January that it was working with IBM to “lead an industry-wide collaboration initiative” to create a supply chain and trading ecosystem based on blockchain. This budge comes hot on the high-heeled shoes of a blockchain-settled trade inbetween Wells Fargo and Commonwealth Bank of Australia for a shipment of cotton from the US to China in the final quarter of 2016.

Another Australian startup, Blockfreight, is aiming to bring similar efficiencies to global container freight markets.

Improved cargo traceability through blockchain could help avert fraud such as the Qingdao port scandal, where in two thousand fourteen real or imagined physical volumes of copper, alumina, steel and other metals where used as collateral for numerous loans.

Trading practices can be slow to switch in some of the more conservative commodity markets, but given the range of applications that blockchain offers, it is hard to believe that it won’t play a role of some sort in the near future.

Related video:

A Brief History of Bitcoin, Virtual Currency Before Bitcoin, InformIT

A Brief History of Bitcoin

This chapter is from the book

This chapter is from the book 

Albeit Bitcoin is the best-known virtual currency, it wasn’t the very first. In fact, Bitcoin is just the latest of a multitude of schemes designed to supplement or substitute traditional money.

One of the very first virtual currencies was E-gold, founded in 1996. E-gold was unique in that its virtual currency was backed by real, honest-to-goodness gold bullion. In essence, trading E-gold was basically the same as interchanging gold ownership, but anonymously.

At its peak, in 2008, E-gold claimed more than five million user accounts. However, the anonymous nature of the currency made the service very attractive to crime syndicates looking to launder their dirty dollars into cleaner cash. Powerless security systems also contributed to an influx of hacking and fraud from these same crime syndicates.

All of this led the U.S. government to get involved, and in two thousand eight the company’s management pleaded guilty to money laundering and operating an unlicensed money transfer business. The Feds froze all user accounts, amounting to more than $86 million in E-gold. The company itself closed its doors the following year.

By the way, E-gold was just one of several similar virtual gold payment systems back in the day. Competitors included GoldMoney and e-Bullion, which appeared identically shady. (E-Bullion’s possessor was eventually arrested on charges of running an illegal money transfer business and of paying three hit dudes to stab his wifey to death. Good folks there.)

Beenz and Flooz

In 1998, an interesting fresh website called Beenz.com was launched. The idea behind Beenz.com is that you could earn virtual currency (called Beenz) for performing a multitude of online activities, such as visiting certain websites or shopping online. The Beenz you earned could then be spent on various online goods and services.

The site attempted to position itself as “the web’s currency” that would challenge the world’s traditional currencies. That it didn’t succeed is now evident. In fact, Beenz had a very brief life, closing its virtual doors in 2001. It never got past the challenge of persuading governments around the world that it truly wasn’t establishing a fresh currency, or of persuading users that it wasn’t all a big scam.

Similar to Beenz was Flooz, which was promoted by none other than comedian Whoopi Goldberg. Flooz was as big a joke as Beenz was, and operated in much the same style, attempting to establish a unique online currency for use with Internet merchants. Flooz launched in one thousand nine hundred ninety nine and closed in 2001, never having attracted much of a user base.

Q Coins

The Chinese Internet service provider Tencent has a very successful instant messaging service called QQ. Back in 2002, QQ developed its own internal virtual currency, called Q Coins, that customers could use to purchase various virtual goods and services, such as extra storage space, virtual pets, and online game avatars.

Over the next few years, various non-QQ online merchants began accepting Q Coins for real-world goods and services. More than one hundred million Chinese ended up using Q Coins, generating a trading volume in Q Coins of several billion yuan a year. Eventually, Q Coins ended up being so popular that they were being traded on China’s black market for whatever it is that the Chinese trade on the black market. This so worried the Chinese government that it eventually cracked down on the real-world trading of Q Coins—albeit they’re still used today within the QQ service.

(China’s practice with Q Coins no doubt led to their latest crackdown in Bitcoin trading. They’ve been through all this before.)

Linden Dollars

The concept of virtual currency makes a lot of sense within online virtual worlds. Case in point, the virtual world of 2nd Life and its very popular virtual currency, Linden Dollars.

For those unacquainted with virtual worlds, these are online communities that take the form of interactive simulated environments—kind of like a massive multiplayer movie game. Users inhabit the world’s graphical three-dimensional environment and interact with one another via cartoon-like avatars, often participating in virtual activities and—this is significant—economies.

The economy part comes in when users want to buy things within the virtual world, such as virtual clothing for their avatars, virtual housing, virtual entertainment, you name it. For this reason, most virtual worlds have their own unique virtual currencies that can be spent only within the restricts of the online world.

Thus it was with 2nd Life, which was one of the—if not the—most popular virtual worlds. 2nd Life was developed by a company called Linden Lab back in 2003, and its proprietary virtual currency was dubbed Linden Dollar. Users could purchase Linden Dollars (abbreviated L$) using U.S. dollars and other real-world currency on 2nd Life’s LindeX exchange, or from other users or independent brokers.

Buying Linden Dollars in 2nd Life.

2nd Life and its Linden Dollar currency became so popular that tons of real-world companies, including American Apparel, Reebok, and Ford, established presences within 2nd Life. These companies accepted payment for both virtual and real-world goods and services in Linden Dollars.

The growth in 2nd Life and its virtual currency eventually led serious investors to speculate in Linden Dollars. In fact, virtual investment banks arose to facilitate 2nd Life currency trading.

All good things come to an end, however. In 2007, 2nd Life virtual investment bank Ginko Financial collapsed, leaving users incapable to retrieve approximately $750,000 worth of Linden Dollars that had been invested. This led to Linden Labs officially banning all virtual banks in 2nd Life, as well as removing all objects related to in-world virtual banking.

Over the next several years, interest in 2nd Life began to wane. 2nd Life is still around, but it’s a shadow of its former self. You can still trade Linden Dollars for U.S. dollars (and other currency), but you’d be hard-pressed to find many buyers.

Facebook Credits

In-world virtual currencies are not the foot province of online games and virtual worlds. Many bit-time social media sites have at least experimented with the concept of their own proprietary virtual currencies.

Take Facebook, for example. In two thousand nine Facebook began testing the concept of Facebook Credits, which could be used to pay for in-game goods and services on the Facebook site. Facebook Credits went live in January 2011, and users could purchase ten Facebook Credits for one U.S. dollar.

Purchasing Facebook Credits in 2011.

Much to Facebook’s chagrin, Facebook Credits never truly took off. Facebook killed the project in June of 2012, converting all remaining Facebook Credits into standard dollar (or other currency) credits to users’ accounts.

And More.

As you can see, a plethora of various virtual currency schemes have been floated (and mainly drowned) over the past fifteen years or so. In addition to the currencies already mentioned, you run across others such as Dexit, DigiCash, eCache, eCash, InternetCash, Pecunix, and WebMoney. (Google them if you’re interested.) What all these virtual currencies have in common is that they are failures. For one reason or another, none of these virtual currencies managed to make it into the mainstream; at best, some existed within their own virtual worlds, but that’s the extent of it.

That doesn’t mean that all virtual currencies are destined to fail, however. Which brings us to the next stage in our history lesson: the birth of Bitcoin.

The concept of in-world or in-game virtual currencies is an interesting one—especially when you layer in the capability to trade online goods for real-world currency. Here’s what happens.

Game players want to buy virtual things in their virtual worlds, but don’t want to (or can’t) build up the currency via normal in-world means. So they pay other players real-world cash for the in-game currency that the other players have built up by playing the game. In other words, if you want to level up, you can pay for some other player’s tokens that get you to that level.

The problem comes when individuals or groups of individuals commence doing this for a profit—that is, selling their in-game credits for real money. This is called gold farming, and it’s a real thing. (And a big enough deal that many games ban the practice.)

It’s also a source of something resembling gimp labor. Evidently, work camp inmates in China have been compelled to play online games to accumulate online goods and credits that are then sold for real-world currency. It’s kind of a virtual sweatshop, when you think about it.

A Brief History of Bitcoin, Virtual Currency Before Bitcoin, InformIT

A Brief History of Bitcoin

This chapter is from the book

This chapter is from the book 

Albeit Bitcoin is the best-known virtual currency, it wasn’t the very first. In fact, Bitcoin is just the latest of a multitude of schemes designed to supplement or substitute traditional money.

One of the very first virtual currencies was E-gold, founded in 1996. E-gold was unique in that its virtual currency was backed by real, honest-to-goodness gold bullion. In essence, trading E-gold was basically the same as interchanging gold ownership, but anonymously.

At its peak, in 2008, E-gold claimed more than five million user accounts. However, the anonymous nature of the currency made the service very attractive to crime syndicates looking to launder their dirty dollars into cleaner cash. Powerless security systems also contributed to an influx of hacking and fraud from these same crime syndicates.

All of this led the U.S. government to get involved, and in two thousand eight the company’s management pleaded guilty to money laundering and operating an unlicensed money transfer business. The Feds froze all user accounts, amounting to more than $86 million in E-gold. The company itself closed its doors the following year.

By the way, E-gold was just one of several similar virtual gold payment systems back in the day. Competitors included GoldMoney and e-Bullion, which appeared identically shady. (E-Bullion’s holder was eventually arrested on charges of running an illegal money transfer business and of paying three hit boys to stab his wifey to death. Good folks there.)

