Why Cryptocurrencies Matter [Opinion]

Why Cryptocurrencies Matter [Opinion]

After telling friends and family what I do for a living, I’m often asked, “Why cryptocurrency?” And it’s gotten me thinking: what is it about this space that I find so fascinating, so promising, and so important?

Of course there are a number of good explanations. There’s the obvious fact that cryptocurrencies are new and exciting from a technological point of view. Distributed networks are building censorship resistance; encryption is facilitating trustless online transactions; and blockchains are revolutionizing countless industries across the globe—even if the technology still needs work before realizing its full potential.

Then there’s the other obvious fact: that cryptocurrency is a multibillion dollar industry offering the prospect of lucrative financial returns. While 2018 has certainly put a damper on this side of the crypto industry, hope for the next bull run still lingers in the mind of every cryptocurrency enthusiast, myself included.

But these superficial characteristics are not enough to explain my interest in cryptocurrencies. If I wanted to write about technology, why not quantum computing, AI, genetic engineering or space travel? If I wanted to make money, then why not take the traditional finance route, which offers incredible wealth and significantly less risk?

The truth is that, while the obvious facts still matter, the real reason I and so many others care about this space is the unique set of principles that lie at the heart of cryptocurrency and cryptocurrency alone. What I think many outside of the crypto industry fail to appreciate is that cryptocurrency is more than technology, and it’s more than money. It is a concerted effort to reintroduce two basic principles that have been forgotten in the digital age:

  1. Individuals have a right to privacy.
  2. Decentralized power is preferable to centralized power.

These two beliefs are the foundation upon which nearly every cryptocurrency is built, and they do a decent job of summarizing what is unique about cryptocurrency compared to other fintech industries. What’s particularly interesting about these principles is that they transcend political lines: two individuals can agree with both of the above statements for very different reasons. This contributes to cryptocurrency’s widespread appeal, and is a big part of why cryptocurrency enthusiasts are so passionate about the space.

The remainder of this article will take a closer look at the philosophical underpinnings of cryptocurrency’s two most basic principles. Where did they come from? What reasons do we have to believe them? And how can we convince people outside of the cryptosphere to believe them too?

The Cypherpunk Ethos and the Right to Privacy

No group has played a bigger role in the creation of modern cryptocurrencies than the Cypherpunks. It’s a term you’ve probably seen thrown around in cryptocurrency circles, but maybe never heard a good definition of what it means. The most influential description of the Cypherpunk ethos comes from Eric Hughes’ A Cypherpunk Manifesto (1994), which describes the Cypherpunks as an ideologically motivated group of computer programmers who use cryptography to promote digital privacy.

For Hughes and other Cypherpunks, “privacy” is defined as “the power to selectively reveal oneself to the world.” This power is essential in order for individuals to have a personal life that remains separate from their public one. It’s something we often take for granted in our face-to-face interactions, while simultaneously giving it up altogether in many of our interactions online.

Early discussions about privacy on the Internet tended to focus on naive children making poor choices, first by interacting with strangers in shady chatrooms, then by revealing too much personal information on their publicly viewable MySpace profiles. In retrospect, our concerns were far too narrow.

Only in recent years have we begun to realize how much of our personal data has been collected by tech companies like Facebook and Google. I say “begun to realize” because we still have not fully come to terms with it, and we still have many unanswered questions. Most obviously, what these companies actually do with our data remains somewhat of a mystery: we know that they sometimes sell it to advertisers and other vague entities, but it’s hard not to wonder what Mr. Zuckerberg and Mr. Pichai still haven’t told us.

Indeed, social media companies are a major concern, but they are arguably not the worst offenders with regard to privacy, only because it is still possible to remain anonymous on social media. The arena in which privacy has been completely cast aside on the Internet is in online payments.

Prior to the advent of cryptocurrencies, the only options one had for making payments on the Internet were banks and Paypal, both of which require users to complete know your customer (KYC) requirements which eliminate the possibility of privacy.

Cypherpunks recognized this problem back in the early 90s. “When my identity is revealed by the underlying mechanism of [an online] transaction,” writes Hughes, “I have no privacy. I cannot here selectively reveal myself; I must always reveal myself.”

The Cypherpunk solution to the above problem was to create “anonymous transaction systems.” It might sound unusual in the Internet age to think of anonymous payments, as we’ve become so accustomed to revealing our personal information in many everyday purchases; but people have been making “anonymous” payments for millennia in the form of cash, coins or trade. Such systems are anonymous in that they do not require you to reveal your identity in order to make a purchase. For example, if you buy something with cash at the store, the clerk won’t ask for your name and address—which is handy if you’d prefer some purchases to be private.  

The Cypherpunk influence is clear in the Bitcoin white paper, in which Satoshi describes Bitcoin as “a peer-to-peer electronic cash system.” And true to the cypherpunk emphasis on privacy, bitcoin allows two parties to transact with one another without having to trust each other, and without having to reveal their identities to anyone.

Cryptocurrency enthusiasts generally resonate with the Cypherpunk ethos, but I’ve found when speaking to people outside the cryptocurrency industry that the right to privacy is not always taken very seriously. Many people are not particularly concerned about sharing their online payment histories with their payment providers. Nor are they concerned that such data might be compromised as it was in the notorious Equifax hack.

In my experience, such people are quite comfortable trusting the centralized third parties who make their payments possible. They either do not see any reasons why banks should not be trusted, they see the reasons but don’t find them compelling enough to explore alternatives, or, perhaps most commonly, they are willing to sacrifice some individual privacy in the name of safety/regulation/the common good: “Why would you need private transactions—unless you have something to hide?”

Ultimately this is why the right to privacy is the lesser of the two basic principles: because for many people, a transaction between you, your transaction partner, and your bank is private enough. But the types of people who are drawn to cryptocurrency tend to have stricter standards for privacy, standards that are based primarily on a belief that centralized power is inherently untrustworthy.

