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Staking — The New Way to Earn Crypto for Free

Staking — The New Way to Earn Crypto for Free
Airdrops are so 2017, free money was fun while it lasted but now when someone says free money in crypto, the first thoughts are scams and ponzi schemes. But in 2020, there is a way to earn free money, in a legitimate, common practice, and logical manner — staking.
Staking is the core concept behind the Proof-of-Stake (PoS) consensus protocol that is quickly becoming an industry standard throughout blockchain projects. PoS allows blockchains to scale effectively without compromising on security and resource efficiency. Projects that incorporate staking include aelf, Dash, EOS, Cosmos, Cardano, Dfinity and many others.

PoW — Why change

First, let’s look at some of the issues facing Proof-of-Work (PoW) consensus that led to the development of PoS.
  1. Excessive energy consumption — In 2017, many concerns were raised over the amount of electricity used by the bitcoin network (Largest PoW blockchain). Since then the energy consumption has increased by over 400%, to the point where 1 single transaction on this network has the same carbon footprint of 736,722 Visa transactions or consumes the same amount of electricity as over 20 U.S. households.
  2. Varying Electricity Costs — The profit of any miner on the network is tied to two costs, the initial startup cost to obtain the hardware and infrastructure, and more critically, the running cost of said equipment in relation to electricity usage. Electricity costs can vary from fractions of a cent per kWh to over 50 cents (USD) and in some cases it is free. When a user may only be earning $0.40 USD per hour then this will clearly rule out certain demographics based purely on electricity costs, reducing the potential for complete decentralization.
  3. Reduced decentralization — Due to the high cost of the mining equipment, those with large financial bases setup mining farms, either for others to rent out individual miners or entirely for personal gains. This results in large demographic hotspots on the network reducing the decentralized aspect to a point where it no longer accomplishes this aspect.
  4. Conflicted interests — The requirements of running miners on the network are purely based on having possession of the hardware, electricity and internet connection. There are no limits to the amount a miner can earn, nor do they need to hold any stake in the network, and thus there is very little incentive for them to vote on upgrades that may benefit the network but reduce their rewards.
I want to take this moment to mention a potential benefit to PoW that I have not seen anyone mention previously. It is a very loose argument so don’t take this to heart too strongly.
Consistent Fiat Injection — The majority of miners will be paying for their electricity in fiat currency. At a conservative rate of $0.1 USD per kWh, the network currently uses 73.12 TWh per year. This equates to an average daily cost of over $20 million USD. This means every day around $20 million of fiat currency is effectively being injected into the bitcoin network. Although this concept is somewhat flawed in the sense that the same amount of bitcoin will be released each day regardless of how much is spent on electricity, I’m looking at this from the eyes of the miners, they are reducing their fiat bags and increasing their bitcoin bags. This change of bags is the essence of this point which will inevitably encourage crypto spending. If the bitcoin bags were increased but fiat bags did not decrease, then there would be less incentive to spend the bitcoin, as would see in a staking ecosystem.