Beenz and Flooz

In 1998, an interesting fresh website called Beenz.com was launched. The idea behind Beenz.com is that you could earn virtual currency (called Beenz) for performing a multitude of online activities, such as visiting certain websites or shopping online. The Beenz you earned could then be spent on various online goods and services.

The site attempted to position itself as “the web’s currency” that would challenge the world’s traditional currencies. That it didn’t succeed is now demonstrable. In fact, Beenz had a very brief life, closing its virtual doors in 2001. It never got past the challenge of coaxing governments around the world that it indeed wasn’t establishing a fresh currency, or of persuading users that it wasn’t all a big scam.

Similar to Beenz was Flooz, which was promoted by none other than comedian Whoopi Goldberg. Flooz was as big a joke as Beenz was, and operated in much the same style, attempting to establish a unique online currency for use with Internet merchants. Flooz launched in one thousand nine hundred ninety nine and closed in 2001, never having attracted much of a user base.

Q Coins

The Chinese Internet service provider Tencent has a very successful instant messaging service called QQ. Back in 2002, QQ developed its own internal virtual currency, called Q Coins, that customers could use to purchase various virtual goods and services, such as extra storage space, virtual pets, and online game avatars.

Over the next few years, various non-QQ online merchants began accepting Q Coins for real-world goods and services. More than one hundred million Chinese ended up using Q Coins, generating a trading volume in Q Coins of several billion yuan a year. Eventually, Q Coins ended up being so popular that they were being traded on China’s black market for whatever it is that the Chinese trade on the black market. This so worried the Chinese government that it eventually cracked down on the real-world trading of Q Coins—albeit they’re still used today within the QQ service.

(China’s practice with Q Coins no doubt led to their latest crackdown in Bitcoin trading. They’ve been through all this before.)

Linden Dollars

The concept of virtual currency makes a lot of sense within online virtual worlds. Case in point, the virtual world of 2nd Life and its very popular virtual currency, Linden Dollars.

For those unacquainted with virtual worlds, these are online communities that take the form of interactive simulated environments—kind of like a massive multiplayer movie game. Users inhabit the world’s graphical three-dimensional environment and interact with one another via cartoon-like avatars, often participating in virtual activities and—this is significant—economies.

The economy part comes in when users want to buy things within the virtual world, such as virtual clothing for their avatars, virtual housing, virtual entertainment, you name it. For this reason, most virtual worlds have their own unique virtual currencies that can be spent only within the restricts of the online world.

Thus it was with 2nd Life, which was one of the—if not the—most popular virtual worlds. 2nd Life was developed by a company called Linden Lab back in 2003, and its proprietary virtual currency was dubbed Linden Dollar. Users could purchase Linden Dollars (abbreviated L$) using U.S. dollars and other real-world currency on 2nd Life’s LindeX exchange, or from other users or independent brokers.

Buying Linden Dollars in 2nd Life.

2nd Life and its Linden Dollar currency became so popular that tons of real-world companies, including American Apparel, Reebok, and Ford, established presences within 2nd Life. These companies accepted payment for both virtual and real-world goods and services in Linden Dollars.

The growth in 2nd Life and its virtual currency eventually led serious investors to speculate in Linden Dollars. In fact, virtual investment banks arose to facilitate 2nd Life currency trading.

All good things come to an end, however. In 2007, 2nd Life virtual investment bank Ginko Financial collapsed, leaving users incapable to retrieve approximately $750,000 worth of Linden Dollars that had been invested. This led to Linden Labs officially banning all virtual banks in 2nd Life, as well as removing all objects related to in-world virtual banking.

Over the next several years, interest in 2nd Life began to wane. 2nd Life is still around, but it’s a shadow of its former self. You can still trade Linden Dollars for U.S. dollars (and other currency), but you’d be hard-pressed to find many buyers.

Facebook Credits

In-world virtual currencies are not the foot province of online games and virtual worlds. Many bit-time social media sites have at least experimented with the concept of their own proprietary virtual currencies.

Take Facebook, for example. In two thousand nine Facebook began testing the concept of Facebook Credits, which could be used to pay for in-game goods and services on the Facebook site. Facebook Credits went live in January 2011, and users could purchase ten Facebook Credits for one U.S. dollar.

Purchasing Facebook Credits in 2011.

Much to Facebook’s chagrin, Facebook Credits never truly took off. Facebook killed the project in June of 2012, converting all remaining Facebook Credits into standard dollar (or other currency) credits to users’ accounts.

And More.

As you can see, a plethora of various virtual currency schemes have been floated (and mainly submerged) over the past fifteen years or so. In addition to the currencies already mentioned, you run across others such as Dexit, DigiCash, eCache, eCash, InternetCash, Pecunix, and WebMoney. (Google them if you’re interested.) What all these virtual currencies have in common is that they are failures. For one reason or another, none of these virtual currencies managed to make it into the mainstream; at best, some existed within their own virtual worlds, but that’s the extent of it.

That doesn’t mean that all virtual currencies are destined to fail, however. Which brings us to the next stage in our history lesson: the birth of Bitcoin.

The concept of in-world or in-game virtual currencies is an interesting one—especially when you layer in the capability to trade online goods for real-world currency. Here’s what happens.

Game players want to buy virtual things in their virtual worlds, but don’t want to (or can’t) build up the currency via normal in-world means. So they pay other players real-world cash for the in-game currency that the other players have built up by playing the game. In other words, if you want to level up, you can pay for some other player’s tokens that get you to that level.

The problem comes when individuals or groups of individuals begin doing this for a profit—that is, selling their in-game credits for real money. This is called gold farming, and it’s a real thing. (And a big enough deal that many games ban the practice.)

It’s also a source of something resembling sub labor. Evidently, work camp inmates in China have been coerced to play online games to accumulate online goods and credits that are then sold for real-world currency. It’s kind of a virtual sweatshop, when you think about it.

Related video:

A History of Bitcoin – Smith Crown

A History of Bitcoin

This article is a brief history of Bitcoin. Our purpose is to give the reader a reliable abbreviated overview of Bitcoin. We will reference places where the interested reader can learn more about specific topics or dive deeper.

The history will be structured around Bitcoin’s trade price (as a reflection of market sentiment) and page views of wikipedia (as a reflection of broader awareness).

2008/2009: Bitcoin’s birth

In November 2008, someone going by the user name ‘Satoshi Nakamoto’ released a paper to a cryptography mailing list. The 9-page paper was entitled “Bitcoin: A Peer-to-Peer Electronic Cash System“, and it laid out a vision for a distributed digital money system.

In January 2009, Satoshi Nakamoto released the very first version of the open-source bitcoin core software on SourceForge and the bitcoin protocol commenced running. Nakamoto mined the very first fifty bitcoins. The protocol was a breakthrough in cryptography, tho’ it drew on developments that had preceded it but hadn’t been combined yet.

Bitcoin ran calmly in the background—a topic of excitement and fascination for a dedicated crowd of coders but largely off the world’s radar. Discussion was distributed across different forums, and it wasn’t until the end of the year that the very first dedicated forum was established. This helped coders could more lightly coordinate with other coders as the underlying code got tweaked. By mid-2009, people other than Satoshi Nakamoto were actively contributing to the open-source codebase in Github.

The protocol was a breakthrough in cryptography, tho’ it drew on many cryptography innovations that preceded it. A community of cryptography experts and privacy advocates known as the Cypherpunks (cypher not cyber) played a key role in recognizing the technical genius of Bitcoin and understanding its implications. Many members of this community would become torchbearers later in Bitcoin’s history.

As two thousand nine ended, Bitcoin did not have a ‘trade price’ and three hundred nine people viewed the Wikipedia page.

2010: Bitcoin’s very early years

The Bitcoin ‘ecosystem’ was largely just a record of Bitcoin transactions (the blockchain), a set of online forums where users communicated and organized transactions, and the open-source software code. There were no wallet services, payment processors, or real user interface beyond actual instruction prompts and raw code. This limited involvement to a dedicated and savvy crowd who organized transactions through online forums and initiated them on the blockchain with code. For example, the very first commercial transaction took place in May 2010: a programmer in Florida spent Ten,000 BTC on a pizza.

However, beginnings of a market support system began to emerge. In early 2010, the very first exchange opened, which permitted structured trading of bitcoins. The very first “article” on bitcoin appeared on Slashdot and stoked interest beyond the initial insider cryptocurrency crowd. Users grew. In late 2010, Mt. Gox launched as the 2nd exchange and became the superior place to trade Bitcoins for a duo years.

As two thousand ten ended, the price of one Bitcoin was $.Trio and three hundred nine people viewed the Wikipedia page.

2011: Bitcoin finds niche uses and awareness grows

In 2011, Bitcoin began to mature as a digital payment system, tho’ its use was limited by the aspirations of early adopters.

The perceived anonymous nature of the digital currency made it ideal for online black markets. That year spotted the emergence of the Silk Road, an ebay for illicit goods (predominantly drugs) that used Bitcoin as a payment method. The Silk Road was one of the public’s primary introductions to Bitcoin, prompting several politicians cast the currency as a vehicle for money laundering and drugs.

Mainstream media also began covering it. Forbes, Bloomberg, and TIME all wrote articles. Politicians warned against it. Academics wrote about it. At the end of the year, CBS aired an scene of the “The Good Wife” that focused on bitcoin.

