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A look at the different applications of cryptocurrency.
Cryptocurrency tokens boast different functions, each with their own tradeoffs and risks. Holders need to take these functions into account, especially given that they have a strong impact on long-term price appreciation.
Analysts at Smith + Crown have outlined some of the pitfalls of token functions in research published Nov. 18. The examination of the different functions tokens can perform, as well as their associated trade-offs, found that designing a crypto-economic infrastructure can be a daunting task for development teams.
Token Functions
The research company’s analysts outlined six functions that cryptocurrency tokens can have. The list is not exhaustive, but includes the most commonly observed token functions: value transfer, contribution, membership, governance, dividends, and asset backing.
Value transfer is the most common token function. The value transfer properties of a token make it the only — or easiest way — to transfer value or make a payment on the host platform.
The function of contribution refers to allowing token holders the opportunity (or obligation) to perform work or provide services in exchange for being rewarded in that token. One example is Augur, the prediction market, which requires reporters to verify market results or resolve disputes. Augur’s native REP token rewards holders working as reporters through platform fees.
The contribution function of tokens typically requires users to stake their cryptocurrency in proof-of-stake networks.
The membership function gives holders “access to premium features or capabilities on the platform, including membership and discount features.” Governance allows token holders to participate in a network by voting on decisions made regarding the platform in terms of development and other matters.
Dividends are a function among some tokens that offer regular payouts to token holders. These payments can form part of a platform’s revenue or fee-sharing arrangements.
An asset-backed token is “redeemable for or represents claims to an underlying physical or digital asset.” Examples vary from stablecoins (redeemable for underlying fiat currencies or real-world assets) to non-fungible collectibles like CryptoKitties.
The Tradeoffs and Risks Associated With Functions
Most tokens have more than one of the functions mentioned above. Binance’s recently launched BUSD is backed 1:1 by U.S. dollar reserves. It can also be used to transfer value. And while Binance has denied it will give holders reduced trading fees, the exchange has promised that holders will be able to unlock additional financial services within Binance’s ecosystem.
However, creating crypto-economic models that appropriately incentivize users is complex and poses risks. As Smith + Crown stated,
“Token functions have implications for everything from design, use case, the business model of the underlying organization, and valuation methodologies. They present tradeoffs that projects must manage.”
The value transfer function alone, for example, does not incentivize holding. The function is easy to implement and helps establish a clear link between usage and value. On its own, however, holders gain nothing for owning the tokens. Having long-term holders adds price support for a token.
Tokens with contribution functions benefit from decentralizing the development of the host platform and creating a clear link between the health of the network — or at least its underlying protocols — and the value of the token. Holders are incentivized to contribute to the network, which enables the network to grow and develop, ultimately becoming more valuable over time.
Membership functions, on the other hand, tend to require centralized decisions to be made about the benefits and rewards that token holders receive. These functions can also make valuation difficult, as the benefits of membership may have different levels of perceived value among users.
Governance, which allows token holders the right to participate in key decision-making processes for the future of a network also comes with its own problems. While it aligns with the spirit of decentralization and incentivizes good decisions, it is difficult to implement and can be perceived as an insufficient reason to hold the tokens.
The dividend function provides a clear link between the price of a token and its value. Revenue-sharing models, however, present risks to holders and creators. The more a dividend-paying token resembles a security token, the more closely it may be examined by regulators.
Smith + Crown actually found that the distinction between security tokens and utility tokens lacks substance. According to the research, it was not clear that the “differences between ‘utility tokens’ and other types of tokens… [are] a straightforward distinction.”
Value Transfer
Value transfer is the most frequently observed function among cryptocurrencies, common among virtually all of the company’s ‘Signal’ tokens (those it considers to be of higher quality).
Courtesy Smith + Crown, Token Function Distribution
However, tokenomic models are adapting and evolving. As the industry both matures and develops, those models will become more complex and nuanced. New functions will likely emerge over time as developers embrace alternative models. For network creators and participants alike, it is important to understand the risks involved in different cryptocurrency applications.
source https://cryptobriefing.com/cryptocurrenc...dividends/
by Paul de Havilland
Read More, Posted by: crytocure ![[Image: bic_whale_altcoin-750x375.jpg]](https://3xz7gj47vd1t2zgr1q19hmwl-wpengine.netdna-ssl.com/wp-content/uploads/2019/11/bic_whale_altcoin-750x375.jpg)
IntoTheBlock has documented what percent of each cryptocurrency is held in the richest addresses. What they found shouldn’t surprise anyone.
It’s difficult to assess the extent of inequality within cryptocurrency ecosystems. After all, they could be exchanges or custodial groups—but, in some cases, a few whales really do own a large portion of the circulating supply of some cryptocurrencies.
IntoTheBlock (@intotheblock) decided to do some digging and find the actual numbers. Here’s what they found.
Breaking Down the Cryptocurrency Numbers
Concentrations of ownership over cryptocurrencies are not surprising. In a decentralized system, some will get advantages and hold more. However, there are limits to how sustainable extreme concentrations of wealth are in a decentralized system. These are the numbers for some of the top altcoins and how concentrated they are.
The standouts in IntoTheBlock’s findings are Litecoin and Tether. Both seem to have higher concentrations of wealth than the rest of the cryptocurrency industry. How this will impact the trajectory of these projects remains open to debate.
What It Means
Some people may scoff at the insinuation that high concentrations of cryptocurrency assets in just a few addresses is even a problem. After all, if you are using a cryptocurrency like Bitcoin Cash, it may not even matter. This is because Bitcoin Cash and other proof-of-work currencies do not have a governance model.
Ethereum and Cardano, on the other hand, do. So, concentrations of wealth could very well end up impacting the ecosystem at large—and may even lead to decisions against the majority of Ethereum users.
![[Image: shutterstock_1014831007-1024x683.jpg]](https://3xz7gj47vd1t2zgr1q19hmwl-wpengine.netdna-ssl.com/wp-content/uploads/2018/10/shutterstock_1014831007-1024x683.jpg)
So, the impact of high concentrations of assets depends on the respective cryptocurrency’s ecosystem. Governance can seldom work if there is oligarchic-like control of a large portion of a decentralized system. It’s an issue that developers will have to keep in mind as they’re building these governance models. We can’t let cryptocurrencies fall into the same issues that currently plague traditional fiat marketplaces—these concentrations of wealth should definitely be up for discussion.
IntoTheBlock (@intotheblock) decided to do some digging and find the actual numbers. Here’s what they found.
Breaking Down the Cryptocurrency Numbers
Concentrations of ownership over cryptocurrencies are not surprising. In a decentralized system, some will get advantages and hold more. However, there are limits to how sustainable extreme concentrations of wealth are in a decentralized system. These are the numbers for some of the top altcoins and how concentrated they are.
- Ethereum (ETH)—151 addresses own around 39% of the circulating supply.
- Bitcoin Cash (BCH)—112 addresses own 29% of the supply.
