Tag Archives: bitcoin blockchain mirror

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:

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 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.

Related video:

9 reasonable cryptocurrencies to invest in – Paul Miller – Medium

9 reasonable cryptocurrencies to invest in

After my Ethereum investment grew 45x (as per Sep 21, 2016), I determined to do a similar research on alternative cryptocurrencies.

Since an advice without skin in the game should not be taken gravely, I invest a significant amount of individual money into all the projects listed here.

I think of pouring money into cryptocurrencies as an accessible scheme of a venture investment. U.S. regulations prohibit an investor from purchasing ownership interests in companies that are not publicly listed on a stock exchange — unless he / she has at least $200K of a yearly income. This is very unfortunate and closes those fine instruments from the general population.

Cryptocurrency investment, on the other palm, is not presently regulated by SEC — or similar agencies. Keeping this in mind, investing in Ethereum development in middle-2014 has been utterly similar to a venture investment. And, well, it played out — permitting ETH team to grow rapidly.

Any investment may grow by a enormous factor. Or, it may become worth nothing. It’s your take whether to go after the advice, or to overlook it. There are many cryptos out there which are just sophisticated ponzi schemes determined to enrich their creators. Similarly, currencies which do not bring any innovations to the table have been excluded from the list.

The simplified list

  • Ethereum: Had 40x growth rate over the last two years. Permits to build fully-functional applications on blockchain without middlemen. Utterly promising currency, solid team (take a look at what Vitalik Buterin is doing right now). #Two crypto right now — but still 1/Ten of the Bitcoin value. So even while being conservative, thinking that any crypto would not grow higher than BTC, it may grow 10x. Still 10x is a puny amount — compared to other solutions on the market. So, not enormously yummy for a mid-game. Long-term, I am keeping most of the cash here.
  • Monero: Anonymous / private Bitcoin. Now, you may think, “What are you talking about, the BTC is anonymous already?” — which is a very unfortunate albeit popular misconception. All BTC transactions can be seen by the public. For example, by providing out your wallet address to someone, the person is able to see all the payments you’ve received and sent. The black market (drug dealers and weapon manufacturers) created a solution for this: basically a software that mixes your coins with other coins. Nevertheless, the software needs to be trusted and may not work correctly. This is pretty bad when your freedom depends on it. Monero has the mixing system built-in — which makes it very delicious for any kind of black market. This is how the currency got its very first big growth boost — basically a popular darknet market adopted it. Moreover, the transaction privacy is a necessity for any kind of widely adopted currency, which makes me think it may even overtake BTC. The market capitalization of Monero is presently 1/100 of BTC, which makes it a better investment in my opinion. This is where I put most my of my “new” investment batch in.
  • Factom: A blockchain-based system that’s optimized to store millions of realtime records with a single hash. Useful for all kinds of business apps. Runs on top of Bitcoin.
  • Counterparty: A plain description of it may sound like an “Ethereum competitor backed by Bitcoin blockchain”.
  • Siacoin: Distributed data storage. An alternative to Box, Google Drive. The big corporations would not have any access to your data in this point.
  • Lisk: A JavaScript-based Ethereum competitor that aims to make the deployment and development effortless. Interesting solution for an internet of things device from a simpleness perspective.
  • Ripple: A protocol which basically permits to reduce financial transaction fees by a hefty amount (to a duo cents) — and makes the settlement almost instant. Already backed by some VCs and used inwards big banks. The currency itself tho’ is different from others: it’s premined and centralized.
  • STEEM: A decentralized platform which permits to prize content creators lightly.
  • Zcash: crypto, which aims to solve the same problem Monero does. Some venture capital is pouring in. I am unconvinced — a plain backdoor at this point can compromise the entire system in the future. Nevertheless, my individual thoughts don’t matter here — what the market thinks is much more significant; i’d very likely pour some cash once the inflation rate would become stable.

The investment process

The most elementary way of investing is buying the Bitcoin with real money on any exchange, then selling the BTC for any currency from the list.

I’ve used Poloniex to buy BTC and other currencies; which has all the pairs from the list.

I would advice to not keep any significant amount of assets on an exchange. After buying the currency of your choice, send it to a wallet without an internet connection. Reminisce to do some googling and research to ensure your storage is solid and secure.

Prepare yourself to not brief the investments with yet another market fright. Largest points in an investment game are awarded for bearing discomfort.

The article has been translated: На русском

9 reasonable cryptocurrencies to invest in – Paul Miller – Medium

9 reasonable cryptocurrencies to invest in

After my Ethereum investment grew 45x (as per Sep 21, 2016), I determined to do a similar research on alternative cryptocurrencies.

Since an advice without skin in the game should not be taken earnestly, I invest a significant amount of private money into all the projects listed here.

I think of pouring money into cryptocurrencies as an accessible scheme of a venture investment. U.S. regulations prohibit an investor from purchasing ownership interests in companies that are not publicly listed on a stock exchange — unless he / she has at least $200K of a yearly income. This is very unfortunate and closes those fine instruments from the general population.

Cryptocurrency investment, on the other arm, is not presently regulated by SEC — or similar agencies. Keeping this in mind, investing in Ethereum development in middle-2014 has been enormously similar to a venture investment. And, well, it played out — permitting ETH team to grow rapidly.

Any investment may grow by a hefty factor. Or, it may become worth nothing. It’s your take whether to go after the advice, or to overlook it. There are many cryptos out there which are just sophisticated ponzi schemes determined to enrich their creators. Similarly, currencies which do not bring any innovations to the table have been excluded from the list.

