Stellar Lumens (XLM) Forum with for newcomers and contributor's rewarded Check here




'Professor bitcoin' and the rise of crypto-currencies
John Shinal, Special for USA TODAY8:02 a.m. EST December 6, 2014

[Image: 1403008354000-AP-Bitcoin-Majority-Threat.jpg]
SAN FRANCISCO —Gregory Maxwell, a co-founder of the digital currency startup Blockstream, sat in front of a crowded room of Bitcoin experts and investors in a conference room of San Francisco's Kabuki Hotel this week and answered a question that many came to hear:
Should development of "blockchains"—the globally-distributed encryption technology at the core of the Bitcoin currency—remain united?
Or is it better to have many so-called "sidechains," each with its own rules?
While the latter approach could boost Bitcoin innovation, it might also result in competing standards, slowing the commercialization and adoption of the currency.


Quote:“The price of trust just fell to pennies --”
Andrew Barriser

A wide range of startups are now developing products based on the Bitcoin protocols, on the hope that it will compete with other global payment systems.
These new software companies and their future rivals look likely to do more than transform online payments.
They may one day transform stodgy business processes such as escrow, insurance and incorporation.
All thanks to a core Bitcoin principle: When a business or a person can run machine learning software on a massive computer network to prove that a financial transaction occurred, they won't need to pay humans to guarantee that it did.

TRUST IS SO 1987
In the view of crypto-currency believers, trust is an anachronism of the analog age, ill-suited to digital commerce.
"The price of trust just fell to pennies," said Andrew Barriser, a proponent of a unified currency approach who sat to Maxwell's right on the panel, and spoke just before him.
Money is now pouring into this disruptive software innovation, with some coming from traditional venture capital investment and much of it from crowdfunding.
Ethereum, founded by Vitalik Buterin as a teenager, raised the equivalent of $15 million worth of Bitcoin in a crowdfunded campaign reported in September.



Its software research has led to the notion of "smart contracts," which could guarantee digital transactions quickly and at little cost.
Then there's ChangeTip, a peer-to-peer, social-media-based tipping service that raised a $3.5 million seed round led by San Francisco's Pantera Capital on Dec. 2.
Pantera invests exclusively in Bitcoin startups, says CEO Dan Morehead, who expects total Bitcoin investment to exceed $300 million this year.
Last month, Blockstream raised a huge seed investment round of $21 million.
The sidechains that Blockstream and others are developing could be efficient platforms for conducting fast, low-cost, secure transactions over the Internet.
But the competing efforts also risk Bitcoin splitting into multiple competing currencies.
That could slow its adoption rate and open the door for any of the dozens of other digital currencies out there, including a notable one from Ripple Labs.
Back in Japantown, Maxwell was treated with noticeable deference by attendees.

'PROFESSOR BITCOIN' SAYS STANDARDIZE
His reputation for finding security holes in Bitcoin code of all types has earned him a reputation one attendee described as "Professor Bitcoin."
In the end, he told Bitcoin fans in the audience what they wanted to hear: Support for a standardized approach.





Bitcoin "should be THE blockchain," and not one of many, Maxwell pronounced.

While that may calm the Bitcoin faithful, those are fighting words to rival crypto-currency camps.

Ripple Labs operates an online exchange where currency traders can swap many types of digital currencies.

The software platform doesn't rely on the core Bitcoin technology.

That means acquiring it doesn't require the massive computing power to "mine" a currency, or find and prove ownership of Bitcoins through a confirmed blockchain transaction.

A key hurdle to Bitcoin's broad acceptance is that mining it has become more expensive and thus concentrated in the hands of those who can afford to.

That in turn could allow bad actors who accumulate a majority of the currency to manipulate its inflation rate, by changing blockchain rules, and thus manipulate the value of Bitcoin.


RIVALS: RIPPLE, STELLAR

Ripple's currency unit, the XRP, is capped at 100 billion units by its founding protocol, according to the company.

Yet another digital currency came this year from the Stellar Foundation, which is using a philanthropic model of creating a currency and giving away grants of it to non-profit charities.

Whether Bitcoins or Stellars or XRPs or some other future currency will emerge as an enduring alternative to paper is an unknown right now.

The same goes for exchanges like Coinbase, BitPay and GoCoin, all of which signed processing agreements with eBay's PayPal unit in September.

But winners will eventually emerge, with their underlying technologies quite likely to shake up the world of digital finance over the next 10 years.

Read More Read More, Posted by: hokkybejo
NOTE= user must be ACTIVE for 7days prior delivering the rewards
if not active, then the reward back to ZERO



[Image: stellar.png]
Quote:FREE 1 Stellar XLM, for 
new user    +10 QUALITY Reply    +AVATAR picture

How to claim=
Please reply your Stellar address here, + make ANY 10 reply on different thread, and you will get FREE XLM! 

CLAIM RULES=
- 1 account = 1 new wallet address for 1 new user, also have to input Unique AVATAR Picture
- 1 account = must make 10 Quality reply, in any different thread.

- Maximum claim per Wallet & ID is only 1x,  if you want to claim more, you must create new wallet and new id.
- The FREE XLM distribution will take around 7 days to your Stellar account.

.
.




.
.
.
.


UPDATED Received list, ALL username+Wallet will be check, please dont cheat..!
some might pass our radar, but we are fast learner, to prevent another cheat,
RED COLOR will not receive more of this reward
Quote:
Quote:GA
  1. Jaymars69                        GACNJOY3GDLGVOZVP3AKHLJ3XDDARYJOEFLU3GTDWPFA4B3T7WSON6CT

  2. Madcotto                           GAP66SFBQNL5MQFZ2XZB2V3JDPTCQ7PI2L5ER5NEPA5Z5HS4BNHGSSZU
  3. PluviOPhil3                       GAVPK6VS54SVYY7CVZ5NUWYNFOCXQTQWUILST2DCBUKKUH5VGIIMWV6O
  4. vikas27                              GAZINZMPQXDLFJJEK25GLPPEWIJEDRNRCUJLJS2ZFBSO2DXUF5VPCOEW
  5. plangaplongo                    GAZ6RBIVFYILPNLUQOIOFQN3ZTS2CTG4UMMFHTVX4O6CXP4M3DZIXZNV
  6. justinjaye21                      GA2FX2XCHGYT6DWOD6OQUHH327HHDOGBF5B3FSXIYJE64LIRZDMETA6X
  7. Tando                                GA3SKUO65P37JZJLYR4ZL6KYJJIBFV4CLY5YZPHO2Y2LLZ5SNATLZVQO


Quote:GA5X=  ?????????????
note:
all BITTREX Exchange wallet are using GA5XIGA5C7QTPTWXQHY6MCJRMTRZDOSHR6EFIBNDQTCQHG262N4GGKTM
and differentiate by Destination TAG.

  1. Breachboy     destination TAG    2254706083





.


Quote:GB
  1. Cahyadi           GBBREMBR5THB5YQ4UZ5QEEZ2K3RWCLGKGBVPRRJZFTYLL5I423U6JJOK
  2. love007           GBEG7RWCBUBUOFZUYBXZRDUCRMDZ2C7XY4Z5JDEFUUJNBO5U52UXK6MQ
  3. lenka98           GBCKVXSYIVVJZLGBJJXFR5A7NYQK4FHMWFZA4A3VBEKMHBMYCGLT6JM7

  4. mochkaye       GBGCGPCRY2Y3ASZOOKL3ZFLKOV2TIMVJIKGQLIZLRYYORGEDM2ZYAK5D
  5. Yipstars1        GBH3NOGKNM5MGIL2U4DPZYPKEMOZYHQU7FBYNMFXAK4GYZMKNTIBDXXA
  6. mrcomedy      GBH7VW22KLLASV4CONRE4LULZPQNE7C2RNLN2HE2EJKM5CTBWDJFAXWM
  7. baziit               GBICXH4MEURETWN4GUD63WLYA6GALKHVBFORZTRPSKTUWN4UJHPLC26A
  8. madi4              GBPYRAHLWKHZJPLQBGTYT53UKSO3RCX27FZFSW4VBIAAIWC3EGTLP3PI
  9. paladin            GBRWU2BPDMX3HP5NLZWO3W7VLSIXR55IKDET5QYPSIQALP3PXJHJDSSW
  10. mryoso1994   GBS5U2IEKXMTMPETCAE55DXGMLMKPOLSF4KHIUXUQ2YA424GH2OM7OXV
  11. moneng           GBX5DNNTL6WD7ROHQWSVK27U7HIFD572DEIHRYNLODCA6TTH5R74FUYW
  12. kumbarajaya   GBVZCEQVUIGN7XMSU4F3LLMZXORFOQIWLZRDDXKW2ZNQD6T23GQK62G5
  13. katonadams    GBZADFK3VBOES76CKJW4CRW43V56ASYOGTXZ7XWXHG7OG3OPMC2XGHJS
  14. milak                GB2AG5P5M75ORXTS4JC274KRRQAI5FDJ3NGZ5XILXEDD4O66JXK22DGV
  15. gerryj                GB26MITORXMSHB3W3NXBPARS2ESEBP4ERH7EUPI6RYDIIJD3JIGPW62C
  16. bnogal              GB3YQNYRNCQLQ6D5B7VDYD5PIGG7C6GAYFQSDCSDFZTMQCJYRCL6KUFK
  17. visky                  GB4FLQ76256KCVX7KAIUJHQ3MUCT6UEKDHLRP5325Y2KHVRXZFDENJBB
  18. mmhaimhai     GB4VFSFCPVXIPNYQAEV5GXXPP6SJP4PIARNVTWWRMT7HVBHTVSOZ37L4
  19. zura17              GB5744LAKESCENTTYJS47VWWIZGGPQO6CA7FN2KPCDWMX2ZHE6BQQEVB
  20. josea15            GB7CA3VBYTUV5KETUNVN2N5LAD7OYW7X56DBTMSUGK5YWJZBMTOATSST

Quote:GB6Y=  BITTREX.COM
note:
all BITTREX Exchange wallet are using GB6YPGW5JFMMP2QB2USQ33EUWTXVL4ZT5ITUNCY3YKVWOJPP57CANOF3
and differentiate by Destination TAG

  1. nh0xpr075     destination TAG    80948c2de67e412bb5b
  2. cintastr          destination TAG    121886092de041a8bf9
  3. myouza          destination TAG    7b1b10d9801c44f0823






.