Decentralization: A Rallying Cry for Libertarians and Anti-Capitalists

A remarkable thing about cryptocurrencies is that they invite people to reevaluate their fundamental conceptions about how the world should work. For example, should governments and banks be in complete control of the money supply? It’s unlikely that this question would have been taken seriously 30 or 40 years ago, simply because there weren’t any viable alternatives to the existing system. With the advent of Bitcoin and other cryptocurrencies, however, many enthusiasts have begun to imagine new worlds without centralized money.

The desire for such a world is rooted in the second, and most important, principle of cryptocurrency: decentralized power is preferable to centralized power.

I was careful when writing this principle to make it very broad, so broad that it is likely to be agreed upon by almost everyone who reads it. Centralized power in its most extreme form is called tyranny, and there is nothing more universally despised than a tyrant.

Many of the most important structures in modern society are explicitly designed to prevent tyranny: democratic voting, governmental checks and balances, term limits, anti-trust laws, anti-discrimination laws, and progressive tax systems. I could go on and on, but the point is that nearly everyone recognizes that too much power cannot reside in one place, or else that power will likely be abused.

With these ideas in mind, I ask once again: Should governments and banks be in complete control of the money supply?

Cryptocurrency enthusiasts answer this question with a resounding “No.” Together, governments and banks have a duopoly on money, which gives them too much control over society as a whole.

As mentioned in the introduction, much of the power of this principle comes from the fact that it can be shared by individuals with completely opposite political leanings. Libertarians and anti-capitalists, for example, are likely to have clashing views on nearly every issue, but can still agree on decentralization.

Libertarians are in favor of decentralization because they are most interested in protecting the rights of individuals, including the rights to privacy, to free enterprise, and to self-defense. Given the focus on the individual, it makes sense that libertarians are generally distrustful of centralized power, as centralization always brings with it an implicit threat of coercion.

When it comes to the financial system, libertarians will argue that both the government and the banks have too much power. A favorite target of libertarians is the Federal Reserve and other central banks, which overtly manipulate a country’s money supply.

Libertarians point to the Fed and say that it is an affront to the free market and exerts too much power over individuals’ financial lives. Cryptocurrencies appeal to libertarian sensibilities because cryptocurrencies are capable of taking power away from the government and putting it back into the hands of individuals.

Anti-capitalists, by contrast, support cryptocurrencies and decentralization for entirely different reasons, usually emphasizing the power—and corruption—of banks rather than of governments. For the anti-capitalist, the ultimate goal is to produce a more equitable society in which resources are more widely distributed among all people. Government can be a valuable tool in bringing about this distribution; but banks consist of profit-minded “1 Percent-ers” who will happily cheat marginalized groups if it helps their bottom line.

For the anti-capitalist then, cryptocurrencies are valuable because they take power away from banks (and the wealthy people who run them) and redistribute that power across society.

The lines of thinking used by the libertarians and the anti-capitalists have almost nothing in common, yet decentralization of financial power is desired by both. It’s rare to find a principle that resonates with such a wide range of people while at the same time being so revolutionary. In my mind, this a strong indicator that there is truth in it.

Conclusion

Though crypto enthusiasts may disagree in profound ways, nearly everyone who cares about this industry shares a belief in two basic principles: individuals have a right to privacy, and decentralized power is preferable to centralized power. In its most favorable light—which admittedly is not the reality much of the time—the ultimate goal of cryptocurrency is to defend these principles in the digital age.

But is it all really necessary? In other words, do these principles really need defending?

If you’re reading this article, you likely live in a country with reasonably trustworthy financial systems. I for one am fortunate enough to live in the United States, which by global standards has incredibly fair institutions—even if it doesn’t always seem that way.

However, it’s important to never assume that stability and prosperity are permanent. A functioning society is a fragile thing, and hubris is a recipe for destruction.

The problem is not necessarily that our existing institutions are fundamentally broken, although many people would certainly agree with that statement. The problem is that we are all subject to those institutions whether we like it or not, and there’s a strong sense among us that the institutions are not always looking out for our best interests.

By providing individuals with privacy while simultaneously stripping power away from the nameless, faceless institutions that dominate society, cryptocurrencies offer a safeguard against tyranny in all its forms—and I cannot think of a more noble goal than that.

The post Why Cryptocurrencies Matter [Opinion] appeared first on UNHASHED.

Ontology Embraces Securities With New Token Standard

Ontology Embraces Securities With New Token Standard

Ontology, a blockchain with a focus on identity management, has announced a new token standard called OEP-506. This optional standard will allow developers to create and issue security tokens that are compatible with most Ontology wallets.

Security tokens created under OEP-506 can be controlled in a way that complies with regulations and satisfies user trust. The new token standard will also be tightly integrated with Ontology’s ID system, which can be used to approve investors and other parties.

Will this type of token become a prominent trend?

Security Tokens In a Nutshell

Securities are tradable assets that are subject to certain regulations. Although the SEC has made it clear that ICO tokens in general are securities, Ontology is using the term “security token” to refer to something slightly different.

By Ontology’s definition, security tokens are used to tokenize real-world securities such as corporate equity, trust shares, or precious metals — all of which are the target of the new standard. Traditional ICO tokens can still use Ontology’s regular token standards: OEP-4 and OEP-8.

However, the new standard does support practices that have become commonplace in both traditional ICOs and security token offerings (STOs). Most notably, the new standard facilitates KYC procedures by using Ontology’s ID system to approve investors who want to obtain a particular token.

In conjunction with Ontology’s ID system, the new standard can also provide different degrees of authorization and permission to different participants. For example, it could allow specific exchanges to access investor information. Additionally, the new standard would allow the creation of compliance and notification systems.

Ontology suggests that security token offerings have made access to security ownership widely available. It also claims that its own blockchain infrastructure and identity services will facilitate access on an even greater scale. With the help of Ontology, security tokens will indeed gain some amount of adoption thanks to the new feature.

