Blockchain Smart Contracts

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We have talked about smart contracts before. However, it is something that deserves its own article. To start off, what are smart contracts? Smart contracts are a little computer program that stores contracts.

Once all requirements are met, the contract completes itself. Once it does this, the transaction or agreement is posted to a public ledger and cannot be changed or altered. Now the main reason that they are exciting is that they are efficient and secure. They cut the need for a trusted third part and lower the cost.

“It’s worth noting that bitcoin was the first to support basic smart contracts in the sense that the network can transfer value from one person to another. The network of nodes will only validate transactions if certain conditions are met. But, bitcoin is limited to the currency use case. By contrast, ethereum replaces bitcoin’s more restrictive language (a scripting language of a hundred or so scripts) and replaces it with a language that allows developers to write their own programs. Ethereum allows developers to program their own smart contracts, or ‘autonomous agents’, as the ethereum white paper calls them. The language is ‘Turing-complete,’ meaning it supports a broader set of computational instructions.” - Coindesk

Ethereum is the favorite among many who are designing or working with smart contracts. It is flexible and has plans to move away from just mining as a way of enhancing its applicability. “Ethereum has plans to move away from mining altogether by changing the consensus algorithm from Proof-of-Work (PoW) to Proof-of-Stake (PoS). PoS creates blocks based on the token holdings of the nodes rather than computational power. In addition, Ethereum plans to tackle scalability by implementing “sharding.” Sharding breaks up the blockchain into many many interconnected sub-blockchains. Bitcoin currently has no such plans.” -Solomon Lederer, Blockchain: A Practical Guide to Developing Business, Law, and Technology Solutions

Now how exactly does ethereum complete these transactions on the blockchain? “ethereum runs smart contract code when a user or another contract sends it a message with enough transaction fees. The Ethereum Virtual Machine then executes smart contracts in ‘bytecode,’ or a series of ones and zeroes that can be read and interpreted by the network.” -Coindesk

This doesn't necessarily have to be related to fees. It can also just be a set of conditions which trigger the blockchain to complete the contract. This means that its uses can be endless because as long as there is an interaction between two parties that are agreeing on something, there is a place for a smart contract.

How Smart Contracts Are Applicable (example)

Smart contracts are a form of automation. “The classic example used to demonstrate smart contracts in the form of code executing automatically is a vending machine. Unlike a person, a vending machine behaves algorithmically; the same instruction set will be followed every time in every case. When you deposit money and make a selection, the item is released. There is no possibility of the machine not feeling like complying with the contract today, or only partially complying (as long as it is not broken). A smart contract similarly cannot help but execute the prespecified code. As Lessig reminds us, “code is law” in the sense that the code will execute no matter what. This could be good or bad depending on the situation; either way, it is a new kind of situation in society that will require a heavy accommodation period if blockchain-based smart contracts are to become widespread.” - Melanie Swan, Blockchain: Blueprint for a New Economy

They take out the necessity for a trusted third party. There are a couple of great examples of how this could work. One example is selling stuff on eBay. So you have just upgraded to a new phone, and you don't want your old one, so you go to sell it on eBay. eBay connects buyers and sellers and acts as that trusted third party. They have a market place, and they also have an escrow process.

Escrow is when a trusted and impartial third party holds onto funds until the transaction is complete and everything has been shown to be above board. However, they aren't doing this out of the kindness of their heart. They are doing this to make money.

An example of this on a larger scale is the purchases of homes or properties. Both the buyer and the seller of the property must trust an escrow company to ensure that payments are not fraudulent and that sellers are actually selling what is advertised.

Smart contracts get rid of intermediaries like this which are there to not only ensure buyer and seller protection but also take their cut. This, in turn, increases the cost of the transaction and also the inefficiency.

Because all of this is done on a blockchain through computer programs governed by logic, transparency is much greater and so is security. It will be the future of not just financial transactions but also contracts where terms and conditions are agreed upon.

Smart Contracts Can Scale Into Perpetuity

Conducting activities like this on a blockchain instead of through third parties allows for transactions to be scaled far beyond what is currently possible at the moment. As humans and businesses, we can only do so much. It is impossible for humans to work 24/7 all year round and the human capital required to do so if a business wants to gets very expensive very quickly.

Smart contracts take human fatigue out of the equation and replace it with a machine that never miscalculates and never gets tired.

Conclusion

All of these factors result in a very efficient and effective for dealing with agreements and contracts. It also is creating a public record of the transaction which cannot be tampered with. This adds a level of security that we have not previously had. Especially when two parties do not trust each other. In essence, it a fascinating time, and it will be interesting to see how this aspect of blockchain technology gets implemented into how we interact and get things done.

If you are interested in reading more about this, we suggest Blockchain A Practical Guide To Developing Business. It is a fantastic book that covers how blockchain could affect business, government, law, and our daily lives.

Trading Bitcoin And Its Derivitives

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Bitcoin trading has been around for a while, and it is something we thought we should cover. In essence, Bitcoin trading is like trading any other asset or security. You make a prediction of whether the price will go up or down based on its past behavior and what the general sentiment is. Being bullish means, you believe that it will increase in value, and being bearish means, you think it will dip below the price it is currently at.

There are other options such as derivatives of Bitcoin like options and futures which are heavily leveraged positions that are basically guessing at the Bitcoin's price in the future.

This is called the expiration date. However, it is essential to note that these financial instruments are not for the faint of heart or for beginners.

There are a number of exchanges that you can trade bitcoin on. It is really up to you, but if you are new to it, then simple platforms like Robinhood and Coinbase are great.

Other Exchanges like Deribit and Coinbase Pro are also great if you really want to get deep into the world of trading cryptocurrencies. Don't worry, I will dive into each exchange in more detail later in the article.