PoS Variations

Different approaches have been taken to tackle different issues the PoS protocol faces. Will Little has an excellent article explaining this and more in PoS, but let me take an excerpt from his piece to go through them:
  • Coin-age selection — Blockchains like Peercoin (the first PoS chain), start out with PoW to distribute the coins, use coin age to help prevent monopolization and 51% attacks (by setting a time range when the probability of being selected as a node is greatest), and implement checkpoints initially to prevent NoS problems.
  • Randomized block selection — Chains like NXT and Blackcoin also use checkpoints, but believe that coin-age discourages staking. After an initial distribution period (either via PoW or otherwise), these chains use algorithms to randomly select nodes that can create blocks.
  • Ethereum’s Casper protocol(s) — Being already widely distributed, Ethereum doesn’t have to worry about the initial distribution problem when/if it switches to PoS. Casper takes a more Byzantine Fault Tolerant (BFT) approach and will punish nodes by taking away (“slashing”) their stake if they do devious things. In addition, consensus is formed by a multi-round process where every randomly assigned node votes for a specific block during a round.
  • Delegated Proof-of-Stake (DPoS) — Invented by Dan Larimer and first used in Bitshares (and then in [aelf,] Steem, EOS, and many others), DPoS tackles potential PoS problems by having the community “elect” delegates that will run nodes to create and validate blocks. Bad behavior is then punished by the community simply out-voting the delegated nodes.
  • Delegated Byzantine Fault Tolerance (DBFT) — Similar to DPoS, the NEO community votes for (delegates) nodes, but instead of each node producing blocks and agreeing on consensus, only 2 out of 3 nodes need to agree on what goes in every block (acting more like bookkeepers than validators).
  • Tendermint — As a more sophisticated form of DBFT and a precursor to Casper, Jae Kwon introduced tendermint in 2014, which leverages dynamic validator sets, rotating leader elections, and voting power (i.e. weight) that is proportional to the self-funding and community allocation of tokens to a node (i.e. a “validator”).
  • Masternodes — First introduced by DASH, a masternode PoS system requires nodes to stake a minimum threshold of coins in order to qualify as a node. Often this comes with requirements to provide “service” to a network in the form of governance, special payment protocols, etc…
  • Proof of Importance (POI)NEM takes a slightly different approach by granting an “importance calculation” to masternodes staking at least 10,000 XEM. This POI system then rewards active nodes that act in a positive way over time to impact the community.
  • “Proof-of-X” — And finally, there is no lack of activity in the PoS world to come up with clever approaches and variants of staking (some are more elaborate than others). In addition to BFT protocols such as Honeybadger, Ouroboros, and Tezos, for further reading, also check out “Proof-of-”: Stake Anonymous, Storage, Stake Time, Stake Velocity, Activity, Burn, and Capacity.

Earning Your Stake

In order to understand how one can earn money from these networks, I’ll break them down into 3 categories: Simple staking, Running nodes, and Voting.
Simple Staking - This is the simplest of the 3 methods and requires almost no action by the user. Certain networks will reward users by simply holding tokens in a specified wallet. These rewards are generally minimal but are the easiest way to earn.
Running a node - This method provides the greatest rewards but also requires the greatest action by the user and most likely will require ongoing maintenance. Generally speaking, networks will require nodes to stake a certain amount of tokens often amounting to thousands of dollars. In DPoS systems, these nodes must be voted in by other users on the network and must continue to provide confidence to their supporters. Some companies will setup nodes and allow users to participate by contributing to the minimum staking amount, with a similar concept to PoW mining pools.
Voting - This mechanism works hand in hand with running nodes in relation to DPoS networks. Users are encouraged to vote for their preferred nodes by staking tokens as votes. Each vote will unlock a small amount of rewards for each voter, the nodes are normally the ones to provide these rewards as a portion of their own reward for running a node.

Aelf’s DPoS system

The aelf consensus protocol utilizes a form of DPoS. There are two versions of nodes on the network, active nodes & backup nodes (official names yet to be announced). Active nodes run the network and produce the blocks, while the backup nodes complete minor tasks and are on standby should any active nodes go offline or act maliciously. These nodes are selected based upon their number of votes received. Initially the top 17 nodes will be selected as active nodes, while the next 100 will stand as the backup ones, each voting period each node may change position should they receive more or less votes than the previous period. In order to be considered as a node, one must stake a minimum amount of ELF tokens (yet to be announced).
In order to participate as a voter, there is no minimum amount of tokens to be staked. When one stakes, their tokens will be locked for a designated amount of time, selected by the voter from the preset periods. If users pull their tokens out before this locked period has expired no rewards are received, but if they leave them locked for the entire time frame they will receive the set reward, and the tokens will be automatically rolled over into the next locked period. As a result, should a voter decide, once their votes are cast, they can continue to receive rewards without any further action needed.
Many projects have tackled with node rewards in order to make them fair, well incentivized but sustainable for everyone involved. Aelf has come up with a reward structure based on multiple variables with a basic income guaranteed for every node. Variables may include the number of re-elections, number of votes received, or other elements.
As the system matures, the number of active nodes will be increased, resulting in a more diverse and secure network.
Staking as a solution is a win-win-win for network creators, users and investors. It is a much more resource efficient and scalable protocol to secure blockchain networks while reducing the entry point for users to earn from the system.
submitted by Floris-Jan to aelfofficial [link] [comments]

