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Implementing the Bitcoin Lightning Network on Stellar

I’ve been thinking about how to expand support for smart contracts onStellar, looking at use cases to learn what we need to make them viable. One of the most compelling things I’ve found is my friends Joseph Poon and Thaddeus Dryja’s smart contract-based proposal for bitcoin. It’s called Lightning Networks.  
Lightning allows you to set up a channel to send transactions securely between two parties, off blockchain. Neither party needs to trust the other—they only go to the blockchain to settle a dispute or to close the channel. Theoretically, any given channel could stay open for years and have millions of transactions flow across it without ever settling to the public ledger.
The two parties involved in the channel exchange pre-signed transactions without introducing them to the network. These transactions vary the fraction of the escrow amount sent to each end of the channel, a setup that is effectively equivalent to sending money between the two ends. Only the latest signed transaction should be valid between the two parties, but the network doesn’t know that—every transaction seems valid to the network. The trick is to set the channel up so that if either party introduces an old transaction, the malfeasor is penalized. Read the Lightning paper for a more thorough description.
A Lightning-like system is possible on Stellar today. Here’s one way you could set it up:

What’s involved
Setting up the channel will involve some of the more advanced features of the Stellar protocol: time bounds on transactions, accounts withmultiple signers, and batched operations.  
  • A: Account of one participant in the channel, (Alice, Adrian, Arkon, …)
  • B: Account of one participant in the channel, (Bob, Brody, Bevis, …)
  • Escrow: Account that holds the funds moved between A and B and the malfeasor insurance posted by each participant.
  • Helper: Account controlled by A and B that issues the assets needed by the channel. The helper account holds no funds.

  • SetupTx: Created and submitted to the network once to establish the channel.
  • CloseTxA & CloseTxB: These txs close the channel and return the correct balance to each participant. Creating a new closeTx is also how the balance between the two participants is changed while the channel is open. An A and B version of the closeTx make it clear who closed the channel.
  • RefundTx: This transaction finishes closing the channel and returns the insurance to the participants if there hasn’t been any bad acting. It can only be introduced a few days after a closeTx to give people time to submit a penaltyTx if there has been cheating.
  • PenaltyTxA & PenaltyTxB: For each pair of closeTx’s, there is a corresponding pair of penaltyTx’s. These transactions are only valid if one participant introduces an old closeTx. This action allows the other participant to introduce the penaltyTx and claim the entire insurance amount held in escrow.  

Information to track
Each participant must individually keep track of the following information outside of the Stellar ledger:
  • refundCounter: How many times the refundTx has been bumped.
  • txCounter: How many off-ledger transactions have occurred over this channel.
  • maxCloseTxTime: All closeTxs must be limited to execution before this time, allowing enough time for a penaltyTx to be introduced before the refundTx.
  • current balance between the two parties
  • latest refundTx
  • latest closeTx
  • latest penaltyTx

How it works
To make a Lightning-like system work, we use assets in a novel way. They act as a counter, relying on the fact that payment operations (and thus the entire transaction) will fail if the account doesn’t have the necessary funds.
The channel needs 3 assets: `AEND`, `BEND`, and `TIME`. What these assets are used for should become clear below.
To close a channel, either A or B must introduce a closeTx. These closeTx’s send a decreasing amount of either `AEND` or `BEND` to the escrow account. The penaltyTx that corresponds to a given closeTx requires escrow to hold more of the `AEND` or `BEND` then that closeTx sends to escrow. Thus the penaltyTx will only be valid if an old closeTx was introduced.
For example, if A closes the channel correctly:
  • A introduces the current closeTxA.
  • Escrow now holds X `AEND`, where X=(MAX_INT-txCounter).
  • But penaltyTxA needs to send X + 1 `AEND` so it fails and B cannot submit it.

But if A cheats:
  • A introduces an old closeTxA.
  • Escrow now holds Y `AEND`, where Y=(MAX_INT-old_lower_txCounter).
  • penaltyTxA is now valid since Y>X. In other words, escrow does hold enough `AEND` to send back to the helper account.

This logic should become clearer when you look at the actual transactions below.
The `TIME` asset works in a similar way for the refundTx’s.
Assume you have two parties, A and B. They want to create a lightning channel between themselves. A and B agree that the maximum either wants to pay the other is $100. They will each need to escrow $200: $50 for float to pay the other and $150 to post to ensure that neither can cheat.
A and B create, sign, and exchange the first closeTxB, closeTxA, and refundTx defined below. Then they create, sign, and submit the setupTx to the network.


Source account

  1. A creates escrow account
  2. B creates helper account
  3. A sends escrow $200 ($50 for float to pay B. $150 to provide malfeasor insurance.)
  4. B sends escrow $200 ($50 for float to pay A. $150 to provide malfeasor insurance.)
  5. Escrow trusts helper for `AEND` (asset we are using to know when A sends a closeTx out of order)
  6. Escrow trusts helper for `BEND(asset we are using to know when B sends a closeTx out of order)
  7. Escrow trusts helper for `TIME` (asset we are using to make sure old refundTxs aren’t valid)
  8. Escrow account sets A and B as the only signers
  9. Helper account sets A and B as the only signers


This transaction sets up the Escrow and Helper accounts and makes it so that any transaction from either requires A and B to sign.


Source account
Sequence number
current+1  (so isn’t valid until after some closeTx is submitted)
Time bounds
valid between: { now + 1 month, now + 2 months}

  1. Escrow sends {asset: `TIME`  amount: MAX_INT-refundCounter} to Helper
  2. Escrow sends $150 to A (*refunding the malfeasor insurance*)
  3. Escrow sends $150 to B (*refunding the malfeasor insurance*)


A makes, signs, and sends the refundTx to B. B signs it and returns it to A. Both A and B hold on to the latest refundTx but don’t submit it to the network until after a closeTx is submitted.
Whenever a new refundTx is created, maxCloseTxTime is set to (now + 1 month – 1 day).


Source account
Sequence number
Time bounds
valid between: { dawn of time, maxCloseTxTime }

  1. Escrow sends A  As_fraction_of_$100
  2. Escrow sends B  Bs_fraction_of_$100
  3. Helper sends {asset: `BEND` amount: MAX_INT-txCounter} to Escrow
  4. Helper sends {asset: `TIME`  amount: MAX_INT-refundCounter} to Escrow


A creates, signs, and sends the closeTxB to B.


Source account
Sequence number
Time bounds
valid between: { dawn of time, maxCloseTxTime }

  1. Escrow sends A  As_fraction_of_$100
  2. Escrow sends B  Bs_fraction_of_$100
  3. Helper sends {asset: `AEND` amount: MAX_INT-txCounter} to Escrow
  4. Helper sends {asset: `TIME`  amount: MAX_INT-refundCounter} to Escrow


B creates, signs, and sends the closeTxA to A.


Source account
Sequence number
current + 1 (so isn’t valid until after some closeTx is submitted)

  1. Escrow sends {asset: `AEND` amount: (MAX_INT-txCounter)+1 } to Helper
  2. Escrow sends $300 to B


A creates, signs, and sends the penaltyTxA to B.