The main reason to give trading Bitcoin a shot is that it is a great way to get a feel for the technology and get involved. Experiencing technology in a hands-on fashion instead of just reading about it can be a great way to learn.

Leveraged Positions (good or bad?)

A leveraged position in Bitcoin is the same as a leveraged position in a stock. Essentially what it allows you to do is trade with more money than you actually have. For example, on Deribit, you can trade with a 100x leverage meaning that with 10 dollars with of bitcoin you can trade the Bitcoin equivalent of 1,000 USD.

However, leverage can be a mixed bag. There is an opportunity for big profits and also an opportunity for devastating losses. The bottom line is that leverage is a tool and a fickle one at that. It is like a knife. It can make your job a lot easier, but it can also cut you if you aren't careful and fail to give it the respect that it deserves.

If it is your first time trading or even if you have traded with leverage but are new to crypto, then take your time. Give it some time and learn the market and its level of volatility before using it. I will leave you with a quote on leverage from Warren Buffet just as a fair warning. "When you combine ignorance and leverage, you get some pretty interesting results."– Warren Buffett

Do with this what you will.

Derivatives

Next up on the list of topics to touch on are derivatives. Derivatives are leveraged financial instruments that usually involve the future price of a given asset that it is derived from. Hence the name derivative. The two most popular forms are futures and options. These function the same as regular futures and options such as stock options or commodity futures.

"An option gives an investor the right, but not the obligation, to buy (or sell) shares at a specific price at any time, as long as the contract is in effect. A futures contract requires a buyer to purchase shares, and a seller to sell them, on a specific future date unless the holder's position is closed before the expiration date." - Investopedia

Consider these as more advanced things to dabble in once you have gotten your feet wet and have a feel for the market. It is always good to have a solid foundation to build upon, so take your time and don't rush the process. There is no sense in getting in over your head for no reason.

Exchanges

When It comes to exchanges, I would only ever recommend the ones I have used. Robinhood, Coinbase, Deribit, and Coinbase Pro are the three that I trust. By far, the easiest ones to use are Coinbase and Robinhood. There is no leverage, and there are no derivatives to worry about. It is the most user-friendly and low-risk option for new traders. On the other end of the spectrum, you have Deribit and Coinbase Pro.

Deribit is purely options and futures. It does these two things very well. Data is fast and easy to understand, and so are the options to buy and sell. They also charger very modest fees and won't gouge you on withdrawals. For better or for worse, it also offers 100x leverage.

This is great for making a lot of money very quickly if you do it right and losing money just as fast. Do with that what you will. The only downsides is that is all they offer, and they do not serve people from the U.S. However, as I am sure you are aware of there are always a way to circumvent that given that it is blockchain we are dealing with here.

Coinbase Pro is basically Coinbase but on steroids with a lot more options when it comes to charts as well as an order book. Also, another great feature is that All digital assets held in online storage are fully insured.

All USD balances are covered by FDIC insurance, up to a maximum of $250,000 per customer. If you are looking to trade crypto with an exchange that is similar to a lot of brokerages, then this is it.

One thing that should be noted is that with the exception of Deribit, all these exchanges will require either a government-issued ID or a social security number and sometimes both. This is just something to be aware of.

Conclusion

I would like to leave you with this information so that should you read this and have an interest in trading Bitcoin then you will have a general understanding of what's out there. However, I would also like to state that this should not be seen as financial advice. Instead, it should be seen as information on a subject.

Bitcoin and crypto trading, in general, is incredibly risky. It is incredibly volatile, and markets are open 24/7 year round. This means you can wake up to an account that is a fraction of what it was when you went to sleep. Trust me, I have made money doing this, but I also have been burned multiple times.

In my opinion, trading cryptocurrencies is something that should be done for educational purposes and not with the intent of becoming rich. Trading is a great way to make transactions and be intimately involved with the technology.

If you have an interest in learning more about the Bitcoin and its history before trading, I suggest checking out the documentary, The Rise and Rise of Bitcoin. I hope this helped you understand the world of cryptocurrency trading and I wish you the best of luck in the markets should you choose to give it a shot.

Blockchain For A Better Government

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The way that governments keep records is inefficient, there are electronic records, and there are physical records. This can cause confusion, mistakes, and a lack of security. Moreover, these things are spread across a number of government institutions, magnifying the already glaring issues we see.

One fantastic example of how slow governments are is the DMV. If you live in the United States and own a car, then you have had to deal with them. It can literally be an all-day ordeal, and in some cases, you will need to come back because you need something else you didn't realize you needed.

However, this doesn't have to be the way that the government works in the future. Estonia is leading the charge and is becoming one of the first countries to implement blockchain into its government. Government services there are offered 24/7, and there are only two things you have to do physically. They are buying physical property like a house or a plot of land and getting married. That is it, and it is the future. Right now Dubai which is part of the UAE is also joining in and rolling out a blockchain network

How Is Dubai Doing It

In May 2019 Dubai government issued a report. It said that it was going to implement blockchain and they are starting out with mortgages. "The e-mortgage system is the latest initiative by Dubai government's real estate department to adopt blockchain, the digital ledger technology, in its administrative processes. Last year, it launched the blockchain-based Real Estate Self Transaction, or "Rest," system, intended to enable "the complete digital management of real estate transactions, eliminating paper documents and reducing brokerage procedures"

This streamlines the process for sellers, buyers, and lenders. It also eliminates the need for escrow because funds can be quickly and securely verified through the blockchain. Moreover, it holds all parties accountable because you can't tamper with the blockchain to add, hide, or change ledger items.