- Litecoin (LTC)—131 addresses own 47% of the supply.
- Bitcoin SV (BSV)—103 addresses own 24% of the supply.
- Cardano (ADA)—41 addresses own 39% of the supply.
- Tether (USDT)—132 addresses own 63% of the supply.
Quote:
intotheblock@intotheblock
Talking about whales and ownership by concentration of an asset
Check out how concentrated these assets are!$ETH 151 addrss owns 39% $BCH 112 addrss owns 29%$LTC 131 addrss owns 47%$BSV 103 addrss owns 24%$ADA 41 addrss owns 39%$Tether 132 addrss owns 63%
10
6:32 PM - Nov 20, 2019
Twitter Ads info and privacy
![[Image: fNWzE_jL_bigger.png]](https://pbs.twimg.com/profile_images/1114099262634246144/fNWzE_jL_bigger.png)
The standouts in IntoTheBlock’s findings are Litecoin and Tether. Both seem to have higher concentrations of wealth than the rest of the cryptocurrency industry. How this will impact the trajectory of these projects remains open to debate.
What It Means
Some people may scoff at the insinuation that high concentrations of cryptocurrency assets in just a few addresses is even a problem. After all, if you are using a cryptocurrency like Bitcoin Cash, it may not even matter. This is because Bitcoin Cash and other proof-of-work currencies do not have a governance model.
Ethereum and Cardano, on the other hand, do. So, concentrations of wealth could very well end up impacting the ecosystem at large—and may even lead to decisions against the majority of Ethereum users.
So, the impact of high concentrations of assets depends on the respective cryptocurrency’s ecosystem. Governance can seldom work if there is oligarchic-like control of a large portion of a decentralized system. It’s an issue that developers will have to keep in mind as they’re building these governance models. We can’t let cryptocurrencies fall into the same issues that currently plague traditional fiat marketplaces—these concentrations of wealth should definitely be up for discussion.
by Anton Lucian
Read More, Posted by: crytocure ![[Image: gpu-1-900x570.jpg]](https://coindoo.com/wp-content/uploads/2019/11/gpu-1-900x570.jpg)
Mining with a GPU can generate a considerable profit if the electricity costs are low. But many wonders, does mining damage GPU or affect their longevity?
Well, the answer depends on how you put to use your graphics card, and there are some factors you should consider if you want to preserve the lifecycle of your GPU.
Why Mine Using GPU?
GPU mining is convenient in many ways, as they are easy to find online, and are not overly expensive compared to ASIC miners. Also, more performant models can produce excellent with just a few setup adjustments.
For example, AMD Vega Frontier edition may be able to soon mine Ethereum at 70MH/second, if circulating rumors are to be believed. The setup of a GPU mining rig will require some fine-tuning if you want them to operate at optimum capacity and synchronizing multiple cards to mine using the same motherboard can be challenging at times.
![[Image: AMD-Vega-Frontier-edition-1024x463.jpg]](https://coindoo.com/wp-content/uploads/2019/11/AMD-Vega-Frontier-edition-1024x463.jpg)
gamersnexus.net
After the rig has been set up and configured, most miners leave the device to mine on its own. With today’s mining software, the device will switch to using mining pools to generate the most profits. Most miners will leave the hardware to do their things while monitoring the process from the interface app. But the hardware, however, requires frequent check-ups and maintenance, as it is subjected to difficult processing tasks while mining cryptocurrencies. Also, most miners underestimate the stress imposed on their hardware.
Heat management
The mining process keeps your GPUs under constant stress at full loads at all times, with the fans typically spinning at the highest RPM. Some might think that this is less damaging than spinning up and cooling down again, but this is not always the case. To answer the question, “does mining damage GPU?”, we will have to look into the heating and cooling process.
![[Image: Heat-management-300x238.jpg]](https://coindoo.com/wp-content/uploads/2019/11/Heat-management-300x238.jpg)
If your GPU fans run at a constant speed at all times, they will obviously wear out faster. Even though fans were created to support higher spin rates, their longevity is greatly impacted if they are forced constantly to run at maximum capacity. Also, not using any fans when you are mining is equally as damaging to your hardware.
This is because overheating is the main cause of GPU damage, so it is essential that you maintain your device operating between safe temperature levels.
GPUs are usually designed to support working at high temperatures, reaching around 80C or even higher. However, it is still important to constantly check the temperature of your graphics cards to prevent your device from getting too hot.
Below is a table that shows the safe ranges of mining temperature in which your GPU should have while mining:
Fan Replacements
You should regularly replace your mining fans if they are running at the same rate, as they are the only GPU component which has the shortest lifecycle because of the wear and tear. Your other GPU components will be at risk if your fans will stop working properly.
Even if your GPU temperature is within the lower ranges, you should always check and replace your fans, so that you can avoid the overheating of power components.
How Can Mining Damage Your GPU?
The first and most common way of damaging your GPU is by running it at high temperatures (in the 90C range) for a prolonged period of time, as it will definitely impact the lifecycle of the card’s other components.
If replacing fans is too complex or time-consuming for you, you can also opt for a system that is based on liquid cooling, although this option will be a lot more expensive.
![[Image: GPU.png]](https://coindoo.com/wp-content/uploads/2019/11/GPU.png)
coincentral.com
Does Mining Damage GPU: Other Aspects
Overclocking
Overclocking is necessary for the crypto mining process. On the good side, it cannot actually damage modern GPUs, as most of them have an integral protection mechanism that shuts down the card if it is setting wrong.
It actually requires a lot of effort to inflict any physical damage to your card just by overclocking since it doesn’t have come close to the impact it has on power draw and temperature compared to CPU overclocking.
Thermal cycling
Thermal cycling is something that all GPU miners should take into consideration. Even though one would expect mining to have low thermal cycling maintenance, this is not how it is in reality.
With some minor alterations to each card’s power limit setting, you can easily make this maintenance process very easy to upkeep.
If you reapply thermal paste on a GPU once in a while, you will be able to keep your card cool and avoid major damage without much effort. Keep in mind that you shouldn’t go overboard with reapplying the paste, as it is recommended you do this only once per month.
Conclusion: Does Mining Damage GPU?
Unlike games and other computational tasks, cryptocurrency mining keeps a GPU running at full capacity almost continuously. Even when you stress test the card, the capacity is kept for a limited amount of time before they risk damaging cards.
![[Image: 166660-200.png]](https://coindoo.com/wp-content/uploads/2019/11/166660-200.png)
Whether you mine Ethereum or Dogecoin, the mining process will stress a card to its limits during the entire operation. Although most of today’s models are able to work at such demanding parameters, it will still take a toll on the card’s longevity and performance. Even if the effects of strenuous mining are not noticeable at first, a few months down the line, you might notice that it will start producing lower hash rates and ultimately crashing.