Source account
Sequence number
current + 1 (so isn’t valid until after some closeTx is submitted)

  1. Escrow sends {asset: `BEND` amount: (MAX_INT-txCounter)+1 } to Helper
  2. Escrow sends $300 to A


B creates, signs, and sends the penaltyTxB to A.
Anytime A wants to send a transaction, they create and sign a new closeTxB with the updated balance between the two parties. B replies with the corresponding closeTxA and the penaltyTxB. A then sends penaltyTxA and the off-chain transaction is considered complete.
As time inevitably marches forward and gets close to maxCloseTxTime, the parties can increment the refundCounter and generate a new RefundTx. Future closeTx’s will be created with the updated refundCounter and maxCloseTxTime.
Happy path
A and B merrily exchange closeTx’s until they no longer want to maintain the channel. At that point, one of them introduces the latest closeTx and then both sign a transaction dividing up the insurance.
A cheats and introduces an old closeTxA
Let’s say that at some point there was a closeTx that sent $70 to A and $30 to B, but then A sent $45 to B over the channel. As a result, the current closeTx sends $25 to A and $75 to B.
A might be tempted to introduce the old closeTx. However, if A does that, B can submit the latest PenaltyTxA, which will succeed: Because of the old closeTxA, the escrow account now holds too much `AEND`. A can’t submit the refundTx before B has a chance to submit the penaltyTx. The current refundTx isn’t valid until sometime in the future. Since closeTxA is time-bound, it must have sent the current amount of `TIME` asset to escrow. Thus an old refundTx will fail because escrow doesn’t have enough `TIME` asset to send to helper.
Channel closes but B is a jerk
If the channel was closed correctly but B decides not to sign a transaction dividing up the insurance, A must wait for the pre-signed refund transaction to be valid and then submit it to the network.
Note: The channel in this example is for USD, but it could work with any currency or asset. There’s a bit of extra work I left off to ensure that A or B don’t remove their trust of the channel asset, which would prevent the close and refund transactions from working. But it’s possible to set up in a safe way, which I’ll leave as an exercise for the reader. (If the channel is for lumens you don’t have this issue.)
Going Further
Setting up a payment channel between two parties is just the first step in creating a full-fledged lightning network. The network becomes even more powerful when you can chain parties together and chain channels between totally different ledgers or blockchains. But more on how to do that later…

Jed McCaleb
Stellar Cofounder

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Jed Settlement Victory

February is shaping up to be a winning month for me and Not only was my birthday last week, we also had two great pieces of news. Poetically, one represents the start of a new exciting chapter and the other the end of a longstanding issue.
First, we announced an integration that will bring free money transfer to 200 villages in Nigeria and reach over 300,000 people. This has the potential to massively impact lives. And it is the first real-world example of the Stellar protocol (or I believe any blockchain technology) being used for humanitarian purposes at scale. This also starts to show what the Stellar network can do and how it will benefit people. We are very excited about the rest of 2016.
This week also sees the end of a longstanding issue. Stellar and I have finally reached a settlement with Ripple in the ongoing dispute between the parties. The settlement shows that Ripple’s claims were entirely baseless. Ripple has conceded in exchange for Stellar and I agreeing to settle the litigation.   
  • Stellar receives all the funds Ripple had inappropriately frozen in Bitstamp, proving all their claims against us were frivolous. When I left Ripple, I agreed to (and Ripple’s lawyer sent an email confirming) sale limitations applied to XRP held by me or in the name of my children. But then Ripple — in direct contradiction of its prior confirmation — claimed sales by other people violated my agreement, and caused Bitstamp to freeze $1 MM that belonged to Stellar. As a result of this settlement, the entire $1 MM was released to Stellar — proving we are correct.    
  • Ripple pays all of Bitstamp legal fees and is responsible for all financial settlement with certain other parties.  This also shows that the entire basis for Ripple’s and Bitstamp’s lawsuit against me was frivolous.
  • I fully complied with the previous agreement but now I have better terms for the amount of XRP I’m able to sell. The new rate is a percent of daily volume. This results in a higher limit given recent trading volume and allows for significant increases in my selling ability as volume increases, something that was not possible before with the prior agreement’s flat dollar limit. To effectuate this, I have escrowed my XRP.
  • I can finally donate 2B of my XRP to charitable causes, something I was unable to do under the prior agreement. This allows me to continue to fund more charities like Give Directly and MIRI which has been something I was actively doing prior to the previous agreement.  
  • As part of this settlement, I finally sold the rest of my Ripple equity. Ripple was required to find a buyer for me at a great price.

The results of this settlement agreement show that I fully complied with the terms of the previous agreement. Personally, I am excited to see the conclusion of these baseless allegations.
The announcement of integration with rural communities and end of the Ripple baseless allegations means that Stellar can continue to move forward on its humanitarian mission unencumbered by Ripple-related legal woes. And I am happy to say Stellar will be using the funds to continue its rural financial access programs. I wish the Ripple community the very best and it is time to refocus all my energies on bringing Stellar to those who need it to change their economic lives.

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 Jed McCaleb work with Stellar
I am the cofounder and CTO of Stellar Development Foundation, a nonprofit working toward financial access for all. If you’d like to learn about the technical details of the Stellar network, a good place to start would be the developer portal. There are a ton of ways to get involved with the open source project, including contributions beyond code. Come say hello in our live Stellar community chat on Slack.

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A preview of the Stellar Developer portal.

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Jed McCaleb and Joyce Kim on Bitcoin, Stellar, and the Future of Money

Last year, Joyce KimGreg Brockman and I appeared on a Future of Money panel entitled “Stellar: Building a Common Financial Platform.” Joyce are I are’s cofounders, and Greg Brockman is a member of Stellar’s board. Commerce Ventures’s Dan Rosen moderates the discussion, inquiring about how Stellar Development Foundation got started, why it must be a nonprofit, and the wider social implications of a distributed payments network.

I’ve compiled an abbreviated version of the panel to make it easier to read quickly. Learn about the ethos behind Stellar, how it compares with Bitcoin, and how the protocol may develop in the future.

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Jed McCaleb: When I first learned about Bitcoin, I was really enamored by it and always thought it was the awesomest idea. I spent a lot of time thinking about it because prior to that, I didn’t think such a system was possible. I’ve always been into distributed systems, but didn’t think a payment system without a central issuer was possible. Once I understood the implications of that, it’s pretty radical and it can actually change the world pretty dramatically, so I knew I wanted to do something in this space. I think BitCoin is a very much a first iteration of a decentralized payment network. Like with everything in software, there’s a first iteration then like people improve upon it and make better and better versions.
I was thinking about ways to improve upon Bitcoin and remove the mining, which I think is a big problem both in terms of environmental impact and economic impact. In trying to solve that problem I came up with this consensus method.

Greg Brockman: To build on that a little bit, one thing I think is really interesting about Bitcoin is that everyone talks about bitcoin as a currency. But Bitcoin is much larger than that. You start off with this digital currency that’s off by itself that is doing this thing, it’s got its own rules, its own sort of way being traded around and getting new pieces and that sort of thing. But as soon as you have to inter-operate with the rest of the world, suddenly you’re back in a world having all these exchanges.  And the same people who are on the BitCoin network and really excited about the decentralized nature are also on these very centralized exchanges and sort of each one, they don’t interoperate, they have their sort of rules, you have to do your own trust evaluation and that sort of thing. And so really, BitCoin is this ecosystem, I think it doesn’t make sense to look at any one piece of it.
It’s really about what’s the sort of sum of all the activities, all the things people have to build in order to make it all work. And soon as you’re in a world where you have to do this inter-operation, so you have to build these exchanges. You may as well build this into the protocol. And so I think that in a lot of ways, what’s Stellar really is, is it’s the minimum encoding of a financial system that can inter-operate with what’s already out there. And I think that no matter sort of how the rest of the digital currencies space evolves, I expect that we’re going to see more and more sort of adoption of this concept of “let’s standardize how all these other pieces work and actually try to bring them into the core protocol.”

Dan Rosen: Interesting. You’re definitely one of the few nonprofit startups I know. So, can you talk a little bit more about what that means on a practical day-to-day basis and maybe just a little bit about the mission and how you are pursuing that mission?

Joyce Kim: When we were deciding whether to be a nonprofit or a social B Corp, we looked at a number of different things. From a philosophical perspective, it was very much the right thing to do because when we look at infrastructure that is this core to how we live—I mean, money impacts us on a societal basis everyday. The type of infrastructure that touches us multiple times a day needs to be owned by everybody, and it needs to be owned by nobody. One of the reasons why we decided to make it nonprofit was to separate revenue motivation from the design of the protocol.