Nevertheless, securities remain a controversial topic in the crypto world: some see securities regulations as exclusionary and overreaching, while others see blockchain-based securities as a vital bridge between traditional finance and the blockchain. In any case, OEP-586 serves a definite purpose and will likely remain a useful feature.

Suggested Reading Learn about the best EOS wallets.

Alternatives to Ontology

Ontology is not the only platform with an interest in supporting security tokens. In fact, Ethereum proposed a similar standard earlier this year. Since countless tokens can rely on a single underlying standard, this approach is extremely convenient: a new security token can be deposited in almost any Ontology or Ethereum wallet.

However, more full-fledged security token platforms are also available. For example, Swarm exclusively provides security-related features. Some platforms, such as OpenFinance, are committed to complying with U.S. regulations. These platforms usually introduce their own blockchain and token standard, but not always: for example, Tokeny is integrated with Ethereum.

As blockchain technology becomes more widely adopted by mainstream finance, it seems likely that controllable security tokens will become more prevalent — but whether specialized platforms will prevail over popular platforms remains to be seen.

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Bisq Decentralized Exchange Drops Bitcoin Cash, Denounces Hash War

Bisq Decentralized Exchange Drops Bitcoin Cash, Denounces Hash War

Bisq, a major decentralized exchange, has announced that it is dropping support for Bitcoin Cash (BCH) as part of its latest update. Unlike some decentralized exchanges, which often trade minor tokens, Bisq has always focused on supporting leading coins. Now, one major cryptocurrency will no longer be available to users.

The removal is a direct result of the recent Bitcoin Cash hard fork, which left the coin’s mining community divided. Many leading exchanges temporarily delisted Bitcoin Cash during the fork, but quickly restored the coin once a dominant faction (Bitcoin ABC) emerged. The fork has concluded, and Bitcoin Cash is now offered on most exchanges once again — although it is trading at a much lower price than it once was.

Bisq, however, does not see eye-to-eye with those major exchanges, and it relies on community opinion to decide which coins are included on the exchange. Last week, Bisq Founder Manfred Karrer began a thread in which he expressed contempt for Bitcoin SV, a Bitcoin Cash faction that has filed lawsuits against the dominant faction, Bitcoin ABC. Karrer wrote:

“Those lunatics from the BCH [SV] camp are starting to [sue] exchanges who listed BCH (Kraken). I think now the time has come to cut any connection with those scammers. If you support that proposal please add a thumbs up.”

Karrer also criticized the hash war, in which each faction is attempting to mine more blocks than the other in order to gain control of the Bitcoin Cash blockchain:

“BCH has created so much damage and their hash-war is probably the main reason for the current price crash in BTC. So that all sums up more then enough reason to not support anything related to BCH in any way.”

Within a day, the removal had received overwhelming support, with 44 upvotes and zero downvotes. Many users stated concern about the possibility of a 51% attack on Bitcoin Cash and the coin’s declining value. Others expressed distrust in market cap rankings, which allegedly make Bitcoin Cash appear to be more significant than it actually is.

Nevertheless, there was tempered support for Bitcoin Cash. One Bisq user argued that it is “bold to remove a top 5 cap currency” from the exchange. Another claimed that it is “not a good idea to take sides” in general. However, these responses did not persuade the community to continue its support for the coin.

Suggested Reading Learn about our picks for the best Bitcoin Cash wallets.

It should be noted that Bisq has doubled back on related decisions in the past. When Bitcoin Cash was first released in August 2017, Karrer and the Bisq community stated that they would not include the coin in the exchange. Bisq nevertheless added support for the coin a few months later.

Whether Bisq’s decision to remove Bitcoin Cash will last permanently remains to be seen. Although the discussion was heated, the decision was made quite hastily. It is possible that an effort to reintroduce Bitcoin Cash to Bisq will take place, or that a forked version of Bisq that supports the coin will be created.

In any case, the Bisq proceedings are certainly part of a larger division that has formed in the crypto community. The conflict shows no signs of dying down any time soon, and whether Bitcoin Cash will be able to maintain its high-ranking position in the aftermath of the fork is still uncertain.

The post Bisq Decentralized Exchange Drops Bitcoin Cash, Denounces Hash War appeared first on BitcoinLinux.

Binance Crypto Incubator Program Expanding to Five More Cities

Binance Crypto Incubator Program Expanding to Five More Cities

Binance Labs, the venture capital branch of the Binance exchange, is expanding into more cities in search of promising new blockchain startups via their incubator programs. Having launched in San Francisco earlier this year, March 2019 will see expansions into Buenos Aires, Lagos, Singapore, Hong Kong, and Berlin, reports CoinDesk.

Funding The Future

Each session consists of a 10-week program for fresh blockchain startups. San Francisco’s ends this Friday, but the next batch will see leaders heading to Singapore for a three-week showcase of their accomplishments. This first incubator session chose eight teams from 500 applicants, each of which received $500,000 to work on their ideas.

Ella Zhang, the head of Binance Labs, commented on the inclusion of Africa and Latin America in upcoming sessions, stating that “those two emerging markets have native blockchain and crypto use cases. So we hope to find teams solving local problems like payments, the instability of local currencies, or remittance problems.”

The goal with these Labs is to create “high-token projects” that would get listed on an exchange. To help with this, teams can promote their successes via Binance’s platforms after graduation. One example from the previous incubator is SafePal — a hardware wallet that only costs $10.

Zhang commented on the promotion techniques:

“Some of our enterprise solutions will have Binance adopt them as clients, adding projects that boost mainstream adoption could attract new users to Binance. Also, we’ll push the hardware [SafePal] product to our community and users.”

Suggested Reading : Learn how to transfer Bitcoin from Coinbase to Binance.