Other consumer services were also commencing to emerge. WikiLeaks began accepting Bitcoin donations. An iPad app was launched. Bitpay, a service that let merchants accept bitcoins over the phone, was founded and claimed to have one hundred merchants. More exchanges opened, letting people trade bitcoins for other currencies.

The Bitcoin code also underwent a major switch. Through 2011, Satoshi Nakamoto had overseen the maintenance of the codebase. Satoshi never called or met anyone and only communicated on forums and direct messages. In April 2011, Satoshi Nakamoto wrote his last verified email, leaving Gavin Andreson in charge of the project, and left, never to be (verifiably) seen or heard from again. Andreson quickly selected four others to share this responsibility and introduced some structured ways of updating the underlying code.

“He told myself and Gavin that he had moved on to other things and that the project was in good mitts.”

Also in 2011, the very first alternative digital currency or “altcoin”, Litecoin, launched.

The world was in an awkward time in which financial markets were doing well but workers were not. Occupy Wall Street commenced in September and soon Occupy protests had taken place in almost one thousand cities worldwide. It is effortless to see how the idea of a bankless currency could take root.

By the end of the year, the world was deeply ambivalent about the digital currency. A currency for the 21st Century that could topple banks? A contraption for laundering money and buying illicit substances?

As two thousand eleven ended, the price of one Bitcoin was $Four.60 and two thousand one hundred eighty five people viewed the Wikipedia page.

2012: Bitcoin matures

Bitcoin was railing a wave of legitimacy in many circles, and these were having conflicting effects.

The currency became a popular target for hackers and thieves. Mt. Gox had been hacked in 2011, and now more major attacks on exchanges and other databases led to millions of dollars worth of Bitcoin theft. Several Ponzi schemes ended with theft.

Black markets utilizing bitcoin as a payment method continued to operate. It’s estimated that $15 million worth of Bitcoin passed through the Silk Road this year. A popular online gambling site, Satoshi Dice, launched and flooded the bitcoin network with very puny gambling transactions (bets worth less than $.0001). This sparked a debate on how to deal with such ‘transaction dust.’

More generally, the community was feeling the impacts of having no central authority. There were no dedicated funds to support core development of the code and no sanctioned gathering places places other than online forums.

The Bitcoin Foundation was also established. Its role was to fund core development, represent the currency to governments, and conduct outreach and education. Late that year, a Bitcoin exchange Bitcoin-central.net was licensed similar to a bank in Europe.

As it garnered the attention of more governments, its legal ambiguity became more demonstrable and more awkward. People were trading it like an asset, using it like a currency, and downloading it like open-source software. Gambling and the Silk Road didn’t help. Some services commenced pulling down bitcoin out of fear of its legality.

Broadly, this is a year in which the industry also witnessed the promise of banking the unbanked with Bitcoin. Forbes runs one of the very first mainstream articles discussing Bitcoin’s use in remittance payments. WordPress embarked accepting Bitcoin, explaining that traditional payment processor limitations were preventing international bloggers from participating in the blogosphere.

As two thousand twelve ended, the price of one Bitcoin was $13.44 and two thousand eight hundred nine people viewed the Wikipedia page.

2013: The world wakes up to bitcoin

2013 was one of the most tumultuous years for Bitcoin. It had two period of incredible volatility in which people literally woke up to almost 100% price increases.

The very first occurred in early 2013. A bail-out deal inbetween the EU and Cyprus included a levy on bank accounts with sizeable sums of money, inspiring Cypriot account holders to buy bitcoin en masse. The Bitcoin price almost doubles, and Cypress sets a precedent for using Bitcoin as a means of capital flight.

Bitcoin survived one of its very first major crises of legitimacy this year: the shutting down of the Silk Road and the arrest of its founder. The government seized all assets and helped cement public association of Bitcoin with online black markets. After a quick price drop, the price quickly recovered, but Bitcoin has lived in the Silk Road’s shadow ever since.

Globally, governments began to take Bitcoin more gravely but reactions were mixed.

  • The People’s Bank of China, after originally approving Bitcoin, banned financial institutions from using it or working with customers whose businesses involve it.
  • The US Department of Homeland Security proclaimed Mt. Gox a ‘money transmitter’ (a powerfully regulated entity) and moved to seize some of its assets.
  • US Financial Crimes Enforcement Network (FINCEN) issued some of the world’s very first bitcoin regulation in the form of a guidance report for persons administering, exchanging or using virtual currency. In particular, exchanges must conform with money laundering laws and register as Money Services Businesses.
  • The US Senate held a hearing which was (to the surprise of many) open to the long-term prospects of Bitcoin.

The 2nd period of volatility occurred in November. In thirty days, the price went from just over $100 to just over $1200. Searches for bitcoin spikes. News outlets covered it. In thirty days, it went from a successfully digital currency proof-of-concept to a fresh technology in the eyes of the world. The price plummeted back down in December, but it never stayed below $200 again.

The erect of popularity led to an explosion of “altcoins”—digital currencies based on modified or different underlying protocols. Litecoin had been the very first, back in 2011, but two thousand thirteen witnessed hundreds of these fresh altcoins launch. Many turned out to be scams, but many are also still traded today.

As two thousand thirteen ended, the price of one Bitcoin was $764 and twenty six thousand three hundred fifty four people viewed the Wikipedia page.

2014: Bitcoin beyond cryptocurrencies and cryptocurrencies beyond Bitcoin

In early 2014, Bitcoin survived another major crisis of legitimacy: the closure of Mt. Gox. Mt. Gox had been the longest-running and most successful virtual currency exchange to date. It was a pole of both the bitcoin economy and the community. In February, Mt. Gox abruptly shut trading, and leaked documents display it had lost 744,000 BTC (approximately $40 million). Bitcoin naysayers had a field day on forums, and it was widely seen as a gargle to the digital currency’s capability to operate securely without any oversight or regulation.

Governments began to pass regulation this year. The wild end to two thousand thirteen woke many regulators up to the volatility of this currency. The IRS proclaimed Bitcoin to be taxed as property. The People’s Bank of China coerced Chinese banks to close the bank accounts of major Chinese exchanges, tho’ many exchanges exploited legal loopholes to keep operating. Fresh York announced its Bitlicense: a legal licensing framework for businesses that interact with Bitcoin and cryptocurrencies. This is largely decried by the cryptocurrency community. The desire of unregulated cash was quickly fading.

The currency also traveled more into the payment mainstream, and a wave of major retailers accepted the currency. Overstock, Tiger Direct, Newegg, Dell, and Microsoft all announced acceptance of Bitcoin. Near the end of the year, a subsidiary of PayPal announced it will work on integrating Bitcoin on their platform.

Another development in the world of cryptocurrencies is that many many people began imagining Bitcoin without the digital currency part: how could the underlying technology be used for other purposes?

A wave of fresh protocols emerged with applications beyond digital currency, presaging a so-called “Bitcoin Two.0” era in which people would repurpose blockchains (Bitcoin’s and others) to store all kinds of information. Some notable ones included

  • Ethereum, a platform for software that could run on a distributed network.
  • Maidsafecoin, a protocol to permit distributed file storage built on top of the Bitcoin blockchain
  • Factom launches to create a data layer on top of the blockchain to enable elementary, verifiable, and secure record keeping.

This reflected the rising awareness of what early enthusiasts had thought: the technology of cryptocurrencies could be the foundation of the next Internet. Today is like the early 90s, and in the coming years, blockchains could remake everything. The idea was planted, but with it, a sobering realization: this process would take time.

Despite these developments, Bitcoin’s price began a slow decline this year that would bottom out in early two thousand fifteen below $200 and stay relatively dormant for months. Part of this decline was a shift in capital from bitcoin to other digital currencies. Bitcoin’s contribution to the total market value of all cryptocurrencies fell from a higher of 95% in August to 78% in December. Another was the realization that upending global financial markets wouldn’t happen overnight. Bitcoin was not above the law, and financial law was very complicated. Bitcoin had the potential to be disruptive but disruption can be slower than founding visionaries hoped. In many ways, cryptocurrencies faded from the public eye.

AS two thousand fourteen ended, the price of one Bitcoin was $314 and six thousand one hundred sixty two people viewed the Wikipedia page.

2015: The business blockchain

The basic features of this industry mostly continued. Hacks and theft continued, including a high-profile loss of close to $Five million from a major exchange at the beginning of the year.

Regulators around the world continued to explore the implications of this technology while also proving that users of Bitcoin are not beyond the reach of the law. Ross Ulbricht, founder of The Silk Road, is sentenced to life in prison without parole for deeds that were “terribly ruinous to our social fabric.” Mark Karpeles, CEO of Mt. Gox, is arrested in Japan. Two federal agents who stole Bitcoin during the Silk Road investigation plead guilty.

The fattest shift came from banks and industry. Many industry executives began talking about “blockchains” and “distributed ledgers” rather than Bitcoin. Microsoft launched blockchain-as-a-service (BaaS) on its Azure cloud-computing platform. This permits companies to experiment with blockchains and explore how they could be used in different areas of their business.

This likely contributed to the growth in interest in Bitcoin among the broader public and among traders. Bitcoin’s price began a constant ascent as people embarked realizing Bitcoin and blockchains were still around.