Quote:GC

  1. maria                 GCDHF5KB2UB5BXAG5HEMBKGHM5RPA6ZQXSJK6M4BVQLZPSBITJCLA5FN
  2. bahlulfahrul      GCE33B7SHA73NWGCJ7TUYC2RVBOSKPNTVYHIHX6SL7676KMQCNTFBHSW
  3. Trucvi2207        GCFXHS4GXL6BVUCXBWXGTITROWLVYXQKQLF4YH5O5JT3YZXCYPAFBJZB
  4. pietervdm          GCGN4GYZFCTF76I2LZ6TLFDBLSSJZENV3EZ3JVZM2774KDD3A5AA473W
  5. miliko                 GCJHFCAMJU2JL3WOHDMMLAQ3JAVXLLG7OJ3VOODKROCGPGRUCFMXJHJK
  6. anakonda          GCNOKWH4HEOL7IMNNHYGTCVZH6VQUCET5VPBT67DJJ7HOETIFV6W4I2A
  7. asopiandi           GCPK7OH4IOVN3NGJ4HPFGLEA67LMMEKWI3VVVU6D3LVKBTE6WGCSNMMA
  8. mitsuki               GCSWJN7M5DSYFE5CSWNXIJOK7UHX65WKQBOW3PUQSZVPDGTXWXMQU6NS
  9. raama                 GC6FCWJ3KCV7B3443XARZ6XYHQOWWXAHNTMHXLEIR3RO4O6SXFKIKFYR
  10. alexbaros           GC7VR22GZZ3S5O46CPXFAWIL43LAXJK5QCNHMZENTPQDC3C2LRFUDV45



Quote:GC4K=  VIP.BITCOIN.CO.ID
note:
all VIP wallet are using GC4KAS6W2YCGJGLP633A6F6AKTCV4WSLMTMIQRSEQE5QRRVKSX7THV6S and differentiate by Destination TAG

  1. Joehard         destination TAG     4412157
  2. Smartcare     destination TAG     5583548
  3. ridho98         destination TAG     264294
  4. Chong            destination TAG     174397
  5. akatsuki48    destination TAG     224766


Quote:GCGN=  POLONIEX.COM
note: all POLONIEX wallet are using CGNWKCJ3KHRLPM3TM6N7D3W5YKDJFL6A2YCXFXNMRTZ4Q66MEMZ6FI2 and differentiate by Destination TAG

  1. blackyblack       destination TAG     483472
  2. zef316                destination TAG     6325222
  3. permana           destination TAG     7930944
  4. melati               destination TAG     5991663




.


Quote:GD

  1. yahla20                 GDAJU6ZM6MCRZLQPKD5L7LSMM7JRDKGNXUZFKP4PTPPFCK5DD6MHUH2Z
  2. yourface12           GDCJDUOWEAFWHDDDCRUEEXI5UG5QYGFEGQHQU2LDCTNPF432DQWNY6OP
  3. elize87                  GDCZHKPAH2S2UZJ5IKL3H3WEX3FCFQD7VNVXBTRXI5PZYG54FOIERTTJ
  4. truongict               GDL4DZFEQ2LTGWV2P3NQ23PB7TCPSMGPONEOSGWY33BX44TWPYFLEKUR
  5. ahnsho                  GDMJB2ARXE6GCC6XTLI7LBDAL6773HQQZTKZMLP4CBXZA6PYOLTOLXKD
  6. cheanne30            GDMKZUJFR2X2CTHG75N2SM3FSRH4HPKOBI4KREKXKARMRSYYUK3MXUFT
  7. kinar11                  GDOKH3XAMNKM5Q32C3ALSSR3PIV37XITZUUNCAMCUDNZGC4NXGHDJ25O
  8. chris190                GDTQGRDYGPTZD7SS2GITPILK3KUILEJ4YS7CYSCYA32H6PNB3VGTJPIR
  9. kuyayoyoy            GDUSYPZFDMT36VM2MQVHEPCGFUXS52CWUBO5E3GHX5NV6CD4S2LSUG5K
  10. icaduut                 GDVL754YEZTSAFYVL3SZ7QYO2YT6KAWPNRAJDWLO4BDRQOWHNIY3Q6WD
  11. Fang8                   GDXMZH666RBG5USEJ22NRKCCBQERYPF5ZZP2YDA76I3PVHV7QKGSIHXJ
  12. Altrian                   GDZYQUZEAOZMVH7AP6HE636BX5PCFBM7Y6OBBMSBVI2UFC2KWCERAOV2
  13. kennice8               GD67GPOEEXFG5VBO6SIVJ2B72PYELZQD5M2NVVCRUGH5BDSUP7JLILTO

Read More Read More, Posted by: Forum IT
Bitcoin Pizza Day: Celebrating the Pizzas Bought for 10,000 BTC

Grace Caffyn (@GCaffyn) | Published on May 22, 2014 at 19:16 BST

[Image: shutterstock_47338990-300x185.jpg]
Today, bitcoiners the world over will celebrate the anniversary of the most expensive pizzas in history.

Bought on 22nd May 2010 by Laszlo Hanyecz, the programmer paid a fellow Bitcoin Talk forum user 10,000 BTC for two Papa John’s pizzas. Back then – when the technology was just over a year old – that equated to roughly $25, but is $5.12m by today’s exchange rate.

At bitcoin’s all-time high last December, the pizzas would have been worth an eye-watering $11.47m, making them likely candidates for the most expensive pizzas of all time.
Now widely recognised as the first real-world transaction with bitcoin, May 22nd has come to celebrate 'Bitcoin Pizza Day', with cryptocurrency enthusiasts raising a slice to Hanyecz’sinfamous hunger pangs that paved the way for early merchant adoption.
   

Then and now
"It wasn’t like bitcoins had any value back then, so the idea of trading them for a pizza was incredibly cool," Hanyecz told Nick Bilton in a recent interview with The New York Times. "No one knew it was going to get so big."
Yet, the picture today is vastly different. Worldwide, there are more than 70,000 merchants accepting the young currency, with block chain transactions now averaging over 57,000 per day.
In addition, data from coinmap.org indicates that more than 100 brick-and-mortar stores currently accept bitcoin for pizza – and this number is on the rise.
Business tie-ins
Retailers are getting in on the action, too. eGifter, the popular gift card platform is giving away extra points to customers purchasing Domino's, UNO and Papa John’s gift cards using either bitcoin, litecoin or dogecoin.
The company is also providing a 10,000-point prize in honour of the 10,000 BTC used in Hanyecz's transaction.
E-commerce platform provider snapCard is similarly commemorating Bitcoin Pizza Day by giving away 150 cheese pizzas for $0.99. At press time, the company was reporting an enthusiastic response, with roughly 30 orders placed in the first 10 minutes of the offer going live.
Closer to CoinDesk's headquarters, Takeaway.com lets UK customers choose from over 7,500 listed restaurants for home delivery, many of which may not even realise they are accepting the currency (albeit indirectly). After a quick postcode search for 'pizza' outlets, we decided to put the service to the test.
   
Surely enough, Papa John's – Hanyecz's brand of choice – came top.

A few clicks and a Blockchain web wallet workaround later (a drawback of using iOS) the pizzas were on their way.
   
How will you celebrate Bitcoin Pizza Day? Why not head to your local joint and raise a slice to Laszlo Hanyecz, whose late-night escapade changed bitcoin forever.



Who knows, maybe one day your pizzas could be worth $5.12m too.

Read More Read More, Posted by: Forum IT
NOTE= user must be ACTIVE for 7days prior delivering the rewards
if not active, then the reward back to ZERO



Quote:
 Search PAID to POST  Search

you can
INVITE or POST and BLOG and SHARE ANYTHING you love..
and receive STELLAR INCOME monthly
also this page as
REPORTS of any REWARDS Claimed by members


[Image: BANNER%20Rules%20Posting%20-%20B.png]

.

.
Santa For the moment, please reporting manual, request for reward at this forum =
Requesting periode must be before date 15th /every month


Quote:
HOW TO CLAIM =
Reply on this forum, if you want to redeem, gave us = username and stellar wallet
  • Example=
Hello i want to redeem my posting and all rewards, here is my username and wallet
username = Forum IT
wallet = GDOC5MCV6I5I6TGUZSOVG44TSW7GYAZPDFAZWZLH2WOBMPUSQVHJ3DYD
thank You
your account and postings quality will be check Nonono and reward will be release along the release reports, 


Summary on every release of reward will be noted in next posting (Post no. #3), including rank reward (Post no. #4). 
Please see list below


.

Read More Read More, Posted by: Forum IT
[Image: stellar.png]

Quote:
Stellar / Lumens 
giveaway for bitcoin holder.
Claim until October 5, 2016.



If you are holding bitcoins on your own wallet,
you are eligible for the Lumens/Stellar XLM giveaway.
Read more about it on:
https://www.stellar.org/blog/bitcoin-claim-lumens/

NewyearTo claim your Lumens/Stellar XLM follow the instructions here:   
https://www.stellar.org/lumens/bitcoin-lumen-program/





Quote:There is still no announcement for the XRP (Ripple) giveaway,
but this time only a small amount of Lumens (3Billion) was given away to bitcoin holders to test the process.
Terharu There will be a much bigger Lumens giveaway (17Billion) for bitcoin holders after this one. Taunt

Read More Read More, Posted by: Rufus
THE DIGITAL GOLD RUSH
Your complete A-Z guide to cryptocurrencies
By The Kernel

Anybody can create their own cryptocurrency. The fact that Bitcoin is open source means that anyone can tinker with it, slap a new own name on top, and create their own version. That’s led to a glut of hundreds, if not thousands, of so-called altcoins. Who can keep track of them all?

We’ve compiled a glossary of some of the important, creative, and just plain weird cryptocurrencies you’ve been wondering about.

Anoncoin

“Your business is none of our business” is Anoncoin’s mantra. Released in 2013 to capitalize on cyrptocurrency fans’ taste for exchanging money without credit cards and bank accounts, Anoncoin’s developers call it the first cryptocurrency to support the I2P and Tor anonymous networks.

But they want to go a step farther now. Its development team has announced plans to implement something called Zerocoin, a project designed to sure up perceived privacy issues with Bitcoin’s public blockchain. Anoncoin’s value took a significant hit in October, when the developers said Zerocoin implementation would be delayed. Since there’s still no firm date for its release, privacy advocates are, for now, stuck with Anoncoin. Or any of the other altcoins that promise better privacy. —Fran Berkman

[Image: anoncoin.jpg]

BitShares

BitShares makes use of Bitcoin’s blockchain technology, but it eschews mining, which its developers view as a drain on resources.

Without a mining system that completes proof of work to authenticate transactions, BitShares relies on something it calls a delegated proof-of-stake system, in which 101 delegates oversee construction of the blockchain. Users pick the delegates through Reddit-style upvotes, so a delegate can quickly lose the position if it’s not handled properly.

Bitshares itself is not even really a cryptocurrency. It’s more of a software that launches and maintains what’s called Decentralized Autonomous Companies. The first of these launched this summer. Called BitShares X, it’s an exchange that ties digital entities to real-world assets, such as dollars, gold, and oil. Skeptical? Confused? Some people sure buy it. It’s quickly captured investors’ attention, as it’s currently in the top five of all cryptocurrencies when it comes to market cap. —F.B.

Counterparty

Counterparty’s life started with the destruction of nearly $2 million worth of Bitcoin in what it described as a “proof-of-burn” in January 2014. How’s that for making an entrance?

Developers told anyone interested in investing in Counterparty to send Bitcoin to a virtual wallet for which no one possesses the key. Those investors were rewarded with a proportional amount of XCP—confusingly, the counterparty unit—which would become the foundation of Counterparty’s service. Developers say those bitcoins were not retained, both to avoid regulatory complications and to make the process as fair as possible to all investors.

This service now allows users to set up their own financial assets that operate on top of Bitcoin’s blockchain. Setting up an asset is marketed as creating a “Custom Token” on Counterparty’s website, and the assets are based on XCP.