Helping Each Other Out

While it may seem only to benefit the startups, Binance actually gains a lot from the incubator program. Essentially, the company is guaranteeing itself early access to potentially game-changing blockchain projects. Commenting on SafePal, Zheng reveals, “We’ll help them build up the sales and distribution channel. We have the user base. Binance itself has over 10 million users.”

Binance Labs mentors include the co-founder of Earn.com — a project acquired by Coinbase — Eric Meltzer from Primitive Ventures, and Viktor Radchenko from Trust Wallet. These mentors can invest in startups via the program.

The founder of Path, a successful project coming out of the Labs program, Robert Yau, disclosed to CoinDesk just how helpful these mentors can be:

When I went in we had a tax software [provider] that used the platform. The big feedback was, there are only so many people doing crypto taxes. Chatting with different mentors and folks is how we came from where we originally were to where we are heading towards.”

Because of Binance’s program, Yau claims that there are 1,000 people on Path’s waitlist. Zhang adds onto this, asserting that “the ability to prove demand like this is crucial.” Binance looks at applicants based both on experience and their proven demand. “You should have customers, clients, if you’re doing enterprise solutions,” she concludes. “Only if the users are willing to pay for or are dying to use this feature, that’s product-market fit.”

The post Binance Crypto Incubator Program Expanding to Five More Cities appeared first on BitcoinLinux.

Top-Funded Stablecoin Basis Shuts Down Due to SEC “Regulatory Constraints”

Top-Funded Stablecoin Basis Shuts Down Due to SEC “Regulatory Constraints”

In a shocking move, Basis, the well-funded stablecoin formerly known as Basecoin, is closing its doors while returning raised capital to any investors.

As revealed via a blog post from CEO Nader Al-Naji, the team claims that “having to apply US securities regulation to the system” had a severely detrimental effect on their chances of launching the project.

Stable No More

The stablecoin set out to be “resistant to hyperinflation, free from centralized control, and more stable and robust than the monetary systems that came before it.” Basis was a good step towards doing so. Essentially, the project ensured stability by incentivizing investors to buy and sell the asset based on demand via bonds and shares. When demand is high, more coins will be created to match it. As demand lowers, assets would be repurchased.

Basis raised $133 million in one round of investing after publishing its white paper. However, when looking at regulatory policies, the team realized they would not be able to launch their project in its current state. The capital was raised from spaces such as Google Ventures, Bain Capital, and Andreessen Horowitz.

First off, Basis lawyers realized that while their main token would be free from securities status, the bond and share assets would not. Because of this, bond and share tokens would be up against transfer restrictions set by the Securities and Exchange Commission (SEC). Because of this, Intangible Labs, the team behind Basis, would have to limit tokens only to accredited investors for the first year. That limiting would lead to reduced liquidity alongside the project losing its censorship resistance. Also, each token’s year starts upon launch. This means the team could never entirely move from a whitelisted system.

Fewer investors participating on the Basis blockchain means it will be less stable and that others may not want to jump on. These restrictions would hurt the Basis ecosystem and prevent it from growing.

“We met with the SEC to clarify a lot of our thinking,” said Al Naji in an interview with Forbes. “The SEC generally avoids saying that something will definitely be one way or the other. But from that meeting we got the impression that we would not be able to avoid securities classification.”

Suggested Reading Learn about the best ICON wallets here.

A Long Time Coming

This isn’t the first forced change either. Basis launched in New York but had to move to New Jersey to avoid the state’s complicated BitLicense criteria.

Essentially, Basis is in trouble because it features a lack of intrinsic utility. Instead, it’s meant purely as a replacement for fiat currency. “Fundamentally, that lack of utility puts us on a different ground than ethereum or filecoin,” says Al Naji. “That puts us at a disadvantage in the existing regulatory framework.”

Al Naji ends the Forbes interview with some advice for fellow crypto startups. He says those looking to build stablecoins should found companies outside the United States. They shouldn’t take money from U.S. investors, and teams should be sure their company has some sort of “consumable utility.” Finally, he says that while current stablecoins are still tied to fiat currencies, they do provide features such as “speed and borderlessness,” and because of this, they “will actually do very well. But it’s a disappointment that we can’t offer an alternative that doesn’t rely on trusting a centralized authority,” Al Naji concludes.

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Number of On-Chain Transactions for Fiat-Backed Stablecoins Increased by 1000 Percent in Three Months

Number of On-Chain Transactions for Fiat-Backed Stablecoins Increased by 1000 Percent in Three Months

Since September, on-chain stable coin transaction activity has increased by over 1000%, according to a report from Diar. This statistic does not include the billions of trades per day on exchanges.

This boost is helped in part by the number of different stablecoins that have come online over the past few months. In that same time frame, we’ve seen TrueUSD (TUSD), Paxos Standard (PAX), USD Coin (USDC), and Gemini Dollar (GUSD) raise $5 billion in value.

Improving Numbers

Interestingly, these transaction stats are much better than when Tether (USDT) was the majority stablecoin. Back then, the asset would stick within Bitfinex or similar exchanges and wasn’t traded much on-chain. This was mostly due to Bitfinex having the largest amount of Tether liquidity, which made it the ideal place to trade.

The increase in on-chain usage begs the question: why are all these stablecoins moving around?

In terms of actual numbers, TrueUSD saw the most transactions at 24,372, with USDC in second at 16,620, and PAX in third with 12,154. Interestingly, the total value of PAX transactions was higher than that of USDC, despite having around 25% fewer transactions.

A Holding Majority

In related news, a CCN reporter found that of the top five holders of GUSD, three of them seem to be Huobi-owned wallet addresses. The first- and third-ranked wallets are named Huobi_3 and Huobi_7, and together hold 51% of Gemini’s total assets, worth $44.4 million. The second highest holder is Maltese exchange OKEx, while Huobi also owns the fifth largest wallet worth $5 million. If we’re counting every Huobi wallet address, it seems that they hold 65% of all Gemini Dollars.