DOGE market analysis for February 19th 2014

1 DOGE is currently valued at $0.00139 or 0.000002196 Bitcoin/DOGE. DOGE has become 5% more valuable vs. the Bitcoin since yesterday, and roughly 5% more valuabe vs. the USD since Bitcoin's price is holding steady around $630/Bitcoin.
The DOGE market cap (total value of all DOGE) is $71,123,000 today, with a total of ~52 billion DOGE in existence. The market cap of DOGE is roughly 1% the size of Bitcoin's market cap, which is impressive. DOGE currently has the 5th biggest market cap out of all the digital currencies, behind Bitcoin, Ripple (not really a mineable currency), Litecoin, and Peercoin.
DOGE has seen a steady decrease in value this week, losing 40% of its value vs. the USD, and 11% of its value vs. Bitcoin. Alot of this can probably be explained by instability in the Bitcoin market due to Mt. Gox's shutdown.
However, in the longer term DOGE is showing strong growth. It has increased in value 315% vs. Bitcoin since it opened 67 days ago. DOGE has strengthened 31% vs. the USD since opening, however since DOGE's weakest point on January 8th DOGE has strengthened 650% vs. the USD!
In other news, miners are currently mining around block 108,000. Rewards for blocks won't be halved until 92,000 blocks from now. The current reward is 0-500000 per block.
submitted by turtlecane to dogecoin [link] [comments]

Draft of CGB Website's new text - Your Input Requested!


Greetings everyone. I am posting a draft of some of the sections of the new website. They are a work in progress and any input on this content or anything else you would like to see on the new site is appreciated! The website will be focusing on educating investors of all ability so that they can understand the crypto-currency markets and make wise decisions within them. Without this understanding, our markets will not be able to efficiently, and with confidence, allocate capital to the true pillars of this new economy.
Note: Most of my updates can be seen directly here. I expect to have this completed by the weekend so that we can hopefully have the new site up and running. Even once up, there will be lots of work to do to really perfect it.

Site Navigation:

Quick Nav: FAQ | Block Explorer | Paper Wallet | Get CGB
Main Nav: Home | About | Getting Started | Investor Brief | Blog | Resources | Contact
The main navigation categories may have a submenu. Any sub items of this submenu are page sections.
  • About CGB
  • Team
  • Learn More
    • Papers and Articles
    • CGB's Life Cycle
    • Market Fundamentals
  • Frequently Asked Questions
Getting Started
  • Quick Overview
  • Get CGB
  • Storage and Use
  • Investor Brief
  • CGB Resources
  • Community
    • CGB Communities
    • Support CGB
    • Development
    • Community Content
    • CGB Accepted Here
  • Charts and Data
    • Embedded Live Data
    • External Live data (links)
    • Static Charts
    • Analysis
  • Marketing
    • Marketing Strategy
    • Viral Concepts
    • Material
    • Press


  • (logo)
  • Released in late June 2013, Cryptogenic Bullion was designed primarily with wealth preservation in mind. With its accelerated mining period, and fast declining inflation, Cryptogenic Bullion is now entering it’s final stage as an interest bearing, low inflation, cryptographic digital asset.
  • Wallet download selection
  • Quick Information section
  • What is Cryptogenic Bullion? - Cryptogenic Bullion is a peer-to-peer internet currency that enables instant payments to anyone in the world. Its fundamental specifications enable it to efficiently function as a store of wealth.
  • Energy and Cost Efficient - Our network requires far less energy than generating hardware-intensive proof-of-work hashes. Proof-of-stake also does away with the ~$1 billion “tax” on the Bitcoin network through proof-of-work blocks.
  • Higher Security - Maintaining the network through the hybrid proof-of-work/proof-of-stake algorithm reduces the risk of the Selfish-Miner Flaw, 51% attacks, Kimoto Gravity Attack and the block bloating that have been used to exploit other currencies.
  • Coin Specifications - Cryptogenic Bullion is based on a hybrid Proof of Stake / Proof of Work scrypt algorithm. It has a block interval of 60 seconds and retargets difficulty every 2 blocks. A reward of 1.5% interest is earned by those who maintain a savings of CGB, while 0.5% interest is earned by miners who also help to secure the network.
  • A Digital Asset - Cryptogenic Bullion is a digital asset with all of the properties of money. Like gold, it is portable, divisible, fungible, scarce, low inflation, durable, non-consumable, and a store of wealth. It can be stored in a private safe and yet transferred across the globe in minutes.
  • Get Involved - Our community is focused on empowering its members with the knowledge and resources required to quickly spread the benefits of Cryptogenic Bullion to new participants.
  • Updates and News Latest blog information, twitter feed, etc.
  • Investor Brief
    $___ USD/CGB Price $500,000 Market Cap B_____CGB/BTC Price 950,000 CGB Total Supply Last updated: X seconds ago