The simplified list

  • Ethereum: Had 40x growth rate over the last two years. Permits to build fully-functional applications on blockchain without middlemen. Utterly promising currency, solid team (take a look at what Vitalik Buterin is doing right now). #Two crypto right now — but still 1/Ten of the Bitcoin value. So even while being conservative, thinking that any crypto would not grow higher than BTC, it may grow 10x. Still 10x is a puny amount — compared to other solutions on the market. So, not utterly yummy for a mid-game. Long-term, I am keeping most of the cash here.
  • Monero: Anonymous / private Bitcoin. Now, you may think, “What are you talking about, the BTC is anonymous already?” — which is a very unfortunate albeit popular misconception. All BTC transactions can be seen by the public. For example, by providing out your wallet address to someone, the person is able to see all the payments you’ve received and sent. The black market (drug dealers and weapon manufacturers) created a solution for this: basically a software that mixes your coins with other coins. Nevertheless, the software needs to be trusted and may not work correctly. This is pretty bad when your freedom depends on it. Monero has the mixing system built-in — which makes it very delicious for any kind of black market. This is how the currency got its very first big growth boost — basically a popular darknet market adopted it. Moreover, the transaction privacy is a necessity for any kind of widely adopted currency, which makes me think it may even overtake BTC. The market capitalization of Monero is presently 1/100 of BTC, which makes it a better investment in my opinion. This is where I put most my of my “new” investment batch in.
  • Factom: A blockchain-based system that’s optimized to store millions of realtime records with a single hash. Useful for all kinds of business apps. Runs on top of Bitcoin.
  • Counterparty: A plain description of it may sound like an “Ethereum competitor backed by Bitcoin blockchain”.
  • Siacoin: Distributed data storage. An alternative to Box, Google Drive. The big corporations would not have any access to your data in this point.
  • Lisk: A JavaScript-based Ethereum competitor that aims to make the deployment and development effortless. Interesting solution for an internet of things device from a plainness perspective.
  • Ripple: A protocol which basically permits to reduce financial transaction fees by a big amount (to a duo cents) — and makes the settlement almost instant. Already backed by some VCs and used inwards big banks. The currency itself tho’ is different from others: it’s premined and centralized.
  • STEEM: A decentralized platform which permits to prize content creators lightly.
  • Zcash: crypto, which aims to solve the same problem Monero does. Some venture capital is pouring in. I am unconvinced — a plain backdoor at this point can compromise the entire system in the future. Nevertheless, my private thoughts don’t matter here — what the market thinks is much more significant; i’d very likely pour some cash once the inflation rate would become stable.

The investment process

The most plain way of investing is buying the Bitcoin with real money on any exchange, then selling the BTC for any currency from the list.

I’ve used Poloniex to buy BTC and other currencies; which has all the pairs from the list.

I would advice to not keep any significant amount of assets on an exchange. After buying the currency of your choice, send it to a wallet without an internet connection. Recall to do some googling and research to ensure your storage is solid and secure.

Prepare yourself to not brief the investments with yet another market fright. Largest points in an investment game are awarded for suffering discomfort.

The article has been translated: На русском

Related video:

Five Ways Theme Parks Could Embrace Blockchain (And Why They Should)

Без кейворда

Jegar Pitchforth is a statistician, data scientist and blogger with a background in sophisticated systems analysis.

In this opinion chunk, Pitchforth takes a tour of potential blockchain applications in the theme park industry, presenting five ways the summer entertainment staple could improve by using the tech.

The theme park world has been known to embrace all forms of fresh technology, from virtual reality in rails to recommendation systems on mobile apps and the touchless payment technology that now pervades all major theme parks globally.

But while the methods of delivering the theme park practice are as advanced as they come in any industry, the systems behind all of it are sorely lacking. The practice of booking tickets and organizing the visit is often a lot more strained than it needs to be, and anything that minimizes this process is likely to be well received.

Meantime, the digital world is undergoing a switch in the way it stores information and makes financial transactions. A technology known broadly as ‘blockchain’ is gaining more and more attention amongst development circles, and it promises a fresh way of interacting with data altogether free of server costs or security issues.

You’ve most likely heard of the very first major application of the blockchain known as bitcoin – an entirely digital currency given value by those who use it.

But for all the hype you’ve heard about bitcoin, this is only the very pointy peak of a continent-sized iceberg. The next iteration of cryptocurrency is called ethereum, and its applications to the theme park world are far ranging.

1. Ticketing

Ticketing is very likely the most demonstrable application of the blockchain to the operations of theme parks. There are already a range of interesting ethereum-based ‘dapps’ that promise ticketing services for music festivals and concerts at a fraction of the price.

Because the blockchain only ever permits one copy of a digital property (such as a ticket to a theme park), users can have a password-protected wallet on their phone that contains the digital tickets signed by the park which are scanned at the gate, at which time the payment transfer is finalized inbetween the guest’s wallet and the theme park’s.

No ID, no paper tickets, just a secure decentralized system approved by consensus.

What’s more, these digital tickets don’t have to be bought all at once or even by the same person. A guest who knows they want to go to the park a year out can make a promise to buy a ticket, which they can then pay off at their will over the remaining time they have. The blockchain can lightly store the payment history of the guest without any specific human approval or oversight.

Now that your tickets are digital assets that you don’t need to keep an eye on, you can pretty much permit people to do whatever they want with them.

Ethereum has the capability to run ‘brainy contracts’ (executable code with instructions to carry out deeds based on specific triggers), so any time someone sells on your park’s tickets at a profit you can get a cut. Say you take 50% of any resales as part of the contract when you sell the ticket. On popular days that ticket might go through any number of arms, and you are making money each time without any effort, while also permitting others to make money from their good predictions.

Two. Fastpass tracking and interchanges

Similar to theme park ticketing, fastpass tickets for rail queues like this one at Universal, or the equivalent at Walt Disney World can be entirely managed through wise contracts, providing them much more plasticity than the current systems.

The current system has a entire range of books and forums dedicated to how to game it, with people spending hours attempting to get the best rail times and cover the rest of their dearest rails through careful planning. It surely doesn’t need to be so tense.

What if everything switched over to a bidding system with every guest given equal chance to begin with?

You could provide guests with some tokens to spend on fastpasses when they buy a ticket, then use a demand-based system for the token cost of each rail in the park. The xxx fans can spend all their tokens on the newest rail at the most popular times, while the kids can spend theirs on railing the Jungle Cruise for the five-millionth time.

Now that you’ve established a within-park market for rail times, there’s nothing stopping you from selling extra tokens to guests buying premium packages, or to their relatives wishing them a good holiday.

The cool thing about this is that you get a lot more information about which rails people indeed wished to go on, because you can track the ‘price’ and witness them trading with each other. This would let you embark improving your recommendations to them, providing them indications of rails they might like and good times to rail them that suit their intended schedule.

Trio. Create a theme park currency

You can very likely see where all this is heading: a theme park currency that can be used at any of the park owner’s subsidiary and affiliate businesses.