So, does mining damage GPU? Not if you mine responsibly and take the right maintenance approach, such as keeping your device from overheating, avoid unnecessary overclocking, keep your PC clean, and replace your fans if they show signs of wearing down.
Now that you know the dos and don’ts of GPU mining, you can start putting it to use to generate your favorite crypto.
source https://coindoo.com/does-mining-damage-gpu/
by Anca F.
Read More, Posted by: crytocure ![[Image: crypto-market-down-540x340.jpg]](https://cdn.shortpixel.ai/client/q_glossy,ret_img,w_540,h_340/https://www.newsbtc.com/wp-content/uploads/2019/11/crypto-market-down-540x340.jpg)
Crypto Market Could Dive To $200B, Bitcoin Turns Red: BCH, XLM, EOS, TRX Analysis
- The total crypto market cap is currently in a bearish zone below the $220.0B resistance.
- Bitcoin price is trading above the $8,000 support and remains at a risk of more losses.
- BCH price is now consolidating losses below the $250 resistance area.
- EOS price is declining and approaching the $3.050 and $3.000 support levels.
- Stellar (XLM) price is down more than 2% and it is now below the $0.0650 support.
- Tron (TRX) price is down close to 4% and it is trading near the $0.0165 support.
Bitcoin Cash Price Analysis
Recently, BCH price declined heavily below the $265 support area against the US Dollar. The price even broke the $250 support area and traded close to $235. It is currently consolidating losses above $240 and facing a strong resistance near the $250 and $255 levels.
The main resistance is now near the $265 level. On the downside, an initial support is near the $235 level, below which the price could test the $225 level.
Stellar (XLM), EOS and Tron (TRX) Price Analysis
EOS price declined sharply in the past few days and broke many key supports near $3.500 and $3.350. The price is now trading in a bearish zone and it is approaching the $3.050 and $3.000 support levels. A downside break below $3.000 might push the price towards $2.850.
Stellar price trimmed most its gains from well above the $0.0700 level and it is now declining below $0.0168. XLM price even broke the $0.0650 support and it seems like it is likely to test the $0.0620 support area. On the upside, the $0.0665 may perhaps act as a resistance.
Tron price faced an increase in selling pressure after it broke the 0.0185 support area. TRX price is down around 4% and it is trading near the $0.0165 support area. If there are more losses, the price is likely to continue lower towards the $0.0152 support area.
![[Image: Crypto-Market-Cap-6.png]](https://cdn.shortpixel.ai/client/q_glossy,ret_img,w_1828,h_868/https://www.newsbtc.com/wp-content/uploads/2019/11/Crypto-Market-Cap-6.png)
Crypto Market Cap
Looking at the total cryptocurrency market cap 4-hours chart, there are many bearish signs visible below the $220.0B and $230.0B resistance levels. On the downside, the main support is near the $210.0B level, below which there is a risk of a drop towards the $200.0B support area. Therefore, there are chances of more downsides in bitcoin, Ethereum, EOS, ripple, litecoin, bitcoin cash, XLM, TRX, BNB, WAN, WTC, ICX, and other altcoins in the near term unless the crypto market cap climbs back above $230.0B.
source https://www.newsbtc.com/2019/11/21/crypt...-analysis/
by Aayush Jindal
Read More, Posted by: crytocure ![[Image: bitcoin-circ-brown.jpg]](https://cryptodailycdn.ams3.cdn.digitaloceanspaces.com/uploads/featured-images/Bitcoin/bitcoin-circ-brown.jpg)
Why These Comments About Bitcoin Are Important
- Bill Gates & Al Gore have their say
- Peter Thiel Thinks Bitcoin has succeeded on a new level
When people both inside and outside of the cryptosphere talk about Bitcoin, it makes an impact on the industry. On a small scale, people talking ‘badly’ about Bitcoin can have a huge impact on the future adoption of the cryptocurrency. On a larger scale, more prolific speakers can have an impact on regulation, laws and legislation, as well as impacting the government ‘feel’ towards crypto. Therefore, it’s important to sit back at times and observe what people are saying about Bitcoin, in order to understand the important quotes, and, the FUD. Doing this helps us become better investors and allows the entire community to become more rounded.
Let’s start with a big one by Bill Gates, the creator of Microsoft:
Quote:“Bitcoin is exciting because it shows how cheap it can be. Bitcoin is better than currency in that you don’t have to be physically in the same place and, of course, for large transactions, currency can get pretty inconvenient.”
Why is this important? Well, that’s pretty clear. Bill Gates is one of the most prolific names within the technological world, therefore if he’s behind a product, the big guns and the policy makers will be too, especially if they can make money from it.
Next up, Al Gore:
Quote:“When bitcoin currency is converted from currency into cash, that interface has to remain under some regulatory safeguards. I think the fact that within the bitcoin universe an algorithm replaces the function of the government, that is actually pretty cool.”
The former Vice President of the United States is an important figure and an important advocate of Bitcoin. As ex-government, he can see clear ways for Bitcoin to be regulated in the United States. One thing that is clear is that US regulation will no doubt provide a platform for the rest of the world to follow suit, so, whilst Gore is bigging up Bitcoin, we need to pay attention to what is going on within the likes of the SEC and at government level.
Last but not least, Peter Thiel, a Co-founder of PayPal:
Quote:“PayPal had these goals of creating a new currency. We failed at that, and we just created a new payment system. I think Bitcoin has succeeded on the level of a new currency, but the payment system is somewhat lacking. It’s very hard to use, and that’s the big challenge on the Bitcoin side.”
Here, Thiel recognises that Bitcoin has achieved some of what PayPal failed to do, though also points out some of Bitcoins more intrinsic issues. This is a very important thing to note because Thiel is a prominent figure within finance. If he has a way to combine the efficiency of PayPal with the technology behind Bitcoin, the result could be frankly outstanding.
source https://cryptodaily.co.uk/2019/04/why-th...-important
by Adrian Barkley
Read More, Posted by: crytocure ![[Image: Stellar-Lumens-XLM-Price-Analysis.jpg]](https://www.cryptonewsz.com/wp-content/uploads/2019/11/Stellar-Lumens-XLM-Price-Analysis.jpg)
Stellar (XLM) Struggles to Maintain a Price Recovery; Traces a Lower Low Pattern
- Stellar has traced a bearish trend line today, despite the overall market rebound
- XLM has faced a rejection above $0.0662; price recovery faces hurdles
- The coin has recently found support at $0.0642; price rebound crosses above the 50-day SMA line
In fact, the coin has been going through the volatile phase since it opened today. As the coin couldn’t fight barriers above, it pulled back, maintaining its bearish trendline. Here, Stellar formed a lower low, noting the return of bears in the trend.
XLM price again went up and formed a lower high at $0.0657 before finding bottom today at $0.0642. the coin seems to have a support level there, as it has started to move up from there, and has even crossed the 50-day SMA line. Currently, the price of Stellar Lumens is trading at $0.0649 at 11:56:59 UTC.