However, a crisis was brewing in the form of the “block size debate.” The Bitcoin protocol was designed to process approximately seven transactions per 2nd; the blocks in the blockchain were not large enough to store more. Members of the community realized Bitcoin was on rhythm to reach that in 2015. If nothing was done, it could stymie the currency’s growth in popularity.

What followed was a bitter and divisive debate about whether to increase the size of the Bitcoin blocks (permitting more transactions per 2nd) or to reposition the Bitcoin blockchain as a ‘settlement layer’ while permitting other services to process transactions that happen off-chain. In Bitcoin, there are no democratic rules, public sanctioned spaces to gather, or Robert’s rules of order. Reddit, Bitcointalk, and a duo other online forums were serving as venues for ‘public’ discussion, and the Bitcoin Foundation began hosting events toward the end of the year.

No one could agree, and the debate was fierce. This deadlock struck a suck to Bitcoin’s perceived legitimacy. If it couldn’t deal with a challenge like this, how could it deal with others? People began talking earnestly about other currencies that might be viable alternatives to Bitcoin. Ethereum topped that list, and in early 2016, its price would increase tenfold.

As two thousand fifteen ended, the price of one Bitcoin was $426 and four thousand seven hundred thirty people viewed the Wikipedia page.

2016: A Year of Promise

It is too early to tell the story of two thousand sixteen for Bitcoin. Many of the trends that coalesced in two thousand fifteen continued: more enterprise and corporate interest in blockchain technology, more uncertainty over the block size debate, and some price volatility.

Security remains an issue. Just this year, Gatecoin, a major exchange based in Hong Kong, lost $Two million and suspended trading. Shapeshift, a major US-based exchange, suffered a series of hacks in a saga that reads like a crime novel.

Broadly, industry players in finance and technology remain bullish on blockchains and ambivalent about Bitcoin. More and more startups are branding themselves as blockchain companies rather than bitcoin companies. A fresh ambivalence about Bitcoin has emerged: not as a dangerous quasi-legal currency but as a good proof-of-concept that ultimately won’t be ready for primetime. As they say, “the pioneers get the arrows, the settlers get the land.” At a premier industry conference, some compared Bitcoin to Netscape.

A History of Bitcoin – Smith Crown

A History of Bitcoin

This article is a brief history of Bitcoin. Our objective is to give the reader a reliable abbreviated overview of Bitcoin. We will reference places where the interested reader can learn more about specific topics or dive deeper.

The history will be structured around Bitcoin’s trade price (as a reflection of market sentiment) and page views of wikipedia (as a reflection of broader awareness).

2008/2009: Bitcoin’s birth

In November 2008, someone going by the user name ‘Satoshi Nakamoto’ released a paper to a cryptography mailing list. The 9-page paper was entitled “Bitcoin: A Peer-to-Peer Electronic Cash System“, and it laid out a vision for a distributed digital money system.

In January 2009, Satoshi Nakamoto released the very first version of the open-source bitcoin core software on SourceForge and the bitcoin protocol began running. Nakamoto mined the very first fifty bitcoins. The protocol was a breakthrough in cryptography, however it drew on developments that had preceded it but hadn’t been combined yet.

Bitcoin ran calmly in the background—a topic of excitement and fascination for a dedicated crowd of coders but largely off the world’s radar. Discussion was distributed across different forums, and it wasn’t until the end of the year that the very first dedicated forum was established. This helped coders could more lightly coordinate with other coders as the underlying code got tweaked. By mid-2009, people other than Satoshi Nakamoto were actively contributing to the open-source codebase in Github.

The protocol was a breakthrough in cryptography, however it drew on many cryptography innovations that preceded it. A community of cryptography experts and privacy advocates known as the Cypherpunks (cypher not cyber) played a key role in recognizing the technical genius of Bitcoin and understanding its implications. Many members of this community would become torchbearers later in Bitcoin’s history.

As two thousand nine ended, Bitcoin did not have a ‘trade price’ and three hundred nine people viewed the Wikipedia page.

2010: Bitcoin’s very early years

The Bitcoin ‘ecosystem’ was largely just a record of Bitcoin transactions (the blockchain), a set of online forums where users communicated and organized transactions, and the open-source software code. There were no wallet services, payment processors, or real user interface beyond actual directive prompts and raw code. This limited involvement to a dedicated and savvy crowd who organized transactions through online forums and initiated them on the blockchain with code. For example, the very first commercial transaction took place in May 2010: a programmer in Florida spent Ten,000 BTC on a pizza.

However, beginnings of a market support system began to emerge. In early 2010, the very first exchange opened, which permitted structured trading of bitcoins. The very first “article” on bitcoin appeared on Slashdot and stoked interest beyond the initial insider cryptocurrency crowd. Users grew. In late 2010, Mt. Gox launched as the 2nd exchange and became the superior place to trade Bitcoins for a duo years.

As two thousand ten ended, the price of one Bitcoin was $.Trio and three hundred nine people viewed the Wikipedia page.

2011: Bitcoin finds niche uses and awareness grows

In 2011, Bitcoin began to mature as a digital payment system, however its use was limited by the aspirations of early adopters.

The perceived anonymous nature of the digital currency made it ideal for online black markets. That year spotted the emergence of the Silk Road, an ebay for illicit goods (predominantly drugs) that used Bitcoin as a payment method. The Silk Road was one of the public’s primary introductions to Bitcoin, prompting several politicians cast the currency as a vehicle for money laundering and drugs.

Mainstream media also began covering it. Forbes, Bloomberg, and TIME all wrote articles. Politicians warned against it. Academics wrote about it. At the end of the year, CBS aired an scene of the “The Good Wife” that focused on bitcoin.

Other consumer services were also beginning to emerge. WikiLeaks embarked accepting Bitcoin donations. An iPad app was launched. Bitpay, a service that let merchants accept bitcoins over the phone, was founded and claimed to have one hundred merchants. More exchanges opened, letting people trade bitcoins for other currencies.

The Bitcoin code also underwent a major switch. Through 2011, Satoshi Nakamoto had overseen the maintenance of the codebase. Satoshi never called or met anyone and only communicated on forums and direct messages. In April 2011, Satoshi Nakamoto wrote his last verified email, leaving Gavin Andreson in charge of the project, and left, never to be (verifiably) seen or heard from again. Andreson quickly selected four others to share this responsibility and introduced some structured ways of updating the underlying code.

“He told myself and Gavin that he had moved on to other things and that the project was in good arms.”

Also in 2011, the very first alternative digital currency or “altcoin”, Litecoin, launched.

The world was in an awkward time in which financial markets were doing well but workers were not. Occupy Wall Street commenced in September and soon Occupy protests had taken place in almost one thousand cities worldwide. It is effortless to see how the idea of a bankless currency could take root.

By the end of the year, the world was deeply ambivalent about the digital currency. A currency for the 21st Century that could topple banks? A implement for laundering money and buying illicit substances?

As two thousand eleven ended, the price of one Bitcoin was $Four.60 and two thousand one hundred eighty five people viewed the Wikipedia page.

2012: Bitcoin matures

Bitcoin was railing a wave of legitimacy in many circles, and these were having conflicting effects.

The currency became a popular target for hackers and thieves. Mt. Gox had been hacked in 2011, and now more major attacks on exchanges and other databases led to millions of dollars worth of Bitcoin theft. Several Ponzi schemes ended with theft.

Black markets utilizing bitcoin as a payment method continued to operate. It’s estimated that $15 million worth of Bitcoin passed through the Silk Road this year. A popular online gambling site, Satoshi Dice, launched and flooded the bitcoin network with very puny gambling transactions (bets worth less than $.0001). This sparked a debate on how to deal with such ‘transaction dust.’

More generally, the community was feeling the impacts of having no central authority. There were no dedicated funds to support core development of the code and no sanctioned gathering places places other than online forums.

The Bitcoin Foundation was also established. Its role was to fund core development, represent the currency to governments, and conduct outreach and education. Late that year, a Bitcoin exchange Bitcoin-central.net was licensed similar to a bank in Europe.

As it garnered the attention of more governments, its legal ambiguity became more demonstrable and more awkward. People were trading it like an asset, using it like a currency, and downloading it like open-source software. Gambling and the Silk Road didn’t help. Some services began ripping off bitcoin out of fear of its legality.

Broadly, this is a year in which the industry also spotted the promise of banking the unbanked with Bitcoin. Forbes runs one of the very first mainstream articles discussing Bitcoin’s use in remittance payments. WordPress embarked accepting Bitcoin, explaining that traditional payment processor limitations were preventing international bloggers from participating in the blogosphere.

As two thousand twelve ended, the price of one Bitcoin was $13.44 and two thousand eight hundred nine people viewed the Wikipedia page.

2013: The world wakes up to bitcoin

2013 was one of the most tumultuous years for Bitcoin. It had two period of incredible volatility in which people literally woke up to almost 100% price increases.

The very first occurred in early 2013. A bail-out deal inbetween the EU and Cyprus included a levy on bank accounts with sizeable sums of money, inspiring Cypriot account holders to buy bitcoin en masse. The Bitcoin price almost doubles, and Cypress sets a precedent for using Bitcoin as a means of capital flight.

Bitcoin survived one of its very first major crises of legitimacy this year: the shutting down of the Silk Road and the arrest of its founder. The government seized all assets and helped cement public association of Bitcoin with online black markets. After a quick price drop, the price quickly recovered, but Bitcoin has lived in the Silk Road’s shadow ever since.