A majority of people that visit premium parks now download the app before they go so they can organize their day and use the map. It’s not a good step for that app to become a digital wallet that visitors can use in your parks, stores and even online platforms. What makes this a digital currency rather than the old-school version of ‘park dollars’ is that these could be exchanged back into local currency anywhere someone wants to set up an exchange.

On its own, the prospect of having a future corporate currency that could be more stable than many local governments is interesting, but the instant benefits are still compelling. Once you transfer your ticketing, fastpasses, merchandising and digital distribution payments through one channel that doesn’t require a bank, your accounting all of a sudden becomes a lot simpler.

The concept is especially arousing for larger brands who may not have a park, but do have a store in a particular country.

The park currency can be used in all these stores without having to make special banking or business arrangements, permitting for much quicker expansion into fresh markets. With amazingly low transfer costs inbetween countries, theme parks that embrace blockchain would be able to capitalize on the post-visit practice much more effectively.

Four. Audience surveys with meaning

One of the most popular early uses of the ethereum cryptocurrency was as a voting system. Rather than a ‘one person one vote’ treatment, The DAO (the earliest manifestation of an ethereum organisation) used a share-based system where those with more coins had more vote.

While this may not be exactly what you want for your theme park, having a good skill of what the highest spenders in your park are looking for is a useful thing.

On top of that, you might also see a groundswell of grassroots support from lower-spending guests (like Universal witnessed with the opening of Harry Potter worlds in Florida), which would give you an indication that you need to build a rail with high throughput that doesn’t need a lot of stores nearby.

Whatever the outcome, an audience survey with the answers weighted by how much they have invested in your company is a lot more useful than standing around on corners asking people how they feel about things.

Five. Turn everyone into an ambassador

Once you have your audience used to using your park’s currency, and it’s gained some value, there’s more and more benefit to suggesting what are essentially cash prizes for advertising and information about your park.

This could be as basic as forwarding coins to a wallet linked to a Twitter account that posts lost of very retweeted content, or as sophisticated as real-time prizes for advice about park waiting times, incident reports and events. There are already dozens of forums online vying to be the accomplished of one park or another, why not bring it all into your own app ecology and prize your guests for their effort?

You could create ‘flashmobs’ in the park with your most loyal fans by incentivizing them with tokens, as could any guest with enough tokens and approval from the park’s digital protocols. There is no end to the ways people could build secondary and tertiary businesses around your brand, and with the right protocols you wouldn’t need to spend a cent on protecting it.

There’s a massive range of ways which theme parks can use blockchain technology, and it’s titillating to imagine what the future might hold.

What other ways could theme parks use blockchain technology? Or should they be looking at this at all? Let us know in the comments below.

This article originally appeared on the author’s blog, and has been republished here with his permission.

The leader in blockchain news, CoinDesk strives to suggest an open platform for dialogue and discussion on all things blockchain by encouraging contributed articles. As such, the opinions voiced in this article are the author’s own and do not necessarily reflect the view of CoinDesk.

Related video:

Five Practical Ways Bitcoin and Blockchain Can Influence your Petite Business

Five Practical Ways Bitcoin and Blockchain Can Influence your Puny Business

With all the hum around blockchain tech and cryptocurrencies, puny businesses might feel left out.

Even for those who are not necessarily cutting-edge in terms of tech, these five tips can empower entrepreneurs and petite businesses in leveraging bitcoin and blockchain as cryptocurrencies for their financial and other needs.

Using Bitcoin and Blockchain in Your Puny Business

Accepting Payments in Bitcoin and Other Cryptocurrencies

The survival of the cryptocurrency revolution is totally reliant on its acceptance, and that is where puny businesses can excel. Some larger companies, like Amazon and Tesla, are presently accepting cryptocurrency with not too many puny businesses hopping on board.

Very first, let’s talk a moment about why accepting cryptocurrency can be of benefit to you:

Little to no fees — Credit card processors will lightly charge you 2-4 percent in fees for using the service. Cryptocurrency transfers are close to free, albeit services will usually charge a minimal amount (0-1 percent) which means you will save money. Note that you can use services that can confirm blockchain transfers swifter, but will have a thicker fee to expedite it.

Quicker access to your funds — Banks are not involved with the transactions, and there are no centralized clearing processes. This means you get the payments considerably quicker. For example, most bank-based payment processors send payment within 1-2 days. You can get Bitcoin payments within minutes to a few hours, depending on the network’s cryptographic explosion.

No government ties — Since cryptocurrencies are not tied to any governments or regulatory agencies, there are no borders to consider. You can avoid international exchange rates or transaction fees.

Avoid disputes — Albeit cryptocurrencies are entirely digital, they work like cash rather than credit. All sales are final, and there is no way for a customer to dispute a transaction. If you have had issues with people contesting charges, accepting cryptocurrency can switch that for you.

You can actually make a name for yourself by being a pioneer in this regard. It’s as effortless as setting up a payment processor that specializes in cryptocurrency.

While many services will suggest “wallet” capability, some startups go beyond this. CryptoPay, for example, offers both a digital wallet for Bitcoins and a physical debit card, which permits users to spend cryptocurrency at any establishment that accepts Visa debit cards. CryptoPay is one of the more established players in this niche and is planning to raise funds through an initial coin suggesting (ICO) in order to further improve its services.

Signing Agreements with Vendors Through Clever Contracts

Signing agreements with vendors would usually require a lawyer to draw up a contract for you and your client to sign. This can be an agreement for an exchange of service and money, accomplish with the agenda and timeline. You would wait for the contract to be finalized, parties to sign it, and it would get notarized. Then you would do the work and expect payment to arrive. If the other party didn’t pay you as agreed, you would then go back to your lawyer to bring suit against the other party.

Brainy contracts switch all of that by making it simpler.

Blockchain technology makes brainy contracts possible — these are digitally-signed agreements to execute certain things when certain conditions are met. You create it with the services you will provide, the mutually agreed upon cryptocurrency amount and the deadline for the service to be finished.

Once submitted, the contract cannot be altered, and copies will be hosted across all the knots in the blockchain, so that it’s downright accessible at any time. Because the contract is on the blockchain, it is monitored to be sure the service promised is delivered. Then when the service is provided, the cryptocurrency is exchanged on the due date without anyone having to do anything to begin the process.