Stellar (XLM) Price Analysis:
![[Image: Stellar-Price-Chart-4.png]](https://www.cryptonewsz.com/wp-content/uploads/2019/11/Stellar-Price-Chart-4.png)
Bollinger Bands are pointing out to the upcoming volatility in Stellar’s price trend as they widen. At the same time, RSI is at 63 and may enter the overbought zone soon. MACD chart is bullish enough at the moment as the MACD line is on the up-side and is also set to cross the zero-line of the histogram. However, SMA lines are giving a bit negative sign, as they have just traced a death-cross.
XLM coin is likely to see resistance at $0.0679, $0.0702, and $0.0717 and support levels at $0.0641, $0.0626 and $0.0603.
source https://www.cryptonewsz.com/stellar-xlm-...ern/52746/
by Ruti Vora
Read More, Posted by: crytocure ![[Image: Crypto-Ecosystem_V4.jpg]](https://2oqz471sa19h3vbwa53m33yj-wpengine.netdna-ssl.com/wp-content/uploads/2019/11/Crypto-Ecosystem_V4.jpg)
Cryptocurrencies have now evolved past simple digital currencies, offering solutions to meet the complex needs of modern financial markets.
Today’s graphic from Abra visualizes the complex, ever-evolving cryptocurrency ecosystem and its real-world applications.
Characteristics of Cryptocurrencies
Why are cryptocurrencies important for the future of digital finance?
- Borderless
Drastically reduces fees and processing times due to a lack of cross-border restrictions
- Censorship-free
Prevents governments or major institutions from blocking financial activities at whim
- Greater financial control
Individuals can have total control of their funds
- Greater security
Prevents fraudulent alterations from third parties
- Lower costs
Lower transaction fees thanks to fewer third parties
- Greater Accessibility
Reduces or eliminates traditional barriers to capital markets
Categorizing the New Crypto Economy
Today’s cryptocurrencies go beyond replacing cash. This new token-based economy is evolving─with unique solutions emerging in finance, security, identification, social engagement, and ownership.
Cryptocurrencies are generally categorized by their primary application within the ecosystem:
- Payments
Digital cash can be used for both ecommerce and brick-and-mortar retailers
- Store of value
New form of scarce native currency and a means of settlement
- Programmable money
Borderless money that enables easy conversion between currencies
- Stablecoins
Crypto version of fiat which is tied to the value of resources like gold or the U.S. dollar
- Privacy
Private digital transactions, with some offering anonymity
- Digital ownership
Digital handling, storage, and monetization of data
- Decentralized utilities
Crypto-enabled networks, products, and services that exchange between assets
- Alternative finance
Digital assets such as collectibles, commodities, and tokenized securities
Applications of Cryptocurrencies
Because cryptocurrencies are programmable, customizable computer code, developers can design and adapt them for many use cases within the digital economy.
How are these various cryptocurrencies being used in everyday applications?
Current Projects
- SPEDN auto-converts crypto to fiat for merchants, reducing exchange rate risk while offering convenient customer payment options.
- Slice offers real estate investing to anyone for as low as $10,000 through fractional investment.
- CyClean plans to launch a blockchain-enabled electric vehicle (EV) fleet that mines crypto as users travel—reducing emissions and rewarding users for doing so.
- Digital construction platform Builderium connects contractors to clients around the world through blockchain, opening up a global marketplace of potential deals.
The Growth of the Crypto Economy
Worldwide, the numbers show that blockchain-based technology and cryptocurrency use is growing. Blockchain wallet users rose from nearly 9 million in 2016 to over 42 million in 2019.
Developers produced a mere 100 decentralized apps (DApps) in 2015─with that number skyrocketing to over 3,100 by 2019.
Overall, cryptocurrencies are helping to create an innovative and accessible financial system around the world.
Quote:Cryptocurrency deserves an opportunity to find a sustainable future in our economy.
—Adena Friedman, President & CEO of NASDAQ
While the future of the new cryptocurrency economy is still taking shape, one thing is certain─cryptos are forever altering the way we view and measure the value of money.
source https://www.visualcapitalist.com/visuali...ecosystem/
by Ashley Viens
Read More, Posted by: crytocure ![[Image: bitcoin-mining-1024x682.jpg]](https://blockonomi-9fcd.kxcdn.com/wp-content/uploads/2019/09/bitcoin-mining-1024x682.jpg)
The thing is, few investors actually know what this means, and what effect said “capitulation” will have on the broader Bitcoin and cryptocurrency market.
So, here’s more about what this term means and how it could affect the price of cryptocurrencies moving forward, especially as bulls fail to step in.
Miner Capitulation? What’s That?
Miner capitulation this, Miner capitulation that — it may sound like a bunch of hogwash to you. Though, Cole Garner, a popular cryptocurrency analyst, recently broke down the significance of the term in an extensive Twitter thread.
Long story short, miner capitulation is when smaller, non-industrial mining operations “get backed into a corner” when the price of Bitcoin falls and their mining machines become technologically obsolete.
This forces these miners to sell the BTC they earned via mining, often all at once, to keep the lights on, cash out, or to upgrade their systems for the future. This may sound relatively innocuous — of course, miners need to sell Bitcoin to fund their operational expenses — though Garner noted that it becomes a vicious cycle, especially when profitability is limited.
He wrote:
Quote:“Undercapitalized miners panic sell, price dumps, longs get squeezed, stop losses cascade — then more miners lose their lunch.”
The capitulation is signaled by a bearish crossover, which Garner calls an “inversion,” of the Hash Ribbons — an indicator that uses a long-term moving average of the hash rate and a short-term moving average of the hash rate to show how healthy the Bitcoin mining ecosystem is.
The inversion is when the long-term level crosses above the short-term level, signaling that miners have stopped allocating resources to improve the security of Bitcoin.
What Could Happen to the Bitcoin Market?
A few miners selling coins doesn’t sound that bad — Bitcoin is literally a market worth over 100 billion dollars, not even factoring in altcoins and derivatives based on cryptocurrencies. Though, historical events of capitulation show that investors should be worried about miner capitulation. Quite worried, in fact.
Below is a chart from Garner, which shows the price action of Bitcoin in 2016. The inversion of the Hash Ribbons led to a 30% drop literally days after the signal flashed, then a few weeks and months of consolidation prior to an eventual breakout.
![[Image: EJs0Ku_U8AA9_cI.jpg:large]](https://pbs.twimg.com/media/EJs0Ku_U8AA9_cI.jpg:large)
This wasn’t a one-off event. Garner noted later in that thread that a Hash Ribbon inversion took place in the middle of November of 2018, which as readers likely remember is when Bitcoin began its 50% crash from $6,000 to $3,000.
As explained earlier, the cycle of unprofitable miners selling coins becomes a vicious cycle, with fear overtaking the market, leading to rapidly-falling prices with seemingly no buyers.