A division of Dubai's government that deals with technology, called Smart Dubai endorsed the blockchain platform built by one of Dubai's two telecommunication companies. "The city of Dubai has pioneered blockchain from the onset and continues to be a global leader in providing new and improved ways to implement and set the future roadmap for the evolution of this ground-breaking technology," - Smart Dubai CEO Wesam Lootah

It has also been said that Dubai's blockchain will be compatible with blockchains such as Ethereum. This is interesting because Ethereum may be in the midst of a change which will take it away from the traditional mining methods and use other methods that Solomon Lederer can explain much better than me. "Ethereum has plans to move away from mining altogether by changing the consensus algorithm from Proof-of-Work (PoW) to Proof-of-Stake (PoS). PoS creates blocks based on the token holdings of the nodes rather than computational power. In addition, Ethereum plans to tackle scalability by implementing "sharding." Sharding breaks up the blockchain into many many interconnected sub-blockchains. Bitcoin currently has no such plans." -Solomon Lederer, Blockchain: A Practical Guide to Developing Business, Law, and Technology Solutions

Countries like Estonia and Dubai intend to continue leading the charge on creating better and more efficient governments. This is truly great for everyone involved because a more efficient government means that it is less of a drag on its citizens and consumes less taxpayer money. Moreover, government services are better. It is a win-win.

The Triple Entry Ledger

What is a triple entry ledger? To understand this, we first have to understand what a double entry ledger is. In accounting terms, a double entry ledger is used to describe a transaction. The two entries consist of a debit and a credit. The debit is the increase of an item such as cash, and the credit is a decrease. Now, this is something that is backed into the blockchain. Triple entry accounting is basically this, but it is a shared ledger, and the third entry is the "shared" part.

This shared ledger eliminates the need for audits and holds everyone accountable because every party involved in an activity can see it.

In government, this could be used for gathering taxes so that making payments. Because it is taxpayer money, then the involved parties are the vast majority of the nation. This holds the government accountable for where the money is going and what it is used for. We can see exactly is going to social programs like social security, unemployment, or defense.

This also limits the government's ability to fraudulently spend taxpayer money and make sure that special interest groups aren't getting more than they should.

Moreover, this streamlines the institutions and limits the need for a vast number of its employees. This, in turn, cuts down on spending and makes it so that people get a better and cheaper government.

One book that really covers this and more very well is Blockchain: A Practical Guide to Developing Business, Law, and Technology Solutions by Joseph J. Bambara, Paul R. Allen, Kedar Iyer, Rene Madsen, Solomon Lederer, and Michael Wuehler.

Conclusion

The landscape of just about everything is about to change because of blockchain. We are beginning to see how it can affect so much more than just how we complete financial transactions. It is truly an exciting time, and one I am excited to be a part of. I believe it will not be perfect, but it will certainly do more good than harm and like will all things there is no such thing as growing without growing pains.

Finding Trust Through The Blockchain

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Blockchain is honest and unemotional. It is decentralized, autonomous, and has no loyalty to any nation or organization. "generic definition of a blockchain: a distributed, append-only ledger of provably signed, sequentially linked, and cryptographically secured transactions that's replicated across a network of computer nodes, with ongoing updates determined by a software-driven consensus." - Michael J. Casey, The Truth Machine: The Blockchain and the Future of Everything This means that it is the perfect tool to do business. It takes the power of those who are corrupt or greedy and puts at least some of that power into the hands of the people.

There is a great deal of corruption and special interest groups in the global economy. Some states do not get along, and there are trade wars, and there are tariffs, and lastly, There exists a level of fraud and distrust when completing transactions today.

As a result, this makes it very hard to conduct trade where there is a mutual benefit for both parties involved. If you know anything about trade and macroeconomics, you know that through competitive advantages and trade nations and enterprises become wealthier.

But what if we utilized new technologies to better instill trust, and make transactions between two parties that don't trust each other go much smoother. "Their model showed that if we can resolve our trust issues with technology and give people confidence to transact, those people are willing and able to go into direct exchanges with complete strangers. These ideas are setting us on a path to a peer-to-peer economy." - Michael J. Casey, The Truth Machine: The Blockchain and the Future of Everything

Trust

However, distrust makes it very hard for us to cooperate and build something of greater value than we could on our own. But, if we were to use blockchain, we would have what is called a ledger, and it would be secure and impartial. This would mean that all financial and activities would be recorded and stored on a decentralized and unbiased network of nodes. This would, at the very least, give back some level of trust that is greater than what we had before.

This trust would, in turn, make transactions more accessible and more efficient meaning we could be more productive and cooperative. "Trust—particularly trust in our institutions—is a vital social resource, the true lubricant of all human interaction." - Michael J. Casey, The Truth Machine: The Blockchain and the Future of Everything

This quote sums it up nicely. There is no reason to forgo a tool that would make us wealthier. In fact, according to Michael J. Casey blockchain could become a tool to greater enhance trust between two or more parties engaging in a transaction. "The best way to think about blockchain technology, then, is not as a replacement of trust—as a "trustless" solution, as some cryptocurrency fanatics damagingly describe it—but as a tool upon which society can create the common stories it needs to sow even greater trust, to build social capital, and to forge a better world."

Completely taking humans out of the equation and adding a more significant amount of accountability for both parties. It could act as a form of checks and balances fostering more significant opportunities for those doing business.

Reforming Corrupt Financial Systems

Whether it be governments or reckless lending by banks, they are often found to be the culprit behind economic collapse and financial crises. For example, Greece and the Euro Crisis or Lehman Brothers and Financial Crisis of 2008. "Just consider this: control of a currency is one of the most powerful tools a government wields; ask anybody in Ireland, Portugal, Greece, or Cyprus who lived through those countries' recent financial crises. Bitcoin promises to take at least some of that power away from governments and hand it to people. That alone augurs significant political, cultural, and economic clashes." - Paul Vigna, The Truth Machine: The Blockchain and the Future of Everything

However, blockchain could change this with more accountability and less power for institutions. The ledger is what captures data and displays it. It does this in the form of debits and credits much like an accounting ledger which is used to keep companies honest about their business activities.