Greg Brockman: I think that when you think about any sort of core protocol of the internet, that you really do need to have a story for why this isn’t going to just be twisted to one company’s needs, that there isn’t going to be some entity out there who’s going to try to put their owns need before sort of making a protocol that’s really successful and giant.
Having a custodian that is very clear what they’re doing, what their motivations are, what the rules are that they’re bound by certainly makes [Stripe] really comfortable and excited about working with Stellar. And I think that it provides a story for how this becomes larger than something that’s just a couple of companies really come something that’s a universal protocol.

Joyce Kim: I read a lot of studies about how financial access plays out in the developing world and in communities where there’s not a lot of financial services to begin with. And what these studies have shown is that financial access is never alone: it has to be paired quite closely with education. And for the entire digital currency space to move forward or for financial access to reach that next level, there has to be an organization that’s focused entirely on education of consumers and companies and government officials and whoever the case may be on how these things work, the pros and the cons, and being a non-profit allows us to focus on that quite heavily as we move forward.

Greg Brockman: I actually think that one of the great things about the approach of making it accessible and easy is that it goes from being as abstract concept. It’s a little bit scary actually if you just hear about this like weird, like digital crypto something, something in the Cloud. Who knows what that is? But then when you actually get it, and you see the rocket go, you just realized that, “Oh, this is what it’s actually doing.” I think it makes it a lot more friendly. And I actually think that’s a really important thing not just for Stellar, but for crypto-currencies generally.

Dan Rosen: what countries are your biggest countries?

Joyce Kim: After the US and Europe, it’s Indonesia, Vietnam, Philippines, Singapore, Mexico, like along those lines. Countries that you see that are developing world economies that have a strong middle class, have strong mobile penetration, like Indonesia and Philippines, they’re both island nations which means mobile penetration is much faster than regular internet. Vietnam is this funny edge case, so like two-three days after we launched, our Vietnam numbers started to go crazy and we’re like, “What is going on?” So we were getting all these emails in Vietnamese and for any of you that have tried to use Google Translate for Vietnamese, it really sucks. So we’re getting emails that made no sense. And then finally some of the users spoke English and we were asking them “How did you find out what, what’s going on?” And they all pointed us to this one particular guy on Facebook who is a poet/ journalist in Vietnam who has a million Facebook followers, respected journalist.
Journalists, they’re great people around the world. And he translated all of our launch material into Vietnamese, and then he published it on his Facebook feed, and in one fell swoop, we hit the tech NPR audience of Vietnam and it just took off like wildfire there. And, it took us like four or five days to figure that out and, meanwhile, we’re staring at these numbers and getting all these emails and not knowing how to communicate yet. So, it was an interesting… Dipping our toe into learning how things move in other countries and realizing like the blind… We have a very diverse team in terms of country distribution, but we still have blinders ’cause we’re all still tied to Silicon Valley somehow.

Dan Rosen: In general either technically or business-wise, what’s been the most challenging aspect of, the first four or five months of this business?

Jed McCaleb: Technically, by far the biggest challenge has been scale. I mean, this is the first time this kind of technology has been stressed to this limit. So, we’ve been kind of scrambling to, like, keep up with the load. We’re doing a major refactor of the code base right now just to deal with this level of scale, so that’s certainly the biggest challenge.

Joyce Kim: We always have this thesis that money is culture. How we pay for things here is different than how I pay when I’m in Korea, which is different from how I split the bill with friends in Europe. So we knew there was an intense amount of localization that had to happen, but when your audience is already global three days out and your team is sitting in an office in San Francisco, we weren’t ready for that, and we’re scaling up on that side of it now. We have to really get more boots on the ground in countries where we’re seeing a lot of users, and understand what are the specific problems in their countries. In Indonesia, it’s something like less than 15% of the population has credit cards, so what happens then, and why they’re using Stellar.

Greg Brockman: And I think one thing that’s important to keep in mind with Stellar is how early it is. And I think that for sort of introducing any big shift or any sort of new piece of technology or something you want to be successful, I think that there’s no question that it’s a long haul. You really have to be ready for this slog, where 90% of the work of building something is always all of the sort of little grungy details that aren’t the kinds of things that anyone wants to listen to on a panel like this. And that’s really what most of the work is.
The thing with BitCoin I think is interesting is that it’s been this very iterated process over many years to get people more and more aware of it, and though I think there’s a lot of good stuff going on in the BitCoin community, though I think that there’s still a lot of shortcomings. And I think that the upside case with something like Stellar is that it’s able to address those sort of shortcomings. I think that the good outcome or a really cool place to be would be one in which you can kind of mesh all these things together and you end up with an ecosystem that’s way more valuable than any pieces would be on their own.

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What's New on the Upgraded Stellar Network

Jan 06, 2016 7:38 PM by Bitcoin Magazine

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Editor's Note: This is a guest post by Jed McCaleb, co-founder and CTO of

Stellar is a fully decentralized payment network that allows anyone to send and exchange any currency. It can act as a decentralized exchange for bitcoin.
Why Stellar? After years of working in the fintech space, I realized that the world’s financial infrastructure is fundamentally broken, leaving billions without resources. As a result, Joyce Kim and I co-founded to create an open standard for financial technology. Since anyone can participate in the network, it can be particularly helpful for the 2 billion unbanked people worldwide.
Since the launch of Stellar, we’ve announced several partnerships, spoken at the United Nations and unveiled a new consensus algorithm and codebase.Along with other contributors to Stellar Core — Professor David Mazieres, Graydon Hoare and Nicolas Barry — I had the task of designing this new codebase. I’m excited to share some of the motivations behind the design decisions and to talk about projects that Stellar’s future might hold.

Upgrade to a simple, modular network
One of the key principles that facilitated organic growth of the Internet was its low-level simplicity. With this in mind, we designed the upgraded network with complexity moved to the edges. With simple primitives that can be composed in different ways, the system is robust and maintainable, yet still expressive and powerful. 
The upgraded Stellar network is more secure, scalable and modular. We separated the network’s responsibilities into multiple components to make them easy to understand, maintain and extend. Stellar Core is now less than half the size of the previous codebase. It stores data in a standard SQL database, making it easier for people to get information out of the Stellar network and interact with it using standard tools and libraries. Graydon’spresentation provides granular details on the movement and locations of data in the Stellar system.

Safety first
One of the main reasons we refactored the code was to implement the new Stellar Consensus Protocol (SCP), which has a unique, provably correct federated consensus algorithm. Distributed systems are complex, and achieving consensus in a decentralized network is even more complex — it requires a fully understood and proven consensus algorithm like SCP, which ensures the network will not fork. 
For maximum safety, we simulated many failures through unit and integration tests. We also used an interface and model that connects Stellar Core to Kyle Kingsbury's Jepsen tool for testing distributed systems against network partitions. In all these cases, the network halts until quorum can be re-established, at which point it picks up and carries on. The network must halt in these conditions. The other option is to fork, meaning two sides of the network disagree about the state of the world. Not forking is a critical feature of any distributed, decentralized consensus algorithm and the one we've spent the most time trying to get right.

Smart contracts
Following our overarching design philosophy, we focused on creating simple components that users can combine in complex ways to get the behavior they need. Our approach to smart contracts has been to keep most of the logic outside of the core system so that Stellar Core can scale globally.
The two key components of smart contracts on the Stellar network are multi-signature support and the ability to batch operations. Accounts can now have multiple signers with various weights, so you can simply set up m-of-n accounts or other, more complex, access schemes.
Transactions are now a series of operations that affect the state of the world. For example, a single transaction can trivially say A sends to B if B sends to C. These abstractions, coupled with the network’s distributed exchange, produce a surprisingly rich vocabulary for contracts. Bonds, escrow, collateralized debt and the Lightning Network are all possible on the network. 

Community-run network
The live network is entirely run by community participants outside We want to ensure that the network does not wind up operated or administered primarily by us. contributes to the open-source core protocol, but everything beyond that — everything that actually makes the network useful and valuable — is up to the community!