Globally, governments began to take Bitcoin more earnestly but reactions were mixed.

  • The People’s Bank of China, after originally approving Bitcoin, banned financial institutions from using it or working with customers whose businesses involve it.
  • The US Department of Homeland Security announced Mt. Gox a ‘money transmitter’ (a strongly regulated entity) and moved to seize some of its assets.
  • US Financial Crimes Enforcement Network (FINCEN) issued some of the world’s very first bitcoin regulation in the form of a guidance report for persons administering, exchanging or using virtual currency. In particular, exchanges must obey with money laundering laws and register as Money Services Businesses.
  • The US Senate held a hearing which was (to the surprise of many) open to the long-term prospects of Bitcoin.

The 2nd period of volatility occurred in November. In thirty days, the price went from just over $100 to just over $1200. Searches for bitcoin spikes. News outlets covered it. In thirty days, it went from a successfully digital currency proof-of-concept to a fresh technology in the eyes of the world. The price plummeted back down in December, but it never stayed below $200 again.

The erect of popularity led to an explosion of “altcoins”—digital currencies based on modified or different underlying protocols. Litecoin had been the very first, back in 2011, but two thousand thirteen witnessed hundreds of these fresh altcoins launch. Many turned out to be scams, but many are also still traded today.

As two thousand thirteen ended, the price of one Bitcoin was $764 and twenty six thousand three hundred fifty four people viewed the Wikipedia page.

2014: Bitcoin beyond cryptocurrencies and cryptocurrencies beyond Bitcoin

In early 2014, Bitcoin survived another major crisis of legitimacy: the closure of Mt. Gox. Mt. Gox had been the longest-running and most successful virtual currency exchange to date. It was a pile of both the bitcoin economy and the community. In February, Mt. Gox abruptly shut trading, and leaked documents display it had lost 744,000 BTC (approximately $40 million). Bitcoin naysayers had a field day on forums, and it was widely seen as a deepthroat to the digital currency’s capability to operate securely without any oversight or regulation.

Governments began to pass regulation this year. The wild end to two thousand thirteen woke many regulators up to the volatility of this currency. The IRS announced Bitcoin to be taxed as property. The People’s Bank of China coerced Chinese banks to close the bank accounts of major Chinese exchanges, tho’ many exchanges exploited legal loopholes to keep operating. Fresh York announced its Bitlicense: a legal licensing framework for businesses that interact with Bitcoin and cryptocurrencies. This is largely decried by the cryptocurrency community. The wish of unregulated cash was quickly fading.

The currency also traveled more into the payment mainstream, and a wave of major retailers accepted the currency. Overstock, Tiger Direct, Newegg, Dell, and Microsoft all announced acceptance of Bitcoin. Near the end of the year, a subsidiary of PayPal announced it will work on integrating Bitcoin on their platform.

Another development in the world of cryptocurrencies is that many many people began imagining Bitcoin without the digital currency part: how could the underlying technology be used for other purposes?

A wave of fresh protocols emerged with applications beyond digital currency, presaging a so-called “Bitcoin Two.0” era in which people would repurpose blockchains (Bitcoin’s and others) to store all kinds of information. Some notable ones included

  • Ethereum, a platform for software that could run on a distributed network.
  • Maidsafecoin, a protocol to permit distributed file storage built on top of the Bitcoin blockchain
  • Factom launches to create a data layer on top of the blockchain to enable ordinary, verifiable, and secure record keeping.

This reflected the rising awareness of what early enthusiasts had thought: the technology of cryptocurrencies could be the foundation of the next Internet. Today is like the early 90s, and in the coming years, blockchains could remake everything. The idea was planted, but with it, a sobering realization: this process would take time.

Despite these developments, Bitcoin’s price began a slow decline this year that would bottom out in early two thousand fifteen below $200 and stay relatively dormant for months. Part of this decline was a shift in capital from bitcoin to other digital currencies. Bitcoin’s contribution to the total market value of all cryptocurrencies fell from a higher of 95% in August to 78% in December. Another was the realization that upending global financial markets wouldn’t happen overnight. Bitcoin was not above the law, and financial law was very complicated. Bitcoin had the potential to be disruptive but disruption can be slower than founding visionaries hoped. In many ways, cryptocurrencies faded from the public eye.

AS two thousand fourteen ended, the price of one Bitcoin was $314 and six thousand one hundred sixty two people viewed the Wikipedia page.

2015: The business blockchain

The basic features of this industry mostly continued. Hacks and theft continued, including a high-profile loss of close to $Five million from a major exchange at the beginning of the year.

Regulators around the world continued to explore the implications of this technology while also proving that users of Bitcoin are not beyond the reach of the law. Ross Ulbricht, founder of The Silk Road, is sentenced to life in prison without parole for deeds that were “terribly disruptive to our social fabric.” Mark Karpeles, CEO of Mt. Gox, is arrested in Japan. Two federal agents who stole Bitcoin during the Silk Road investigation plead guilty.

The thickest shift came from banks and industry. Many industry executives began talking about “blockchains” and “distributed ledgers” rather than Bitcoin. Microsoft launched blockchain-as-a-service (BaaS) on its Azure cloud-computing platform. This permits companies to experiment with blockchains and explore how they could be used in different areas of their business.

This likely contributed to the growth in interest in Bitcoin among the broader public and among traders. Bitcoin’s price began a constant ascent as people began realizing Bitcoin and blockchains were still around.

However, a crisis was brewing in the form of the “block size debate.” The Bitcoin protocol was designed to process approximately seven transactions per 2nd; the blocks in the blockchain were not large enough to store more. Members of the community realized Bitcoin was on tempo to reach that in 2015. If nothing was done, it could stymie the currency’s growth in popularity.

What followed was a bitter and divisive debate about whether to increase the size of the Bitcoin blocks (permitting more transactions per 2nd) or to reposition the Bitcoin blockchain as a ‘settlement layer’ while permitting other services to process transactions that happen off-chain. In Bitcoin, there are no democratic rules, public sanctioned spaces to gather, or Robert’s rules of order. Reddit, Bitcointalk, and a duo other online forums were serving as venues for ‘public’ discussion, and the Bitcoin Foundation began hosting events toward the end of the year.

No one could agree, and the debate was fierce. This deadlock struck a gargle to Bitcoin’s perceived legitimacy. If it couldn’t deal with a challenge like this, how could it deal with others? People began talking earnestly about other currencies that might be viable alternatives to Bitcoin. Ethereum topped that list, and in early 2016, its price would increase tenfold.

As two thousand fifteen ended, the price of one Bitcoin was $426 and four thousand seven hundred thirty people viewed the Wikipedia page.

2016: A Year of Promise

It is too early to tell the story of two thousand sixteen for Bitcoin. Many of the trends that coalesced in two thousand fifteen continued: more enterprise and corporate interest in blockchain technology, more uncertainty over the block size debate, and some price volatility.

Security remains an issue. Just this year, Gatecoin, a major exchange based in Hong Kong, lost $Two million and suspended trading. Shapeshift, a major US-based exchange, suffered a series of hacks in a saga that reads like a crime novel.

Broadly, industry players in finance and technology remain bullish on blockchains and ambivalent about Bitcoin. More and more startups are branding themselves as blockchain companies rather than bitcoin companies. A fresh ambivalence about Bitcoin has emerged: not as a dangerous quasi-legal currency but as a good proof-of-concept that ultimately won’t be ready for primetime. As they say, “the pioneers get the arrows, the settlers get the land.” At a premier industry conference, some compared Bitcoin to Netscape.

A History of Bitcoin – Smith Crown

A History of Bitcoin

This article is a brief history of Bitcoin. Our aim is to give the reader a reliable abbreviated overview of Bitcoin. We will reference places where the interested reader can learn more about specific topics or dive deeper.

The history will be structured around Bitcoin’s trade price (as a reflection of market sentiment) and page views of wikipedia (as a reflection of broader awareness).

2008/2009: Bitcoin’s birth

In November 2008, someone going by the user name ‘Satoshi Nakamoto’ released a paper to a cryptography mailing list. The 9-page paper was entitled “Bitcoin: A Peer-to-Peer Electronic Cash System“, and it laid out a vision for a distributed digital money system.

In January 2009, Satoshi Nakamoto released the very first version of the open-source bitcoin core software on SourceForge and the bitcoin protocol embarked running. Nakamoto mined the very first fifty bitcoins. The protocol was a breakthrough in cryptography, tho’ it drew on developments that had preceded it but hadn’t been combined yet.

Bitcoin ran calmly in the background—a topic of excitement and fascination for a dedicated crowd of coders but largely off the world’s radar. Discussion was distributed across different forums, and it wasn’t until the end of the year that the very first dedicated forum was established. This helped coders could more lightly coordinate with other coders as the underlying code got tweaked. By mid-2009, people other than Satoshi Nakamoto were actively contributing to the open-source codebase in Github.

The protocol was a breakthrough in cryptography, however it drew on many cryptography innovations that preceded it. A community of cryptography experts and privacy advocates known as the Cypherpunks (cypher not cyber) played a key role in recognizing the technical genius of Bitcoin and understanding its implications. Many members of this community would become torchbearers later in Bitcoin’s history.