It could do this better though by taking human error and fraud out of the equation if it were retooled correctly for this purpose. "We have an opportunity to reform the financial system, to turn it into the public utility that it's supposed to be—a level playing field that everyone can indiscriminately use in their bid to get ahead. Let that be the standard for the coming age of cryptocurrency." - Paul Vigna, The Truth Machine: The Blockchain and the Future of Everything

Conclusion

The current system of trade, governments, and enterprise is flawed. Whether it be through corruption or poorly informed decisions, the system has a lot of room for improvements. While it still may be a long way out, we have building blocks to improve and better the way we keep records, do trade, and hold institutions as well as individuals accountable.

Blockchain has given us an exciting glimpse into what the future holds for these aspects of the global economy. There will undoubtedly be growing pains, but it is more likely than not that with this new technology would be looking at a much more prosperous and cooperative future.

This is not just about us but also about laying the groundwork for future generations to build upon the foundation we are laying now.


Why Bitcoin Isn't Just For Criminals

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Bitcoin is in the same place that the internet was in back in the early 90s. It is not easy to use, and it is not quite ready for a large scale adoption. Moreover, it is regarded as something that criminals and terrorists use to either make money or fund their endeavors.

It has become a mirror image of what the internet looked like 25 to 30 years ago. People labeled the internet in the same way they label Bitcoin, saying that it is something only bad people use to do more bad things.

However, look at where we are now. How far we have come and how many amazing things we have gotten out of the internet. We have gotten smartphones that enhance communication, we have gotten unlimited access to the library of human knowledge, and it is even at our fingertips.

We don't even have to leave our house to run errands if we don't want to. Meals, groceries, and household supplies can all be sent to us, and we don't need to lift a finger. This gives us time to be more productive and focus on what is essential as well as just recharge our batteries after a long day. It is all truly amazing stuff that has really become a net positive for society, and it is going to continue to get better and better with Bitcoin and blockchain.

It is more likely than not that Bitcoin will follow in the footsteps of the internet. First, it will start out small and poorly understood with a lousy image, and then it will grow and mature and change the way we do business and view the world.

Right now, we are in the small and poorly understood phase. To most people as in the general public, Bitcoin is a buzzword, and that's about it. They don't understand its applicability, and they also don't understand its power to change and better things that we do in our daily lives.

Bitcoin Is Good For Society

If you have ever taken a macroeconomics class, you will know that there is the Austrian school of thought and the Keynesian school of thought. The Austrian theory of macroeconomics is that we cannot spend more and more and that alone will keep the economy running. ""The twentieth 'century's binge on conspicuous consumption cannot be understood separately from the destruction of sound money and the outbreak of Keynesian high-time-preference thinking, in vilifying savings and deifying consumption as the key to economic prosperity""- Saifedean Ammous, The Bitcoin Standard

This is kind of excessive spending falls into the Keynesian school of thought. However, Bitcoin is by nature, a currency that falls in line with the Austrian school of thought. At its core, as Saifedean Ammous calls it, it is sound money. The reason for this is because there is only so much of it out there and central banks can't just make more when they want to.

According to author Jimmy Song, this a good thing ""Sound money allows for savings and savings allows for capital accumulation. When sufficient capital has been accumulated, that can be utilized to create larger-scale projects to make production more efficient. The example in the book is that of a fisherman using bare hands vs. using savings to buy a fishing rod and nets. The latter is more efficient and allows for more production."" - Jimmy Song, Programming Bitcoin

This is part of why Bitcoin or at the very least, the tech that it is built on could change a lot about our world for the better.

Currently, there are about 7.53 billion people on this planet, and only 1-2 billion of them have access to banking. ""For the 'other 6 billion' who don't enjoy international, control-free banking as we do, bitcoin represents an opportunity to become part of a global economy which up till now did not exist. For those users, bitcoin is more than just a curiosity, it might be a doorway to connect to the world."" - Andreas M. Antonopoulos, The Internet of Money

The fact of the matter is that reliable and quality financial services, free of fraud and manipulation are actually quite a rarity. Bitcoin changes this. It allows anyone with a device that has internet access to have banking. Perhaps it 'isn't sophisticated banking like lines of credit and savings accounts that earn interest but at the very least it is something.

These people who 'don't have access to banking are currently restricted to cash and barter systems only. This makes it hard to do business when you can only do so in person. It also makes it very hard to grow a business, and as a result, the local economy is not as prosperous as it could be and as a result of that, the national economy 'isn't what it could be either. This stifles growth and ultimately hurts emerging markets

Conclusion

It is exciting to see that something not physical and with such humble beggings could really change the world for the better. Much like how the internet has. It may still be poorly understood and come with the notion that it is something used by criminals, but that doesn't have to stop it. Remember, the internet faced the same scrutiny and look at what it has become today.

but in the world of tomorrow, it will more likely than not gain, traction and become an integral part of both our daily life and as well as enterprise and government.

Bitcoin, Its Wallets, And the Blockchain

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A significant figure in the Bitcoin and blockchain space is Andreas Antonopoulos. He is an engineer and pioneer. He has been around for quite a while and even watched the internet come into its own as it became widely adopted and used for government, enterprise, and personal activities.

This is about the nitty gritty side of Bitcoin and less about its more conceptual applications. It has long been touted that Bitcoin is only used by terrorists and criminals. Yes, that used to be the case; however, that is rapidly changing as both individuals and institutions begin to understand its application more and more.

Bitcoin is at its core an efficient tool for secure data transfers. The wallet is part of what is really interesting because it is independent of the Bitcoin network and is more secure and has many more advantages than the traditional way of banking and completing mobile payments. Let's take a dive into how this works and what makes Bitcoin such a fantastic financial tool.