It’s Begun
Unfortunately, capitulation is seemingly upon us yet again. The Hash Ribbons indicator for Bitcoin’s one-day chart has just printed an inversion signal, and has begun to trend red.
And interestingly, the capitulation, at least on a small scale, has begun to affect the Bitcoin market. Cryptocurrency analytics upstart Bytetree recently posted the following image to Reddit’s Bitcoin forum, writing that “a miner dumps $17 million [worth of their coins] into an already weak market as price battles $8,000.”
Their chart implies that the sale of the $17 million stash only affected the price of BTC to a small extent, though the selling pressure may get worse in the coming days, especially as the “vicious cycle” that Garner depicted earlier has the potential to become reality.
![[Image: ati6sde7fnz31.png?width=1024&auto=webp&s...6c722381b3]](https://preview.redd.it/ati6sde7fnz31.png?width=1024&auto=webp&s=df8abf16cb229cdeb79e8a9c1e4bdd6c722381b3)
source https://blockonomi.com/what-is-bitcoin-m...itulation/
by Nick Chong
Read More, Posted by: crytocure ![[Image: wallet-401080_1280-e1574149081984.jpg]](https://sfo2.digitaloceanspaces.com/engamb/wp-content/uploads/2019/11/19121927/wallet-401080_1280-e1574149081984.jpg)
![[Image: Capture.png]](https://sfo2.digitaloceanspaces.com/engamb/wp-content/uploads/2019/11/19112038/Capture.png)
The first major spike was noted between the 3rd and 4th quarters of 2017, which coincided with the crypto-market’s bull run, and the second significant rise was seen during Q2 of 2019.
TronWallet CEO Dio Ianakiara believes that within a couple of years, cryptocurrency wallets will transform the world. In a recent interview with a media outlet, Ianakiara said,
Quote:“I believe that within the next 5-10 years, crypto wallets will transform the world and will be the gateway for personal financial freedom. It will transform common people into investors. It will transform how industries do business. It will transform how governments and companies handle user identity. TronWallet aims to be at the forefront of the evolution of individual financial liberty in the blockchain age.”
Blockchain is the backbone of the cryptocurrency industry. Over the past ten years, the ever-evolving space has seen a significant influx of curious enterprises trying to create real-world use cases for the technology, despite many businesses being reluctant to enter the space due to a lack of proper infrastructure and regulatory issues. TronWallet CEO said,
Quote:“I believe mass adoption will happen within 2-3 years as the crypto and blockchain industries are evolving faster than most can imagine. Bitcoin will be the first crypto to be utilized by millions of people in each country due to its stability and name recognition.”
source https://eng.ambcrypto.com/tronwallet-ceo...the-world/
by Chayanika Deka
Read More, Posted by: crytocure ![[Image: xtimthumb.php,qsrc=https,3A,_,_cryptosla...35zbx.webp]](https://cryptoslate.com/wp-content/themes/cryptoslate-2017/imgresize/xtimthumb.php,qsrc=https,3A,_,_cryptoslate.com,_wp-content,_uploads,_2019,_11,_lost-bitcoin.jpg,aw=824,ah=298,aq=75.pagespeed.ic._Y4Pp35zbx.webp)
Calculating Bitcoin’s circulating supply much harder than it looks
While Bitcoin’s whitepaper only touches on the topic of supply, one of its biggest value propositions is its scarcity. With a supply capped at 21 million coins that halves every 4 years, Bitcoin doesn’t let anyone forget its scarcity.
A report from Coin Metrics showed that the world’s largest cryptocurrency might be even more limited than we think it is. The report, which set out to calculate Bitcoin’s circulating supply, found that it was significantly smaller than it ought to be.
This time last month, the network celebrated a major milestone as block 600,000 was mined, putting Bitcoin’s circulating supply at around 18 million BTC.
However, further inspection showed that the actual supply was much lower than that.
When added together, lost coins amounted to more than 1.6 million, pushing Bitcoin’s actual supply down to just over 16.4 million BTC.
Getting to that number wasn’t easy, as the report had to divide the lost bitcoins into two groups—provably lost and probably lost.
World’s largest cryptocurrency scarcer than ever
Coin Metric’s research found that the provably lost coins were the genesis coins, duplicate transactions, unclaimed mining rewards, and OP_return outputs.
Bitcoin’s first block, called the genesis block, contains a transaction with a 50 BTC output which wasn’t included in Bitcoin’s ledger, while the only two instances of duplicate transactions on the network resulted in 100 BTC being removed from the blockchain. Just over 3 BTC were embedded into the blockchain as messages, effectively making them unspendable forever.
![[Image: JQG8WSFL6q1wch34r71htAxgTXVO2ew4f7ZfyR4M...YFjjFCTycM]](https://lh5.googleusercontent.com/JQG8WSFL6q1wch34r71htAxgTXVO2ew4f7ZfyR4Mnk7ONCBAQkwFKvBvAIGExDSSAANDCI2yHGGsHzm_tWvJn36oOYpUSBp69wtP5iMPXBV3ES1LTIL5oVLXBgcyfLYFjjFCTycM)
Nearly 182 bitcoins were provably lost by block 600,000 Source: Coin Metrics
Before OP_RETURN outputs were standardized, a significant amount of coins were sent to bogus addresses to burn them. Three of these bogus addresses currently account for over 2200 BTC which aren’t lost forever but are unlikely to ever be recovered.
Another category of coins that is most likely lost forever are “zombie coins.” According to Coin Metrics, those are the coins that have been inactive for years. But, unlike some estimates that put their number close to 4 million, the report only considered the 1.5 million BTC that haven’t been touched since July 2010.
The final category of coins considered lost by the report are known stolen coins. As the nature of Bitcoin’s ledger makes it easy to trace these coins, it’s highly unlikely they will ever be inserted back into circulation.
Around 200,000 BTC were lost in two thefts alone—80,000 BTC were stolen from MtGox in 2011, while just under 120,000 went missing from Bitfinex in 2016.
While there are only 182 provably lost bitcoins, the report assumes that at least 1.5 million are most likely lost forever.
![[Image: 3j62rIWh7W6EB1J1ILVoQLO-UqsAL_1btyan9K9_...I5H19a_JoN]](https://lh5.googleusercontent.com/3j62rIWh7W6EB1J1ILVoQLO-UqsAL_1btyan9K9_WrP7RBtCyX02ZaId6Ls7JrXLMbljt58vJtkX69BrXuBzQ-4HB8UcHZDShALdgjZ7bf7z19d_lkPHsoJMIhL5-RI5H19a_JoN)
Total amount of assumed lost coins
That means that Bitcoin’s actual circulating supply is much lower than it should be according to the number of blocks.