Essentially, users can take advantage of Bitcoin’s cryptographic security to make assets they can control and distribute. —F.B.

Darkcoin

Contrary to some popular belief, Bitcoin isn’t anonymous. Like a clever screen name, it’s pseudonymous: You’re consistently identified by your wallet address, though no one has to know the real-life name behind that address unless you want them to. That, of course, never stopped Bitcoin from being the go-to currency for online black market transactions. But Darkcoin could change that.

Like Anoncoin, Darkcoin aims for genuine anonymity. It’s otherwise pretty similar to Bitcoin, and its transactions are still recorded on a blockchain. But Darkcoin transactions can go through an anonymizer, called DarkSend, making it “impossible,” according to the coin’s creators, to track where a given transaction came from. In theory, it’s the next step in wiring money if you don’t ever want to be watched. —Kevin Collier

[Image: darkcoin.jpg]

Ethereum

Ethereum developer Vitalik Buterin doesn’t imagine his creation as just another cryptocurrency. His dreams are much bigger. Though largely modeled on Bitcoin, Ethereum is an entirely separate platform that allows for the creation of custom digital currencies and auto-executing smart contracts that its boosters believe could replace everything from bookies to lawyers to the World Wide Web itself.

At the core of Ethereum is the idea that it’s possible to create programmable money that can be told how to behave all on its own. Smart contracts allow coins to be told ahead of time to transfer themselves depending on an event’s outcome: to Bob’s account if the Broncos win the Super Bowl, for example, or to Alice’s if the Cowboys come out on top. Since a cryptocurrency can represent anything, from the deed for a house to a vote in an election, and the instructions can be complicated as the programmer wants to make them, there may be no limit to what Ethereum-created contracts can facilitate.

Buterin’s company conducted an initial presale of Ethereum last year and hopes to begin mining the currency in the coming months. —Aaron Sankin

Fuelcoin

In theory, Fuelcoin is educational. Its anonymous founder so desperately wants people to get into cryptocurrency, he says he’ll sponsor Fuelcoin parties—think Tupperware, but for pretend Internet money that you send with your phone. There’s a slight hitch to that, though: No such thing has been announced on the Fuelcoin’s site, or on its Twitter account, in the eight months since Fuelcoin’s creation.

The coin’s nevertheless doing moderately well for itself despite a lack of much identify. Its value soared in October, then plateaued in December, and currently boasts cryptocurrency’s 14th-biggest market cap: $4,249,351. To quote Fuelcoin’s borderline-nonsensical slogan, “Fuel Your Dreams!” —K.C.

GCoin

A cryptocurrency created by the Freemasons, designed to be used for charity? It sounds like something your conspiracy-minded uncle who doesn’t understand Bitcoin made up, besides maybe the charity part. But that is, at least ostensibly, the idea behind GCoin.

Its developer, who claims to be a Freemason, says the idea was born of a conversation with his mentor, who asked, “What have you done lately to make the world a better place.” That gave him a wild idea: another Bitcoin clone, but this one can be used to give money to charity!

Notwithstanding the fact that dogecoiners have given substantially to charity and bitcoiners continue to do so, GCoin isn’t an official Freemason project, according to a group spokesperson, though that admittedly would have been fascinating. GCoin’s unnamed developer has repeatedly tried to convince other masons on Reddit to use his coin, and they’ve repeatedly shunned him, asking for Freemason credentials that he refuses to provide. Conspiracy! —K.C.

HoboNickels

Traditionally, a “hobo nickel” is a piece of folk art, a physical coin carved into tiny, circular bas relief. In the world of cryptocurrency, however, HoboNickels attempts to be one of the fastest coins available, though in reality, there’s little besides its name distinguish it from other altcoins.

The name reportedly came about because of who the coin was made for, a user named “cryptohobo.” As befitting a coin bearing the name of the less fortunate, HoboNickels are geared toward charities, with a few of them being listed on the coin’s site as being open to donations like the children’s charity Songs of Love Foundation and Bitcoin Utopia Aquaponics, which funds science projects. And hey, Hobonickels do the service of reminding  us of how cool old, actual hobo nickels are. —K.C.

[Image: hobonickels.jpg]

Infinitecoin

A key feature of Bitcoin is that only a finite number of them can be mined, meaning that one day—more than a century from now, say some calculations—the well will run dry. Come that day, we’ll have to make due with the bitcoins we have.

Contrary to its name, Infinitecoin asks the big question: What if that end date comes really soon?

Infinitecoin gets its name from the fact that mining Infinitecoin produces a huge amount of coins—more than 90 billion already. It’s on pace to be “one of the first to be completely mined out,” according to its website.

Don’t mistake Infintiecoin’s prevalence for wealth, though: at $ 0.000004, one of them is still only a fraction of a value of a dogecoin, which is already the shining example of a currency being practically worthless. —K.C.

Juggalocoin

The early spring of 2014 saw the rise of cryptocurrencies designed to supplement the currencies of small nations: AuroraCoin in Iceland, and Mazacoin for South Dakota’s native American Oglala Lakota Nation. Somewhere, a juggalo—a fan of the rap group Insane Clown Posse, probably dressed like a goth clown and possibly confused by magnets—nodded in solidarity.

In theory, Juggalocoin would allow juggalos of all stripes to easily pay each other back if they were, say, cashless and wanted to bogart a fellow fan’s Cheetos or Faygo or low-quality marijuana. But It’s not clear if Juggalocoin ever really got off the ground. It’s still not traded on any cryptocurrency charts we could find, but maybe it’s more a political statement than something people would use day-to-day. As the coin’s official site actually says, “You don’t have to be black to support Civil Rights, and you don’t have to be a Juggalo to support the Juggalo Family.” —K.C.

Kittehcoin

The genius of Dogecoin, before its community was taken for a ride by shady entrepreneurs, was simple. Take Litecoin (see below) but bring an air of silliness and generosity to the coin, and emphasize that by branding it with the silly Doge meme. The idea of Kittehcoin is that maybe you could do the same thing with Namecoin (featured below) and cats.

Speaking in LOLcat, someone who helped start Kittehcoin introduced it on the popular cryptocurrency forum Bitcointalk: “Some mangy Doge has been getting an awful lot of attention on the netz lately, and Kitteh is not pleased.” Right.

Unfortunately for those who wanted a new way to buy cheezburgers, lead developer Dan Wasyluk stepped down in December to work on Syscoin, and the kitteh’s been pretty lifeless since. —K.C.

Litecoin

Created in his spare time by former Google engineer Charlie Lee in 2011, Litecoin was built for speed. Due to the structure of the Bitcoin network, it takes about 10 minutes for any transaction to be processed. While Bitcoin users have developed workarounds, Lee realized if a competing cryptocurrency could improve on that transaction time, it would have a shot of grabbing some of Bitcoin’s market share. By constructing Litecoin with a transaction time of just a quarter of Bitcoin, he had a hit. Though it was recently surpassed by Ripple, Litecoin spent years as the second biggest cryptocurrency on the market.

While Lee, who now works at leading Bitcoin wallet service Coinbase, once said that “adding gimmicks does not help a currency succeed,” last year Litecoin joined forces with Dogecoin, the king of gimmicky cryptocurrencies, for merged mining. Lee saw that as a way to increase the security of both currencies. —A.S.

[Image: litecoin.jpg]

Mazacoin

Last winter, developer Payu Harris created Mazacoin for a poverty-stricken Native American nation in South Dakota. At that time, some outlets reported that the Oglala Lakota tribe made Mazacoin its official currency, which would have made it the first sovereign nation to adopt a cryptocurrency. But tribal politics proved to be a roadblock for Mazacoin, and it was never officially adopted.

Harris has continued to promote the cryptocurrency in and around the Oglala Lakota’s Pine Ridge reservation. He’s presenting it as a tool the tribe can use to move toward financial independence from the United States government, and one that could help alleviate the extreme poverty that plagues the reservation.

Never lacking optimism, Harris told the Kernel that a new president and tribal council took office on Jan. 2, and the new leaders have expressed interest.

“We’re expecting a lot of movement on Mazacoin here in the next few weeks,” he said. —F.B.

Namecoin

Despite being called a “coin,” Namecoin doesn’t have all that much to do with monetary exchange. Instead, it’s focused on the transfer of data.

That data can be a myriad of things: email, encryption keys, or even other Bitcoin addresses.

But importantly, because all of this data is stored publicly on a blockchain and enjoys all of the benefits that come with a decentralized, peer-to-peer system, Namecoin data is resistant to censorship. This in turn means that Namecoin may help to “protect free-speech rights online,” according to coin’s website.

As the first fork of Bitcoin, it is naturally also the brainchild of a pseudonymous creator. Whereas Bitcoin had its Satoshi, Namecoin owes its existence to the mysterious “Vinced.” —Joseph Cox

[Image: namecoin.jpg]

Opal

You’ve heard Bitcoin fanatics talk about how its real genius is the blockchain technology, right? Enter Opal.

Opal is a cryptocoin, sure. But it also spans a wide array of other blockchain-focused projects.

There’s Opal Drive, an encrypted cloud storage service, and Opacity+, a secure messaging protocol, which, in addition to servicing anonymous communication, also allows financial transactions. There’s also the Opal Marketplace, a platform to buy and sell digital products in exchange for Opal coins. —J.C.

Paycoin

In theory, Paycoin is designed to be practical. Merchants who already accept Bitcoin will be compatible with Paycoin too, and instead of trying to completely undermine the financial systems already in place, it attempts to work with them because it’s designed to work with established credit card hardware.

It’s also backed by a reserve of U.S. dollars, which “shields early adopters from risk and increases acceptance by large institutions,” according to Paycoin’s website.

But it’s run into a few hitches, namely that many have turned on Paycoin, calling it a “clear scam” and alleging that some of its coins were deceitfully premined. —J.C.

Quarkcoin

With a playful jingle playing in its tutorial video, Quarkcoin wants to convince people that cryptocurrencies are as big a revolution to finance as email was to communication.

Although it doesn’t seem to have much of an unique selling point except claiming to be faster and more secure than Bitcoin, Quarkcoin’s developers of the coin claim that it is one of the most secure cryptocurrencies and is “protected by 9 rounds of hashing from 6 different hash functions,” according to the Quarkcoin website. And hey, that ukulele sound nice. —J.C.



RonPaulCoin

Of every public figure that could conceivably serve as the namesake for a cryptocurrency, Ron Paul is the least surprising. The former Texas congressman is the godfather of America’s libertarian movement. That movement is in turn is largely responsible for bringing cryptocurrencies from being the exclusive province of propellerhead code jockeys into the consciousness of the general public. Bitcoin is, after all, basically a libertarian ideal: money backed by high-level math rather than the full faith and credit of a government. It allows its users to transact securely without the need for regulation or even any third-party whatsoever.

In a 2014 interview on CNBC, Paul said he does support the RonPaulCoin, even though he didn’t have anything to do with its creation. “I think that [support is] why they named it the RonPaulCoin; I’m advocating competing currencies because I’m not too high on our own currency,” he said.