It’s important to point out that it’s probably not the exchanges themselves, but rather the exchange users who hold these assets. Neither of these holdings are within the Winklevoss’ Gemini exchange. This is a good sign, as it means GUSD is actually being used.

This news comes shortly after Huobi launched their own “multi-stablecoin” with the ticker HUSD. Their asset is based only in the Huobi exchange and serves as an intermediary between the different stablecoins.

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IOTA to End Centralization With ‘Coordicide’

IOTA to End Centralization With ‘Coordicide’

IOTA has reportedly settled on a plan to end centralization within its network by eliminating its coordinator node. This part of the IOTA Tangle is currently responsible for ordering transactions, but it introduces a number of secondary problems.

IOTA has dubbed the process of removing the node ‘coordicide,’ and it is determined to eliminate the node next year. TangleBlog, an independent blog that has been in contact with IOTA developer Hans Moog, reports that IOTA has finalized its plans to remove the node:

The Coordinator Node

IOTA’s coordinator node was originally created to order transactions on the IOTA Tangle. This responsibility prevented attackers from dominating IOTA’s hash rate and performing a majority attack—or,  in IOTA’s case, a 33% attack.

Unlike Bitcoin, IOTA is not mined. However, the platform still requires its users to perform a small amount of hashing, making a majority attack on IOTA theoretically possible. The coordinator node currently provides a safeguard against such an attack, but it also introduces a massive amount of centralization.

This means that quite a lot of power is concentrated in the coordinator node. For example, the node allows transactions to be prioritized and enables funds to be frozen. (However, it does not allow those funds to be taken away.)

The coordinator node also introduces a single point of failure: if the node stopped working or became the target of an attack, the entire IOTA network would cease to function.

Suggested Reading Need help choosing an IOTA wallet? Take a look at our guide.

A Specific Solution

These issues led to complaints from members of the IOTA community, who criticized the platform’s level of centralization. The IOTA team was responsive, and they began working on a solution in late November. This process has been thoroughly outlined on the IOTA blog.

Three possible approaches were considered. First, a node accountability and reputation system was proposed. Next, an improved tip selection algorithm with random walks was suggested. Finally, a constellation-like “star” system with trusted transaction pathways was considered.

Any of these solutions would eliminate the need for a coordinator node. However, the Tangle Blog did not reveal which of the above approaches was selected by IOTA developers, only that one solution has indeed been selected. It is likely that the IOTA Foundation will make an official announcement in the near future.

The uncertainty surrounding the development is not unusual, as IOTA has always been highly experimental. For this reason, blockchain features that would otherwise be commonplace (such as reusable addresses and smart contracts) have taken some time to arrive on IOTA.

Decentralization is a fundamental value of many crypto and blockchain advocates. Now, at long last, the removal of IOTA’s coordinator node will bring a degree of decentralization that is expected by most of the crypto community.

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Razer Releases “Mining” Software for Gaming Loyalty Program

Razer Releases “Mining” Software for Gaming Loyalty Program

PC gamers invest tremendously into their computer rigs. This marks them as prime candidates to be cryptocurrency miners — primarily due to their powerful GPUs. However, getting involved with crypto mining can be confusing for non-enthusiasts. Computer peripheral maker Razer is here to change that.

Based in Singapore, the gaming hardware company revealed Razer SoftMiner this Wednesday via a tweet:

The software enables users with top-tier GPUs (Nvidia GTX 1050 or AMD RX 460 are recommended as minimums) to mine “Razer Silver” while their computers run idle.

Suggested Reading Learn about the best Monero wallets on the market today.

Mining For Fake Crypto

Miners are rewarded in Razer Silver—a digital (non-crypto) asset based in Razer’s loyalty program. Users can trade Silver for gaming mice, keyboards, games, and more. According to the website, a gamer with the “proper setup” can earn 500 silver per day. Silver lasts for a year before expiring and isn’t very valuable. As reported by CCN, the cheapest Razer Silver item is a $5 discount to the storefront, which costs 1,500 Silver. That match converts to $1.67/day or $0.07c/hour. Also, that number doesn’t include electricity prices.

Users cannot convert Silver to fiat currency, though they can purchase a $10 Domino’s Pizza gift card for 14,000 credits. That’s about a month’s worth of consistent mining. In fact, mining for 24 hours a day every day of the year only nets 182,500 Silver. That’s just under 100,000 less than the most expensive item, the Razer Huntsman Elite, at 280,000 points. This news, on top of Silver expiring yearly, doesn’t seem like much of a deal for miners.

Also, these numbers are going to drop as more people get involved. And that’s assuming Razer is entirely forthcoming about all the data.

Twitter users aren’t happy about this at all. The first reply reads, “Seriously? This is an early April fools joke right?” Another user states “Wow. What exploitative, bad for the environment, bad for people’s equipment, fing nonsense. Grats on loosing a customer for good.”

Unsurprisingly, Razer isn’t the only major PC company to release a software miner. Last month, Asus dropped its own version of SoftMiner in partnership with Quantumcloud. Interestingly, Asus enables users to cash out via PayPal or WeChat, while Razer miners are only rewarded in Silver.

We can expect to see some clarification from Razer in the coming days. That said, at least we are getting more mainstream exposure regarding cryptocurrencies. If only it were a bit more positive.

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What is Tezos? | The Complete Beginner’s Guide

What is Tezos? | The Complete Beginner’s Guide

Although it is a relative newcomer to the blockchain market, Tezos has been propelled through the ranks after enduring a rocky start. Tezos offers dApp blockchain features that make it comparable to Ethereum or EOS, but Tezos’ underlying blockchain introduces significant technical innovations. This guide provides a broad overview of the Tezos platform.

Table of Contents

  • What is Tezos?
    • Legal Roadblocks
    • The Long-Awaited Launch
  • The Technology Behind Tezos
    • Liquid Proof-of-Stake Consensus
    • Verifiable Smart Contracts
    • Self-Amending Updates
  • Tezos Advantages
  • Tezos Disadvantages
  • How to Buy Tezos
  • Tezos Wallets
  • Conclusion

Tezos was conceived by Kathleen and Arthur Breitman as a platform that would fulfill the same role as Ethereum: a programmable blockchain capable of supporting decentralized applications.