![[Image: Xea84_-jalq8wRqdYniV68wCvs5WppC81l2d0Izg...q-_NGh75q5]](https://lh5.googleusercontent.com/Xea84_-jalq8wRqdYniV68wCvs5WppC81l2d0Izg6-PiJ_wpaWL-YP2v3SL8EcZEX85BlnShLfBItytDSESOVqridiKmgNAqFwdqvnVsd1wUimV-QXZM7rHiAbUPSQq-_NGh75q5)
Bitcoin’s estimated supply when lost coins are accounted for
With a liquid supply or around 16.3 million and less than 3 million left to mine, Bitcoin is becoming scarcer with each passing day.
source https://cryptoslate.com/more-than-1-6-mi...t-forever/
by Priyeshu Garg
Read More, Posted by: crytocure ![[Image: https%3A%2F%2Fspecials-images.forbesimg....it%3Dscale]](https://thumbor.forbes.com/thumbor/960x0/https%3A%2F%2Fspecials-images.forbesimg.com%2Fdam%2Fimageserve%2F876199432%2F960x0.jpg%3Ffit%3Dscale)
Big institutional investors that dominate traditional asset classes are just starting to dip their toes. Before they arrive en masse, trading technology has to catch up to what institutions are used to in equities and other established asset classes.
In this article, I'm going to outline the missing technology elements that we noticed while developing our in-house trading platform for managing our own digital assets treasury.
The ‘Traditional’ Setup
"Institutional investors" is a very broad term that includes a wide range of market participants, from passive fund managers overseeing index funds to niche hedge funds trading obscure securities.
Most investors have more or less the same trading technology infrastructure provided by big investment banks that act as prime brokers. For example, Goldman Sachs, Morgan Stanley, and JPMorgan serviced 80% of all hedge funds launched in 2018, according to Preqin data. They take care of almost everything: trade execution, securities lending, custody, clearing and settlements, and back-office work. These services were previously manual and are now done mostly with software. This work is largely commoditized, and institutional investors usually can pick whichever brokers they like most.
Also, most institutional investors have access to the same financial market data, provided by, for example, Bloomberg and Thomson Reuters. Such services cost tens of thousands of dollars per user (for example, Bloomberg Terminal is $24,000 a year) but hardly provide an advantage, since everybody has the same information.
Data Sources For Digital Assets
Unlike in traditional asset classes, data for digital assets is disparate and not easy to use. Although, in crypto, data is mostly free. In particular, bitcoin and Ethereum’s public blockchains contain the full record of all transactions for anybody to read and analyze. Most cryptocurrency exchanges also publish their volumes.
However, digital assets are a new phenomenon, and there are no dominant pricing models, for example, for fundamental analysis. Most digital assets do not have cash flows, and there are no obligations to disclose information in a structured way. In particular, U.S. federal disclosure requirements do not explicitly mention digital assets, and nontraditional assets require only "brief" descriptions.
Since retail investors and traders make up most of the market, it is important to have a measure of the prevailing sentiment. Media coverage and social media chatter could be used to estimate the market mood.
To get an edge in the market, you need to either find a new way to use the existing data or create new data sources. This may involve building your own analytical platform, just as my company has, but it’s also possible to uncover insights in public data by combining and integrating different sources.
Automatic Strategy Testing And Deployment
Before trading real money in the market, a trading strategy is first backtested on historical data and then forward tested using live data.
For equities and other established assets, this can be done automatically using existing software, either developed in-house or provided by trading infrastructure specialists. Data is readily available for all instruments, although it could be very expensive.
This is a lot less straightforward in digital assets. First, there are fewer years of market data observations. Bitfinex is one of the oldest bitcoin exchanges, was founded in 2012. Binance, one of the biggest altcoin exchanges, launched in 2017.
There are dozens of other exchanges, and integrating all market data -- and adapting it for strategy testing -- is not an easy task.
Because programmatic strategy testing in digital assets is difficult, a significant portion of portfolio managers in digital assets currently rely on passive holding and infrequent discretionary trading. During the bull run of 2017, this worked well, and crypto hedge funds on average generated 1,700%. But, in 2018 they made -71%, according to Eureka data.
Quantitative algorithmic strategies are rare in digital assets, and there are few testing solutions for them. We had to develop our own trading platform to test strategies, optimize them and deploy them in production while managing risks.
It’s important to be able to input and monitor strategies throughout the whole cycle: backtesting, forward testing and live trading. Be sure that your company's solution checks these same boxes.
Order Execution For Cryptocurrencies
In traditional asset classes, brokers guarantee the best execution. It is their legal responsibility to execute orders on behalf of their customers (for example, institutional investors) to get the best possible result in terms of price, costs, speed and other considerations. This is usually done programmatically, and it’s not something most investors need to think about.
The whole idea of best execution in digital assets is still new. First, there is no regulation in crypto that would ensure that investors receive the best price execution. In fact, front-running is rampant on many exchanges, according to Bloomberg.
Second, in our experience, many large trades are done via OTC desks, since even the biggest exchanges might not have the liquidity to execute orders quickly and without moving the price. This means the real costs of trades could be quite high.
The solution is to develop basic order execution capabilities in-house. Your goal here should be to minimize slippage through executing orders programmatically. This should eventually become standard practice, but right now, even a simple programmatic execution can help to increase returns.
Conclusion
Today, the digital assets market is still too underdeveloped for most institutional investors. Technology infrastructure that they expect is not yet built -- possibly because there are too few paying clients who need that. This also means that there are plenty of opportunities for new players that are willing to invest in developing their own trading infrastructure capable of more than just passive holding.
source https://www.forbes.com/sites/forbestechc...1ea3db6e6b
by Mike Brusov
Read More, Posted by: crytocure Interestingly, however, the day after saw this crossover reverse, with miners stepping in at the eleventh hour to stop this signal from being etched into stone. Regardless, a top analyst has asserted that BTC remains on the “edge of a cliff,” citing the fact that this key indicator remains on the verge of flipping bearish.
Why Bitcoin May Be About to Return to $6,000, Maybe Lower
It seems that the “Crypto Winter” of 2018 has come back to haunt Bitcoin bulls in 2019.
Cole Garner, a popular cryptocurrency analyst, recently noted that miners are on the verge of capitulating, which is what happened in mid-November, just before BTC began to tumble from $6,000 to $3,000.
Miner capitulating, for those unaware, is when “small miners get backed into a corner when BTC price is low & the generation of mining hardware they use becomes obsolete.” The important part of this is that the capitulation of miners induces the sale of mined Bitcoin en-masse, pushing prices lower in a vicious cycle: “Undercapitalized miners panic sell, price dumps, longs get squeezed, stop losses cascade.”
Quote:
Cole Garner@ColeGarnerBTC
MINERS ARE CAPITULATING
1/ Hash ribbons is on the brink of inversion. That’s news you never want to hear.
Inversion signals a downturn in hashrate. It's a leading indicator of miner capitulation. $BTC is dangling on the edge of a cliff.