There are services to enable businesses and individuals to execute legally-binding wise contracts, such as Agrello, which dispenses with the need for middlemen, such as lawyers, and eliminates the possibility of cracking the contract.

Conserving Power through Brainy Electrical Grids

While cryptocurrencies have been criticized for their excessive use of electro-therapy, we are eyeing a turnaround in being able to conserve power through the blockchain. In some larger cities, folks are selling solar power on the blockchain to one another.

Essentially, they harvest the solar energy from their own solar panels and then store the excess on a wise power grid. Then, they utilize blockchain technology in order to monitor tens unit usage, availability of solar-generated power, and such.

These communities also use the blockchain to sell excess energy to their neighbors or the electrical play grid, or to acquire energy when their solar cells are brief. All transactions are, of course, dealt with in cryptocurrency.

As a puny business proprietor, you can benefit from using someone else’s excess solar energy, which can result in savings from buying tens unit from the grid. If you have a big enough solar power facility, you can even be a net seller of electrical play.

The Brooklyn Micro Gird is a P2P energy market based on the blockchain technology. Such projects and initiatives will improve our capability to monitor and manage transactions, as well as creating a connected and distributed network that could disrupt the energy market on a larger scale.

Keeping Track of Logistics and Vendor Shipping

As we mentioned previously, the blockchain is tamper-resistant when it comes to the integrity of your documents. You can add whatever you want, and you cannot delete or switch any document or transactions within the blockchain – albeit everything can be audited and monitored by all parties involved.

This means a lot for the petite business possessor who needs to track inventory. When you receive inventory, its transaction is recorded in the blockchain. When you sell that item, it’s recorded. When you ship the item, it’s recorded. Who you purchase the inventory from, who purchases it, and who is shipping is all recorded and makes your life much lighter. This means no more costly programs that are supposed to do this for you that happen to permit for transactions to be altered or deleted. All of it is done in real-time and with no major cost to you.

Several startups are attempting to revolutionize the supply chain. The future holds many promises and it’s only a matter of time until businesses use this technology.

Paying Utility Bills Through Bitcoin Wallets

In the past, one of the reasons people weren’t excited about cryptocurrency was the lack of use for everyday items. We want to be able to pay bills or buy gas with our cryptocurrency and permit our bank accounts to grow while we do so. This has leisurely been switching and we are observing more Bitcoin wallets providing the capability to make utility payments for us.

The above-mentioned platform CryptoPay offers a way to lightly make bill payments without having to by hand transfer your Bitcoins to your US dollar bank account. Some wallets even let you convert your Bitcoins to fiat currency (like Euros or US dollars) so you won’t be affected by the volatile values.

Conclusion

While cryptocurrencies haven’t been embraced over the last few years like we had hoped, we are still watching growth happen — both in terms of their values vis-à-vis fiat currency and more acceptance across different businesses. Hopping on board now broadens your customer base and provides you with some added benefits that you can’t get in today’s current market.

Related video:

Five Benefits of Cryptocurrency: A Fresh Economy For The Future

Five Benefits of Cryptocurrency: A Fresh Economy For The Future

Over the last duo of years the term cryptocurrency has been rapidly gaining the public eye. You might be more familiar with terms like Bitcoin, Litcoin and Ether. These are all cryptocurrencies.

In fact, there many! Just take a quick look

Just a ordinary google trend search shows you the commence of the growth

But before you proceed reading, I want to give a brief primer of cryptocurrency

A cryptocurrency is a digital currency that is created and managed through the use of advanced encryption technologies known as cryptography. Cryptocurrency made the leap from being an academic concept to (virtual) reality with the creation of Bitcoin in 2009. While Bitcoin attracted a growing following in subsequent years, it captured significant investor and media attention in April two thousand thirteen when it peaked at a record $266 per bitcoin after surging 10-fold in the preceding two months. Bitcoin sported a market value of over $Two billion at its peak, but a 50% plunge shortly thereafter sparked a furious debate about the future of cryptocurrencies in general and Bitcoin in particular. So, will these alternative currencies eventually supplant conventional currencies and become as ubiquitous as dollars and euros someday? Or are cryptocurrencies a passing fad that will flame out before long? The reaction lies with Bitcoin.

HOW WILL CRYPTOCURRENCY WILL HELP YOU?

The world is becoming more and more economically unsafe. This is not to say we are not growing. But asNassim Taleb states in his book. Antifragile. Our economic machine is like a glass jaw. one petite punch to it and it all comes crushing down! Both long term and brief term this is not good for you and all of the hard working citizen of the world.

“FRAGILITY IS THE QUALITY OF THINGS THAT ARE VULNERABLE TO VOLATILITY.”

– NASSIM NICHOLAS TALEB

So below, I will outline some pros and cons of us adopting a global acceptance of Cryptocuurency. And my hopes with this is…you will walk away with having found fresh found respect for cryptocurrency.

PROS AND CONS OF CRYPTOCURRENCY

The benefits of cryptocurrency over current fiat currency tech

Example: Central governments can’t take it away

Recall what happened in Cyprus in March 2013? The Central Bank wished to take back uninsured deposits larger than $100,000 to help recapitalize itself, causing meaty unrest in the local population. It originally desired to take a percentage of deposits below that figure, eating directly into family savings. That can’t happen with cryptocurrency/bitcoin. Because the currency is decentralized, you own it. No central authority has control, and so a bank can’t take it away from you. For those who find their trust in the traditional banking system unravelling, that’s a big benefit.