Looking toward the future
We're currently developing tools and protocols that live above the base Stellar protocol and support future features such as messaging and private transactions.
I have a long list of interesting ideas for things that could be built on Stellar. I jotted down a few of my favorite ones here:
Honestly, I'm most excited to see what people come up with on their own — I know there will be amazing ideas that we haven't even thought of yet.

Jed McCaleb is co-founder and CTO of In 2000 he developed e-Donkey, one of the largest file-sharing networks of its time. He later created Mt. Gox, the first bitcoin exchange, which was subsequently sold and re-coded by its current owners. Find Jed online on GitHubLinkedIn, andTwitter.

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Can Stellar disrupt the stokvel? Mbewu meets the CEO to find out


For many of us outside of the tech “start-up” world, there is an indescribable allure about the idea of coming up with an innovative idea that fundamentally changes the lives of millions of people around the world. We’ve seen companies like Twitter, Alibaba, Uber and even… Tinder, transform the way millions of us respectively receive the latest news and information, source vendors to do business with, get from A to B and choose who we want date. The world has become an increasingly convenient place to live, especially for those who embrace these technological and digital advances. Now, in highly unequal societies, such as South Africa, the level at which one has the opportunity to embrace (or consciously reject) the conveniences of technology is largely determined by class and geography. But this is not necessarily the first time developing countries have faced an issue of economic exclusion and subsequently made strides to offer non-conventional solutions. For example, Muhammed Yunus and Grameen Bank, were jointly awarded a Nobel Peace Prize for pioneering the idea of microfinance and essentially provided rural entrepreneurs (who could not qualify for traditional bank loans) access to loans and credit for their businesses, without requiring collateral. Furthermore, we have started to see a shift in traditional Financial Institutions in South Africa who are attempting to “bank the unbanked” market by providing alternative services and transaction channels (click here to read more). With this drive towards more inclusive financial services, brings new opportunities from a technology perspective. And so, when Mbewu Movement founding members had dinner with the founders of Stellar, Joyce Kim (Stellar Executive Director) and Jed McCaleb (Stellar Board Member and Developer), on their first trip to South Africa we were delighted to hear, firstly, an international perspective on the changes in the technology world and how they think these could impact South African society, and secondly, advice on startup entrepreneurship and particularly what they think is important to know about building a start-up organisation (especially, as we know many you in the Mbewu community are already thinking this big).

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Joyce Kim (image:

So what is Stellar? Stellar is an NPO based in California which “aims to expand financial access and literacy worldwide by building a common financial platform” (click here for Stellar website). According to Stellar, “around 2.5 billion people across the world cannot afford a bank account. Stellar gives everyone a chance to be banked, save money, build credit, start a business, or otherwise participate in the global economy – free of fees and other charges”. As Joyce herself explains, “the internet allowed anyone to send an e-mail, Stellar’s common financial platform allows you to conveniently send, save, and receive money, without large fees or hassle”. She also believes that “when individuals have access to financial services and the confidence that those services are working in their best interest, those individuals can independently improve their lives” (see video: Re-imagining the World’s Financial Systems with Digital Currency).

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Jed McCaleb (image:

With this said, although Joyce and Jed’s visit to South Africa was to explore the extent to which Stellar could add value in the local Financial Services context, the major opportunity that Stellar is keen to explore locally is remittances (click here to read more). Which makes sense considering the number of foreign nationals in the country who would benefit a great deal by being able to easily and quickly transact with family, friends and businesses back home and/or across borders (click here to read more). Furthermore, although Joyce and Jed seemed to show immense fascination about the stokvel club culture, Stellar does not necessarily plan on disrupting stokvels. In fact, Joyce’s prediction is that that the stokvel club will be turned into chat someday since it is not only about financial exchange and contributions, it also has a very strong a social element.

Following this discussion, we then went on to talk about whether Stellar plans to have an impact on women in Africa? Joyce acknowledged that “women are financially excluded at much higher rates than men- depending on the culture women might not have the right to have their own bank account, not have the right to have their own sim card, their finances are watched, their money is taken from them. Women are also more often giving others (including Service Agents) their pins and passwords because they do not own their own devices. So anything that gives women access to save their money is important.” Stellar does plan on focusing on women through partnering with other organisations, such as the Girl Effect, which, amongst many other initiatives, encourages girls to invest in savings accounts and be responsible for their finances through gamification. In addition, gender equality is deliberately entrenched in the culture and ethos of Stellar- the office comprises of half women and everyone in the company believes in equal opportunity for men and women.

In summary, who better to receive entrepreneurial advice from, other than two brilliantly innovative and passionate founders of Stellar. Some key considerations that Joyce and Jed shared with us included the following:

  1. In Silicon Valley, the average person needs to really hustle to get funding and grow their ideas, which means that you need to spend a lot of time investing in networking and become a highly networked individual. Joyce said “the most powerful people I know in Silicon Valley are highly networked and have very strong domain expertise. So it is important to evaluate the networks you have now in the work environments that you are in and whether they are strong enough so that if you leave your company, you don’t lose those valuable connections you had built while you were there”

  2. In addition, you need to think about how you will make yourself useful to people in positions of power, for example, “Women Who Code” and “#Yes We Code” organisations have brands that appeal to people in positions of power in top tech firms because these companies want to promote and be seen promoting diversity in their companies and in the tech industry

  3. Before deciding to take the plunge to independently pursue your passion project, leverage the domain expertise of your personal friends, for example, if you are looking to get funding for a passion project, ask your Marketing friends for their opinion on your pitch or for advice on what companies are look for in sponsoring projects such as the one you will be pursuing

  4. Try to think about how some of the day-to-day operations would run in your organization and determine whether it will be viable venture, for example, create a budget for your organisation before you decide to pursue it full time, decide how much you want to get paid, think about whether you will need extra people on your team and how much you would pay them, get marketing advice

  5. Experiment with different interests on the side (at night / over weekends) in order to gain traction on your ideas and gather data more data on your target market. Publishing a website and monitoring the stats over a period of time, is a relatively easy and inexpensive way to learn about who is clicking / interested in your idea

  6. Find your passion. And by this Joyce means take the time to “discover the things that you do that make you proud as hell”. She strongly believes that being truly passionate about your work is possible and she didn’t find her passion until Stellar. Also, Joyce advises that if you know your passion but can’t get to it, it doesn’t mean that it’s gone, it just means that you need to plan more strategically about how you will get to it. Lastly, Joyce also realized that “when you follow your passion you will find that you actually end up working much harder then you used to, and your next challenge is defining work-life balance on your own terms”
Talking to the founders of Stellar provided a refreshing perspective on innovation, technology, entrepreneurship and cross cultural experiences. It was also thoroughly exciting to have the opportunity to engage personally on their ideas around making economic participation more democratic in South Africa by allowing the traditionally “unbanked” access to banking services and facilities. Lastly, we hope that the our community of budding social and private sector entrepreneurs ponder on the preparation and soul searching required to transform your passion project to a successful and sustainable start-up.

[Image: 307b6ac.jpg]

Article by: Magcino Radebe | Mbewu Movement Founding Member
Magcino Radebe holds a Master of Philosophy in Politics, Philosophy and Economics (University of Cape Town). She is a former Strategy Consulting Manager and is currently on sabbatical until she embarks on a career in Insurance Financial Services.

Read More Read More, Posted by: Rufus
  • How blockchain technology is bringing low-cost banking to the world’s poor
25 Feb 2016 | by Collaborative Media & Publishing

Poor people in Nicaragua and many other developing countries can’t afford to save money in bank accounts. Instead, they’re forced to save in livestock. It makes withdrawing small amounts of money to pay for essential items, such as medicine for a sick child, impossible.

“Payments haven't kept up with the way the internet works,” says Jed McCaleb, co-founder and CTO of non-profit payment platform Stellar. “It’s easy, free and instant to send an email to anywhere in the world but that's not true of a payment.”