Bitcoin Has More Than One Blockchain

It only makes sense that one coin would have one blockchain that it runs on. However, that is not the case. Bitcoin, in fact, has multiple blockchains that all serve specific purposes. One, in particular, is the Bitcoin Test Blockchain. "Bitcoin's Test Blockchains You might be surprised to learn that there is more than one bitcoin blockchain. The "main" bitcoin blockchain, the one created by Satoshi Nakamoto on January 3rd, 2009, the one with the genesis block we studied in this chapter, is called mainnet. There are other bitcoin blockchains that are used for testing purposes: at this time testnet, segnet, and regtest. Let's look at each in turn. Testnet — Bitcoin's Testing Playground Testnet is the name of the test blockchain, network, and currency that is used for testing purposes. The testnet is a fully featured live P2P network, with wallets, test bitcoins (testnet coins), mining, and all the other features of mainnet. There are really only two differences: testnet coins are meant to be worthless and mining difficulty should be low enough that anyone can mine testnet coins relatively easily (keeping them worthless). Any software development that is intended for production use on bitcoin's mainnet should first be tested on testnet with test coins. This protects both the developers from monetary losses due to bugs and the network from unintended behavior due to bugs." - Andreas M. Antonopoulos, Mastering Bitcoin: Programming the Open Blockchain

This is part of what makes Bitcoin and also blockchain such great technology. Because of its open-source nature, anyone from anywhere with an internet connection can learn and study Bitcoin. If they have a different perspective and see something that could be improved or changed to make it better, then they can test it on the Bitcoin's Test Blockchain. This is great because it takes anyone and everyone who has interest or expertise and allows them to test ideas without any barriers to entry.

There are no cultural or national barriers, and literally, anyone can be a part of it if they wish too.

The Bitcoin Wallet

Part of what makes Bitcoin and the wallet so secure is that they are entirely separate from one another. In fact, the wallet can operate on its own without an internet connection, and in a way, it is independent of the blockchain until it has to interact with it to complete a transaction. "The digital keys in a user's wallet are completely independent of the bitcoin protocol and can be generated and managed by the user's wallet software without reference to the blockchain or access to the Internet." - Andreas M. Antonopoulos, Mastering Bitcoin: Unlocking Digital Cryptocurrencies

This is something truly exceptional about Bitcoin. Especially when compared to say mobile banking on an iPhone. With say a chase bank account and mobile app to do anything you have to be connected to the internet and the bank's servers. However, with a Bitcoin wallet, you don't always have to be connected, and you are not relying on one institution.

In fact, with Bitcoin, you are relying on no one. Even when it comes to maintaining balances in wallets, Bitcoin is more efficient and better than any other solution we have seen before. The process of debits and credits between users is entirely decentralized and automated. Moreover, it is transparent. "The concept of a balance is created by the wallet application. The wallet calculates the user's balance by scanning the blockchain and aggregating the value of any UTXO the wallet can spend with the keys it controls. Most" - Andreas M. Antonopoulos, Mastering Bitcoin: Programming the Open Blockchain

However, Bitcoin and especially it's counterpart the wallet do not come without their drawbacks. Firstly Bitcoin wallets are secured with a private "key." This is Bitcoin and its wallets main drawback. This key must stay secret because you can make another one, and if someone gets that key, they can immediately take control and drain the entire account.

There is also no recourse or way to recover a key if it is lost. Should you lose the key, then it is game over, and those funds will be lost forever. In essence, Bitcoin is incredibly secure as long as the key is not lost or stolen.

Bitcoin May Not Be As Anonymous As We Thought

We tend to think that Bitcoin is a way to make completely anonymous transactions. However, Andreas M. Antonopoulos author of Mastering Bitcoin: Unlocking Digital Cryptocurrencies believes that this is in fact, not the case. "Bitcoin is often mistakenly characterized as "anonymous" currency. In fact, it is relatively easy to connect identities to bitcoin addresses and, using big-data analytics, connect addresses to each other to form a comprehensive picture of someone's bitcoin spending habits."

This can often be the case as we continue to explore new technologies. It is bound to have flaws the closer we look at it. However, this takes a lot more energy to accomplish. Essentially it is not perfect but at the end of the day what technology is. However, it is certainly better than making easily trackable payments via a debit or credit card or receiving money through the same methods.

All of these forms of making and receiving payments are monitored and controlled by centralized powers, and at the end of the day, Bitcoin is not. This is why it is so appealing to many and feared by many surveillance states.

Blockchain And Big Data

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Bitcoin has ramifications outside of disrupting the world of money and payments. It isn't Bitcoin itself but rather the technology behind it, which is blockchain. With Bitcoin, there is a ledger which is a public record of all transactions that automatically verifies and authenticates payments. The scale on which these activities can be recorded is much larger and far more transparent than what is available currently.

This fast and secure form of records is what could really help business, and government entities streamline themselves to become more efficient and better. This helps with keeping transparent records of activities. Melanie Swan author of Blockchain: Blueprint for a New Economy, had a quote that really captures the possibilities of what blockchain could do for businesses in the future.

"Cloud-based, blockchain-based autonomous business entities running via smart contract could then electronically contract with compliance entities like governments to self-register in any jurisdictions in which they wanted to operate. Every business could be a general universal business first, and a jurisdictional business later when better decisions can be made about jurisdictions. The same could be true for individuals as general humans first, and citizens on demand later."

Blockchain Data In Business

The blockchain ledger is part of what makes it so great. This is what most companies and government agencies will most likely use. It can record so many actions and transfers so quickly and accurately that it is truly astounding.

Moreover, the fact that it is decentralized is another great advantage because it doesn't have one person or group controlling it. This means that it is much hard to commit fraud and mislead people. It is essentially the perfect accounting and records tool.