Paul’s push for the use of non-dollar currencies is based on his opposition to the Federal Reserve’s ability to print money at will, and its inclination to do so at a record rate in the wake of the financial crash. Following in Paul’s spirit of promoting scarcity to prevent inflation, the total number of RonPaulCoins in existence is capped at one-tenth the total supply of Bitcoin. —A.S.

[Image: ronpaulcoin.jpg]

Stellar

While bankrupt Bitcoin exchange Mt. Gox will forever be associated with Mark Karpelès, the man whose leadership drove it into the ground, it was originally created by Jed McCaleb as an online hub for trading Magic: The Gathering cards. After selling the site to Karpelès, McCaleb helped create Ripple, now the second largest cryptocurrency after Bitcoin, then another cryptocurrency platform, called Stellar.

Stellar’s goal, supported by the platform’s associated nonprofit foundation, is to act as a payments mechanism for people around the world with limited access to traditional financial institutions. The network allows users to interchangeably send each other digital currencies like Bitcoin or its own eponymous coin and physical currencies like the U.S. dollar or Europrean euro. Fortune called it “a sort of all-inclusive online money exchange.”

Stellar’s own currency is primarily doled out through social media, with users getting free coins just for signing up online and learning about how it works. However, this distribution system did create some problems: people used Amazon’s Mechanical Turk human labor marketplace to pay workers tiny amount of money to sign up for Stellar and then turn over their free coins. —A.S.

Titcoin

It’s the rule 34 of digital money: If there’s a cryptocurrency out there, there’s probably a porn version of it. Enter Titcoin, the Bitcoin alternative that’s intended exclusively for XXX producers and consumers. With its tongue-in-cheek name and naked lady logo, Titcoin is about as subtle as a Mack truck. But it has the advantage of being more efficient and discreet than traditional forms of payment. Because Titcoin transactions won’t show up on a credit card bill, you don’t need to worry about a snooping significant other seeing them. —E.J. Dickson

[Image: titcoin.jpg]

Unobtanium

Unobtanium is playing the long game.

Think of Unobtanium as the opposite of Infinitecoin, which deliberately aims to produce a glut of its currency. There are currently 193,000 unobtainiums in existence, and by design, it will max out at 250,000. But as it grows, it’s exponentially more difficult to mine new ones. According to the coin’s community manager, who mysteriously goes by FallingKnife, it’ll take about 300 more years before Unobtanium is mined out. Early reports indicate it’s working: In the past nine months of its year-long existence, Unobtanium’s been remarkably stable. Maybe we’ll look back fondly on it 300 years from now. —K.C.

Viacoin

A fork of Bitcoin—surprise!—Viacoin promises that it’s the “future of cryptocurrency.” They all promise that, of course, but at least Viacoin is trying a few new ideas. With the hiring of Bitcoin Core developer Peter Todd in July, Viacoin gained access to a couple of his technologies that operate differently than the standard Bitcoin protocol.

Viacoin uses its own protocol, called ClearingHouse, which the company says “allows the building of fully decentralized exchanges, issuing of new currencies, asset tracking, betting, digital voting, reputation management and even form the basis of fully decentralized market places.”

Todd has clout in the cryptocurrency world, so this may be bigger than just another altcoin, especially given his big ideas. But given the complexity of what the company is trying to do, the Viacoin team still has its work cut out for it. —Andrew Couts

[Image: viacoin.jpg]

Worldcoin

Worldcoin encourages users to “think outside the banks”—a call to action that virtually anyone in the virtual currency world can get behind. Unfortunately for the Worldcoin folks, few have become enlightened to the ways of Worldcoin, with a mildly active forum and an almost completely inactive Reddit community.

Another derivative of Bitcoin, Worldcoin is essentially like any other generic altcoin out there. If the coin survives until long enough—not saying it won’t—a total of 265 million coins will ultimately be created. That’s hundreds of millions more than Bitcoin’s 21 million mining total, which means it’s even less likely that a Worldcoin stash will ever be worth much of anything. Of course, it could suddenly see an uptick in popularity. But as you can see, there are a lot of other options to choose from. —A.C.

XCurrency

Built on Blockchain 2.0 technologies, XCurrency’s big selling point is privacy and security. The company launched this year a “trustless mesh network,” which basically means it’s harder for people to figure out who paid who using the XCurrency application because the information is split into parts and all mixed up.

XCurrency developers have big plans for all types of other applications that they say will allow for things like private Web browsing, encrypted chat apps, and other security tools that make use of a mesh network like XCurrency’s.

While it’s hard to say whether the XCurrency team’s ideas will all come to fruition, the company is one of many in the cryptocurrency world trying to find something more to do with this technology than simply buy stuff. —A.C.

YBCoin

Unlike a lot of coins out there, YBCoin is actually worth an amount of money you could hold in your hand: $1.04. Also unlike many other coins out there, YBCoin is specifically targeted for the Chinese market, the central hub of cryptocurrency mining if there ever was one. Notably, the Chinese market has largely banned Bitcoin.

The YBCoin team built this virtual currency on the source code of its predecessor, YACoin, but reduced the number of total coins that will be created to 200 million. The team has published their white paper in English. But beyond that, there is not a lot of information about YBCoin available for English-only readers. Of course, you can always just watch the charts. —A.C.

Zetacoin

Earlier this year, Zetacoin became the coin to watch. A developer known as “Konen” promised that a “major” third-party had big plans to invest in Zetacoin (basically just a Bitcoin clone) and deploy it in East Africa. The rumors about this investment got the cryptocurrency world into a greedy froth, which boosted the price of Zetacoin some 500 percent—meaning anyone who’d invested in Zetacoin early was enjoying returns beyond their wildest dreams.

Of course, all that third-party investment stuff was a lie. We’ll let the Zetacoin community do the talking: “A game changing announcement, by the leader of ZBAD and an individual known as ‘Konen,’ promised to take Zetacoin to the people of East Africa. Excitement brewed, prices soared and the community grew. But months of promised deadlines passed and warnings from outside the community were ever present. Based on information ‘Konen’ and the leaders of the Zetacoin community claimed to have had, many people believed and helped promote what we all now know to have been nothing but lies.”

The remaining Zetacoin crew promises to recover from the pump-and-dump scheme and move on to a “fresh start” with a “better and stronger team.” So, uh, good luck with that. —A.C.
- See more at: http://kernelmag.dailydot.com/issue-sect...iMajL.dpuf

Read More Read More, Posted by: Rufus
Bitcoin, Stellar and Sidechains Feature at Future of Money Summit

Daniel Cawrey (@danielcawrey) | Published on December 3, 2014 at 11:04 BST
[Image: futureofmoneyfeat1-600x370.jpg]
The fifth annual Future of Money & Technology Summit brought together both bitcoin believers and traditional financial industry experts at the Hotel Kabuki in San Francisco on Monday.
Organizer Brian Zisk said more than 500 people in total came to the event to learn more about how innovation, both within the bitcoin ecosystem and beyond, is changing the finance industry.
While primarily focused on traditional financial technology, the summit featured a dedicated digital currency track that saw discussion on issues as diverse as bitcoin mining centralization and sidechains – a system for experimentation within bitcoin itself.


Overall, the conference proved to be an interesting mix of traditional finance expertise and those looking to build platforms to innovate in distributed ways, with conversations that reflected the ever-evolving space of digital currencies and entrepreneurship.
Importance of emerging markets
The most popular cryptocurrency-related session was one simply titled 'Bitcoin'.
The panelists taking part were Boost VC’s Adam Draper, 500 Startups’ Sean Percival, dogecoinfounder Jackson Palmer and BitPay Chief Commercial Officer Sonny Singh. Moderating was Mark Rogowsky, a tech journalist at Forbes.
Draper conceded that bitcoin would need emerging markets to really take off, because the US doesn’t need digital currency innovation because of its strong banking system.
Draper told the audience:
Quote:
“The US is the worst place for bitcoin to take off. But that is not true in all parts of the world.”
He noted that places where bank account adoption is only 10% but cellphone adoption is 90% are ripe for cryptocurrency adoption.
Even so, it’s just not that easy to get bitcoin in those places yet, as BitPay’s Singh pointed out. “It’s got to be easier to use bitcoin, and for people to get bitcoin. It’s much harder in developing countries to get bitcoin.”
Palmer, whose dogecoin alternative cryptocurrency creation is nearing its one-year milestone, believes younger generations will pick up on digital money with relative ease.
“I think it’s about changing the mindshare. The older generation is attached to hard, cold cash,” Palmer said.
Focus on the blockchain and Stellar
Two other panels that featured interesting digital currency discussions focused on blockchain technology and Stellar – a virtual currency forked from Ripple Labs.
The blockchain panel placed an emphasis on the further consolidation of the mining industry.
Bitcoin core developer and Blockstream co-founder Gregory Maxwell conceded that the consolidation of bitcoin mining is simply part of the economics of cryptocurrencies. ”There are some advantages of scale in mining,” he told the audience.
An entire panel was dedicated to Stellar, launched this summer and still just three months old.
Moderated by investor Dan Rosen, the panelists were Stripe CTO Greg Brockman and Stellar founders Joyce Kim and Jed McCaleb.
Brockman, whose company Stripe invested $3m in Stellar, believes bitcoin has some issues that need to be worked out, something he outlined earlier this year on his company’s official blog.
“I think there’s a lot of good stuff in the bitcoin community, [but] I think there are some shortcomings,” he told the audience.
The future of money
The conference’s one-day schedule concluded with a panel that featured investors talking about where monetary technology might be headed.

Called 'Visions of the Future of Money', the panel included investor and BitFury board member Bill Tai, Ribbit Capital’s Nick Shalek and Pantera Capital CEO Dan Morehead. John Shinal from USA Today moderated the session.

[Image: visionpanel.jpg]

(L-R) Shinal, Tai, Shalek and Morehead
Morehead, whose Pantera Capital invests solely in digital currency startups, was bullish on the concept of sidechains as a way to enable new cryptocurrency developmental projects.
Although Pantera did not invest, sidechains is a project being spearheaded by Blockstream, which recently raised $21m.
“Sidechains is one of the most important innovations in bitcoin,” Morehead said. “There’s billions of dollars in bitcoin, you can’t just throw things at the wall and hope they stick.”
While there were many portions of The Future of Money devoted solely to financial technology, the presence of a room dedicated solely to digital currencies is a sign that bitcoin is increasingly being seen as intriguing by members of the financial community, and potentially influencing the industry.
Shalek, the Ribbit Capital partner, told the audience during the closing panel:
Quote:
“Bitcoin has this promise of enabling innovation. There are already 10 million people or more using bitcoin.”

Read More Read More, Posted by: Rufus
The Ultimate List of Bitcoin and Blockchain White Papers

16 Dec 2014
By : William Mougayar


Want to (really) understand Bitcoin and the blockchain? 
Read these 30 White Papers.

Bitcoin and the blockchain are fascinating developments that are capturing the imagination of developers, entrepreneurs, investors, governments and consumers. But it’s still made-up of complex pieces.

You can be a passive or active actor in Bitcoin’s future. If you want to be passive, just wait til it develops further. But if you want to be an active actor, you need to understand as many of these pieces as possible, because each one of you is a potential developer, investor, inventor, creator or innovator in the crypto-based ecosystem that is dominated by Bitcoin and its blockchain technology.