A transaction fee of just 50c represents more than one-quarter of the daily income for almost 2.8 billion peopleforced to survive on less than $US2 a day. It is a relic of the way the financial system has evolved, which takes money through a labyrinthine closed system connecting major institutions and payment systems.

“This is hitting the poorest of the poor – it's really material for them if they're spending a significant amount of their money on this remittance fee,” he says. “We're hoping to fix all that.”

A new solution
Stellar, designed by Stanford professor David Mazières, is an open-platform based on a decentralized worldwide financial network. It aims to remove the high-cost barriers to entry which keep many of the worlds’ poorest out of the financial system (read the white paper here).

Creating an open SWIFT-like network, which has no need for a central counterparty, remains the number one priority for the organisation and pilot programs to help microfinance institutions with domestic transfers are currently underway in countries such as South Africa and Nigeria. As the network supports regular currencies like Dollars and Euros, as well as the Nigerian Naira or the South African Rand, it would allow non-financial institutions to easily send money to each other and their customers at ultra-low cost.

“Our challenge is to narrow down the focus and make it work in one small region before we tackle the world,” McCaleb says. “It's permission-less so once it's working in one region in Africa, other regions can join in seamlessly in the same way that the internet grew organically.”

In a recent speech, Stellar’s other co-founder, Joyce Kim, pointed to the success of a pilot which processed 6 million transactions using the Stellar network for just 20c in total fees. By comparison, those same transactions would have accrued $US150 million in fees through traditional wire services or $US2 million through mobile phone money transfer service M-Pesa.

A future with blockchain
The rise of new services using open source protocols built on blockchain technology has forced the established financial services industry to question what it means for their businesses and, at a deeper level, their role in society.

While the debate about blockchain continues, McCaleb says the industry should not view such open networks as a threat.

“It just increases the reach of their organisation,” he says, pointing to a company like PayPal, which could potentially build services on top of Stellar to reach even more people around the world.

“The internet disrupted some businesses but increased the overall amount of information and connectivity in the world and increased overall economic activity which is what we're hoping for Stellar.”

Banks will still have a major role to play over the next decade even as blockchain becomes established.

“It's going to change the landscape but the world will be more similar than we think,” McCaleb says.

Thirty banks from around the world, including the Commonwealth Bank of Australia, National Australia Bank and Macquarie Bank, are working together through the R3 distributed ledger initiative to explore potential uses for blockchain, including an open-sourced shared ledger to reduce reconciliation costs.

Meanwhile, Westpac recently held a blockchain design challenge at Sydney-based innovation hub Stone & Chalk to explore potential uses for the technology.
 This article represents the views and opinions of the author and do not necessarily reflect the opinions of BPAY.
Published by BPAY Pty Ltd.  BPAY is offered by over 150 Financial Institutions. Contact your Financial Institution to see if it offers BPAY and to get the terms and conditions. This is general advice – before using BPAY please review the terms and conditions and consider whether BPAY is appropriate for your personal circumstances.

Read More Read More, Posted by: Rufus
Jed McCaleb BLOG Press
Jed in the media
Quote:For humanity’s benefit, we need to guarantee that AI systems can reliably pursue goals that are aligned with society’s human values. If organizations like MIRI are able to help engineer this level of technological advancement and awareness in AI systems, imagine the endless possibilities of how it can help improve our world. It’s critical that we put the infrastructure in place in order to ensure that AI will be used to make the lives of people better.
Quote:“Our challenge is to narrow down the focus and make it work in one small region before we tackle the world,” McCaleb says. “It’s permission-less so once it’s working in one region in Africa, other regions can join in seamlessly in the same way that the internet grew organically.”
Quote:Before deciding to take the plunge to independently pursue your passion project, leverage the domain expertise of your personal friends, for example, if you are looking to get funding for a passion project, ask your Marketing friends for their opinion on your pitch or for advice on what companies are look for in sponsoring projects such as the one you will be pursuing.
[img=891x0][/img]Jed McCaleb with members of the Mbewu Movement in South Africa
Quote:This “internet for money” is still a long way from becoming a working reality—if it happens at all. But those behind Stellar are already deeply experienced in the realm of online money, and the project has received an unusually large amount of attention in the five days since its launch
Quote:One of the key principles that facilitated organic growth of the Internet was its low-level simplicity. With this in mind, we designed the upgraded network with complexity moved to the edges. With simple primitives that can be composed in different ways, the system is robust and maintainable, yet still expressive and powerful.

Read More Read More, Posted by: Rufus
Jed McCaleb: About
Hi, I’m Jed McCaleb. Recognizing that the world’s financial infrastructure is broken and that too many people are left without resources, Joyce Kim and I cofounded Stellar Development Foundation in 2014. At, I’m spending an insane number of hours with the smartest people I’ve ever worked with.

My background
Before cofounding Stellar I made eDonkey2000, an early peer to peer file sharing network. It was the first to implement multi-source downloading and the first implementation of the Kademlia DHT.
I’ve always spent a lot of time thinking about how to improve technologies, and how to use these technologies to improve the world.
[Image: jedmccaleb-300x276.png]
Find me online

Get in touch
Feel free to send me an email:


Quote:[color=rgba(51, 51, 51, 0.701961)]Jed McCaleb[/color]
Stellar Development Foundation
Cofounder and CTO
Jed McCaleb is the cofounder and CTO of nonprofit Before Stellar, Jed created eDonkey and Mt. Gox, the world's first Bitcoin exchange.
San Francisco,CA

i copy this from Jed BLOG
so we know whom this figure is

Read More Read More, Posted by: Rufus
Bonds on Stellar

Setting up this smart contract in Stellar will involve some of the more advanced features of the Stellar protocol. So before you dig in please first read: time bounds on transactions, accounts with multiple signers, and batched operations.

Imagine it is December 2016… Yoyodyne wants to issue a bond to raise money for “research.” It will sell this bond at an auction. The bond will pay $1000 every month for a year. After getting approval from appropriate regulatory bodies, Yoyodyne wisely decides to issue the bond on the Stellar distributed network.
Yoyodyne has a publicly known Stellar account, yoyoAccount with signing key keyA.
To issue the bond, it also creates a new bondAccount.

Yoyodyne adds yoyoKey as a signer on bondAccount. It sets the weight of the bondAccount master key to 0. Now only yoyoKey can sign transactions for bondAccount.
Yoyodyne now creates 12 transactions that look like this:
  • Source Account ID : bondAccount

  • Sequence Number: 1

  • Time Bounds: anytime after 1st Jan 2016

  • Operations: yoyoAccount sends $1000 to bondAccount
  • Source Account ID : bondAccount

  • Sequence Number: 2

  • Time Bounds: anytime after 1st Feb 2016

  • Operations: yoyoAccount sends $1000 to bondAccount
  • Source Account ID : bondAccount

  • Sequence Number: 3

  • Time Bounds: anytime after 1st Mar 2016

  • Operations: yoyoAccount sends $1000 to bondAccount

Yoyodyne signs all these transactions with keyA and makes them publicly available. None of the transactions are valid yet: They need to be signed by bondAccount, and the time bounds haven’t been reached yet.
Now Yoyodyne starts its bond auction. It requests transactions from bidders of the form:
  • AccountID: accountBuyer

  • Operations:
    • bondAccount addSigner(keyBuyer,1)
    • bondAccount addSigner(yoyoKey,0)
    • accountBuyer sends $X to yoyoAccount
  • Signers: keyBuyer
[*]Yoyodyne collects these transactions from people for the duration of the auction. Once the auction is over, it signs the transaction with the highest value of $X and submits it to the Stellar network.
Let’s say Veronica is the highest bidder and buys the bond for $10,000. Yoyodyne receives $10,000 dollars and Veronica is now the only signer on the bondAccount. Veronica also has the transactions that were pre-signed by Yoyodyne. When a coupon date passes, Veronica can add her signature to the appropriate transaction and issue it into the Stellar network.
If Veronica wants to, she can also resell the bond using a similar transaction as above:

  • AccountID: accountBuyer

  • Operations:
    • bondAccount addSigner(keyBuyer,1)
    • bondAccount addSigner(keyVeronica,0)
    • accountBuyer sends $X to accountVeronica
  • Signers: keyBuyer, keyVeronica

The interesting thing is that bondAccount itself becomes an asset that can be traded between accounts and it will continue to issue the bond interests payments to whatever the current account that owns it is.
It is obviously possible to make more complicated schemes. This should just give you some ideas about what is possible.