"The blockchain is a worldwide, decentralized public ledger for the registration, acknowledgment, and transfer of all assets and societal interactions, a society's public records bank, an organizing mechanism to facilitate large-scale human progress in previously unimagined ways. The blockchain is the technology and the system that could enable the global-scale coordination of seven billion intelligent agents. The blockchain is a consensus model at scale, and possibly the mechanism we have been waiting for that could help to usher in an era of friendly machine intelligence." Melanie Swan, Blockchain: Blueprint for a New Economy

Blockchain Keeping Institutions Honest

There is no perfect system but because it is almost impossible to be fraudulent on the blockchain. It means that it can serve as a form of checks and balances, keeping institutions and companies honest.

A secure and decentralized record of activities can present a lot of upsides. To start, it is a computer program, so it has no bias. It simply does as it is supposed to, and that is all.

Human nature can be messy. There are different motivations, beliefs, and biases that all effect a given persons ability to do their job. Humans also get tired, angry, and make mistakes and can also affect their ability to do their job correctly.

On the software side of things, computers and programs can be hacked or modified to display or hide certain items such as certain business activities. Blockchain takes all of this drawbacks and gets rid of them. Blockchain may not be perfect, but it is undoubtedly much more efficient, secure, and transparent. An iteration of this would be what Melanie Swan author of Blockchain: Blueprint for a New Economy calls blockchain governance, Personal Thinking Blockchains which would act as assistants to government agencies. Taking out human factors and errors.

"The first point is that transnational organizations need transnational governance structures. The reach, accessibility, and transparency of blockchain technology could be an effective transnational governance structure. Blockchain governance is more congruent with the character and needs of transnational organizations than nation-state governance. The second point is that not only is the transnational governance provided by the blockchain more effective, but it is also fairer. There is potentially more equality, justice, and freedom available to organizations and their participants in a decentralized, cloud-based model. This is provided by the blockchain's permanent public record, transparency, access, and reach. Anyone worldwide could look up and confirm the activities of transnational organizations on the blockchain. Thus, the blockchain is a global system of checks and balances that creates trust among all parties. This is precisely the sort of core infrastructural element that could allow humanity to scale to orders-of-magnitude larger progress with truly global organizations and coordination mechanisms."

Personal Thinking Blockchains

These are a little futuristic. However, they could definitely play a vital role in keeping more substantial amounts of data reliably stored on a cloud system without fear of one person or entity having more control than they should. Melanie Swan makes the ambitious claim that it could help with bringing computers and minds together and getting the best of both worlds, bringing mankind and machine closer together than ever before.

"Personal Thinking Blockchains More speculatively for the farther future, the notion of blockchain technology as the automated accounting ledger, the quantized-level tracking device, could be extensible to yet another category of record keeping and administration. There could be "personal thinking chains" as a life-logging storage and backup mechanism. The concept is "blockchain technology + in vivo personal connectome" to encode and make useful in a standardized compressed data format all of a person's thinking. The data could be captured via intracortical recordings, consumer EEGs, brain/computer interfaces, cognitive nanorobots, and other methodologies. Thus, thinking could be instantiated in a blockchain..."

This is all very exciting and can hopefully show that blockchain could be the next thing like the first PCs. An innovation like this with widespread adoption could really help the world become a more wealthy, more ethical, and more efficient place. This, in turn, would help humans continue to innovate and bring value with even more tools in their tool chest.

Bitcoin, The Better Cash We Need

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Money in one form or another, has been around for a very long time. Ever since tribes traded and cooperated, there has been some sort of currency involved to facilitate the exchange of goods. At its core, money is something that gets us to work together whether we want to or not. Money has no value in and of itself. It only has value because we give it value. In turn, it becomes a physical expression of this.

As time goes on, it changes, and eventually, it becomes what we see it as today. An expression of value backed and controlled by nation-states. A long time ago, control over "money" left the hands of individuals and became the symbolization of kings and kingdoms.

Bitcoin, blockchain, and cryptocurrencies, in general, will change this if we let it. It will give the ordinary individual more control over their finances than ever before and in turn, more agency over their lives. Andreas Antonopoulos author of The Internet of Money sums this up nicely.

"There are almost 200 currencies of the world, but there's only one international currency. There are almost 200 currencies controlled by central banks and governments, but there is only one mathematical currency today, and that is bitcoin. We are going to build more of them. Cryptographic currencies are going to be a mainstay of our financial future. They are going to be a part of the future of this planet because they have been invented. It's as simple as that. You cannot un-invent this technology. You cannot turn this omelette back into eggs." - Andreas M. Antonopoulos, The Internet of Money

It is a revolutionary technology, and we are watching it grow and play a more prominent and more significant role in society with each passing day.


Money and Cooperation

Money is what helps us work together and build something great than what we could on our own. However, it is entirely controlled by central banks and governments. It has become inefficient and looked after by special powers. In the 21st century, it has become not just an expression of value but a weapon.

Bitcoin and cryptocurrencies, in general, accomplish the same expression of value but without the drawbacks of the highly regulated currencies, we see today.

"Bitcoin represents a fundamental transformation of money. An invention that changes the oldest technology we have in civilization. That changes it radically and disruptively by changing the fundamental architecture into one where every participant is equal. Where a transaction has no state or context other than obeying the consensus rules of the network that no one controls. Where your money is yours. You control it absolutely through the application of digital signatures, and no one can censor it, no one can seize it, no one can freeze it. No one can tell you what to do or what not to do with your money. It is a system of money that is simultaneously, absolutely transnational and borderless. We've never had a system of money like that."-Andreas M. Antonopoulos, The Internet of Money

This is the future we are looking at, and it is something quite exciting. Essentially we are looking at the coming of an age where we will not have cash, we will have electronic money, and this money will mostly have the same excellent properties as cash without the inefficiencies.