In established markets, you need develop new products to gain market attention, and sometimes you do start with a Minimum Viable Product (MVP), and evolve from there. But when the field is uncharted, and the market is undefined, innovation needs to be manufactured by multiple visionaries. So, these visionaries write a White Paper first, (as a sort of MVP) where they describe their vision, and get feedback. Then, they embark on delivering a product later. That’s almost exactly what all Bitcoin and blockchain technology companies have done, including the original creator of Bitcoin, Satoshi Nakamoto.

I’ve been a student of Bitcoin and blockchain technologies for the past 18 months, and still read a fair share of content about it on an on-going basis, in addition to regularly interacting with some of the key innovators that are leading its development and deployment. I can’t emphasize enough that my understanding has deepened the more I read (and often re-read) several of the seminal white papers that pepper this space.

So I’ve compiled a list of the foundational papers and resources that are serving as the basis for the innovation that’s taking place in this segment. Behind each one of these papers, there is either a protocol, an idea, a platform, a product, a service, a marketplace or a dream.

Most of the Protocol related papers require a degree of technical knowledge if you’d like to fully understand them, but you don’t need to be a software developer in order to at least capture some partial understanding. The three categories are presented in descending order of technical content difficulty, so if you’d like to start less technical, start from the bottom of the list.

The Protocols

Bitcoin: A Peer-to-Peer Electronic Cash System (Satoshi Nakamoto, Bitcoin’s inventor)
This is the key paper that started the whole crypto revolution. Even if you only understand 10% of it, you’ve got to read it. It’s like a rite of passage, and it will give you a context for what has happened since this paper was published in 2008.


A Next Generation Smart Contract & Decentralized Application Platform (Vitalik Buterin, Ethereum’s creator)
Arguably, this might be the second most important paper, after Nakamoto’s. Unsatisfied with the original Bitcoin premise, Vitalik Buterin set the bar higher on what cryptography can do to computer science and decentralized applications, and he painted a compelling vision in this seminal paper. Think of Ethereum as a new computing environment with its own stack that’s been optimized for decentralized apps, and you’ll appreciate the future significance of this paper.


Enabling Blockchain Innovations with Pegged Sidechains (Blockstream team)
There are high expectations around sidechains, another key concept that’s supposed to drive innovation around the Bitcoin blockchain, without disturbing its core principles. This paper was authored by nine notable authors and proposes a solution that enables bitcoins and other ledger assets to be transferred between multiple blockchains. Also, see this “Simple Explanation of Bitcoin Sidechains for a less technical interpretation to the same paper.


Ethereum: A Secure Decentralized Generalized Transaction Ledger (Gavin Wood, Ethereum’s co-founder)
A technical paper that takes deeper dives at describing how Ethereum will build and deliver their technology.


The Counterparty Platform (Counterparty)
Counterparty is a platform that’s focused on the financial aspects of a peer-to-peer financial platform that extends Bitcoin’s functionality.


Mastercoin (Mastercoin)
Mastercoin is a protocol layer on top of the Bitcoin network that enables anyone to build their own currency.


Ripple (Ripple Labs)
Ripple is a payment protocol that supports fiat and cryptocurrency, and allows transactions to be settled without the need for a centralized clearing house.


NXT (NXT)
NXT is attempting to build an ecosystem based on its own blockchain, and focused on trustless financial transactions. It includes its own (computing) client and online wallets.


Tendermint (Jae Kwon)
Tendermint is a decentralized  consensus engine that runs on its own blockchain.


Pebble (Pebble)
Pebble is an open source project to launch a  decentralized cryptocurrency that can support economies for microtransactions and up.


Permacoin: Repurposing Bitcoin Work for Data Preservation (Miller, Juels, Shi, Parno, Katz) A proposal that repurposes Bitcoin mining resources to achieve distributed storage of archival data.

Colored Coins: here are 2 papers to understand this concept, Overview of Colored Coins (Meni Rosenfeld, 2012), and this one.

Decentralized Apps and Middlelayers (sometimes including an underlying protocol)

Assembly Coins Whitepaper (Andrew Barisser)

Codius Architecture (Codius)

La’Zooz open source collaborative transportation ecosystem (La’Zooz)

@@@@@@@@@@@@@@@@@@@@@@@@@@@@@@@@@@@@@@@@@@@@@@@@@@@@@@
Stellar (Stellar)
@@@@@@@@@@@@@@@@@@@@@@@@@@@@@@@@@@@@@@@@@@@@@@@@@@@@@@

Factom Project  (Factom)

Making Sense of the Whole Thing

The Blockchain Application Stack (Joel Monegro)

The General Theory of Decentralized Applications, DApps (David Johnston)

The Value of App Coins (David Johnston)

The dawn of trustworthy computing (Nick Szabo)

The Second Wave of Blockchain Innovation (Joel Dietz)

An architecture for the Internet of Money (Meher Roy)

Crowdsale Best Practices (David Johnston)

Some Interesting Add-Ons

A Note on Cryptocurrency Stabilisation: Seigniorage Shares (Robert Sams)

Bitmarkets: Private decentralized marketplaces (Bitmarkets)

The Decerver and Thelonious (Eris Industries)

And to end this list, two books. The Anatomy of a Money-Like Informational Commodity: A Study of Bitcoin, by Tim Swanson. And the much anticipated book authored by Andreas Antonopoulos, due to be released on December 27, 2014. It is oriented for the technical reader, but some of its chapters are approachable for business readers:
Mastering Bitcoin: Unlocking Digital Cryptocurrencies (Andreas Antonopoulos). Here’s a free excerpt from Chapter 1.


One more thing. If you’d like to track Bitcoin developments on an on-going basis, you can also follow my Bitcoin collection on Feedly. It includes 55 sources that regularly cover this topic, and it is already being followed by about 4,300 users. Just “add” the collection to your Feedly account with one-click, and it’s yours.

I will continue updating this page with new essentials, as they get published.
Happy reading. The holidays are around the corner!

Read More Read More, Posted by: Stroopy
Breaking the cryptocurrency stigma: Epiphyte

28 October 2014

[Image: dec6cb3b-37b1-4a1a-a493-9b4f361c16d2.jpg]
"It's a sensitive space, people still associate it with criminality and dubious activities - like the internet in the early days"

When Finextra wrote a story about Epiphyte winning the Innotribe startup award - it was received with scepticism by some of our readers. When you're talking about cryptocurrencies and banks - you're bound to get people nervous.

In the shadow of last year's Mt. Gox exchange shutdown and the raid of online drugs haven, Silk Road, bitcoin has had a difficult time keeping its reputation clean and an even harder time getting banks interested in its potential.

I spoke to Edan Yago, CEO of Epiphyte about how his startup and software could change the way banks and their customers do business forever.

In short - Epiphyte started two years ago, as a technology that allows financial institutions to talk to crypto-financial networks. Using Epiphyte's cBridge technology, banks and institutions are able to integrate with cryptocurrencies over traditional protocols like Swift.

Despite the fearmongering around cryptocurrencies - authentication, KYC, security and risk are priorities for Epiphyte.

'The myth is that these transactions are anonymous, in actuality they are the most transparent and tracked transactions in the world'

says Edan. He goes on to explain the distributed ledger and how it maintains a complete history of every transaction performed and also how an individual, after being KYC'ed by a bank, can be tied to a transaction.

Epiphyte isn't just about bitcoin. It's about the power of the distributed ledger.

'We do this across all the different protocols, we don't know which protocol is going to win, or necessarily if one will. There's bitcoin, there's ripple, there's stellar, there's hyperledger - we integrate with all of them and do the heavy lifting for the backend.'

The benefits to banks is the speed of the transaction. It'll be close to real time and, crucially, it will work within the existing regulatory framework making it a far more attractive proposition to banks who must maintain a sensible relationship with the regulators.

The software generates sales contracts and protects the buyer from counterparty risk by providing payment upon successful completion of the trade. All of this takes place without the banks needing to be in possession of any cryptocurrency.

I sensed that aside from getting institutions to see the benefits of their technology, Epiphyte also had to battle against cryptocurrencies' image problem.

'The stigma against cryptocurrencies is something you still feel but it's not something we are necessarily plagued by - like the internet, initially it's new and scary - but kinks get worked out and over time people will realise the benefits to it and they'll seal up the vulnerabilities'

'There's no way you could utilise our technology for dark-web type activities - it is unquestionably the most traceable, most transparent financial system that has ever been devised,' adds Edan.

'The banks aren't built for it, it's not yet a core competency to know how to engage with smaller companies and certainly not innovative technologies'

'But with that said, we've turned it into a core competency of ours - we've spent a lot of time understanding what their needs, concerns and language was,' adds Edan.

What you might not know about Epiphyte is that it started life as a consultancy, mingling with banks, building relationships and learning how they work to be better poised when launching a product.

Now, Epiphyte is a team of eight. Edan, who previously spearheaded the virtual currency iniatives at Zynga, has recruited ex-Zynga product manager and current CTO of Dating Ring Katie Bambino to assist in development.

They've signed tier 1 banks (who still can't be named) and smaller, more innovative banks too with their sights set on further funding to go fully live.
With time and knowledge, the stigma surrounding cryptocurrencies is diminishing. Technologies like Epiphyte aren't just helping banks to benefit from a business opportunity, they're also enabling a cultural and mindset shift.

Read More Read More, Posted by: Stroopy
SELL WITH STELLAR, USING WOOCOMMERCE

We’re excited to announce that we’ve launched a new, freeWooCommerce Stellar Gateway extension.

There are over three million people Stellar Facebook authorisations, but very few are selling via the Stellar protocol or in the Stellar cryptocurrency.

The WooCommerce Stellar Gateway is a way for non-developers to sell with Stellar.

If you can set up WordPress and WooCommerce, you can sell with Stellar.

BE FIRST TO SELL WITH STELLAR

Stellar has only been around since July 31, 2014 and it already has a whopping 3.4 million Facebook authorisations.

There are very few merchants offering a way for these 3 millionpeople to use their stellars. You can now become one of the first.

SELL INTERNATIONALLY

While it’s still early days, the Stellar dream—of having one protocol for transacting in all currencies—is becoming a reality as more gateways add support for new currencies to the Stellar network.

You can use the WooCommerce Stellar Extension to sell digital or physical goods (depending on your ability to ship) to people internationally and they can pay using their own currency (if they have setup trust lines for that currency).

TRANSACTION FEES VIRTUALLY ZERO

Your transaction fees will also be virtually nothing as a merchant when you use the WooCommerce Stellar Extension, because each stellar transaction only burns 10 microstellars—or 0.00001 stellars. (It does this to prevent spam).

That’s certainly less than the transaction fees charged by most other payment gateways.

STELLAR DEMO VIDEO

Check out our WooCommerce Stellar Gateway video for a demonstration of how to install and use the extension.




PROSPRESS DEMO STELLAR STORE
Want to try it out? Check out our snazzy online demo store.
All proceeds from the store will be donated to the Stellar Foundation.
GITHUB PAGE
If you want to contribute to the extension, join us on Github.
Please note: this post has been updated from its original version.