Tezos Co-founder Arthur Breitman

However, Tezos was also an attempt to innovate on existing consensus mechanisms, governance models, and upgrade practices. In short, Tezos was meant to be a flexible blockchain that would operate smoothly and continuously.

Tezos finally came into existence in 2017, when the Breitmans held an ICO to raise money for the project. This ICO campaign raised $232 million, making Tezos the largest ICO at that time. The project also gained high-profile investments from firms such as PolyChain Capital and independent investors such as Tim Draper. However, Tezos would soon face legal issues that would threaten the success of the project.

A few months after Tezos’ ICO ended, the Breitmans entered a dispute with Johann Gevers, who served as co-founder and president of the Tezos Foundation. This dispute concerned intellectual property ownership and Tezos’ free software license. In addition to causing Gevers to part ways with Tezos, this also caused Tezos’ launch to be delayed.

More critically, the dispute prevented Tezos tokens from being distributed to ICO investors. As a result, investors filed a number of lawsuits against Tezos, arguing that the project’s tokens were unregistered securities. These lawsuits sought refunds, although Tezo’s ICO had called investments “non-refundable donations,” which complicated matters.

The Tezos tokens were eventually distributed in June 2018 when Kathleen Breitman took the initiative to push through the project despite legal uncertainties. Unfortunately, more complications came with this decision: investors who had already purchased tokens were forced to comply with KYC identity checks. This quickly split the Tezos network into two parts: the standard Tezos chain, and an alternative chain without KYC called nTezos.

The standard Tezos network ultimately prevailed, putting the project back on track. Tezos’ first testnet was finally launched on June 30th, 2018, and this version of the platform was used to gradually implement and test the platform’s technical features. Later, in September 2018, the Tezos mainnet was launched, bringing the platform to the public. Tezos has now attracted over 450 “bakers” who produce blocks, plus many more general users.

Like all blockchains, Tezos uses a series of blocks to manage transaction data and other information. It also has a unique consensus mechanism, upgrade system, and programming language, all of which are explained below.

Consensus is the manner in which blockchain participants come to an agreement on the validity of blocks on a blockchain. Tezos’ consensus mechanism can be described as a combination of traditional and delegated proof-of-stake.

Traditional proof-of-stake, which is used in Ethereum’s upcoming Casper protocol, allows node operators to lock up their own tokens for a chance to validate blocks and earn token rewards. This system allows an unlimited number of nodes to vie for control over block validation, and the fact that countless stakers can exist makes the model highly decentralized. Unfortunately, staking is too expensive for many basic users: even if Ethereum lowers the minimum staking amount to 32 ETH, staking will still require thousands of dollars.

Meanwhile, delegated proof-of-stake (DPoS) allows users to stake their tokens in order to vote for a limited number of block producers. EOS, for example, elects only 21 block producers, all of whom are large organizations that must dedicate massive amounts of computing power. This model has come under fire for centralizing power in the hands of a few block producers. However, delegation and voting make it possible for less wealthy users to have an indirect say over the course of the blockchain.

Tezos combines these two models with its unique “liquid proof-of-stake” mechanism. This model allows up to 80,000 block validators or “bakers” to accept delegated tokens. Bakers must hold 10,000 XTZ, which is, again, thousands of dollars. However, Tezos also allows users with smaller holdings to delegate their tokens to bakers and receive rewards in return. In other words, liquid proof-of-stake permits users to either become a full-fledged block validator or merely delegate tokens to validators.

The following infographic gets into some of the specifics of the baking process, which involves unique features like a “quality assurance team” and a “bonding” or “cooldown” phase:

Just like Ethereum and EOS, Tezos supports smart contracts, which are blockchain programs that can execute automatic transactions. However, Tezos uses its own programming language, which is called Michelson. Michelson is Turing-complete, meaning that it has a level of complexity that is found in almost all current programming languages. That means that Michelson can be used to program almost any modern program.

Additionally, Michelson allows for formal validation, a process that mathematically detects problems in code. This process is not perfect, but it does catch some bugs that would otherwise become costly when exploited by hackers.

Ethereum and EOS also have some third-party projects that are attempting to implement formal verification, but Tezos already has this feature built into its smart contract language. Incidentally, Cardano’s Haskell language also has formal verification features.

Tezos is self-amending, meaning that it does not need to go through regular hard forks in order to be upgraded. Even when hard forks are agreed upon by an entire network, they can create a lot of work for developers and node operators. Tezos has a more seamless upgrade process that does not involve regularly forking the blockchain.

That said, it is possible for part of the network to decide to fork Tezos — indeed, this has already happened during the initial KYC controversy.

  • Affordable staking: Tezos provides a relatively affordable way for users to stake or delegate their tokens and receive rewards. There is no minimum amount of tokens that a user must delegate, although some bakers may set their own limits. Users who delegate their tokens receive payouts every seven cycles (approximately 20 days).
  • Accessible governance: Tezos combines the best features of proof-of-stake and delegated proof-of-stake. In addition to generating and distributing token rewards, liquid proof of stake gives most participants a chance to influence the network, either directly or indirectly.
  • Seamless upgrades: Blockchains may experience downtime or price fluctuations around the time of routine hard fork upgrades — this was recently a problem for Steemit, for example. Tezos can avoid those issues with its self-amending ledger.
  • Verifiable smart contracts: Tezos’ smart contracts may provide improved security and resistance against attackers thanks to its formally verifiable contracts. Admittedly, the absence of attacks on Tezos is partially due to the fact that the platform hosts very few dApps at the moment.
  • Education initiatives: Tezos has offered generous grants in order to encourage developers to study the platform. So far, Tezos has given away at least $30 million worth of grants and is working with Kingsland University to provide online training.