The only difference is that it won't have to change hands physically. It can be sent from anywhere in the world with an internet connection to anywhere else that also has an internet connection.

This will bring about a new era where the individual will have more freedom and control over their money than ever before.

The Future

In the future, everyone with a smartphone and an internet connection will have access to banking and financial transactions without the need for ID. The blockchains ability to create unique and anonymous IDs and facilitate secure transactions. Bitcoin and blockchain's ability to verify users safely and anonymously is unparalleled. There really isn't anything like it out there.

"At the end of the day, Bitcoin is programmable money. When you have programmable money, the possibilities are truly endless. We can take many of the basic concepts of the current system that depend on legal contracts, and we can convert these into algorithmic contracts, into mathematical transactions that can be enforced on the bitcoin network. As I've said, there is no third party, there is no counterparty. If I choose to send value from one part of the network to another, it is peer-to-peer with no one in between. If I invent a new form of money, I can deploy it to the entire world and invite others to come and join me. Bitcoin is not just money for the internet. Yes, it's perfect money for the internet. It's instant, it's safe, it's free. Yes, it is money for the internet, but it's so much more. Bitcoin is the internet of money. Currency is only the first application. If you grasp that, you can look beyond the price, you can look beyond the volatility, you can look beyond the fad. At its core, bitcoin is a revolutionary technology that will change the world forever." - Andreas M. Antonopoulos, The Internet of Money

This innovation will most likely give us more control and freedom than we have ever had before when it comes to our money. It will also fundamentally change how we do business and how we view borders when it comes to financial transactions.

Bitcoin, The Gold Standard Of The 21st Century

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To understand The Bitcoin Standard, we have to understand the gold standard. Historically the gold standard uses gold as a store of value and then issues place holders which are insured by the gold in banks or vaults.

It was an excellent way for nations to keep inflation low because it is a straightforward process to print money, and it is tough to mine gold. There is a finite amount of it on earth, so it keeps inflation at bay.

Saifedean Ammous says that "For something to assume a monetary role, it has to be costly to produce. Otherwise, the temptation to make money on the cheap will destroy the wealth of the savers, and destroy the incentive anyone has to save in this medium."

Like gold Bitcoins are hard to produce and will become harder to produce in the future as we get close to a maximum of 21 million coins.

In Saifedean Ammous' book The Bitcoin Standard, he said that "I like to call this the easy money trap: anything used as a store of value will have its supply increased, and anything whose supply can be easily increased, will destroy the wealth of those who used it as a store of value". One of the significant upsides to Bitcoin is that it much like gold you can't print more and therefore, it is a safe store of value because it can't depreciate due to higher supply.


Bitcoin has been labeled the gold of the 21st century; this is because it is valuable and hard to mine, just like gold. This has been a significant pro for many economists who believe that inflation and unchecked printing of money will ultimately hurt society in the long run.



Why Bitcoin

There are only so many Bitcoins that can be mined. The maximum amount is 21 million, and they become harder and harder to mine as we get closer and closer to that number, much like gold.

The decentralized control of the store of value is also very important. This takes away the power of a government to change its value or make more because they physically can't. In relation to the gold standard, Allen Greenspan said, "In the absence of the gold standard, there is no way to protect savings from confiscation through inflation. There is no safe store of value."

Many parallels can be drawn here between gold and Bitcoin. When inflation is high, it is hard to justify saving and then reinvesting that money into something because you are losing money as it just sits there.

However, if you were to store U.S. Dollars in Bitcoin, then this would not be an issue because you are insured that the U.S. would not simply make more Bitcoins and you would lose money due to high supply.

The author of The Bitcoin Standard, Saifedean Ammous states that "Bitcoin can be best understood as distributed software that allows for the transfer of value using a currency protected from unexpected inflation without relying on trusted third parties. In other words, Bitcoin automates the functions of a modern central bank and makes them predictable and virtually immutable by programming them into code decentralized among thousands of network members, none of whom can alter the code without the consent of the rest."

The whole idea behind a Bitcoin backed monetary policy is that it is a sounds store of value. "Human civilization flourished in times and places where sound money was widely adopted, while unsound money all too frequently coincided with civilizational decline and societal collapse" - Saifedean Ammous.

Bitcoin is also an insurance policy against reckless spending on the governments part. Let's say that John is saving money to buy his first home. However, the government wants to increase spending drastically. This action would require the printing of more money, and as a result, we would see inflation. Even though John has the same amount of money, it would be worth significantly less, and he would have to save more. However, if Bitcoin backed his money, then this would be a non-issue.

Essentially what is being said here is that with a monetary policy that is backed by Bitcoin, we could see a very prosperous and wealthy future.


Bitcoin Won't Be Used For Day To Day Purchases Or Payments

When most people think of Bitcoin as a form of currency, they imagine using it themselves to buy things like coffee, Lunch, or clothes. However, that is not Bitcoin's strength. Bitcoin is an excellent tool for moving large amounts of money quickly, securely, and cheaply, all without regard for borders.

In the future, we will most likely see Bitcoin as a store for large amounts of money, and it will be used mainly at an institutional level. We will most likely see it being used for clearing and settlement of funds.


The technology would be perfect for a bank to bank transfer in the many millions or hundreds of millions. A bank like JP Morgan Chase could easily send the money for a government bond to a developing country. For example, if they sent $100,000,000, it would clear in about 40 minutes, and the transaction would cost two to four dollars.

In essence, the future of Bitcoin in the economy that it will be used for large transactions mostly on an institutional level that needs to be completed reliably, with a high level of security and speed. It is now easy to see why it has been labeled the gold of the 21st century.

Even though its application may change between now and ten years down the road, it's technology has the chance to make the world a better place.

Blockchain And How It Will Change Business

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When online banking first came about, it drastically cut down on time it took to for businesses to transfer money. This made companies more nimble and allowed them to be more efficient.