Let’s take a look at some of the improvements that can be made to fiat currency by shifting towards digital cash:

ADVANTAGES OF CRYPTOCURRENCY

  • Fraud: Cryptocurerncies are digital and cannot be counterfeited or reversed arbitrarily by the sender, as with credit card charge-backs.
  • Identity Theft: When you give your credit card to a merchant, you give him or her access to your utter credit line, even if the transaction is for a puny amount. Credit cards operate on a “pull” basis, where the store initiates the payment and pulls the designated amount from your account. Cryptocurrency use a “push” mechanism that permits the cryptocurrency holder to send exactly what he or she wants to the merchant or recipient with no further information
  • Instant Settlement: Purchasing real property typically involves a number of third parties (Lawyers, Notary), delays, and payment of fees. In many ways, the bitcoin/cryptocurency blockchain is like a “large property rights database,” says Gallippi. Bitcoin contracts can be designed and enforced to eliminate or add third party approvals, reference outer facts, or be finished at a future date or time for a fraction of the expense and time required to finish traditional asset transfers.
  • Access to Everyone: There are approximately Two.Two billion individuals with access to the Internet or mobile phones who don’t presently have access to traditional exchange systems. These individuals are primed for the Crytocurrency market. Kenya’s M-PESA system, a mobile phone-based money transfer and micros financing service recently announced a bitcoin device, with one in three Kenyans now wielding a bitcoin wallet. (Let me repeat that again. 1/Three)
  • Lower Fees: There aren’t usually transaction fees for cryptocurrency exchanges because the miners are compensated by the network (Side note: This is the case for now). Even however there’s no bitcoin/cryptocurrency transaction fee, many expect that most users will engage a third-party service, such as Coinbase, creating and maintaining their own bitcoin wallets. These services act like Paypal does for cash or credit card users, providing the online exchange system for bitcoin, and as such, they’re likely to charge fees. It’s interesting to note that Paypal does not accept or transfer bitcoins.

“THE BLOCKCHAIN KEEPS EVERYONE Fair, AND A Entire LAYER OF BANKING BUREAUCRACY IS Liquidated, LOWERING COSTS.” — PAUL VIGNA

MOST Significant. YOU OWN IT

There is no other electronic cash system in which your account isn’t wielded by someone else. Take PayPal, for example: if the company determines for some reason that your account has been misused, it has the power to freeze all of the assets held in the account, without consulting you (Trust me, this has happen to me many times) It is then up to you to hop through whatever hoops are necessary to get it cleared, so that you can access your funds. With cryptocurrency, you own the private key and the corresponding public key that makes up your cryptpcurrency address. No one can take that away from you (unless you lose it yourself, or host it with a web-based wallet service that loses it for you).

THE BAD THINGS ABOUT CRYPTOCURRENCY

Overall, cryptocurrencies have a long way to go before they can substitute credit cards and traditional currencies as a device for global commerce.

Bottom Line: Cryptocurrency is a baby. It will needs years and years of exposure to the global system, before the masses begin accepting it.

CRYPTOCURRENCY DISADVANTAGES:

  • Fact is many people are still unaware of cryptocurrency aka Digital currency
  • People need to be educated about it to be able to apply it to their lives.
  • Businesses need to embark accepting it
  • They need to make it lighter to sign up and get began.

HIGH RISK OF LOSS

Timothy B. Lee, adjunct scholar at the Cato Institute and regular contributor to Forbes.com, identifies four reasons to be cautious about bitcoins:

  • Lack of Security. There is no safety net or ideal way to protect your bitcoins from human error (passwords), technical glitches (hard drive failures, malware), or fiduciary fraud. According to an article in the UK edition of Wired, eighteen of forty web-based businesses suggesting to exchange bitcoins into other fiat currencies have gone out of business, with only six exchanges reimbursing their customers. The authors of the investigate estimate that the median lifespan of any bitcoin exchange is three hundred eighty one days, with a 29.9% chance that a fresh exchange will close within a year of opening.
  • Enlargened Regulation. While relatively benign guidelines are presently in place, law enforcement agencies could determine that bitcoins are a “giant money laundering scheme,” and enact more stringent regulations that would diminish the currency’s value.
  • Limited Scaling. The design of the system thresholds the speed and number of transactions processed, making it unlikely that bitcoins will substitute conventional credit card transactions.
  • Lack of Applications. While acknowledging bitcoins’ popular use for illegal transactions, Lee questions how useful bitcoins truly are. To be truly disruptive to existing fiat currencies or electronic payment systems, Bitcoin would need applications for low-cost international money transfers, the creation of complicated electronic contracts, or use in Kickstarter-style fundraising campaigns or micropayment transfers.

FINAL THOUGHTS

There are always pros and cons to any situation in life. To be able to make a good decision, you need to weigh the good and bad meticulously before finalizing your choice. With Cryptocurrency, it’s more about mass acceptance than technology. The technology is here. Only time will tell when the rest of the world (governments, citizens) will say…YES!

Five Benefits of Cryptocurrency: A Fresh Economy For The Future

Five Benefits of Cryptocurrency: A Fresh Economy For The Future

Over the last duo of years the term cryptocurrency has been rapidly gaining the public eye. You might be more familiar with terms like Bitcoin, Litcoin and Ether. These are all cryptocurrencies.

In fact, there many! Just take a quick look

Just a elementary google trend search shows you the begin of the growth

But before you proceed reading, I want to give a brief primer of cryptocurrency

A cryptocurrency is a digital currency that is created and managed through the use of advanced encryption technics known as cryptography. Cryptocurrency made the leap from being an academic concept to (virtual) reality with the creation of Bitcoin in 2009. While Bitcoin attracted a growing following in subsequent years, it captured significant investor and media attention in April two thousand thirteen when it peaked at a record $266 per bitcoin after surging 10-fold in the preceding two months. Bitcoin sported a market value of over $Two billion at its peak, but a 50% plunge shortly thereafter sparked a furious debate about the future of cryptocurrencies in general and Bitcoin in particular. So, will these alternative currencies eventually supplant conventional currencies and become as ubiquitous as dollars and euros someday? Or are cryptocurrencies a passing fad that will flame out before long? The reaction lies with Bitcoin.

HOW WILL CRYPTOCURRENCY WILL HELP YOU?

The world is becoming more and more economically unsafe. This is not to say we are not growing. But asNassim Taleb states in his book. Antifragile. Our economic machine is like a glass jaw. one petite punch to it and it all comes crushing down! Both long term and brief term this is not good for you and all of the hard working citizen of the world.

“FRAGILITY IS THE QUALITY OF THINGS THAT ARE VULNERABLE TO VOLATILITY.”

– NASSIM NICHOLAS TALEB

So below, I will outline some pros and cons of us adopting a global acceptance of Cryptocuurency. And my hopes with this is…you will walk away with having found fresh found respect for cryptocurrency.