About CGB:
Cryptogenic Bullion is a digital asset with all of the qualities of money. It is a descendant of Bitcoin, but employs an advanced security model which is more efficient and more secure than Bitcoin. The problems of today's debt based fiat currencies find solutions in cutting-edge decentralized cryptographic currencies like Cryptogenic Bullion. Designed to function as a store of wealth, CGB's fundamentals emulate the properties and supply of gold.
While Cryptogenic Bullion shares many traits with Bitcoin such as fast global payments, decentralization, pseudo-anonymity, and non-reversible transactions, there are many improvements which allow CGB to more reliably store wealth. A critical requirement for storing wealth is a low inflation rate. Cryptogenic Bullion is a very rare exception in that it has nearly completed its volatile inflationary stage and settled into its maximum yearly inflation rate of 2%. It also allows prudent savers of Cryptogenic Bullion to earn up to 1.5% interest on funds left unspent in their wallets for at least 30 days.
Crypto-currencies are finding support among a massive and diverse range of participants. For newcomers, a visit to one of the following pages would be beneficial depending on your current level of understanding and intention. Cryptogenic Bullion emulate the properties of gold, a classic safe-haven asset, and also represents a part of the movement towards a more fair and honest system of money. For more details on why and how, see the Fundamental Knowledge section. To quickly learn more about the crypto-markets, see the Investor Brief section. For analysing market dynamics, see the Market Fundamentals section.
  • Proof of Work/Proof of Stake Hybrid
  • Algorithm: Scrypt
  • Linear difficulty retarget (every 2 blocks)
  • 5 Confirmations
  • 60 Second block time
  • 1.5% Annual interest earned
  • Subsidy halving after every 50k blocks until reward of 0.01
  • Target ~1,000,000 CGB
  • 0.5% PoW & 1.5% PoS inflation
  • Based on Peercoin & Novacoin
Fundamental Knowledge:
In order to understand the need for cryptographic currencies like Bitcoin and Cryptogenic Bullion, we must consider a number of fundamental challenges with our current financial system, and the solutions that cryptographic currencies provide. The world's currencies are referred to as debt-based fiat currencies because they are not backed by a physical asset like gold, and can burden up to 30 participants with debt for each actual dollar in reserve, creating the potential for bank runs. It helps to realize that when a credit card is used to purchase something, dollars are created , and when you pay it off, dollars are destroyed. This scheme is referred to as fractional reserve banking and can not happen in a digital currency system without the owner's knowledge because the supply is strictly controlled by a decentralized protocol.
We are beginning, as a society, to understand the dangers and inefficiencies found in centralized systems as corruptions and self destructive processes manifest themselves with no true remedy. As our society looks for answers, they are being found in technological advances which allow us to connect with each other in more meaningful ways which do not require a third party. Cryptographic currencies provide the convenience of cash, with neither the excessive centralized printing, nor the potential for censorship or sanctions which block the transmission of funds. A new economy is forming with various crypto-currencies attempting to fill different roles within the ecosystem. It is imperative that we capitalize these technologies through careful investment to allow for the necessary development which will enable them to be a major part of modern society. To quickly learn more about the crypto-markets, see the Investor Brief section.
Trust in crypto-currencies must begin with a basic understanding of how the system functions and how to use it. Technology has existed for decades now which allow us to verify that a message was signed by an individual. This authentication technology is now used to prove that the holder of a private wallet has sent funds form that wallet to another. Keeping this key secret is the responsibility of each participant and this responsibility is the price for the freedom enabled by cryptographic currencies. Every transaction that has ever occurred is recorded in a distributed ledger which proves the current balance of all wallets in order to validate further transactions. Blocks created every 60 seconds containing all of the new transactions are added to the top of the block chain and further serve to set all previous blocks in "cryptographic" stone. For more details on how CGB's decentralized protocols provide trusted security and honest money, see the Papers and Articles section.
In order to get a glimpse of what the future cryptographic currency ecosystem could look like we must accept that there are many different roles to fill, and it is difficult for one currency to efficiently fill all roles. A store of wealth, like Cryptogenic Bullion (CGB), must have a low inflation rate to preserve capital and reduce volatility. Stability can also be encouraged if the bearer is allowed to earn interest on savings stored unspent for a specified length of time. A currency, like Dogecoin (DOGE), must have a higher inflation rate to slightly exceed the adoption rate. This provides liquidity and encourages spending which furthers the expansion of the participant base. A market gateway, like Bitcoin (BTC), must also have a higher inflation rate to match adoption so that liquidity is maintained which enhances the access to each of its markets. The market gateway also insulates the cryptographic currencies and stores of wealth from the market fluctuations caused by volatile shifts in demand for fiat currencies vs. crypto-currencies as a whole. For more information on these dynamics, see the Market Fundamentals section.
Frequently Asked Questions:
  • General
  • Investing
  • Storing Wealth
  • Wallet Software
  • (more?)
Continued in this comment (directly below).
submitted by papersheepdog to CryptogenicBullion [link] [comments]