Now with blockchain, we are looking at the same type of innovation that will drastically improve efficiency within an enterprise, both domestic and international.

In business time is money and sending money via traditional methods can be slow and lack security. This is where blockchain can be utilized to cut costs, time wasted, and possible security threats. Making an international payment or money transfer can take up to five days to be completed.


With blockchain technology such as Ripple, it can cut that time just 4 seconds. This is why blockchain is the next significant innovation for businesses as a whole.

Blockchain for Enterprises

In both business and banking, we have seen a lot of interest in implementing the technology into two specific areas. The first being banking and the second being business to business transactions.

When it comes to institutional use of blockchain coins like Bitcoin or Ethereum are not what is used. Preferably, stable coins are what is used. Because coins such as bitcoin are so volatile, it simply isn't practical for banks to use.

For example, in banking, if a company operating in the U.S. wants to send money to a subsidiary that is outside of the U.S. then it needs to make an international money transfer. However, we have recently seen the adoption of blockchain technology in the banking world with IBM bringing their new Stellar blockchain to market.

This new blockchain is used by financial and in a recent article by Coindesk.com , Philippines bank RCBC, Brazil's Banco Bradesco, and Bank Busan of South Korea have all been approved to use the new stable coin.

Moreover, "Amazon Web Services has partnered with Kaleido to offer a full-stack blockchain enterprise platform on the cloud that integrates blockchain services with AWS services" - Moonwhale.io. This is a sign of the times and how the landscape of business is quickly changing because of blockchain.

In the coming years, we are likely to see adoption on a much larger scale. The use of blockchain has become a competitive advantage in enterprise, allowing banks and companies to beat out their competition purely through speed. The technology is robust and functional, and ultimately, those who don't use it will be slower and less efficient, making them obsolete.

Domestic and International Payments

The main issue with the traditional form of transferring money, whether in enterprise or banking, is that it is slow, especially when it comes to international payments. To complete an international payment, the money has to go through multiple institutions. This takes a lot of time and is costly.

An international payment takes anywhere from three to five days. This is extremely inefficient when compared to the literal minutes it would take with business to business blockchain transactions. A coin such as Ripple can get the job done in about 4 minutes, so why use the traditional method.

The same goes for domestic money transfers. While they may not be as complicated or resource intensive, they still take time, which is a valuable commodity in any industry. Implementation of blockchain in this instance could drastically speed up a business. For example, if a company wanted to purchase goods or services from a vendor, they would either have to send a physical check or wire money. The check will take days to arrive, and it could also bounce creating unnecessary work for everyone involved. The wire transfer could take up to 24 hours. With a coin such as Ripple, the transfer of money could take only a few minutes.

In essence, whether it is a domestic exchange of money or an international one traditional payment methods are slow, and blockchain ones are lightning fast. They are also just as secure if not more. It truly is the future of how we will do business.


Low Fees

One of the great things about blockchain technology is that it is not just fast, but it is cheap. Because the money doesn't have to pass through bloated financial institutions, the cost is much lower. Blockchain is new and streamlined, meaning that it has gotten rid of a lot of the unnecessary fees associated with doing business and moving money around the traditional way.


In the case of Ripple, a money transfer cost only $0.00001. Yes, that is not a typo that is the actual cost to move money across the Ripple's nodes. The reason for this is because it helps to keep scammers at bay and fight off DDoS attacks. Cointelegraph did a great in-depth dive into the tech and how Ripple may be making a name for itself in the global transaction space. Cointelegraph article.


Besides being fast, technologies like this are what help businesses cut costs. In fact, across the board, blockchain transactions are significantly cheaper than traditional transfers.

Security

Another big selling point of blockchain is that it is decentralized and more secure than big banks. Doing business has become more secure with networks being harder to hack and unique wallets being almost impossible to access. However, there is no impenetrable system. Ultimately blockchain is not 100% safe but its better.

The combination of speed and security makes blockchain technology the perfect tool for enterprise and banking to become more efficient and therefore, more profitable.


It Is The Future

We have already seen that banks and business are using the tech, and some storefronts and online stores are accepting different cryptocurrencies. With every new breakthrough, there are the early adopters and those that come after.


Right now, we are seeing the early adopters who are on the cutting edge. In the future, we are going to see widespread adoption.

If you want to learn more on blockchain and its role in enterprise, the book Blockchain For Business by Jai Singh, Jerry Cuomo, and Nitin Gaur is a fantastic resource.


Is 1 Bitcoin now worth 6,000 acres of land?

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In economics, scarcity is the result of people having "Unlimited Wants and Needs," or always wanting something new, and having "Limited Resources."

Limited Resources means that there are never enough resources, or materials, to satisfy, or fulfill, the wants and needs that every person has. This is a fundamental component to Bitcoin’s design. There will only ever be 21 million coins mined with the reward for mining Bitcoins being halved roughly every 4 years.

This makes Bitcoin a scarce asset.

This past week there was a post from Francis Poulit stating that 1 Bitcoin is now equivalent to 700 acres of land in scarcity terms.

When we compare these two assets its a fun exercise because viewers begin to think of traditional stores of value in denominations of Bitcoin. Adam Back the well known Bitcoin core developer working with Blockstream chimed in with the statement that 1 BTC for 700 acres was low.

In fact he suggested in terms of Canada’s land prices that 1 Bitcoin equals a whopping 6,000 acres of land.

Needless to say land in certain parts of the world is MUCH more expensive than others making the exercise a bit skewed but fun for sure. A barren field in Canada is not the same in Bitcoin denomination as a square block in the heart of New York City or right off Market street in San Francisco.

This is a fun exercise in measurement which is healthy for a brand new industry. I love seeing people thinking differently and being part of the brainstorm. This is what inspires people to build and create amazing things in any new industry including crypto.