PROS AND CONS OF CRYPTOCURRENCY

The benefits of cryptocurrency over current fiat currency tech

Example: Central governments can’t take it away

Recall what happened in Cyprus in March 2013? The Central Bank wished to take back uninsured deposits larger than $100,000 to help recapitalize itself, causing gigantic unrest in the local population. It originally dreamed to take a percentage of deposits below that figure, eating directly into family savings. That can’t happen with cryptocurrency/bitcoin. Because the currency is decentralized, you own it. No central authority has control, and so a bank can’t take it away from you. For those who find their trust in the traditional banking system unravelling, that’s a big benefit.

Let’s take a look at some of the improvements that can be made to fiat currency by shifting towards digital cash:

ADVANTAGES OF CRYPTOCURRENCY

  • Fraud: Cryptocurerncies are digital and cannot be counterfeited or reversed arbitrarily by the sender, as with credit card charge-backs.
  • Identity Theft: When you give your credit card to a merchant, you give him or her access to your utter credit line, even if the transaction is for a petite amount. Credit cards operate on a “pull” basis, where the store initiates the payment and pulls the designated amount from your account. Cryptocurrency use a “push” mechanism that permits the cryptocurrency holder to send exactly what he or she wants to the merchant or recipient with no further information
  • Instant Settlement: Purchasing real property typically involves a number of third parties (Lawyers, Notary), delays, and payment of fees. In many ways, the bitcoin/cryptocurency blockchain is like a “large property rights database,” says Gallippi. Bitcoin contracts can be designed and enforced to eliminate or add third party approvals, reference outward facts, or be finished at a future date or time for a fraction of the expense and time required to finish traditional asset transfers.
  • Access to Everyone: There are approximately Two.Two billion individuals with access to the Internet or mobile phones who don’t presently have access to traditional exchange systems. These individuals are primed for the Crytocurrency market. Kenya’s M-PESA system, a mobile phone-based money transfer and micros financing service recently announced a bitcoin device, with one in three Kenyans now wielding a bitcoin wallet. (Let me repeat that again. 1/Trio)
  • Lower Fees: There aren’t usually transaction fees for cryptocurrency exchanges because the miners are compensated by the network (Side note: This is the case for now). Even tho’ there’s no bitcoin/cryptocurrency transaction fee, many expect that most users will engage a third-party service, such as Coinbase, creating and maintaining their own bitcoin wallets. These services act like Paypal does for cash or credit card users, providing the online exchange system for bitcoin, and as such, they’re likely to charge fees. It’s interesting to note that Paypal does not accept or transfer bitcoins.

“THE BLOCKCHAIN KEEPS EVERYONE Fair, AND A Entire LAYER OF BANKING BUREAUCRACY IS Eliminated, LOWERING COSTS.” — PAUL VIGNA

MOST Significant. YOU OWN IT

There is no other electronic cash system in which your account isn’t wielded by someone else. Take PayPal, for example: if the company determines for some reason that your account has been misused, it has the power to freeze all of the assets held in the account, without consulting you (Trust me, this has happen to me many times) It is then up to you to hop through whatever hoops are necessary to get it cleared, so that you can access your funds. With cryptocurrency, you own the private key and the corresponding public key that makes up your cryptpcurrency address. No one can take that away from you (unless you lose it yourself, or host it with a web-based wallet service that loses it for you).

THE BAD THINGS ABOUT CRYPTOCURRENCY

Overall, cryptocurrencies have a long way to go before they can substitute credit cards and traditional currencies as a implement for global commerce.

Bottom Line: Cryptocurrency is a baby. It will needs years and years of exposure to the global system, before the masses embark accepting it.

CRYPTOCURRENCY DISADVANTAGES:

  • Fact is many people are still unaware of cryptocurrency aka Digital currency
  • People need to be educated about it to be able to apply it to their lives.
  • Businesses need to begin accepting it
  • They need to make it lighter to sign up and get began.

HIGH RISK OF LOSS

Timothy B. Lee, adjunct scholar at the Cato Institute and regular contributor to Forbes.com, identifies four reasons to be cautious about bitcoins:

  • Lack of Security. There is no safety net or flawless way to protect your bitcoins from human error (passwords), technical glitches (hard drive failures, malware), or fiduciary fraud. According to an article in the UK edition of Wired, eighteen of forty web-based businesses suggesting to exchange bitcoins into other fiat currencies have gone out of business, with only six exchanges reimbursing their customers. The authors of the explore estimate that the median lifespan of any bitcoin exchange is three hundred eighty one days, with a 29.9% chance that a fresh exchange will close within a year of opening.
  • Enlargened Regulation. While relatively benign guidelines are presently in place, law enforcement agencies could determine that bitcoins are a “giant money laundering scheme,” and enact more stringent regulations that would diminish the currency’s value.
  • Limited Scaling. The design of the system boundaries the speed and number of transactions processed, making it unlikely that bitcoins will substitute conventional credit card transactions.
  • Lack of Applications. While acknowledging bitcoins’ popular use for illegal transactions, Lee questions how useful bitcoins truly are. To be truly disruptive to existing fiat currencies or electronic payment systems, Bitcoin would need applications for low-cost international money transfers, the creation of sophisticated electronic contracts, or use in Kickstarter-style fundraising campaigns or micropayment transfers.

FINAL THOUGHTS

There are always pros and cons to any situation in life. To be able to make a good decision, you need to weigh the good and bad scrupulously before finalizing your choice. With Cryptocurrency, it’s more about mass acceptance than technology. The technology is here. Only time will tell when the rest of the world (governments, citizens) will say…YES!

Five Benefits of Cryptocurrency: A Fresh Economy For The Future

Five Benefits of Cryptocurrency: A Fresh Economy For The Future

Over the last duo of years the term cryptocurrency has been rapidly gaining the public eye. You might be more familiar with terms like Bitcoin, Litcoin and Ether. These are all cryptocurrencies.