I rewrote the sidebar text

Markdown (source): First, Rev 1, Rev 2, Rev 3, Rev 4, Rev 5, Rev 6. Use RES or orangered me to get latest.
Changes (First->Latest): (excl. minor edits)
“third” to “fourth” “annum” to “year” Remove “to” Restore paragraph split Restore since it's back online Numbered list to bullet points Edit descriptions of exchanges Update link Add marketplace Clean up Link to Bitcoin, Litecoin, and Namecoin Wikipedia pages (last Rev 6 edit) Link to Proof-of-{Stake,Work} explanations Edit cointip text Change FAQ/wiki links Add example screenshots Remove until they come out of testing Add link to service list BTC-e now supports two-factor authentication Add Mt.Gox Add important facts link 
Screenshots: current sidebar vs suggested sidebar.
Comment with any suggestions or ideas you have.
PPCoin or Peercoin is the cryptocurrency with the fourth highest market cap after Bitcoin, Litecoin, and Namecoin. It is the first known iteration of a combined proof-of-stake/proof-of-work coin.
It is designed to be energy efficient in the long run, have a steady inflation rate of one percent per year, and (through proof-of-stake) be free of dependence on miners.
/PPCoin FAQ, wiki
Official website, FAQ, wiki
Wikipedia article
Important facts
Getting started
Walkthrough for Peercoin wallet setup faucet (free Peercoins)
PPCoinTalk marketplace
List of exchanges and other services
All support two-factor authentication.
USD converter (
Cryptocurrency value tracker (
Ticker for Chrome (Creator's announcement thread)
Ticker for Firefox (Creator on reddit)
Forums (alternative currencies section)
Related subreddits
BitcoinTip (Quick Start Guide)
BitcoinTip and ALTcoinTip enabled on /PPCoin.
submitted by AnonymousEntity to ppcoin [link] [comments]

Part 3. What is Blockchain doing Tomorrow?