  • Lack of commercial support: Although it is technically impressive, Tezos is not widely supported in commercial transactions, nor is this a major goal of the platform. Although XTZ tokens may be appropriate for investors, bakers, and delegators, those who intend to spend their crypto should stick with Bitcoin, Ethereum, or another leading coin.
  • Immature network: Much of Tezos’ development team has a focus on programming language theory, possibly to the detriment of other areas. Although the network has gained a considerable amount of users, it is still fairly young and has not reached its capacity. It is difficult to predict what Tezos’ transaction fees and transaction speeds will be once the platform becomes more widely used, and developers have been mostly silent on this matter.
  • Delegation issues: Tezos allows users to delegate their tokens to bakers and receive rewards, as noted above. However, the growth of the network has caused many popular bakers to surpass their capacity, causing a number of users to miss out on their rewards without being notified. A solution to this problem is still uncertain as of December 2018.
  • Past controversies: Tezos’ past legal issues resulted in key Tezos figures (including Johann Gevers) leaving the organization. Although Tezos has restored its public image and seems to have a stable organization, it is not clear whether new divisions between key figures will form.

The Tezos coin (XTZ) can be obtained through a number of prominent exchanges, including Kraken and Bittrex. Each exchange has different trading pairs, meaning that you can purchase XTZ by spending ETH, BTC, Tether, or fiat currency.

A complete list of Tezos trading pairs is available on CoinMarketCap. Additionally, reviews of most major exchanges are available on Unhashed. These resources can help you decide which exchange to purchase coins on.

It should be noted that Gate.io, an otherwise minor exchange, trades a substantial amount of XTZ tokens. This is because Gate.io is involved with the Tezos baking process and distributes rewards to users of the exchange.

Since Gate.io is a minor exchange, this reward scheme is not recommended: you should instead purchase tokens from a well-known exchange and delegate tokens to trusted bakers.

Suggested Reading Learn more about Kraken and Bittrex respectively, here and here.

Unlike most cryptocurrencies, the Tezos team has not introduced an official wallet, nor does it intend to. Although the Tezos client does provide a command-line tool that serves this purpose, most users should select a community-developed wallet that is easy to use. There are several options to choose from:

  • Tezbox: Tezbox was the first-ever Tezos wallet, which makes it a reliable choice. It supports mobile devices and desktops, although it can also be accessed through a desktop web browser. It stores addresses locally on your device, which is a good security practice. Tezbox may also appeal to developers, who can integrate the wallet with their dApps.
  • Kukai: Kukai is a desktop wallet that supports Windows, Mac OSX, and Linux. A web interface is also available. Notably, it features offline transaction signing, which implements security in a manner similar to hardware wallets.
  • Tezos.blue: Tezos.blue is available for Android, iOS, and Windows. Like Tezbox, it can be used by developers to connect a wallet to an application.
  • Galleon: Galleon is a desktop wallet for Windows, Mac, OSX, and Linux. It has a fairly basic GitHub page with little information and few instructions; it may not be a good choice for new users.
  • Wetez: Wetez is a mobile wallet for Android and iOS. It promotes itself as a security-focused wallet. However, its security features are fairly basic: it stores private keys locally, a standard practice that is also carried out by Tezbox and other wallets.
  • Magnum: Magnum is a web wallet. Unlike some web wallets, it merely is accessed through a web browser and does not store coins or private keys online. It stores private keys on your device, just like desktop wallets do.
  • Hardware wallets: Ledger (via a Tezbox plugin) and Trezor also support Tezos.

It is important to ensure that you are obtaining your wallet from the correct source. It is possible for phishers to upload fake software that impersonates a real wallet.

Although Tezos has not yet suffered such an attack, this problem has become increasingly common on app stores. Whenever possible, download wallets directly from official websites rather than through an app store.

Despite a rough start, Tezos has become a promising platform. It offers impressive technical innovations in the areas of consensus, smart contract security, and upgrade procedures. It has also attracted a fair amount of users and “bakers.” The XTZ token has achieved an impressive total value: as of December 2018, it is resting at #22, with a market cap of $342 million, and has remained in line with the overall crypto market for several months.

However, market cap is not everything. Tezos is still quite young, and it will have to attract plenty of app developers if it wants to succeed against up-and-coming app-focused blockchains like NEO and TRON. Tezos’ generous development grants may facilitate app development, although this is far from certain. Additionally, the platform’s lack of focus on commercial applications and user experience may hamper Tezos’ popularity with general audiences.

The post What is Tezos? | The Complete Beginner’s Guide appeared first on UNHASHED.

Best Bytecoin Wallets For 2019: Which Bytecoin Wallet Should You Use?

Best Bytecoin Wallets For 2019: Which Bytecoin Wallet Should You Use?

Bytecoin (BCN) is an altcoin that offers untraceable transactions and relatively profitable mining rewards. After it was created in 2012, Bytecoin weathered a number of controversies, but it has since largely repaired its image. Although it is overshadowed by its more popular descendant, Monero, Bytecoin has managed to maintain a fairly prominent position in the crypto market.

Over the past few years, the Bytecoin development team has rebranded the coin, introducing several new wallets that can be used to store Bytecoin. A number of third party wallets have added support for the coin as well. This guide will outline some of the best choices.

Considerations

Here are the primary factors you’ll want to consider when choosing a Bytecoin wallet:

  • Security: What security features does the wallet offer? Does the wallet provide two-factor authentication (2FA), passphrase login, cold storage or recovery seeds?
  • Supported platforms: Which platforms is the wallet available on?
  • Compatible coins: Does the wallet support coins other than Bytecoin?
  • Ease of use: How difficult is the wallet to download, set up, and use? Is the user interface attractive and intuitive?
  • Development activity: When was the wallet created? Is the wallet still updated regularly? Outdated wallets may introduce security risks, or they may simply no longer work with the most recent version of a coin.