Quote:
[img=63x0]https://secure.gravatar.com/avatar/d3d2f26b5d7da9603cc721e17733fec7?s=128&d=https%3A%2F%2Fprospress.com%2Fwp-content%2Fthemes%2Fbasis%2Fimages%2Fcustom-avatar.png&r=g[/img]October 27th, 2014 Kirby Prickett

Read More Read More, Posted by: Stroopy
Stellar Forks and Decides to Create a New Consensus System.

[Image: stellar-price-rise.png]

Written by: Alberto Mata 2014/12/12 4:00 PM

On December 5, Stellar Executive Director Joyce Kim disclosed news of a ledger fork related to a failure of their consensus system. The consensus system used by both Stellar and Ripple have never been used at the scale Stellar is implementing, and the system failed to reach consensus causing a fork in the ledger. Stellar has about 140,000 active accounts per week, and over 3 million total accounts. The maximum number of total accounts the Stellar consensus mechanism has previously supported is 2.88 million.

“On Tuesday night, the nodes on the network began to disagree and caused a fork of the ledger. The majority of the network was on ledger chain A. At some point, the network decided to switch to ledger chain B…We are completing our review of the impact, but early reports indicate that the impact was not major.”
— Stellar Executive Director Joyce Kim

A few hours of transactions rolled back on chain A, and Stellar tried replaying them on chain B, but some transactions were not able to be replayed. Stellar is reaching out and offering assistance to gateways and exchanges that may have been affected by the consensus failure.
“We are still investigating the triggers for this consensus failure, but believe it is caused by the innate weaknesses of the Ripple/Stellar consensus system outlined above compounded by the number of accounts in the network. “
— Stellar Executive Director Joyce Kim

The risk of failure was predicted by Head of Stanford’s Secure Computing Group Professor David Mazières, and Stellar set out to create a new consensus mechanism. On September 18, a roadmap on Stellar’s github listed creating a new consensus algorithm as a milestone set for November 2014. The roadmap has since been updated, and the new consensus algorithm is currently being built. Stellar has mitigated the risk of ledger forks in the future by running only one validating node until the new consensus system is built.
[img=300x0]http://bitcoinist.net/wp-content/uploads/2014/12/Screen-Shot-2014-12-11-at-4.34.27-PM-300x118.png[/img]
Early Stellar roadmap outlines building new consensus algorithm by November.

“Given this real world occurrence of the consensus system’s previously theoretical risks, it is clear that we must prioritize the development of the new Stellar consensus algorithm and move away from the legacy consensus system to increase safety. The new Stellar consensus algorithm will not only be provably correct but also prioritize safety and fault tolerance over guaranteed termination. We believe this is a better choice since it is preferable for the system to pause than to enter divergent and contradictory states. ” 
— Stellar Executive Director Joyce Kim

Stellar is a gateway based network and a hard fork of Ripple that was launched in August 2014. Like Ripple, the Stellar protocol enables transactions in any currency pair for which gateways and market makers exist. For example, Alice can send 10 bitcoins to a gateway, the gateway will issue Alice a 10 bitcoin IOU on Stellar, and Alice can then choose to send 10 bitcoins worth of US dollars to Bob. Stellar will connect Alice to a market maker that accepts bitcoins and sells dollars, automatically execute the transaction, and deliver 10 bitcoins worth of USD to Bob. The effect is that Alice and Bob can use Stellar to instantly and globally transact in any currency pair.
What do you think about Stellar’s moves?


Read More Read More, Posted by: Stroopy
"Stellar" New Crypto Currency August 27 2014




Found Video

Read More Read More, Posted by: Stroopy
Multigateway: The First Decentralized Cryptocurrency Exchange

Nov 24, 2014 10:56 AM by Juan Galt


[Image: multigateway-the-first-decentralized-cry...change.png]
Disclosure: I own stake in a variety of the assets related to Supernet projects.



Soft launch of the Supernet v0 wallet was announced November 14th by James on the Slack channels with a cheerful:

Quote:“Supernet v0 launched yesterday, took everyone by surprise. gotta love decentralization :)” -JL777
Users of the Supernet may now withdraw Bitcoin, Litecoin, Peercoin and NXT directly out to Visa and Mastercards around the globe! Payouts are done in US dollars and local banks set fiat exchange rate. This is a server provided byCoinomat.


Users can also be relieved to trade on the first live decentralized crypto currency exchange!

The software is available for download at theMultigateway website and functions similar to the NXT wallet client, with the exception of some Supernet magic.

The Multigateway (MGW) is not only safer, but it may also be the cheapest. It charges no deposit fees and the withdrawal fees equal the minimum transaction fee per coin. Currently, users must convert their coin manually, be it Blackcoin or Dogecoin to NXT, in order to transfer to another crypto coin. But will soon change with InstantDEX which expected to allow 3 second or less conversions, programmable trade bots and much more!

Investors can invest in MGW, but the real ROI is expected from InstantDEX which will have competitive fee and leverage MGW’s minimal fees and tech.

Under the hood

MGW works by creating assets on top of NXT’s long standing decentralized asset exchange.

Coin assets such as mgwBTC are traded for deposits of Bitcoin, Blackcoin, Viacoin, etc. at a ratio of 1 to 1. MGW is a full reserve, decentralized exchange with live proof of solvency!

Deposited crypto currencies are stored on server clusters of 3. These are secured through multisignature transactions, where 2 out of 3 servers must agree for withdraws to occur.

Each server is monitored and secured by an independent party, partnered up with the Supernet.

The number of Multisignature parties is not limited by MGW, but by the the Bitcoin protocol.

According to JL777, core Bitcoin devs have coded multisignature transactions beyond m of 3 as non standard. This means miners and nodes need to compile these manually or enable this feature on their own accord, which most don’t. It is not enabled by default. This may be driven by concerns of blockchain bloating.

Because of this, it takes a long time for greater multisig transactions to be confirmed by the BTC network, which would not allow MGW to operate properly and would be the end of InstantDEX. If this was to change or if coins that have solved this problem were to join the MGW then further distributed clusters could be set up, and the possible combinations are stellar.

Though going from 1 out of 1 one key or a central trusted party, to 2 out of 3 may seem like not that much of a change, it is actually massive. Its the difference between a central point of failure and a network. It is perhaps the simplest differentiation between a centralized and decentralized model. However, collusion among parties is still a concern, which is why reputation may be essential to this experiment of multi signatures.

With that in mind, I will highlight the core parties that have stepped up to secure the core MGW cluster as of time of publishing.

MGW clusters

There are two MGW clusters. MGW#0 controls BTC, LTC, DRK, BTCD and VRC coins. This is the main Supernet cluster and is secured by Coinomat, MyNXT.info team and Frohike.

Coinomat is an automatic crypto coin and fiat exchange that serves as a gateway from Visa and Mastercard to crypto currencies. It also provides instant conversions among various crypto currencies such as Bitcoin, Litecoin and Peercoin.

The second key holder of MGW#0 is MyNXT.info “a group of 15 people between investors, advisors, developers and designers,” says abuelau, a Sr. Member of the NXT community, early adopter, and member of the team. MyNXT.info is an NXT blockchain explorermobile wallet and web advertizment agency, fully powered by NXT.
MyNXT were motivated to join “after we saw the hacks on MtGox and Bter,” said abuelau, adding: “Every time I need to exchange NXT or other coins I am nervous with the possibility of losing my coins while they are at the exchange, so anything that helps make it more secure is welcome.”


Frohike is “a German unix server administrator. He specializes in server hardening and security. He’s been involved since June in the team… working with James and recently he joined SuperNET as server admin for the forum and websites,” said VanBreuk, Hero Member of the NXT community and general manager of the MGW development process.

I reached out to Frohike for comment but he did not reply but publishing time.

Unlike cluster number two, live proof of solvency for MGW#0 is not active yet, since they are migrating coins and assets to production servers. The website and api for this monitoring is expected to be available, soon according to VanBreuk.

The second cluster called MGW#2 is responsible for controlling Blackcoin, Viacoin and Dogecoin!

This one is secured by Cobaltsky, Hero Member of the NXT community, artist and developer. Along side Marcus03 Sr. Member who is also developing an NXT mobile wallet and Jeffdiesel, also a Hero Member.

Live proof of solvency for MGW#1 can be currently found here.

For more information on the progress of MGW clusters, follow the main NXT thread.

Decentralizing everything

Anyone can set up their own MGW cluster, as you would expect from a community focused on decentralization. However, for the time being, interested parties must reach out to JL777 or other core Supernet developers to be given access to the private repo. This might change in the future after the main development is finished.

Coin developers, businesses and individuals interested in joining the Supernet are welcome to reach out at the Supernet forums publicly or contact JL777 directly through a private message.

More blockchain technologies wanted!

The Supernet is putting out a call for innovative and active crypto coin communities. Its very difficult to be noticed and compete as a crypto coin these days; there’s over 500 coins on coinmarketcap and great coins may be getting lost among the masses.

The Supernet has some general standards by which to review coins. A solid answer to the question “What value can your crypto coin tech bring to customers?” may be all you need to join.

NXT Phasing

Keep in mind, however, that MGW is still in its beta stages. Compared to 1 out of 1 cold storage solutions for the average exchanges, or deposit accounts for bank like crypto coin organizations, MGW is many times more decentralized, both for its trading platform and its distributed multisignature servers.

However, until NXT releases its “Phased transactoins” feature, the NXT asset side of things will not support multisignature. This means that the coin assets that mirror each crypto coin are controlled manually and could be exploited by dumping them on the market.

MGW beta will end when phasing is live on the NXT network. Until than, each MGW key holder is responsible for a third of a hot wallet with relevant coin assets. The amount of coin assets on the hot wallet are the average expected volume per coin.

The remaining ‘unbound’ assets, which are not expected to be traded for the crypto currencies yet are currently being held in escrow by anon136’s renown escrow services.

Its time to take distributed finance to the next level, and the Supernet’s Multigateway has just raised the bar.

Read More Read More, Posted by: Stroopy
Paypal unit to 'embrace' Bitcoin crypto-currency
  • 9 September 2014
[Image: _77470961_023717911-1.jpg]
Braintree's work on bitcoins will make it easier for online retailers to take payments made in the virtual currency

Paypal subsidiary Braintree has started working on ways to process payments using the Bitcoin virtual currency.

The work is due to be completed within "the coming months", said Braintree boss Bill Ready in a conference speech.

It means that firms such as Uber and Airbnb, which use Braintree as a payment processor, will also be able to accept bitcoins.

So far, there is no indication that bitcoins will be accepted directly by Paypal and eBay.

Price crash

During his speech at the Techcrunch Disrupt conference in San Francisco, Mr Ready said Braintree's work should be seen as its "first foray" into using bitcoins.

Braintree processes payments on mobiles and websites and said it would work with Bitcoin payments site Coinbase to process transactions carried out with the crypto-currency.

Bitcoins are a form of money that use unique numbers instead of notes and coins as a store of monetary value. In November 2013, the value of one bitcoin hit $1,000 (£620) but it has fallen sharply and now each one is worth about $470 (£290).

Braintree's work meant that tens of thousands of merchants would soon be able to accept the digital cash too, said Mr Ready.