520
8:53 AM - Nov 19, 2019
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To give this signal even more relevance, the bearish crossover of the hash ribbons in 2016 “kicked off an immediate 30% drop.” A 30% drop from current price levels would put Bitcoin in the $5,700 range — ouch. In other words, a bearish signal printed by this indicator could spell short-term to medium-term disaster for the Bitcoin market, despite the proximity of the halving.
Perfect Buying Opportunity
While this is harrowing enough, BTC may present an impeccable buying opportunity after the capitulation takes place.
Garner said that if the capitulation snowballs far enough, the cryptocurrency market will provide investors that stick around with a “generational buying opportunity,” adding that this may be the last time Bitcoin prices ever trade at such levels.
![[Image: EJs0LywU0Aczfbs.jpg:large]](https://pbs.twimg.com/media/EJs0LywU0Aczfbs.jpg:large)
Of course, this is a bullish conjecture. Though, history rhyming would see Bitcoin find a long-term bottom at the point at which the capitulation turns into hope.
source https://www.newsbtc.com/2019/11/19/bitco...itulation/
by Nick Chong
Read More, Posted by: crytocure ![[Image: Stellar-Keeps-Crashing-Hard-Despite-the-...M-Burn.jpg]](https://zycrypto.com/wp-content/uploads/2019/11/Stellar-Keeps-Crashing-Hard-Despite-the-Recent-55-Billion-XLM-Burn.jpg)
XLM saw an initial dump down to $0.068 but was able to recover back up to $0.0827 when the real crash started. XLM has been in a downtrend ever since and has seen a 7% loss just today. The volume hasn’t been significant but the bulls lost pretty much all-important support levels and the digital currency is currently in a heavy downfall.
It seems that today’s move was fueled by the transfer of 50 million XLM from the Stellar Development Foundation to Kraken, a cryptocurrency exchange.
Quote:
Whale Alert@whale_alert
50,000,000 #XLM (3,622,791 USD) transferred from SDF Operations to #Kraken
Tx: https://whale
alert.io/transaction/stellar/ddfc569cfa04fd398d8f06e4a2d131de60f76aaa2e819ef5b6b9d365bac49d7c …
81
1:34 AM - Nov 18, 2019
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![[Image: 9ifIGXEQ_bigger.png]](https://pbs.twimg.com/profile_images/1132579647374417921/9ifIGXEQ_bigger.png)
The reactions on Twitter were mostly negative as most people see this as developers dumping their XLM coins. Although this is certainly a big transaction, it’s not necessarily as big as it seems when we take in count XLM has a current market cap of around $1.32 billion.
It’s also important to note that the SDF (Stellar Development Foundation) purpose was to help the Stellar platform achieve the global payments standard and selling those coins might be viewed as dumping but could be a necessary step.
This seems to be a similar situation as XRP with Ripple when the foundation sent large amounts of the cryptocurrency to various different organizations. Investors are usually not quite pleased with this as they don’t know what the purpose of the transactions is. Transparency is usually quite important in the cryptocurrency industry.
As previously mentioned, the bearish volume hasn’t been too significant which means not a lot of people are actually selling their XLM coins but it also seems that not many investors are willing to buy XLM back either.
![[Image: Stellar-Keeps-Crashing-Hard-Despite-the-...M-Burn.png]](https://zycrypto.com/wp-content/uploads/2019/11/Stellar-Keeps-Crashing-Hard-Despite-the-Recent-55-Billion-XLM-Burn.png)
The 4-hour chart has been clearly in favor of the bears but the RSI is currently overextended which means a bounce could be happening soon.
source https://zycrypto.com/stellar-keeps-crash...-xlm-burn/
by Lorenzo Stroe
Read More, Posted by: crytocure ![[Image: maxresdefault-e1573973779752.jpg]](https://sfo2.digitaloceanspaces.com/engamb/wp-content/uploads/2019/11/17122555/maxresdefault-e1573973779752.jpg)
Memes and manipulation: Bitcoin’s BART pattern and its origins
Bitcoin Origins: BART – A ‘meme’nipulation Pattern
The first known connection between Bitcoin and Bart was made on 1 September, 2015 by an account “Whaleclub,” after BTC was priced at $230.
Quote:
Whaleclub@whaleclubco
$229.07 · bart simpson pattern https://whaleclub.co/post/QBvPi9 #bitcoin
3
7:06 AM - Sep 1, 2015
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![[Image: SCXO8wwO_bigger.jpg]](https://pbs.twimg.com/profile_images/844299549783011333/SCXO8wwO_bigger.jpg)
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Since then, a lot of people have used the term. However, consistent use of the “Bart pattern” was seen after a popular trader, “The Crypto Dog,” used it on 27 March, 2018.
Quote:
The Crypto Dog@TheCryptoDog
Typical Bart Simpson pattern on #Bitcoin $BTC / $USD
1,430
9:58 AM - Mar 27, 2018
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![[Image: DZQ1oTYVMAA_-bs?format=jpg&name=medium]](https://pbs.twimg.com/media/DZQ1oTYVMAA_-bs?format=jpg&name=medium)
What is a Bart pattern?
Bart aka Bart Simpson is a character from the popular American sitcom “The Simpsons.” The reason why Bitcoin and The Simpsons found themselves in the same conversation was due to the price of BTC tracing a pattern similar to Bart’s head.
Barts are usually formed when BTC surges suddenly, consolidates sideways, and then proceeds to surge in the direction opposite to the initial surge. The pattern is more consistent in lower timeframes like the 1-hour, 4-hour, and even Daily charts.
Attached below is a 1-hour chart that displays the Bart pattern over 20 days between 20 August 2019 and 9 September 2019. Here, the frequency of the pattern is overwhelmingly evident. This pattern can also be seen in the 5-min, 10-min, and the 15-min time frames.
![[Image: 1-4.png]](https://sfo2.digitaloceanspaces.com/engamb/wp-content/uploads/2019/11/17110955/1-4.png)
Source: BTC/USD TradingView
What is its cause?
By the end of its euphoric run in 2017, Bitcoin started collapsing and rumors were attributing this drop to manipulation. Naturally, Tether and Bitfinex were at the center of this. Moreover, the frequency and variations of BART patterns increased, adding fuel to the fire.
The main reason for the formation, which is still unclear, can be explained by two theories: The Wyckoff price cycle, and manipulation/spoofing.
The Wyckoff Theory
According to the Wyckoff price cycle, the price changes in four phases; the accumulation, markup, distribution, and markdown.
The Manipulation Theory
The second theory is manipulation. Tether and Bitfinex are in the thick of it, according to a critic, who chose to remain anonymous. Speaking to AMBCrypto, the person stated that the price of BTC was controlled like “an etch-a-sketch” by these entities using “bounce bots.”
Quote:“There’s been a few times where and old-bitcoin whale makes a large trade, he’ll make a 10x short, or long, on Bitmex. Bitfinex/Bitfinex traders will find out his liquidation price, and immediately move the prices just enough to liquidate him, and then immediately wash trade the prices back to where they were previously. They will also use things like bounce bots to lessen the effects of sellers dumping.