In fact, there many! Just take a quick look

Just a ordinary google trend search shows you the commence of the growth

But before you proceed reading, I want to give a brief primer of cryptocurrency

A cryptocurrency is a digital currency that is created and managed through the use of advanced encryption technics known as cryptography. Cryptocurrency made the leap from being an academic concept to (virtual) reality with the creation of Bitcoin in 2009. While Bitcoin attracted a growing following in subsequent years, it captured significant investor and media attention in April two thousand thirteen when it peaked at a record $266 per bitcoin after surging 10-fold in the preceding two months. Bitcoin sported a market value of over $Two billion at its peak, but a 50% plunge shortly thereafter sparked a furious debate about the future of cryptocurrencies in general and Bitcoin in particular. So, will these alternative currencies eventually supplant conventional currencies and become as ubiquitous as dollars and euros someday? Or are cryptocurrencies a passing fad that will flame out before long? The reaction lies with Bitcoin.

HOW WILL CRYPTOCURRENCY WILL HELP YOU?

The world is becoming more and more economically unsafe. This is not to say we are not growing. But asNassim Taleb states in his book. Antifragile. Our economic machine is like a glass jaw. one puny punch to it and it all comes crushing down! Both long term and brief term this is not good for you and all of the hard working citizen of the world.

“FRAGILITY IS THE QUALITY OF THINGS THAT ARE VULNERABLE TO VOLATILITY.”

– NASSIM NICHOLAS TALEB

So below, I will outline some pros and cons of us adopting a global acceptance of Cryptocuurency. And my hopes with this is…you will walk away with having found fresh found respect for cryptocurrency.

PROS AND CONS OF CRYPTOCURRENCY

The benefits of cryptocurrency over current fiat currency tech

Example: Central governments can’t take it away

Reminisce what happened in Cyprus in March 2013? The Central Bank desired to take back uninsured deposits larger than $100,000 to help recapitalize itself, causing fat unrest in the local population. It originally wished to take a percentage of deposits below that figure, eating directly into family savings. That can’t happen with cryptocurrency/bitcoin. Because the currency is decentralized, you own it. No central authority has control, and so a bank can’t take it away from you. For those who find their trust in the traditional banking system unravelling, that’s a big benefit.

Let’s take a look at some of the improvements that can be made to fiat currency by shifting towards digital cash:

ADVANTAGES OF CRYPTOCURRENCY

  • Fraud: Cryptocurerncies are digital and cannot be counterfeited or reversed arbitrarily by the sender, as with credit card charge-backs.
  • Identity Theft: When you give your credit card to a merchant, you give him or her access to your total credit line, even if the transaction is for a puny amount. Credit cards operate on a “pull” basis, where the store initiates the payment and pulls the designated amount from your account. Cryptocurrency use a “push” mechanism that permits the cryptocurrency holder to send exactly what he or she wants to the merchant or recipient with no further information
  • Instantaneous Settlement: Purchasing real property typically involves a number of third parties (Lawyers, Notary), delays, and payment of fees. In many ways, the bitcoin/cryptocurency blockchain is like a “large property rights database,” says Gallippi. Bitcoin contracts can be designed and enforced to eliminate or add third party approvals, reference outer facts, or be ended at a future date or time for a fraction of the expense and time required to finish traditional asset transfers.
  • Access to Everyone: There are approximately Two.Two billion individuals with access to the Internet or mobile phones who don’t presently have access to traditional exchange systems. These individuals are primed for the Crytocurrency market. Kenya’s M-PESA system, a mobile phone-based money transfer and micros financing service recently announced a bitcoin device, with one in three Kenyans now wielding a bitcoin wallet. (Let me repeat that again. 1/Three)
  • Lower Fees: There aren’t usually transaction fees for cryptocurrency exchanges because the miners are compensated by the network (Side note: This is the case for now). Even tho’ there’s no bitcoin/cryptocurrency transaction fee, many expect that most users will engage a third-party service, such as Coinbase, creating and maintaining their own bitcoin wallets. These services act like Paypal does for cash or credit card users, providing the online exchange system for bitcoin, and as such, they’re likely to charge fees. It’s interesting to note that Paypal does not accept or transfer bitcoins.

“THE BLOCKCHAIN KEEPS EVERYONE Fair, AND A Entire LAYER OF BANKING BUREAUCRACY IS Liquidated, LOWERING COSTS.” — PAUL VIGNA

MOST Significant. YOU OWN IT

There is no other electronic cash system in which your account isn’t wielded by someone else. Take PayPal, for example: if the company determines for some reason that your account has been misused, it has the power to freeze all of the assets held in the account, without consulting you (Trust me, this has happen to me many times) It is then up to you to leap through whatever hoops are necessary to get it cleared, so that you can access your funds. With cryptocurrency, you own the private key and the corresponding public key that makes up your cryptpcurrency address. No one can take that away from you (unless you lose it yourself, or host it with a web-based wallet service that loses it for you).

THE BAD THINGS ABOUT CRYPTOCURRENCY

Overall, cryptocurrencies have a long way to go before they can substitute credit cards and traditional currencies as a contraption for global commerce.

Bottom Line: Cryptocurrency is a baby. It will needs years and years of exposure to the global system, before the masses embark accepting it.

CRYPTOCURRENCY DISADVANTAGES:

  • Fact is many people are still unaware of cryptocurrency aka Digital currency
  • People need to be educated about it to be able to apply it to their lives.
  • Businesses need to begin accepting it
  • They need to make it lighter to sign up and get began.

HIGH RISK OF LOSS

Timothy B. Lee, adjunct scholar at the Cato Institute and regular contributor to Forbes.com, identifies four reasons to be cautious about bitcoins:

  • Lack of Security. There is no safety net or ideal way to protect your bitcoins from human error (passwords), technical glitches (hard drive failures, malware), or fiduciary fraud. According to an article in the UK edition of Wired, eighteen of forty web-based businesses suggesting to exchange bitcoins into other fiat currencies have gone out of business, with only six exchanges reimbursing their customers. The authors of the explore estimate that the median lifespan of any bitcoin exchange is three hundred eighty one days, with a 29.9% chance that a fresh exchange will close within a year of opening.
  • Enhanced Regulation. While relatively benign guidelines are presently in place, law enforcement agencies could determine that bitcoins are a “giant money laundering scheme,” and enact more stringent regulations that would diminish the currency’s value.
  • Limited Scaling. The design of the system boundaries the speed and number of transactions processed, making it unlikely that bitcoins will substitute conventional credit card transactions.
  • Lack of Applications. While acknowledging bitcoins’ popular use for illegal transactions, Lee questions how useful bitcoins truly are. To be truly disruptive to existing fiat currencies or electronic payment systems, Bitcoin would need applications for low-cost international money transfers, the creation of sophisticated electronic contracts, or use in Kickstarter-style fundraising campaigns or micropayment transfers.