Bytecoin Wallet – Best Desktop Bytecoin Wallet

Security: Good | Platform: Desktop | Compatible coins: Bytecoin (BCN)
Ease of use: Simple (with dev features) | Active since: Unknown

The Bytecoin team provides an official desktop wallet that offers all of the standard crypto transaction tools that you will need. It has tabs for sending and receiving funds, as well as a built-in address book to facilitate repeat transactions. Plus, it displays your total balance and past transactions front and center.

The wallet also doubles as a mining app, meaning that you can start earning Bytecoin with the click of a button — although you should probably consider whether mining Bytecoin is profitable before you begin.

Advanced users can also control the wallet daemon through a console window or a separate command-line daemon. This feature allows Bytecoin transactions to be carried out via RPC commands, an option that is useful for developers who are programming e-commerce applications.

These features are cleanly separated into categories on the sidebar, as shown below:

In terms of security, the Bytecoin wallet provides many basic but important features. First of all, it stores private keys locally on your device – this deters remote attackers, who usually attack centralized wallet services. The app also secures your wallet with an extra password in case your wallet file falls into the wrong hands.

Lastly, the wallet implements a feature called SendProof, which is unique to Bytecoin. This feature can be used to prove that funds have been sent — in other words, it provides verifiable dispute resolution.

Something important to note is that when you create a new wallet, the program will attempt to sync with and download the entire Bytecoin blockchain (a few gigabytes of data). Although this process makes transactions more secure, it is not necessary for basic transactions. You can connect to remote nodes to skip this process.

The desktop wallet is available for all three major desktop operating systems: Windows, Mac OSX, and Linux. The RPC daemon also supports all three platforms and can be downloaded separately.


FreeWallet – Best Mobile Wallet

Security: Acceptable | Platform: Mobile (and web)
Compatible coins: Bytecoin (BCN) +25 others
Ease of use: Simple | Active since: 2016

Bytecoin provides an official mobile wallet, but it is only compatible with Android devices. An alternative third-party wallet called FreeWallet has been endorsed by the official Bytecoin team, and it offers plenty of features that make it a good choice for mobile users.

Most importantly, FreeWallet is supported by both iOS and Android. Your FreeWallet account can also be accessed via a web interface, meaning that you can access your funds even if you don’t have your mobile device on hand. Plus, FreeWallet supports many additional coins, so you can easily exchange Bytecoin for whatever cryptocurrency you might need.

FreeWallet has several high-quality security features, including two-factor authentication, PIN code verification, and fingerprint-based login. It also offers transaction limits – a preventative measure that can stop attackers from withdrawing your money all at once. Finally, it provides multi-signature technology so that you can require authorization from more than one person in order to withdraw money.

These features keep your personal wallet safe. Unfortunately, FreeWallet stores keys and funds on a centrally hosted account, making the wallet a potential target for hackers or corrupt service providers. The wallet suffered from a controversy in mid-2017 involving allegations of stolen Ethereum, but the wallet remains highly rated on most review sites.

Be aware that the wallet’s features do give third parties control over your funds, and retrieving your coins can be very difficult if they become stuck during the trading, deposit, or withdrawal process. If you prefer to maintain direct control over your funds, a desktop Bytecoin wallet is your best option.

Suggested Reading Take a look at the best Verge wallets.


Bytecoin Web Wallet – Best Web Wallet

Security: Acceptable | Platform: Web | Compatible coins: Bytecoin (BCN)
Ease of use: Simple | Active since: 2017

Bytecoin’s official web wallet allows you to access your funds wherever you happen to be. To create a Bytecoin web wallet, you will first need to sign up with a username and email account. This account can also be used to log in to the official Bytecoin Android wallet.

The web wallet offers fewer features than the desktop wallet, but it does have basic send and receive functions. It also shows your recent transactions and address balances. Additionally, it is integrated with an exchange, which allows you to instantly buy Bytecoin if you have Bitcoin or Ethereum on hand. These basic functions are all accessible from the main page, as seen below:

Unfortunately, web wallets are rarely as secure as desktop wallets, and Bytecoin’s web wallet is no exception. Although it offers two-factor authentication, which is a standard security practice, it nevertheless is susceptible to hacking. The Bytecoin web wallet stores keys and funds centrally, just like Bytecoin’s mobile wallets do.

That said, if you use many different computers and devices, you may value convenience and availability over security. In that case, a web wallet may be a good choice.


Bytecoin Ninja – Best Cold Storage Wallet

Security: High | Platform: Web | Compatible coins: Bytecoin (BCN)
Ease of use: Intermediate | Active since: Unknown

Offline wallets (aka “cold storage”) are a good way to securely store large amounts of cryptocurrency for an extended period of time. Cold storage can also be used in tandem with less secure wallets — simply move Bytecoin from cold storage to your mobile or web wallet only when you need to spend it.

Hardware wallets are the best way to create a cold storage wallet. However, none of the three major hardware wallets (Trezor, Ledger, and Keepkey) support Bytecoin. In the absence of a hardware wallet, paper wallets are the next best approach to cold storage.

Bytecoin Ninja is a community-created paper wallet generator for Bytecoin. Although the original site has gone offline, other sites provide a mirror, such as this one. Ideally, you should download the ZIP file, disconnect from the Internet, and open the web page offline to ensure that nobody is logging your keystrokes.

As you can see below, the paper wallet created by the generator is not as flashy or decorative as other paper wallets — but it certainly does what it needs to do. It provides standard public and private keys, which you can use to send money to and from another wallet. Here is what the printable page looks like:

The generator also provides high-resolution QR codes, which are easy to scan when you need to transfer money to or from a mobile wallet — no typing required. Meanwhile, the red lettering serves as a color code that makes it clear which keys are private and which are meant to be shared.

The post Best Bytecoin Wallets For 2019: Which Bytecoin Wallet Should You Use? appeared first on BitcoinLinux.