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Stellar: Building a Common Financial Platform - The Future of Money & Technology Summit 2014
Dec 2, 2014

Joyce really is valuable

Read More Read More, Posted by: FreeSpeach
Stellar and Stripe Speak at
The Future of Money and Technology Summit 2014
[Image: stellar.jpg]
SAN FRANCISCO, California — December 2, Stellar Executive Director Joyce Kim, Stripe CTO Greg Brockman, and Stellar Lead Developer Jed McCaleb sat on a panel and gave an overview of the Stellar project to the audience at The Future of Money and Technology Summit, a yearly fintech conference that meets to discuss the evolution of money. The panel was called “Stellar: Building a Common Financial Platform”, and the entire session was streamed live and published on YouTube courtesy of Bitcoin Magazine.

“The goal of the [Stellar] platform is to be a ubiquitous layer so Stripe, Western Union, or a bank can plug into it. It’s to be kind of like an IP layer for payments, or the equivalent of SMTP for email. It doesn’t matter who your email provider is, they can all interoperate and talk to each other. Stellar is a similar thing, it doesn’t matter who your payments provider is — it gives them all a common language so that you can speak to any of them.” — Jed McCaleb

Stellar is a gateway based network and a hard fork of Ripple. 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.

“Stellar as a protocol is designed to allow bitcoin to move faster, and to allow bitcoin to be more accessible to more people.” — Joyce Kim.

The Stellar Foundation’s distribution strategy is notably different from Ripple Labs’s. On one hand, Ripple Labs plans to distribute ripples to six categories: users, developers, merchants, gateways, market makers, and Ripple Labs. Further details are unknown, and according to Ripple Labs’s website, “[Ripple Labs] will engage in distribution strategies that we expect will result in a stable or strengthening XRP exchange rate against other currencies.” On the other hand, the Stellar Foundation’s distribution strategy is to distribute 100 billion stellars by giving out 50% to the world via the direct signup educational program that requires Facebook user authentication, 25% to nonprofits to reach underserved populations via the increased access program whose details are yet to be announced, 20% to the bitcoin program, and 5% to the Foundation for operational costs. The bitcoin program is designed to distribute stellars to holders of bitcoin and ripples according to their stake in the respective cryptocurrencies. The foundation will take a snapshot of the Bitcoin blockchain and Ripple ledger, and set up a claim page were users can claim and receive their proportional share of stellars. The bitcoin program will distribute 19% of stellars to bitcoin holders, and 1% to ripple holders.

“I read a lot of studies about how financial access plays out in [the] developing world and in communities where there is not a lot of financial services to begin with, and what these studies have shown is that financial access is never enough alone to cause adoption— it has to be paired quite closely with education. For the entire digital currency space to move forward, and for financial access to reach that next level, there has to be an organization that is focused entirely on education of consumers, companies, government officials, and whoever the case may be on how these things work — the pros and cons, and being a non profit allows us to focus on that quite heavily as we move forward.” — Joyce Kim

According to Stripe CTO Greg Brockman, the non-profit nature of the Stellar Foundation was attractive and influenced Stripe’s decision in July to give 3 million dollars to the Foundation in exchange for 2% of stellars.
“Stripe’s formal involvement is that we gave 3 million dollars in exchange for 2% of the stellars, … and one of the things we’re doing is we’re auctioning off half of our stake. The goal there is to get significant chunks of stellars into other companies hands.” — Stripe CTO Greg Brockman.

Tell us what you think about Stellar and Stripe’s announcements below.

Read More Read More, Posted by: FreeSpeach
[Image: canstockphoto3389852.jpg]

Author -  Marry Shane Date - 12.33 51% attack CounterParty Mastercoin Ripple sanctionsStellar

A lot of people have spelled Bitcoin's doom in the past. From a 51% attack to some other vulnerabilities, a lot of technical pitfalls are well known and documented. There is a whole Wiki page on this subject, and I even wrote a master's thesis on the subject. So while Bitcoin looks like it's around to stay, there are many other cryptocurrencies emerging nowadays that can be wiped out in some interesting ways. Lets discuss some of them.

Destroy the value of a currency

First off, a quick recap of the obvious for completeness sake:

The traditional 1.0 copycoins are perhaps the easiest to bring down. Their network is secured by the miners (in case the coin uses PoW) and in return the miners get paid in coins they mine. However, if the value of the coin was attacked, the miners wouldn't have any incentive to mine it. They would need to be subsidized by the people running the network. As I discussed before when talking about Quark, a repeated 51% attack coupled with double-spending various crypto-to-crypto exchanges would quickly ruin the coin's reputation and get it removed from all services, thus destroying the coin's value.

Now with that out of the way, lets talk about some new stuff.

End the "blockchain bloat"

The topic of blockchain bloat has been a heated topic in the Bitcoin community for a few years now. It started with SatoshiDice sending a lot of 1 satoshi transactions, and the topic got more interesting with the advent of Bitcoin 2.0 technologies. By "Bitcoin 2.0", I mean Crypto 2.0 platforms that use the Bitcoin blockchain as a store of their data. For example - Mastercoin and CounterParty. While those systems use the Bitcoin blockchain because they can rely on it being a universally stored immutable record, at the same time they are reliant on the network accepting and storing their extra data. This could be their potential downfall.

There are some people out there that could be called "Bitcoin purists". They createtransaction blacklists to hamper the propagation of transactions from Bitcoin 2.0s and other blockchain bloaters. While those blacklists might be effective if there are a lot of nodes running this code (which is rather unlikely), a more insidious attack would be to convince the mining pools not to include data from the Bitcoin 2.0 platforms. As mining becomes more concentrated in big pools, and the mining profit margins become thinner and thinner, a few pools might welcome a subsidy from a purist or a 2.0 competitor.

Moreover, due to how Bitcoin works, this blacklisting can be quite easy to execute. Someone wishing the bloaters gone could check each block for those transactions. If there were no such offensive records in the given block, the attacker could just send the subsidy to the address from the coinbase transaction. This way one can reward censoring pools without even knowing who the parties involved are. You just have to let them know the rules of the game through an email or some public announcement.

To counteract this, the Bitcoin 2.0 would have to rely on the goodwill of the honest pools, increased transaction fees to give the pools an incentive to include their transactions or a direct subsidy from the 2.0 developers to the pools to let their transactions in.

All in all, this seems like an easy way to carve out your competition in the future if the competition between the Crypto 2.0 platforms will start to become more and more fierce.

Unenforceable embargoes

Many countries use the banking system and the flow of money as tools in their political regime. There is a lot of pressure to keep some countries, such as Iran or North Korea, from being able to deal with the rest of the world. However, in a decentralized Crypto 2.0 system, either everything goes or the system goes. This may very soon create a situation where the unstoppable force of innovation from the crypto space will meet with the unmovable object of nationalistic policies. In the end, only one will be able to prevail.

This issue affects a system like Ripple and Stellar the most. In those 2.0s one can freely trade between any pair of currencies. This means that if say, we have USD issued by a bank from the States and IRR issued by a bank from Iran, one can trade the USD for IRR just as easy as one would trade USD for EURO.

As the systems don't distinguish or discriminate between any currency or issuer, this makes the monetary sanctions unenforceable in the system without completely shutting the network down.

If this issue would ever come up, this would probably be the biggest legal battle a crypto system would have to face. Can a company develop a software that is by its very inclusive nature allowing some people to break the law? Can such a system be allowed to exist and run? Perhaps a combined pressure from a hegemonic government and oligopolistic banks would be enough to drive the crypto scene underground. However, given another outcome, we would see that the emperor has no clothes and progress cannot be stopped...