FINAL THOUGHTS

There are always pros and cons to any situation in life. To be able to make a good decision, you need to weigh the good and bad meticulously before finalizing your choice. With Cryptocurrency, it’s more about mass acceptance than technology. The technology is here. Only time will tell when the rest of the world (governments, citizens) will say…YES!

Related video:

Trio Solutions for Instant Bitcoin Confirmations

Three Solutions for Instant Bitcoin Confirmations

Merchants and customers don’t want to wait around for Bitcoin confirmations.

One of the so-called “problems” with Bitcoin in the eyes of fresh users is the lack of instant confirmations. Transactions are usually viewed as generally secure after a few confirmations on the blockchain, but this can create a problem in situations where you want to buy something from a store and then leave without having to wait around for the next block. The time inbetween fresh blocks has led to the creation of a number of different altcoins that boast confirmation times in the one minute range, but creating an entirely fresh cryptocurrency is not necessary wen you’re just attempting to speed up transaction times. There are also people who believe that unconfirmed Bitcoin transactions are relatively secure, but the fact remains that only confirmed transactions should be trusted. Let’s take a look at three different solutions for making instant Bitcoin confirmations both possible and generally safe.

The Centralized Solution

The most common way that people are dealing with instant confirmations right now is through centralized services such as Coinbase. With this solution, the Bitcoin wallet provider is storing the private keys for customers and merchants, which means there is no risk of a double-spend inbetween two of their users. As long as the transaction is inbetween two Coinbase addresses, the transaction will actually take place off the blockchain. This means that Coinbase simply switches their internal account ledger rather than updating the censorship-resistant Bitcoin blockchain. These “off-chain” transactions also have the advantage of carrying no fees, which makes microtransactions a more realistic possibility. While this is the most widely used solution right now, it is also the most problematic. Bitcoin is supposed to be a entirely decentralized currency and payment system, so creating a fresh version of PayPal on top of the blockchain defeats the purpose of using a cryptocurrency in the very first place.

Trusted Addresses with Multi-sig

Multi-signature Bitcoin addresses are powerful contraptions that can be used to find a fresh balance of power inbetween a company storing bitcoins and that company’s customers. When using a wallet such as GreenAddress.it, there are actually two signatures that are required to finish a Bitcoin transaction. The user must very first initiate the sending of funds with their private key, and GreenAddress will then also sign off on the transaction after checking for any kind of suspicious activity. Not only is this an enhancement in the security department, but it also permits merchants to trust zero-confirmation transactions, as long as they also trust GreenAddress as a company.

Due to the fact that GreenAddress has to sign off on every transaction, any user who dreamed to accomplish a double-spend would also need to have GreenAddress as an accomplice in the fraud. A time sensitive lock is also added to the user’s wallet permits them to use their funds without a signature from GreenAddress after a certain period of time, which means the wallet provider could never prevent a user from using their own bitcoins.

Open Transactions and Federated Servers

One last solution when it comes to enhancing the security of instant Bitcoin transactions is Open Transactions. With this option, bitcoins are stored on federated servers. This means that, much like Coinbase, transactions can be made off-blockchain without having to wait for anything to confirm every ten minutes. The main advantages of the Open Transactions model over Coinbase are that the servers storing the funds can’t forge receipts and there is not one central point of failure. Voting pools also suggest an improvement over the more traditional option of having one entity store your coins. While a system of federated servers should not be considered as secure as a blockchain, it could be the flawless balance of security and convenience that many Bitcoin-related companies have been searching for over the past few years.

Related video:

What is the simplest implementation of the blockchain?

implementing a blockchain

Blockchains are one of the most significant technologies to emerge in latest years, with many experts believing they will switch our world in the next two decades as much as the internet has over the last two.

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

Albeit it is early in its development, firms pursuing blockchain technology include IBM , Microsoft , Walmart , JPMorgan Pursue, Nasdaq , Foxconn, Visa, and shipping giant Maersk . Venture capitalists have so far poured $1.Five billion into the space, with storied firms such as Andreessen Horowitz, Kleiner Perkins Caufield and Byers, and Khosla Ventures making bets on startups.

The applications for blockchain technology seem endless. While the very first demonstrable ones are financial — international payments, remittances, complicated financial products — it can also solve problems and create fresh opportunities in healthcare, defense, supply chain management, luxury goods, government, and other industries. In more advanced stages, the technology could give rise to what Gartner calls "the programmable economy," powered by entirely fresh business models that eliminate all kinds of middlemen, machine networks in which devices engage in economic activity, and "brainy assets" in which some form of property such as shares in a company can be traded according to programmable or artificial intelligence-based rules rather than the control of a centralized entity.

Not every blockchain works the same way. For example, they can differ in their consensus mechanisms, which are the rules by which the technology will update the ledger. But broadly, a blockchain is a ledger on which fresh transactions are recorded in blocks, with each block identified by a cryptographic hash of that data. The same hash will always result from that data, but it is unlikely to re-create the data from the hash. Similarly, if even the smallest detail of that transaction data is switched, it will create a frantically different hash, and since the hash of each block is included as a data point in the next block, subsequent blocks would also end up with different hashes. This is what makes the ledger tamper-proof. Eventually, security also comes from the fact that numerous computers called knots store the blockchain, and so to switch the ledger, one would need to build up control of at least fifty percent of the computing power in order to switch the record — a difficult feat especially for a public blockchain such as bitcoin's.

A blockchain in two hundred lines of code

The basic concept of blockchain is fairly elementary: a distributed database that maintains a continuously growing list of ordered records. However, it is effortless to get mixed up as usually when we talk about blockchains we also talk about the problems we are attempting to solve with them. This is the case in the popular blockchain-based projects such as Bitcoin and Ethereum . The term “blockchain” is usually strongly tied to concepts like transactions , brainy contracts or cryptocurrencies .

The very first logical step is to determine the block structure. To keep things as ordinary as possible we include only the most necessary: index, timestamp, data, hash and previous hash.

constructor(index, previousHash, timestamp, data, hash)

1 2 3 7