As two thousand nine ended, Bitcoin did not have a ‘trade price’ and three hundred nine people viewed the Wikipedia page.

2010: Bitcoin’s very early years

The Bitcoin ‘ecosystem’ was largely just a record of Bitcoin transactions (the blockchain), a set of online forums where users communicated and organized transactions, and the open-source software code. There were no wallet services, payment processors, or real user interface beyond actual instruction prompts and raw code. This limited involvement to a dedicated and savvy crowd who organized transactions through online forums and initiated them on the blockchain with code. For example, the very first commercial transaction took place in May 2010: a programmer in Florida spent Ten,000 BTC on a pizza.

However, beginnings of a market support system began to emerge. In early 2010, the very first exchange opened, which permitted structured trading of bitcoins. The very first “article” on bitcoin appeared on Slashdot and stoked interest beyond the initial insider cryptocurrency crowd. Users grew. In late 2010, Mt. Gox launched as the 2nd exchange and became the superior place to trade Bitcoins for a duo years.

As two thousand ten ended, the price of one Bitcoin was $.Trio and three hundred nine people viewed the Wikipedia page.

2011: Bitcoin finds niche uses and awareness grows

In 2011, Bitcoin began to mature as a digital payment system, however its use was limited by the aspirations of early adopters.

The perceived anonymous nature of the digital currency made it flawless for online black markets. That year spotted the emergence of the Silk Road, an ebay for illicit goods (predominantly drugs) that used Bitcoin as a payment method. The Silk Road was one of the public’s primary introductions to Bitcoin, prompting several politicians cast the currency as a vehicle for money laundering and drugs.

Mainstream media also began covering it. Forbes, Bloomberg, and TIME all wrote articles. Politicians warned against it. Academics wrote about it. At the end of the year, CBS aired an gig of the “The Good Wife” that focused on bitcoin.

Other consumer services were also kicking off to emerge. WikiLeaks embarked accepting Bitcoin donations. An iPad app was launched. Bitpay, a service that let merchants accept bitcoins over the phone, was founded and claimed to have one hundred merchants. More exchanges opened, letting people trade bitcoins for other currencies.

The Bitcoin code also underwent a major switch. Through 2011, Satoshi Nakamoto had overseen the maintenance of the codebase. Satoshi never called or met anyone and only communicated on forums and direct messages. In April 2011, Satoshi Nakamoto wrote his last verified email, leaving Gavin Andreson in charge of the project, and left, never to be (verifiably) seen or heard from again. Andreson quickly selected four others to share this responsibility and introduced some structured ways of updating the underlying code.

“He told myself and Gavin that he had moved on to other things and that the project was in good arms.”

Also in 2011, the very first alternative digital currency or “altcoin”, Litecoin, launched.

The world was in an awkward time in which financial markets were doing well but workers were not. Occupy Wall Street began in September and soon Occupy protests had taken place in almost one thousand cities worldwide. It is effortless to see how the idea of a bankless currency could take root.

By the end of the year, the world was deeply ambivalent about the digital currency. A currency for the 21st Century that could topple banks? A implement for laundering money and buying illicit substances?

As two thousand eleven ended, the price of one Bitcoin was $Four.60 and two thousand one hundred eighty five people viewed the Wikipedia page.

2012: Bitcoin matures

Bitcoin was railing a wave of legitimacy in many circles, and these were having conflicting effects.

The currency became a popular target for hackers and thieves. Mt. Gox had been hacked in 2011, and now more major attacks on exchanges and other databases led to millions of dollars worth of Bitcoin theft. Several Ponzi schemes ended with theft.

Black markets utilizing bitcoin as a payment method continued to operate. It’s estimated that $15 million worth of Bitcoin passed through the Silk Road this year. A popular online gambling site, Satoshi Dice, launched and flooded the bitcoin network with very puny gambling transactions (bets worth less than $.0001). This sparked a debate on how to deal with such ‘transaction dust.’

More generally, the community was feeling the impacts of having no central authority. There were no dedicated funds to support core development of the code and no sanctioned gathering places places other than online forums.

The Bitcoin Foundation was also established. Its role was to fund core development, represent the currency to governments, and conduct outreach and education. Late that year, a Bitcoin exchange Bitcoin-central.net was licensed similar to a bank in Europe.

As it garnered the attention of more governments, its legal ambiguity became more visible and more awkward. People were trading it like an asset, using it like a currency, and downloading it like open-source software. Gambling and the Silk Road didn’t help. Some services embarked pulling down bitcoin out of fear of its legality.

Broadly, this is a year in which the industry also eyed the promise of banking the unbanked with Bitcoin. Forbes runs one of the very first mainstream articles discussing Bitcoin’s use in remittance payments. WordPress commenced accepting Bitcoin, explaining that traditional payment processor limitations were preventing international bloggers from participating in the blogosphere.

As two thousand twelve ended, the price of one Bitcoin was $13.44 and two thousand eight hundred nine people viewed the Wikipedia page.

2013: The world wakes up to bitcoin

2013 was one of the most tumultuous years for Bitcoin. It had two period of incredible volatility in which people literally woke up to almost 100% price increases.

The very first occurred in early 2013. A bail-out deal inbetween the EU and Cyprus included a levy on bank accounts with sizeable sums of money, inspiring Cypriot account holders to buy bitcoin en masse. The Bitcoin price almost doubles, and Cypress sets a precedent for using Bitcoin as a means of capital flight.

Bitcoin survived one of its very first major crises of legitimacy this year: the shutting down of the Silk Road and the arrest of its founder. The government seized all assets and helped cement public association of Bitcoin with online black markets. After a quick price drop, the price quickly recovered, but Bitcoin has lived in the Silk Road’s shadow ever since.

Globally, governments began to take Bitcoin more gravely but reactions were mixed.

  • The People’s Bank of China, after originally approving Bitcoin, banned financial institutions from using it or working with customers whose businesses involve it.
  • The US Department of Homeland Security proclaimed Mt. Gox a ‘money transmitter’ (a strongly regulated entity) and moved to seize some of its assets.
  • US Financial Crimes Enforcement Network (FINCEN) issued some of the world’s very first bitcoin regulation in the form of a guidance report for persons administering, exchanging or using virtual currency. In particular, exchanges must obey with money laundering laws and register as Money Services Businesses.
  • The US Senate held a hearing which was (to the surprise of many) open to the long-term prospects of Bitcoin.

The 2nd period of volatility occurred in November. In thirty days, the price went from just over $100 to just over $1200. Searches for bitcoin spikes. News outlets covered it. In thirty days, it went from a successfully digital currency proof-of-concept to a fresh technology in the eyes of the world. The price plummeted back down in December, but it never stayed below $200 again.

The erect of popularity led to an explosion of “altcoins”—digital currencies based on modified or different underlying protocols. Litecoin had been the very first, back in 2011, but two thousand thirteen spotted hundreds of these fresh altcoins launch. Many turned out to be scams, but many are also still traded today.

As two thousand thirteen ended, the price of one Bitcoin was $764 and twenty six thousand three hundred fifty four people viewed the Wikipedia page.

2014: Bitcoin beyond cryptocurrencies and cryptocurrencies beyond Bitcoin

In early 2014, Bitcoin survived another major crisis of legitimacy: the closure of Mt. Gox. Mt. Gox had been the longest-running and most successful virtual currency exchange to date. It was a pile of both the bitcoin economy and the community. In February, Mt. Gox abruptly shut trading, and leaked documents display it had lost 744,000 BTC (approximately $40 million). Bitcoin naysayers had a field day on forums, and it was widely seen as a deep-throat to the digital currency’s capability to operate securely without any oversight or regulation.

Governments began to pass regulation this year. The wild end to two thousand thirteen woke many regulators up to the volatility of this currency. The IRS proclaimed Bitcoin to be taxed as property. The People’s Bank of China compelled Chinese banks to close the bank accounts of major Chinese exchanges, however many exchanges exploited legal loopholes to keep operating. Fresh York announced its Bitlicense: a legal licensing framework for businesses that interact with Bitcoin and cryptocurrencies. This is largely decried by the cryptocurrency community. The desire of unregulated cash was quickly fading.

The currency also traveled more into the payment mainstream, and a wave of major retailers accepted the currency. Overstock, Tiger Direct, Newegg, Dell, and Microsoft all announced acceptance of Bitcoin. Near the end of the year, a subsidiary of PayPal announced it will work on integrating Bitcoin on their platform.

Another development in the world of cryptocurrencies is that many many people began imagining Bitcoin without the digital currency part: how could the underlying technology be used for other purposes?

A wave of fresh protocols emerged with applications beyond digital currency, presaging a so-called “Bitcoin Two.0” era in which people would repurpose blockchains (Bitcoin’s and others) to store all kinds of information. Some notable ones included

  • Ethereum, a platform for software that could run on a distributed network.
  • Maidsafecoin, a protocol to permit distributed file storage built on top of the Bitcoin blockchain
  • Factom launches to create a data layer on top of the blockchain to enable ordinary, verifiable, and secure record keeping.

This reflected the rising awareness of what early enthusiasts had thought: the technology of cryptocurrencies could be the foundation of the next Internet. Today is like the early 90s, and in the coming years, blockchains could remake everything. The idea was planted, but with it, a sobering realization: this process would take time.