There is more than one way to kill a crypto. You can either attack its value to grind it down to dust, pay the miners to censor it into oblivion, or challenge the status quo and see what remains after the battle.

Read More Read More, Posted by: FreeSpeach
After The Social Web, Here Comes The Trust Web
Posted Jan 18, 2015 by David Cohen (@davidcohen)William Mougayar (@wmougayar)

[Image: trust1.jpg?w=738]
Editor’s note: [i]David Cohen is the founder and Managing Partner of Techstars, the #1 rankedInternet startup accelerator in the world. William Mougayar is an entrepreneur turned angel investor, founder of Startup Management, and currently raising his first fund.[/i]

“You never change things by fighting the existing reality. To change something, build a new model that makes the existing model obsolete.” – Buckminster Fuller

The bitcoin train is really made up of two revolutions in one: money and finance, based on the bitcoin protocol, and exploiting the “currency programmability” aspects; and decentralized applications, based on the blockchain’s distributed technology capabilities.

Both are grounded in similar roots (crypto-technology), but they have different branching. Both paths are creating disruptive, innovative and system-changing opportunities for startups, investors, consumers and business players. Both are joined at the hip, and that hip is the blockchain, the backbone of crypto-based transactions.

To fully understand the blockchain concept and the benefits of cryptography in computer science, we need to first understand the concept of “decentralized consensus,” a key tenet of the crypto-based computing revolution.

Decentralized consensus breaks the old paradigm of centralized consensus, i.e. when one central database used to rule transaction validity. A decentralized scheme (which the bitcoin protocol is based on) transfers authority and trust to a decentralized network and enables its nodes to continuously and sequentially record their transactions on a public “block,” creating a unique “chain” — the blockchain. Cryptography (via hash codes) is used to secure the authentication of the transaction source and removes the need for a central intermediary. The combination of cryptography and blockchain technology together ensures there is never a duplicate recording of the same transaction.

This degree of unbundling is enabling a new way of writing software, and it is a spark of innovation for money- and non-money-related decentralized applications.

There are different flavors of crypto-technology-related implementations. Some are based on the bitcoin blockchain itself and others on an independent decentralized one. Some are based on the bitcoin currency and others on alternative cryptocurrencies or branded tokens. All these various permutations are creating a rich ecosystem environment for cryptocurrency-based innovations.

To say that bitcoin and its sole blockchain hold a monopoly on the future of cryptocurrency-based implementations is like saying in 2006 that LinkedIn was the only social network needed when it was barely leading, and when Facebook, Twitter and many other social platforms were still babies.

We need to view what is happening today as a rich ecosystem that represents the best blend of computer and cryptography science, and not just as an ecosystem of bitcoin-centric technologies.

A future that relies only on bitcoin and its blockchain is simply not possible. The cat is already out of the bag, and innovation around cryptocurrency technologies is racing. At the center of it, trust is shifting from humans and central organizations to computers and decentralized organizations with an underlying decentralized consensus that governs them.

If the social web dominated the period of 2004-2014, the next 10 years might as well belong to the trust web.

What most people don’t realize is that bitcoin is just a protocol, and a pretty low-level one to start with. Any heavy lifting happens on top of it, just as TCP/IP is the Internet’s protocol and a pretty low-level one. The ecosystem in and around bitcoin is actually helping to enrich bitcoin, more than weaken it.

Companies and projects such as EthereumBlockstreamMaidsafeMastercoinCounterpartyStellar, Factom, Codius and NXT are innovating with new technologies, services and applications that are pushing or testing the limits of Satoshi Nakamoto’s original vision.

Today, the bitcoin landscape is still murky, but patterns are emerging. The picture isn’t totally clear, but here’s an inventory of where we are seeing some of the most exciting and promising entrepreneurial activity, both in the money and decentralized applications segments.

Money services

If you live in the Western world, or a relatively developed country, your banking system and currency are typically stable, and you’re probably happy with the services offered. But according to studies, half the world is unbanked and undocumented, and more than 4 billion people still don’t have Internet access.

To peer into the future of decentralized banking for the masses, look no further than the success of easypaisa in Pakistan and M-Pesa in Kenya. They are both SMS-based, cell phone-centric banking services that enjoy a wide user adoption for paying bills, transferring money, buying goods and services, and several other types of transactions. Easypaisa already holds more than a 50 percent market share in mobile financial transactions in Pakistan, and M-Pesa enjoys more than 70 percent market usage penetration in Kenya (higher than Facebook’s), and accounts for over 30 percent of that country’s GDP.

You might think that SMS-based transactions are a pretty simplistic scheme, but that may be exactly what’s needed: a return to simplicity. Bitcoin is all about that.

Microtransactions and money transfer

Bitcoin is perfect for micro-transactions. There is no reason why any web transaction under $10 shouldn’t be done using bitcoin. Credit cards or PayPal really have no place at the low-end of transaction value because transaction fees easily eat into the total transaction itself. Some of the early applications include tipping for a variety of reasons (appreciation, reward, donations, etc.) or as promotional gifts for marketing purposes. Some bloggers are even adding tipping buttons on their sites, perhaps signaling that tipping is the new “liking.”

On the higher end of money operations, money transfers are ideally suited for bitcoin’s native network structure, and the $400 billion-plus global remittance market is waiting to get disrupted, as bitcoin is lowering the costs of transmitting money by orders of magnitude in speed and simplicity. Further, we will soon become regular users of cryptocurrency wallets with built-in logic that will allow you to initiate money transfers or payments via programmatic conditions or rules that are based on smart contracts.

Money as content

One could argue that bitcoin will have a more significant impact than the Internet itself because the Internet didn’t have its own currency. The Internet was missing a native currency, and bitcoin is just that. We can think of bitcoin as an unbundled piece of content, just like content is unbundled all over the Internet; yet it appears well-integrated in websites, applications and services.

Bitcoin allows money to take a new meaning. If you think of this in evolutionary terms, we used to have content in printed newspapers and magazines, then the Internet came along, and allowed content to move aggressively to digital formats. Content that wanted to be free, became freed up on the Internet, and that created new forms of innovations on top of those models. With cryptocurrency, we can easily decouple the transaction logic from the money itself. Bitcoin will become gradually integrated and embedded right into the fabric of the Internet, and we will see it as native content itself.

Blockchain technology stack

There is a new technology topology that is forming for building applications on top of the bitcoin protocol.

Joel Monegro of USV has suggested a five-layer architecture that is blockchain-agnostic: miners and the blockchain; overlay networks; decentralized protocols; open source and commercial APIs; and applications. It is a good depiction of where we’re headed. Whether that exact topology or a variation of it is realized doesn’t matter a lot.

What matters more is that the blockchain concepts, and related technologies are sparking the imaginations of builders and developers who are innovating the form of services, protocols, infrastructure and applications that are decentralized. They are yielding increased consumer power, greater personal data ownership and reduced transaction costs, over the long term.

Digital rights and smart property

If you’re a creator or owner of digital assets, imagine if you could link these assets to the blockchain, binding your ownership (or rights) in irrevocable ways that cannot be undone unless you decide to transfer or sell them. And it’s all within your own control, not someone else’s.

In essence, you would be creating a “smart property,” which is an asset or thing that knows who owns it. The blockchain can be used as an auditable database linked to your cryptographic signature, and your smart property becomes linked to a unique digital fingerprint based on its content. Now imagine the portability, flexibility and discoverability aspects that accompany these capabilities, and that becomes a great lubricator for decentralized peer-to-peer trading and commerce.

Companies like Mine are enabling creators to establish a persistent link between their identity, reputation, a digital file and its meta-data using the blockchain as the proof of ownership. This will unleash new marketplace opportunities for trading these assets securely and efficiently.