Gil Luria, an analyst at Wedbush Securities, told Bloomberg that Braintree's announcement was a "very substantial development". He added that it might also speed up adoption by Paypal which would mean "millions of retailers will de facto be accepting bitcoin overnight".

Paypal spent about $800m (£500m) in September 2013 to buy Braintree, largely because of its role in mobile payment systems.

Braintree's announcement comes as Wired reports on an attempt to unmask Bitcoin creator Satoshi Nakamoto. The tech news site said a hacker has claimed to have take control of an email account known to be used by the reclusive inventor who has never revealed their true identity.

The hacker said they would supply information that would lead to the identification of Mr Nakamoto if they were paid 25 bitcoins (£7,300). Wired was sceptical of the claim to have information about Mr Nakamoto as little evidence was provided by the hacker for his assertion.

An earlier attempt to unmask Mr Nakamoto was made by Newsweek which claimed an American called Dorian Prentice Nakamoto was the elusive inventor. He denied being the creator and interest in the claim led to the real Satoshi Nakamoto issuing a short statement refuting any link with Dorian Nakamoto.

Read More Read More, Posted by: Stroopy
Portal HOME Forum FORUMBLOG MARKET + JOBS | Search Search | Forum Statistic Community >
Help Help >
Join Stellar Slack Channel  https://www.facebook.com/stellarfoundation  https://twitter.com/stellarorg  Youtube Stellar.org Foundation URL  Stellar.org Foundation
myStellar.org

I am super Awesome Announcement, with links and can be used to announce important things. Check here

UserCP  ModCP  AdminCP  Logout  Friends  New Posts

myStellar.org  Cryptocurrency WORLD  Cryptocurrencies News  Some Crypto Quibbles with Threadneedle Street  Edit Post

Delete Post
Delete? To delete this post, check the checkbox to the left and then click the button to the right.
Note: If this post is the first post in a thread deleting it will result in deletion of the whole thread. Delete Now

Edit This Post
Username: julian [change user]
Subject
Some Crypto Quibbles with Threadneedle Street
Post Icon:no icon Question   23 help   22 photo   21 ghost2   20 think   19 shock1   18 merana   17 cicisad   16 sighhh   15 kesal   14 banghead   13 angry2   12 demo2  11 demo   10 confuse   09 butt   08 search   07 nonono   06 go   05 like   04 hehe3   03 funny   02 bug   01 information
Your Message:
Smilies
:) Wink Cool
Big Grin Tongue Rolleyes
Shy Sad Sorry
Angel Angry Blush
Confused UP UP Exclamation
Cicilove Kesal2 Garukpantat
Sleepy What Cry
[get more]
Bold
Italic
Underline
Strikethrough
Align left
Center
Align right
Justify
Font Name
Font Size
Font Color
Remove Formatting
Insert a horizontal rule
Insert an image
Insert an email
Insert a link
Unlink
Insert a video
Insert an emoticon
Bullet list
Numbered list
Insert a Quote
Maximize
View source

SEPTEMBER 16, 2014

Last week the Bank of England published its Quarterly Bulletin, which contained two detailed papers on digital currencies. The Bank deserves credit for writing such a thoughtful review of this space, which was clearly the product of thorough and open-minded research.

One of the two papers titled Innovations in payment technologies and the emergence of digital currencies is noteworthy for pointing out the potential applications of decentralised crypto ledger systems for financial services. Given that I’m co-founder of a new company devoted to such applications, I’m delighted to see that a G10 central bank has the foresight to see this. There will be many points of intersection between private sector innovation here and the regulatory mandate of a central bank.

But you, my readers, are interested in the cutting edge of cryptonomics thinking, so I want to instead discuss the Bank’s second paper, The economics of digital currencies, because I take issue with parts of its analysis. In brief, I believe that the authors have incorrectly analysed the cost structure of digital currency systems and, as a result, incorrectly generalise some problems faced by digital currencies like Bitcoin to digital currencies in general.

The Costs of Mining and Transaction Fees
Ok, first a quick review of mining. We’ll assume the Bitcoin protocol as our template. The micro economics of mining are actually quite simple. To win the mining award (currently, a 25 bitcoin “coinbase” award + block’s TX fees), you have to solve a hash-based proof-of-work problem, which involves using a machine to compute the double sha256 hash of a block of TX over and over until you hit a value below a certain target, which is defined by the protocol’s current difficulty. Difficulty resets every 2016 blocks, increasing if the average duration between solved blocks is below 10 minutes, decreasing if the average duration is above 10 minutes. The scheme insures that average time between blocks approximates 10 minutes.
Now, the probability that a given hash “solves” the problem is precisely defined by difficulty. So, mining profitability is a function these four variables:

  • Current difficulty
  • The efficiency of mining (converting electricity into hashes)
  • The price of bitcoin (market value of mining award)
  • The price of electricity

The efficiency of mining really boils down to this simple ratio: GHs/kWh. How many Gigahashes per second can your hardware compute for a given unit of electricity (including electricity consumed in cooling the machines, etc).
And the dynamic reset of difficulty basically ensures that only those running machines with the highest GHs/kWh ratio and paying the lowest cost per kWh will mine in the long run, as everyone else will be mining unprofitably and drop out of the network. It’s almost a textbook model of perfect competition.
Now, what I think often gets missed here is that the costs of mining bitcoin are entirely a function of the price of bitcoin. If the price of bitcoin goes up, mining becomes profitable and more nodes join the network, which drives up difficulty making mining no longer profitable again. If the price goes down, mining becomes unprofitable at current difficulty, more nodes drop off the network, which drives difficulty down, making mining profitable again.
This dynamic is obscured by the fact that investments in mining hardware have driven GHs/kWh up relentlessly over the last few years, so difficulty rarely declines with bitcoin price, but the dynamic still applies: the price of bitcoin determines the cost of mining.
Failure to appreciate this fact leads to arguments like this one in the BoE paper:


Quote:[color=rgba(0, 0, 0, 0.4)]Moreover, to the extent that miners’ expected marginal revenue exceeds their expected marginal costs, miners’ costs are likely to increase over time. This should occur even if no additional people start to mine and independently from any increase in the number of transactions per block. This is because distributed systems involve a negative externality that causes overinvestment in computer hardware. The negative externality emerges because the expected marginal revenue of individual miners is increasing in the amount of computing power they personally deploy, but the difficulty of the problem they must each solve (and hence their marginal cost) is increasing in the total amount of computing power across the entire network. Individual miners do not take into account the negative effect on other miners of their investment in computing resources. Economic theory would therefore suggest that in equilibrium, all miners inefficiently overinvest in hardware but receive the same revenue as they would have without the extra investment.[/color]


Can you spot the error? It’s right there in the first sentence: “to the extent that miners’ expected marginal revenue exceeds their expected marginal costs, miners’ costs are likely to increase over time.” This is a fallacy of composition.
What we really have here is the familiar pattern of Knightian uncertainty faced by entrepreneurs. The miner must make a capital outlay in advance for his mining equipment (to get an edge over the competition with new kit delivering a higher GHs/kWh ratio), but he doesn’t know what the price of bitcoin will be once he starts winning blocks, nor does he know what the difficulty will be, which will be a function of Bitcoin price and the capital investment of his competitors.
Boom, bust.. it’s all the same, the fixed costs of mining hardware are internalised by the miner, those costs are not an externality as the author’s argue. The cost of mining will be dictated by the price of bitcoin, that is, the market value of the mining award, and difficulty reset enforces the long-run equilibrium condition whereby hashing costs = market value of mining award. Even changes in the variable costs of mining (the price of a kWh, basically), don’t change the long-run costs of mining, as an increase in electricity prices ceteris paribus should cause difficulty to decline and a decrease should cause difficulty to increase. The cost of mining a block will converge to the market value of the mining award.
I’m not an economist, but back in January I suspected that the economics profession would have trouble with this implication of the Bitcoin protocol, when I wrote:


Quote:[color=rgba(0, 0, 0, 0.4)]So the exchange value of the mining award determines the marginal costs rather than the other way round. An economist might find that pretty weird, but that is how it works.[/color]


And that is how it works. Economists are used to thinking in terms of prices (ephemeral market stuff) being a function of costs (stuff that is “material” and “real”, like a production function). But the way the Bitcoin protocol works, the hashing costs of the network are a function of the mining award’s market value. I’m not saying it’s a nice feature of the protocol. But it is what it is.
And that’s why all that investment in mining equipment is not a negative externality, at least from the perspective of mining costs.
But there is different way in which capital investment in mining equipment creates an externality, a way that the authors did not address.



Mining Centralisation
If there is a negative externality to the relentless quest to make mining a positive expected value lottery by investing in new gear that increases GHs/kWh, it’s that thenumber of mining nodes decreases as a result of this process. Mining becomes concentrated in fewer and fewer hands. To run a profitable mining operation, one must run machines with an above average GHs/kWh and below average electricity cost. This is specialised hardware with limited production runs and requiring a non-trivial capital outlay.
A network made up of a few large mining nodes is basically a centralised system with none of the benefits centralisation might bring. What Satoshi envisioned was a one-cpu-one-vote distributed system, people mining on commodity CPU or GPU hardware. That’s not what has evolved, and this is a serious problem for Bitcoin and other digital currencies with protocols designed along a similar pattern.
It might be tempting to think that the amortised cost of that hardware somehow gets baked into the cost of mining the network, as the author’s of the BoE paper do, but those costs are only faced by the miner. It may turn out that the ROI of the latest 28nm mining rigs is negative at current prices. Too bad for the miner who purchased it, but he’ll still mine if the variable costs (the electric bill) are less than the expected mining award. The market value of the hardware itself will decline to the point where the ROI is no longer negative.
And this Knightian boom/bust dynamic raises some questions about the future of mining investment. R&D in specialised mining gear can really go one of two ways. The first scenario is that there will continue to be an edge in capital investment in improving GHs/kWh, in which case capital investment in mining will continue to concentrate mining in few hands, a “bad” outcome.
The other scenario is that the gains from further optimisation’s reach a stage where they are too costly to be worth it and R&D switches to commoditizing the currently most efficient designs, in which case the centralising effects of mining investment go into reverse, a “good” outcome. Whichever way it goes, it is still the case that the mining costs of the network are determined by the market value of the mining award. That’s equilibrium.
So, if there is a negative externality inherent in Bitcoin mining, it is the negative externality of centralisation not of costs.