Despite these developments, Bitcoin’s price began a slow decline this year that would bottom out in early two thousand fifteen below $200 and stay relatively dormant for months. Part of this decline was a shift in capital from bitcoin to other digital currencies. Bitcoin’s contribution to the total market value of all cryptocurrencies fell from a higher of 95% in August to 78% in December. Another was the realization that upending global financial markets wouldn’t happen overnight. Bitcoin was not above the law, and financial law was very complicated. Bitcoin had the potential to be disruptive but disruption can be slower than founding visionaries hoped. In many ways, cryptocurrencies faded from the public eye.

AS two thousand fourteen ended, the price of one Bitcoin was $314 and six thousand one hundred sixty two people viewed the Wikipedia page.

2015: The business blockchain

The basic features of this industry mostly continued. Hacks and theft continued, including a high-profile loss of close to $Five million from a major exchange at the beginning of the year.

Regulators around the world continued to explore the implications of this technology while also proving that users of Bitcoin are not beyond the reach of the law. Ross Ulbricht, founder of The Silk Road, is sentenced to life in prison without parole for deeds that were “terribly devastating to our social fabric.” Mark Karpeles, CEO of Mt. Gox, is arrested in Japan. Two federal agents who stole Bitcoin during the Silk Road investigation plead guilty.

The fattest shift came from banks and industry. Many industry executives began talking about “blockchains” and “distributed ledgers” rather than Bitcoin. Microsoft launched blockchain-as-a-service (BaaS) on its Azure cloud-computing platform. This permits companies to experiment with blockchains and explore how they could be used in different areas of their business.

This likely contributed to the growth in interest in Bitcoin among the broader public and among traders. Bitcoin’s price began a sustained ascent as people began realizing Bitcoin and blockchains were still around.

However, a crisis was brewing in the form of the “block size debate.” The Bitcoin protocol was designed to process approximately seven transactions per 2nd; the blocks in the blockchain were not large enough to store more. Members of the community realized Bitcoin was on tempo to reach that in 2015. If nothing was done, it could stymie the currency’s growth in popularity.

What followed was a bitter and divisive debate about whether to increase the size of the Bitcoin blocks (permitting more transactions per 2nd) or to reposition the Bitcoin blockchain as a ‘settlement layer’ while permitting other services to process transactions that happen off-chain. In Bitcoin, there are no democratic rules, public sanctioned spaces to gather, or Robert’s rules of order. Reddit, Bitcointalk, and a duo other online forums were serving as venues for ‘public’ discussion, and the Bitcoin Foundation began hosting events toward the end of the year.

No one could agree, and the debate was fierce. This deadlock struck a suck to Bitcoin’s perceived legitimacy. If it couldn’t deal with a challenge like this, how could it deal with others? People commenced talking earnestly about other currencies that might be viable alternatives to Bitcoin. Ethereum topped that list, and in early 2016, its price would increase tenfold.

As two thousand fifteen ended, the price of one Bitcoin was $426 and four thousand seven hundred thirty people viewed the Wikipedia page.

2016: A Year of Promise

It is too early to tell the story of two thousand sixteen for Bitcoin. Many of the trends that coalesced in two thousand fifteen continued: more enterprise and corporate interest in blockchain technology, more uncertainty over the block size debate, and some price volatility.

Security remains an issue. Just this year, Gatecoin, a major exchange based in Hong Kong, lost $Two million and suspended trading. Shapeshift, a major US-based exchange, suffered a series of hacks in a saga that reads like a crime novel.

Broadly, industry players in finance and technology remain bullish on blockchains and ambivalent about Bitcoin. More and more startups are branding themselves as blockchain companies rather than bitcoin companies. A fresh ambivalence about Bitcoin has emerged: not as a dangerous quasi-legal currency but as a good proof-of-concept that ultimately won’t be ready for primetime. As they say, “the pioneers get the arrows, the settlers get the land.” At a premier industry conference, some compared Bitcoin to Netscape.

A History of Bitcoin – Smith Crown

A History of Bitcoin

This article is a brief history of Bitcoin. Our aim is to give the reader a reliable abbreviated overview of Bitcoin. We will reference places where the interested reader can learn more about specific topics or dive deeper.

The history will be structured around Bitcoin’s trade price (as a reflection of market sentiment) and page views of wikipedia (as a reflection of broader awareness).

2008/2009: Bitcoin’s birth

In November 2008, someone going by the user name ‘Satoshi Nakamoto’ released a paper to a cryptography mailing list. The 9-page paper was entitled “Bitcoin: A Peer-to-Peer Electronic Cash System“, and it laid out a vision for a distributed digital money system.

In January 2009, Satoshi Nakamoto released the very first version of the open-source bitcoin core software on SourceForge and the bitcoin protocol embarked running. Nakamoto mined the very first fifty bitcoins. The protocol was a breakthrough in cryptography, however it drew on developments that had preceded it but hadn’t been combined yet.

Bitcoin ran calmly in the background—a topic of excitement and fascination for a dedicated crowd of coders but largely off the world’s radar. Discussion was distributed across different forums, and it wasn’t until the end of the year that the very first dedicated forum was established. This helped coders could more lightly coordinate with other coders as the underlying code got tweaked. By mid-2009, people other than Satoshi Nakamoto were actively contributing to the open-source codebase in Github.

The protocol was a breakthrough in cryptography, however it drew on many cryptography innovations that preceded it. A community of cryptography experts and privacy advocates known as the Cypherpunks (cypher not cyber) played a key role in recognizing the technical genius of Bitcoin and understanding its implications. Many members of this community would become torchbearers later in Bitcoin’s history.

As two thousand nine ended, Bitcoin did not have a ‘trade price’ and three hundred nine people viewed the Wikipedia page.

2010: Bitcoin’s very early years

The Bitcoin ‘ecosystem’ was largely just a record of Bitcoin transactions (the blockchain), a set of online forums where users communicated and organized transactions, and the open-source software code. There were no wallet services, payment processors, or real user interface beyond actual guideline prompts and raw code. This limited involvement to a dedicated and savvy crowd who organized transactions through online forums and initiated them on the blockchain with code. For example, the very first commercial transaction took place in May 2010: a programmer in Florida spent Ten,000 BTC on a pizza.

However, beginnings of a market support system began to emerge. In early 2010, the very first exchange opened, which permitted structured trading of bitcoins. The very first “article” on bitcoin appeared on Slashdot and stoked interest beyond the initial insider cryptocurrency crowd. Users grew. In late 2010, Mt. Gox launched as the 2nd exchange and became the superior place to trade Bitcoins for a duo years.

As two thousand ten ended, the price of one Bitcoin was $.Three and three hundred nine people viewed the Wikipedia page.

2011: Bitcoin finds niche uses and awareness grows

In 2011, Bitcoin began to mature as a digital payment system, however its use was limited by the aspirations of early adopters.

The perceived anonymous nature of the digital currency made it ideal for online black markets. That year eyed the emergence of the Silk Road, an ebay for illicit goods (predominantly drugs) that used Bitcoin as a payment method. The Silk Road was one of the public’s primary introductions to Bitcoin, prompting several politicians cast the currency as a vehicle for money laundering and drugs.

Mainstream media also began covering it. Forbes, Bloomberg, and TIME all wrote articles. Politicians warned against it. Academics wrote about it. At the end of the year, CBS aired an scene of the “The Good Wife” that focused on bitcoin.

Other consumer services were also beginning to emerge. WikiLeaks began accepting Bitcoin donations. An iPad app was launched. Bitpay, a service that let merchants accept bitcoins over the phone, was founded and claimed to have one hundred merchants. More exchanges opened, letting people trade bitcoins for other currencies.

The Bitcoin code also underwent a major switch. Through 2011, Satoshi Nakamoto had overseen the maintenance of the codebase. Satoshi never called or met anyone and only communicated on forums and direct messages. In April 2011, Satoshi Nakamoto wrote his last verified email, leaving Gavin Andreson in charge of the project, and left, never to be (verifiably) seen or heard from again. Andreson quickly selected four others to share this responsibility and introduced some structured ways of updating the underlying code.

“He told myself and Gavin that he had moved on to other things and that the project was in good forearms.”

Also in 2011, the very first alternative digital currency or “altcoin”, Litecoin, launched.

The world was in an awkward time in which financial markets were doing well but workers were not. Occupy Wall Street embarked in September and soon Occupy protests had taken place in almost one thousand cities worldwide. It is effortless to see how the idea of a bankless currency could take root.

By the end of the year, the world was deeply ambivalent about the digital currency. A currency for the 21st Century that could topple banks? A device for laundering money and buying illicit substances?

As two thousand eleven ended, the price of one Bitcoin was $Four.60 and two thousand one hundred eighty five people viewed the Wikipedia page.

2012: Bitcoin matures

Bitcoin was railing a wave of legitimacy in many circles, and these were having conflicting effects.

The currency became a popular target for hackers and thieves. Mt. Gox had been hacked in 2011, and now more major attacks on exchanges and other databases led to millions of dollars worth of Bitcoin theft. Several Ponzi schemes ended with theft.

Black markets utilizing bitcoin as a payment method continued to operate. It’s estimated that $15 million worth of Bitcoin passed through the Silk Road this year. A popular online gambling site, Satoshi Dice, launched and flooded the bitcoin network with very puny gambling transactions (bets worth less than $.0001). This sparked a debate on how to deal with such ‘transaction dust.’