Smart contracts based on “proof of work”

A smart contract is equivalent to a little program that you can entrust with money and rules around that money. The basic idea behind smart contracts is that a transaction’s contractual governance between two or more parties can be verified programmatically via the blockchain instead of via a central arbitrator, rule maker or gatekeeper.

Why depend on a central authority if two (or more) parties can agree between themselves after they bake the terms and implications of their agreement programmatically and conditionally? And do so with automatic money releases, while fulfilling services in a sequential manner or pay penalties, if not fulfilled?

At the heart of this undertaking is the key concept of “proof of work,” an integral part of Satoshi Nakamoto’s original vision for the blockchain’s role as the unequivocal authenticator of transactions.

The proof of work is a “right” to participate in the blockchain system. Expect a not-too-distant future where smart contracts based on proof of work and smart property will be dispensed and executed routinely. Smart contracts are potentially Ethereum’s sweet spot, as they represent its atomic unit at the code level, allowing anyone to write them, along with their own rules.

Decentralized peer-to-peer marketplaces

Decentralized peer-to-peer marketplaces are a stepped-up evolution from what we have today in the most successful marketplaces (e.g. Uber, eBay, Amazon). Actually, decentralized peer-to-peer marketplaces threaten to replace some of these existing players that operate semi-centralized markets.

In a decentralized peer-to-peer marketplace, anyone sells and anyone buys, while the center controls less but facilitates more. Trust, rules, identity, reputation and payment choices are embedded at the peer level. Participants arrive already trusted and decentrally acknowledged.

Examples of marketplaces and services to support them are being concocted by startups, such as La’zooz for transportation, or OpenBazaar for P2P trading. A decentralized P2P marketplace has a lot less friction at the center than traditional marketplaces. There are a lot more power and benefits at the edges than at the center. Here’s a more detailed description of the characteristics and behaviors of decentralized P2P marketplaces.


Not only does bitcoin allow companies to mint their own currencies and tie its appreciation to their success, it can also support the full life cycle of equity issuance, governance and trading.

Classical stock offerings could be replaced by a crypto-crowdfunding scheme. The meaning of “equity” is unbundled, and it is reconfigured on the blockchain, therefore potentially re-evaluating the legal nature of the corporation. This particular scenario is also related to the concept of distributed autonomous organizations (DAOs), as fully automated business entities that run by interacting with autonomous agents that contribute to its value appreciation by virtue of the collective intelligence and actions of its users.

This will allow organizations to have global IPOs from day one of their operations. Although the ramp-up can be slow, value is initially commensurate with the maturity of operations, and as users contribute more value to the decentralized operations, overall value and equity continue to increase. Companies like Swarm are enabling cryptoequity-in-a-box, along with sophisticated programmable governance based on smart contracts building blocks.

Decentralized identity

Your identity is yours and no one else’s. We keep our own passport (although it’s tied to a country) and use it to go anywhere, because it’s widely accepted, but we can hardly move or use our identity from one website to another.

Why not decentralize our identities (and even online reputations), along with their parameters, and own them ourselves? Why can’t we arrive at websites or web services with our own identities and move around that way? A decentralized identity opens the doors to a variety of interesting decentralized applications. Openname is working on decentralized identity as a building block protocol for decentralized applications.

A tech renaissance as the path forward

For bitcoin to succeed, we need to approach the new things that were not possible before. Copying the current system is only a starting point. It’s better to invent new things instead of fighting all things, and it’s easier to create new systems that circumvent the old ones.  Of course, bitcoin can replicate some of what is currently being done, but that’s not where most of the interesting developments are.

To see innovation, you need to look at the applications and usages inside new, pure bitcoin spaces, ones that are not constrained by the cumbersome legacies of the past.

Think about new spaces and businesses where you own your identity online, bind your digital assets to the blockchain, and accept payments or get paid in bitcoin or other cryptocurrency, without the need to have an existing bank account. Think about choosing the rules of doing business via smart contracts that protect you. Then attach yourself as a node onto a decentralized peer-to-peer marketplace in order to get discovered and do business.

That is the future of the trust web

Bitcoin’s economic success will not depend on a permission to transfer value to it from other financial assets. Bitcoin is its own currency and has its own technology stack, and it is creating its own wealth. Bitcoin’s native wealth creation will dwarf the current value we see from the transfer of fiat money into wallets (approximately $5 billion as of December 2014). Fiat transfers were just a starting point to boot it up.

That’s why going head-on against existing stakeholders and regulators is a futile exercise. The bitcoin economy growth will come from the creation and appreciation of its own value around its own ecosystem. For example, users will be paid in cryptocurrency in exchange for real services, decentralized apps members will add crypto value to decentralized organizations by virtue of their actions, and new crypto tokens will continue to be mined and linked to the creation of new business models built on top of blockchain protocols.

This is all starting to happen, and it is unstoppable. It’s more than a new paradigm. It’s a renaissance for technology, computer science and cryptography.

Read More Read More, Posted by: FreeSpeach
(21-07-2016, 06:38 PM)brokenfate Wrote: Hello,where I can gett xlm address

A Stellar wallet is an application that allows you to send and receive different currencies/assets on the Stellar network. If you come from Bitcoin or another cryptocurrency you may already be familiar with wallets. All Stellar wallets are lightweight applications and don't need to download the full ledger history.
Here is an overview of the most popular Stellar wallets.

Search Centaurus Android wallet Search 
Centaurus Android wallet is more feature rich. You can get it here:

[Image: attachment.php?aid=280]
[Image: ntwQUZ1.png]

[Image: attachment.php?aid=274]
It will automatically create an account for you and keep the secret key stored in your phone. 
You should export the secret key and store it in a secure location in case you lose access to your phone.
While using the wallet I noticed some small bugs, like the camera view for scanning QR codes is stretched vertically on my Galaxy S6 and it's hard to get the QR code to be recognised.
The description of the application also says:
Quote:Don't hold more Lumens in this app than you need for every day purpose and you can afford to lose in worst case! Use at own Risk.
During my usage I never noticed major issues in the Centaurus wallet.
[Image: attachment.php?aid=273]

Search Lobstr iOS and Android wallet Search 

The Lobstr wallet has a really nice design. You can get it here:

[Image: 7zYQVgx.jpg]
I had it previously installed on my phone, but didn't use it. After I sent some Lumens to the wallet the transaction didn't show up in the view, but the account balance showed that the Lumens arrived. Then I tried to send some Lumens but it asked for a password that I couldn't remember. I went to their website and reset the password.

Search account viewer Search 

The minimal data that represents an account is a public/secret keypair. You can generate a new keypair on this site:

It is important to safely store and never let anyone get access to your secret key. Or she/he will have complete control over your assets in this account. If you lose access to your private key you will also lose access to all assets that this account is holding.

Now you can use's account viewer to see your account balance and send Lumens:

[Image: tYxXIb0.png]
The account viewer is a simple application that gives you only a minimalistic interface without much functionality. You are left on your own to secure your account's secret key. Another drawback of the account viewer is that you can only send Lumens (XLM) and no other assets.

Search Scotty's Wallet  Search 

Another web based wallet is Scotty's wallet:

It is the most feature rich wallet exposing almost all options of the Stellar platform. It allows you to hold multiple assets, place orders on Stellar's distributed exchange and perform many other actions. This makes it also the hardest to use.

[Image: ONAVPJP.png]

Notice that the wallet points to the test network when you first navigate to the website. If you want to use the live network you need to go to Advanced => Change Settings and set it to live network.
I noticed some small issues while using it. Like the export QR code for Centaurus not being accepted by Centaurus, but most of the core functions work as expected.

Quote:Usually cryptocurrencies differentiate between wallets that are full nodes or thin clients (SPV). There is no need to have a full node as your wallet. Reason for bundling everything together are mostly historic. The first Bitcoin implementation was a full node, wallet and miner in one.
Stellar started from scratch and used a much better separation of concerns.

Read More Read More, Posted by: san2ok


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