It’s also not just Bitfinex, but Bitmex as well.”
The anonymous person went on to say that exchanges can make money via liquidations and by setting up trades just before triggering liquidations. Whether it is rumor or speculation, the undeniable fact here is that there is a pattern that keeps recurring. As a trader, the right thing to do here is to exploit it.
Since the Bart pattern remains the same, it can be turned into an advantage if one learns how to use it. Jacob Canfield, a Twitter user and a trader, explained the same in one of his tweets.
Quote:“If there was one pattern I would recommend learning to trade Bitcoin, it would be this one ?μ Otherwise known as the μtorrent or Bart Pattern. It can also appear as an inverse μ as well. The signature trait is the ‘tail’ to initiate the pattern.”
Fin.
Bart is contained within the walls of the cryptocurrency ecosystem and is rarely observed on high liquidity forex markets. However, Richard Wyckoff pointed out similar patterns during the early 1900s. Some attribute this pattern to institutional manipulation, while some to whales. In fact, some think that this is a natural phenomenon seen only in cryptocurrencies due to their inherently volatile nature.
While most of the Bitcoin community decided to ignore these facts, others converted this pattern into a meme.
“Ok Boomer” is the new viral meme that is all over the news and mainstream media.
Memes are an important part of the millennial culture and the same are slowly finding their way with older generations.
Boomers aka Baby boomers are the generation born between 1946 and 1964. Thus far, the housing crisis, faulty CDPs leading to the’08 recession, inflation of the US Dollar, and even the US Debt, which hit $22 trillion, is all the fault of boomers. Or at least that’s what millennials think. Luckily for millennials, they have Bitcoin and cryptocurrencies to rely on.
From calling Bitcoin the orange coin to trolling President Trump’s tweets, memes are an inevitable part of cryptocurrencies, mainly due to the involvement of millennials. Bart is one such pattern birthed by Bitcoin, and the meme has caught on like wildfire.
Coming back to the point, whether it is the pattern or meme, either can be used to one’s advantage. Adding that to the inherently volatile nature of cryptocurrencies, this is an opportunity to get some good profits.
source https://eng.ambcrypto.com/memes-and-mani...s-origins/
by Akash Girimath
Read More, Posted by: crytocure ![[Image: 2048_IGh0dHBzOi8vczMuY29pbnRlbGVncmFwaC5...cuanBn.jpg]](https://images.cointelegraph.com/images/2048_IGh0dHBzOi8vczMuY29pbnRlbGVncmFwaC5jb20vc3RvcmFnZS91cGxvYWRzL3ZpZXcvMWUyZGRiMDA3NjU5OWY4YmE5YjVkNmRkNDUyZWU3ODcuanBn.jpg)
Zero-Knowledge Proofs, Explained
1. What is a zero-knowledge proof?
A zero-knowledge proof is a digital protocol that allows for data to be shared between two parties without the use of a password or any other information associated with the transaction.
In its most basic sense, a zero-knowledge proof (also commonly referred to as ZKP) can be thought of as a protocol through which a digital authentication process can be facilitated without the use of any passwords or other sensitive data. As a result of this, no information, either from the sender’s or receiver’s end, can be compromised in any way.
This is quite useful, especially since such a level of safety provides tech enthusiasts with an avenue to communicate with one another without having to reveal the content of their interactions with any third party.
The idea underlying zero-knowledge proofs first came to the fore back in 1985, when developers Shafi Goldwasser, Charles Rackoff and Silvio Micali presented to the world the notion of “knowledge complexity” — a concept that served as a precursor to ZKPs.
As the name suggests, knowledge complexity acts as a metric standard to determine the amount of knowledge required for any transaction (between a prover and verifier) to be considered valid.
2. Where are ZKPs actually employed?
Zero-knowledge proofs are used by government agencies to determine the origin of certain data without them having to prove how or where they got the information from.
Since their inception, zero-knowledge proofs have been used across a wide array of digital domains. For example, researchers have used this technology for creating novel digital identification mechanisms that do not require users to reveal any sensitive information related to them.
In this regard, several examples exist of self-sovereign identity platforms that allow third-party personnel such as law enforcement agencies to determine whether an individual has a valid driver's license without the person having to hand over anything other than their ID number.
Similarly, governments can also use ZKPs to determine the nuclear capabilities of various militaries without having to spy on or inspect their inventories. On the subject, it can be seen that in July of this year, the Defense Advanced Research Projects Agency, or DARPA, released a statement in which it claimed that it was working on a new project called SIEVE — i.e., Securing Information for Encrypted Verification and Evaluation — that makes use of ZKPs to determine the origin of highly secure data without the U.S. government having to reveal the way in which it was acquired.
3. Can ZKPs be integrated into blockchain platforms?
Zero-knowledge proofs offer a lot of benefits to blockchain systems that make use of the technology. For example, they help in making crypto transaction’s extremely secure thanks to their high-level of encryption.
Yes, a zero-knowledge proof can be very easily be used within the context of a blockchain ecosystem, especially in regard to validating cryptocurrency transactions without disclosing any data related to it — such as where the transactions originated from, where it went or how much money was transferred.
A real-world use case of this technology is Zcash, a crypto platform that employs a special iteration of zero-knowledge proofs (called zk-SNARKs) that allow native transactions to remain fully encrypted while still being verified under the network's consensus rules.
With that said, even though zero-knowledge proofs possess a lot of potential to alter the way in which today’s data systems verify information, the technology is still considered to be in its nascent stages — mainly because researchers are trying to figure out how to best use this concept as well as determining any potential flaws.
4. What advantages do zero-knowledge proofs offer?
ZKPs completely eliminate the need for passwords as well as the use of any other sensitive data when facilitating a transaction.
Zero-knowledge proofs allow for a transfer of information to take place between two parties without the originator having to use a password or reveal any data related to him/her. This helps weed out many of the potential risks that are involved with the use of password-only authentication protocols. Additionally, ZKPs also help in bolstering the security of a person’s online payments/transactions and public cloud accounts.
The only potential downside to using zero-knowledge proofs is that in case the originator of a transaction forgets his/her source passcode, all of the data associated with the transfer will be lost forever.
5. Notable use cases
Over the last two to three years, a number of platforms have adopted zero-knowledge proofs in order to bolster their native security/privacy capabilities.
ZoKrates is a digital toolbox that can be used by skilled developers to devise and verify zero-knowledge proofs using Solidity — an object-oriented programming language used for creating Ethereum-based smart contracts.
Similarly, a couple of years ago, JP Morgan Chase adopted Zcash’s zk-SNARKs-based proof of concept to bolster the privacy of its native blockchain ecosystem called Quorum. Simply put, Quorum is a fork of the Ethereum blockchain that makes use of its very own smart contract language called Constellation.
source https://cointelegraph.com/explained/zero...-explained
by Shiraz Jagati
Read More, Posted by: crytocure 
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