More generally, the community was feeling the impacts of having no central authority. There were no dedicated funds to support core development of the code and no sanctioned gathering places places other than online forums.

The Bitcoin Foundation was also established. Its role was to fund core development, represent the currency to governments, and conduct outreach and education. Late that year, a Bitcoin exchange Bitcoin-central.net was licensed similar to a bank in Europe.

As it garnered the attention of more governments, its legal ambiguity became more visible and more awkward. People were trading it like an asset, using it like a currency, and downloading it like open-source software. Gambling and the Silk Road didn’t help. Some services embarked pulling down bitcoin out of fear of its legality.

Broadly, this is a year in which the industry also eyed the promise of banking the unbanked with Bitcoin. Forbes runs one of the very first mainstream articles discussing Bitcoin’s use in remittance payments. WordPress commenced accepting Bitcoin, explaining that traditional payment processor limitations were preventing international bloggers from participating in the blogosphere.

As two thousand twelve ended, the price of one Bitcoin was $13.44 and two thousand eight hundred nine people viewed the Wikipedia page.

2013: The world wakes up to bitcoin

2013 was one of the most tumultuous years for Bitcoin. It had two period of incredible volatility in which people literally woke up to almost 100% price increases.

The very first occurred in early 2013. A bail-out deal inbetween the EU and Cyprus included a levy on bank accounts with sizeable sums of money, inspiring Cypriot account holders to buy bitcoin en masse. The Bitcoin price almost doubles, and Cypress sets a precedent for using Bitcoin as a means of capital flight.

Bitcoin survived one of its very first major crises of legitimacy this year: the shutting down of the Silk Road and the arrest of its founder. The government seized all assets and helped cement public association of Bitcoin with online black markets. After a quick price drop, the price quickly recovered, but Bitcoin has lived in the Silk Road’s shadow ever since.

Globally, governments began to take Bitcoin more gravely but reactions were mixed.

  • The People’s Bank of China, after originally approving Bitcoin, banned financial institutions from using it or working with customers whose businesses involve it.
  • The US Department of Homeland Security announced Mt. Gox a ‘money transmitter’ (a strongly regulated entity) and moved to seize some of its assets.
  • US Financial Crimes Enforcement Network (FINCEN) issued some of the world’s very first bitcoin regulation in the form of a guidance report for persons administering, exchanging or using virtual currency. In particular, exchanges must obey with money laundering laws and register as Money Services Businesses.
  • The US Senate held a hearing which was (to the surprise of many) open to the long-term prospects of Bitcoin.

The 2nd period of volatility occurred in November. In thirty days, the price went from just over $100 to just over $1200. Searches for bitcoin spikes. News outlets covered it. In thirty days, it went from a successfully digital currency proof-of-concept to a fresh technology in the eyes of the world. The price plummeted back down in December, but it never stayed below $200 again.

The erect of popularity led to an explosion of “altcoins”—digital currencies based on modified or different underlying protocols. Litecoin had been the very first, back in 2011, but two thousand thirteen eyed hundreds of these fresh altcoins launch. Many turned out to be scams, but many are also still traded today.

As two thousand thirteen ended, the price of one Bitcoin was $764 and twenty six thousand three hundred fifty four people viewed the Wikipedia page.

2014: Bitcoin beyond cryptocurrencies and cryptocurrencies beyond Bitcoin

In early 2014, Bitcoin survived another major crisis of legitimacy: the closure of Mt. Gox. Mt. Gox had been the longest-running and most successful virtual currency exchange to date. It was a pole of both the bitcoin economy and the community. In February, Mt. Gox abruptly shut trading, and leaked documents demonstrate it had lost 744,000 BTC (approximately $40 million). Bitcoin naysayers had a field day on forums, and it was widely seen as a deepthroat to the digital currency’s capability to operate securely without any oversight or regulation.

Governments began to pass regulation this year. The wild end to two thousand thirteen woke many regulators up to the volatility of this currency. The IRS announced Bitcoin to be taxed as property. The People’s Bank of China compelled Chinese banks to close the bank accounts of major Chinese exchanges, however many exchanges exploited legal loopholes to keep operating. Fresh York announced its Bitlicense: a legal licensing framework for businesses that interact with Bitcoin and cryptocurrencies. This is largely decried by the cryptocurrency community. The wish of unregulated cash was quickly fading.

The currency also traveled more into the payment mainstream, and a wave of major retailers accepted the currency. Overstock, Tiger Direct, Newegg, Dell, and Microsoft all announced acceptance of Bitcoin. Near the end of the year, a subsidiary of PayPal announced it will work on integrating Bitcoin on their platform.

Another development in the world of cryptocurrencies is that many many people began imagining Bitcoin without the digital currency part: how could the underlying technology be used for other purposes?

A wave of fresh protocols emerged with applications beyond digital currency, presaging a so-called “Bitcoin Two.0” era in which people would repurpose blockchains (Bitcoin’s and others) to store all kinds of information. Some notable ones included

  • Ethereum, a platform for software that could run on a distributed network.
  • Maidsafecoin, a protocol to permit distributed file storage built on top of the Bitcoin blockchain
  • Factom launches to create a data layer on top of the blockchain to enable elementary, verifiable, and secure record keeping.

This reflected the rising awareness of what early enthusiasts had thought: the technology of cryptocurrencies could be the foundation of the next Internet. Today is like the early 90s, and in the coming years, blockchains could remake everything. The idea was planted, but with it, a sobering realization: this process would take time.

Despite these developments, Bitcoin’s price began a slow decline this year that would bottom out in early two thousand fifteen below $200 and stay relatively dormant for months. Part of this decline was a shift in capital from bitcoin to other digital currencies. Bitcoin’s contribution to the total market value of all cryptocurrencies fell from a higher of 95% in August to 78% in December. Another was the realization that upending global financial markets wouldn’t happen overnight. Bitcoin was not above the law, and financial law was very complicated. Bitcoin had the potential to be disruptive but disruption can be slower than founding visionaries hoped. In many ways, cryptocurrencies faded from the public eye.

AS two thousand fourteen ended, the price of one Bitcoin was $314 and six thousand one hundred sixty two people viewed the Wikipedia page.

2015: The business blockchain

The basic features of this industry mostly continued. Hacks and theft continued, including a high-profile loss of close to $Five million from a major exchange at the beginning of the year.

Regulators around the world continued to explore the implications of this technology while also proving that users of Bitcoin are not beyond the reach of the law. Ross Ulbricht, founder of The Silk Road, is sentenced to life in prison without parole for deeds that were “terribly devastating to our social fabric.” Mark Karpeles, CEO of Mt. Gox, is arrested in Japan. Two federal agents who stole Bitcoin during the Silk Road investigation plead guilty.

The thickest shift came from banks and industry. Many industry executives began talking about “blockchains” and “distributed ledgers” rather than Bitcoin. Microsoft launched blockchain-as-a-service (BaaS) on its Azure cloud-computing platform. This permits companies to experiment with blockchains and explore how they could be used in different areas of their business.

This likely contributed to the growth in interest in Bitcoin among the broader public and among traders. Bitcoin’s price began a sustained ascent as people commenced realizing Bitcoin and blockchains were still around.

However, a crisis was brewing in the form of the “block size debate.” The Bitcoin protocol was designed to process approximately seven transactions per 2nd; the blocks in the blockchain were not large enough to store more. Members of the community realized Bitcoin was on rhythm to reach that in 2015. If nothing was done, it could stymie the currency’s growth in popularity.

What followed was a bitter and divisive debate about whether to increase the size of the Bitcoin blocks (permitting more transactions per 2nd) or to reposition the Bitcoin blockchain as a ‘settlement layer’ while permitting other services to process transactions that happen off-chain. In Bitcoin, there are no democratic rules, public sanctioned spaces to gather, or Robert’s rules of order. Reddit, Bitcointalk, and a duo other online forums were serving as venues for ‘public’ discussion, and the Bitcoin Foundation began hosting events toward the end of the year.

No one could agree, and the debate was fierce. This deadlock struck a deepthroat to Bitcoin’s perceived legitimacy. If it couldn’t deal with a challenge like this, how could it deal with others? People began talking gravely about other currencies that might be viable alternatives to Bitcoin. Ethereum topped that list, and in early 2016, its price would increase tenfold.

As two thousand fifteen ended, the price of one Bitcoin was $426 and four thousand seven hundred thirty people viewed the Wikipedia page.

2016: A Year of Promise

It is too early to tell the story of two thousand sixteen for Bitcoin. Many of the trends that coalesced in two thousand fifteen continued: more enterprise and corporate interest in blockchain technology, more uncertainty over the block size debate, and some price volatility.

Security remains an issue. Just this year, Gatecoin, a major exchange based in Hong Kong, lost $Two million and suspended trading. Shapeshift, a major US-based exchange, suffered a series of hacks in a saga that reads like a crime novel.

Broadly, industry players in finance and technology remain bullish on blockchains and ambivalent about Bitcoin. More and more startups are branding themselves as blockchain companies rather than bitcoin companies. A fresh ambivalence about Bitcoin has emerged: not as a dangerous quasi-legal currency but as a good proof-of-concept that ultimately won’t be ready for primetime. As they say, “the pioneers get the arrows, the settlers get the land.” At a premier industry conference, some compared Bitcoin to Netscape.

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