On the sustainability of low transaction fees
I want to focus on another dimension to this mining cost story. So far we have focused on the role that miners play in hashing blocks. But miners actually do two things: in addition to hashing blocks, they also perform transaction verification. The author’s of the BoE paper seem to conflate the two processes:


Quote:[color=rgba(0, 0, 0, 0.4)]Low transaction fees for digital currency payments are largely driven by a subsidy that is paid to transaction verifiers (miners) in the form of new currency. The size of this subsidy depends not only on the current price of the digital currency, but also on miners’ beliefs about the future price of the digital currency. Together with the greater competition between miners than exists within centralised payment systems, this extra revenue allows miners to accept transaction fees that are considerably below the expected marginal cost of successfully verifying a block of transactions.[/color]


It’s that last sentence I take issue with. The “marginal cost of successfully verifying a block of transactions” is the cost of running the scripts on each TX in the block and verifying the digital signatures. The computational costs here are tiny compared to the cost of hashing the block, which plays no role in TX verification whatsoever. Hashing is there to raise the cost of a Sybil attack, nothing more.
What’s confusing about cryptocurrency is that there are these two different costs, hashing and verification, and two different sources of paying for them: seigniorage (the coinbase award) and TX fees. How the pair of costs and revenues match up is a protocol design consideration.
Costs
RevenueProof-of-Work (SHA256 hash problem)
Coinbase (25 bitcoins)
Transaction verification
Transaction fees

In the case of Bitcoin, a miner has no control over the size of the coinbase award, but he does control which TX’s go into the block he’s currently hashing. So basic economic theory dictates that a miner will include a transaction if and only if the expected value of the TX’s fee is greater than his marginal cost of verifying that transaction. The costs due to proof-of-work do not come into the decision at all.
It makes sense to think of proof-of-work and TX verification as two separate subsystems with their own respective sources of financing: proof-of-work financed by coinbase and transaction verification financed by transaction fees. A digital currency protocol could follow this pattern and some do (Ethereum, for example). Bitcoin, however, is different. Its protocol dictates that the coinbase award halves every two years and never exceeds a cumulative total of 21m coins, which means that at some point both hashing costs and verification costs must be paid out of TX fees alone.
I’ve pointed out before that this aspect of Bitcoin’s protocol design is self-defeating in the long run. The market for media of exchange will gravitate towards those systems with the lowest transaction costs, and in the case of proof-of-work digital currencies, that means those protocols that forever subsidise hashing costs with the coin’s seigniorage (no supply cap). And even if that were not the case and Bitcoin remained the dominant digital currency, the protocol will need to change to incorporate a mandatory minimum fee that is sufficiently large to incentivise enough hashing to secure the network. I say “mandatory” because there is a collective action problem here in that an individual miner has no incentive to exclude a transaction whose fee exceeds his marginal verification costs, even if the aggregate effect of this rational behaviour is that the total TX fees are insufficient to support a hashing difficulty that secures the network.
Which brings me to the author’s bleak conclusion:


Quote:[color=rgba(0, 0, 0, 0.4)]The eventual supply of digital currencies is typically fixed, however, so that in the long run it will not be possible to sustain a subsidy to miners. Digital currencies with an ultimately fixed supply will then be forced to compete with other payment systems on the basis of costs. With their higher marginal costs, digital currencies will struggle to compete with centralised systems unless the number of miners falls, allowing the remaining miners to realise economies of scale. A significant risk to digital currencies’ sustained use as payment systems is therefore that they will not be able to compete on cost without degenerating — in the limiting case — to a monopoly miner, thereby defeating their original design goals and exposing them to risk of system-wide fraud.[/color]


This is only partly right, and partly right for the wrong reasons. First of all, it’s not digital currencies that face this problem, but a subset of them that, like Bitcoin, eventually require TX fees to shoulder the entire burden of incentivising proof-of-work. But that is an accidental rather than essential feature of digital currencies. So, the conclusion is only partly right because it does not apply to protocols that finance hashing costs with a perpetual coinbase award.
And right for the wrong reasons… this sentence “With their higher marginal costs, digital currencies will struggle to compete with centralised systems unless the number of miners falls, allowing the remaining miners to realise economies of scale” is wrong because the authors have conflated hashing and verification costs.
I’m not sure I get the “economies of scale” thing in transaction processing systems, but perhaps the author’s are thinking of the extreme redundancy that distributed systems require. Transaction verification in a distributed system is redundantly performed by every node, so if there are 5,000 nodes verifying nodes on the system, every TX is verified 5,000 times. Compared to a centralised system that only needs to verify a TX once, it would seem that there is a simple economy of scale linear in the number of nodes in system.
But a centralised system must do much more than verify TX, it must do lots of things that nodes on a distributed system do not have to worry about. The centralised system must protect the server(s) against error and attack, as a centralised system is by definition a system with a single point of failure. You don’t have to be a network security expert to appreciate that this is hostile and difficult technical territory. I can’t offer estimates on what these additional costs are, but what I do know is that they are a large multiple of transaction verification costs, and exponentially more complicated processes. TX verification–parsing the blockchain and doing a bunch of ECDSA signature verifications–is easy and cheap by comparison.
So it is by no means obvious that the total costs of TX verification are lower in a centralised system than in a decentralised or distributed one, and it may in fact be the other way round. But either way, we can say two things with confidence:

  • The costs of distributed TX verification are a small fraction of the fees charged by legacy payment systems. Unlike hashing, this is not a costly computation even when multiplied by a large number of verifying nodes.
  • The costs of distributed TX verification will decline over time with improvements in computational efficiency, bandwidth, etc.

But the one thing that distributed systems must do that centralised systems do not have to worry about is a mechanism for achieving consensus on the authoritative state of the ledger. For Bitcoin and many other digital currencies, this mechanism is hash-based proof-of-work, and it is crucial to appreciate the fact that verification and proof-of-work hashing are separate processes with independent cost functions.
And it may turn out that the proof-of-work blockchain isn’t the best mechanism for achieving consensus anyway. There are other decentralised consensus algorithms used in projects like Ripple, Stellar, and Hyperledger that do not rely on energy intensive hashing problems to achieve consensus.



Proof-of-Work as “manufactured scarcity”
Now that proof-of-work is liberated from the misconception that it is somehow behind TX verification we can bring some really interesting economic properties of proof-of-work into relief.
As long as there is long-term growth in demand for the coin and the coinbase award is perpetual, seigniorage should be more than sufficient to cover the costs of proof-of-work. That idea alone is, I think, really interesting. Here’s what I mean.
There is a long-standing objection to private fiat money schemes advocated by Hayekand others that goes something like this. Media of exchange are near-substitutes. (This maybe false assumption, but lets go with it and set aside the economics of network effects, etc.) And the marginal costs of producing the media are almost zero, so if a privately produced fiat money is a success, the seigniorage that accrues to the issuer will be substantial. This will invite more and more competition producing more and more media of exchange. Invoke that near-substitutes assumption and, bingo, privately produced money gets driven down to the marginal cost of its production, which is basically zero. Privately produced money is impossible because of free market competition and the the near-zero marginal cost of producing it.
In my opinion, the most important innovation of hash-based proof-of-work isn’t its solution to the problem of distributed consensus, for which there are arguably better solutions. Rather, the real innovation is the way in which this energy intensive defence against the Sybil attack makes the marginal cost of proof-of-work fiat money meaningfully non-zero, refuting the argument above. The scheme’s seigniorage doesn’t really accrue to anyone. Instead, it gets burned up in hashing blocks, where the marginal cost of producing a new set of coins equals the cost of solving the hash problem on the block that brings the new coins into existence. There is no coin “issuer”, scarcity comes into existence ex nihilo.
And this “seigniorage burning” isn’t a complete waste, as my metaphor might suggest and an economist will wrongly suspect as “inefficient”, for it has the side-effect of bootstrapping a solution to the distributed consensus problem and thereby creating a distributed payment system on which the value can be transferred (a coin can’t be scarce if it can be double spent). After all, shouldn’t seigniorage be spent on a public good? I think that this is conceptually beautiful, and it deserves to be a chapter in the micro foundations of money economics, whatever its ultimate fate ends up being. The first credible scheme for credibly rationing the supply of privately produced fiat currency.
The dominant narrative to-date has been that digital currencies like Bitcoin have value because of the utility of the distributed payments system combined with an (eventually) fixed coin supply. I think that the latter belief is unfounded. It’s not the fixed supply of a coin that makes it scarce, but rather the marginal cost of producing the coin that makes it so.
There can be demand for coin because of the expectation that it will be demanded more in future and therefore increase in price (speculative demand), and there can be demand for coin because you want to hold a coin balance to facilitate transactions (transactional demand). A coin may embody demand from both sources, but the former implies the latter or else the coin’s value rests on some sort of “greater fool” phenomena.
The entire history of monetary thinking can probably be told from the perspective of the tension between these two sources of demand, the tension created by a single object embodying the properties of both store-of-value and medium-of-exchange. The pursuit of purchasing power stability in this object isn’t some hubristic policy ideal like the taming of the business cycle or full employment. It is intrinsic to the very idea of money.
A volatile medium-of-exchange is a poor medium-of-exchange, and it is almost inconceivable that a free market would ever converge on a unit of account where the numeraire of all exchange was among the most volatile of assets. Just consider the cost of extracting relative prices in that scenario! We’d have to develop an alternative unit-of-account, which is another way of saying the market would never select such a coin as the unit-of-account in the first place. Trade requires a reliable measuring stick.
This is my favourite paragraph from the BoE paper:


Quote:[color=rgba(0, 0, 0, 0.4)]In order to address a need to respond to variation in demand, a more flexible rule would be required. For example, the growth rate of the currency supply could be adjusted to respond to transaction volumes in (close to) real time. Alternatively, a decentralised voting system could be developed. Finally, variant schemes could embrace existing monetary systems by seeking to match official broad money data or to target a fixed exchange rate, although this would require the abandonment of part of the schemes’ original ideology.[/color]

A more flexible money supply rule behind digital currencies is required. After all, even commodity money has a somewhat elastic supply function. If the price of gold hovers above the marginal cost of pulling gold out of the ground, more gold supply will hit the market. Digital currency with a deterministic money supply function is not a feature but a limitation of early, first designs. And a capped supply function like Bitcoin’s is a bug on microeconomic grounds alone, as we discussed above.
But there’s no reason to jump to the conclusion that the “original ideology” must be abandoned in order to implement certain stability schemes. For example, the coinbase award could be made a function of difficulty deflated by the change in GHs/kWh (improvements in hardware efficiency). Such a scheme would keep the coin price of a kWh roughly constant. A fixed exchange rate without abandoning the “original ideology”. Ok, it’s not a complete proposal, but you get the point. We’ve barely scratched the surface of this technology.
One of the (many) ways in which fiat money is weird and counter-intuitive is how it has value in the first place. The stock and bond markets have value because of the NPV of expected future income flows. But the aggregate value of the money stock is like value created out of nothing. It’s the value of pure liquidity.
So I want to offer a variation on the trust-less theme here: nobody can be trusted with the seigniorage generated from this value.

Post Options:  Signature: include your signature. (registered users only)
Disable Smilies: disable smilies from showing in this post.
Thread Subscription:
Specify the type of notification and thread subscription you'd like to have to this thread. (Registered users only) Do not subscribe to this thread
Subscribe without receiving any notification of new replies
Subscribe and receive email notification of new replies
Subscribe and receive PM notification of new replies
Poll:
Optionally you may attach a poll to this thread. I want to post a poll
Number of options:
2
(Maximum: 10)

Attachments
You are currently using N/A of your allocated attachment usage (Unlimited) [View My Attachments]
New Attachment: Choose File Add Attachment

Update Post  Preview Post

STELLAR.org  Contact  MyStellar  Rss  BitXplor
Powered By MyBB, Made with  by WallBB and Forum IT.
DMCA.com Protection Status

Read More Read More, Posted by: Stroopy

FINANCE with a MISSION to FIGHT POVERTY


Help us Spread the News and Stellar Lumens XLM (Formerly known as STR)
Banner Rules Posting