Back for more? Great! Today's article is going to cover What Blockchain is doing in the future.
1. Proof of Stake vs. Proof of Work
2. Pooled Computing
   2a. Grid Computing
   2b. Blockchain Security
3. Financial Sector Disruption
   3b. ERC-20 Tokens
   3a. ICO's
A short disclaimer: The following Blockchains are discussed purely at my discretion. I did my best to remain unbiased, but I do own most of the coins that are brought up here. I hold the coins because I believe in them, this belief is not just that they will increase in value, but also that they will accomplish the goals they've set for themselves. I could be wrong.
1. Proof of Stake (POS) vs. Proof of Work (POW). For a Blockchain to be secure it must have measures in place to keep bad folks from changing the digital ledger. When Bitcoin was first created it implemented a solution to this problem called Proof of Work, or POW, which made altering the Bitcoin Blockchain very difficult.
Essentially what happens in a POW Blockchain is that all of the Nodes (computers running the Bitcoin client) race each other to solve a cryptographic puzzle. The first Node to solve the puzzle wins the right to chain a new Block onto the Blockchain. Solving this puzzle uses a lot of each Nodes computing power (Time x Electricity), but there is no way to chain a new Block onto the Blockchain without first solving this puzzle. This secures the Blockchain from alterations to its past Blocks, because a malicious Node would have to solve the puzzle for every single past Block AND be the first Node to solve the current Blocks puzzle. Since it obviously takes much more Time x Electricity to solve multiple puzzles instead of just one, the malicious Node will never be able to catch up to the current Block without a massive advantage.
So what is this Massive Advantage? For a malicious Node to alter a POW Blockchain, it would need direct control over a 51% majority of the entire Hashing Power being used by the Blockchain. Hashing Power is the amount of Time x Electricity a computer uses on behalf of the Blockchain (resources spent Validating Requests, solving puzzles, etc). In the case of Bitcoin (and Ethereum), there are literally millions of computer Nodes dedicating their Hashing Power to solving the puzzles. It would take a 51% majority of all Nodes to agree that they wanted to alter the Blockchain before anything could be changed.
Proof of Stake, or POS is an alternative to Proof of Work. Despite the terrible acronym, POS is a much more energy efficient method of securing a Blockchain. Rather than winning the right to chain a Block by quickly solving puzzles, in the POS system the Node who wins the right to chain a new Block is chosen at random, with a few caveats. Essentially the process proceeds like this:
  1. Each Node that wants to participate in chaining a new Block onto the Blockchain selects an amount of that Blockchains CryptoCurrency to Stake. When a CryptoCurrency is Staked it is basically locked in a vault that is untouchable until a certain amount of time passes.
  2. A Node with a Stake is chosen by the Blockchain to chain the newest Block onto the Blockchain.
  3. The other Nodes with Stakes verify that the winning Node is following the rules. If the winning Node is following the rules, the new Block is chained onto the Blockchain and the process repeats for the next new Block.
  4. However, if the winning Node is NOT following the rules, the other Nodes with Stakes tattle on the winning Node. When enough Nodes with Stakes tattle on the winning Node for not following the rules, the winning Nodes entire Stake is burned (deleted) and a new winning Node is chosen to chain the Block.
To date, only a few CryptoCurrencies are using a purely Proof of Stake system (Peercoin & NXT). The majority of CryptoCurrencies use Proof of Work (Bitcoin, Litecoin, Ethereum), and a few use a hybrid system of both POS & POW (Decred).
Ethereum is trying to make the transition from POW to POS, and their lead developer has cited the enormous amount of energy used for Proof of Work as the reason why. The solving of puzzles for POW is the culprit of this energy use, but Proof of Stake has not been tested on a live Blockchain at the same scale as Proof of Work. Time will tell if Ethereum and the other Proof of Stakers are correct, and I hope they are for the sake of the planet! It is estimated that both Bitcoin and Ethereum burn over $1 Million worth of USD in Electricity and Hardware PER DAY to secure their Blockchains.
In my opinion, following the progress of the Casper algorithm for Ethereum is the best way to stay up to speed on the current state of Proof of Stake research, and to better understand the benefits that POS may bring if it goes live on the Ethereum Blockchain. Link to Casper FAQ
2. Pooled Computing. Do you know what the fastest computer in the world is today? It is the Sunway TaihuLight, a Chinese supercomputer that can do 93 Quadrillion floating-point operations per second, also know as FLOPS. This is incredibly impressive, especially because this is the only way we have to perform Molecular Dynamics Simulation, or to simulate what Molecules do under changing situations. All of this computer power being in one place creates an issue though. The issue is that the amount of heat the supercomputer generates while running is enormous, and it is the main factor limiting humanity from building even faster, centralized supercomputers.
    2a. Enter Grid Computing! The decentralized solution to a supercomputer has already been achieved with Grid Computing. Grid Computing is the networking of many different devices (Personal computers, smartphones, servers, etc) for the purpose of carrying out computations each device could not accomplish by itself. This idea sounds great, but the issue Grid Computing runs into is that a single malicious computer can ruin the entire Grid of computers that are connected to form the supercomputer, so opening a Grid Computer to allow the public to participate is currently not feasible.
    2b. Enter Blockchain! With its cryptographically secured trustless system, any computer can be linked into the grid. And since there is no trust required, anyone who wants to interfere with the Grid Computers harmony should not be able to do so. Currently there are no successful Blockchain based supercomputers that I know of, but Golem and SONM are supposedly getting close. Neither of these CryptoCurrencies has released a working version that you can perform computations on as of yet, but if they do Grid Computing will greatly increase access to powerful computers for everyone the world over.
3. Financial Sector Disruption. In the first Quarter of 2017, crowdfunded Blockchain tokens raised more money for new ideas than the entire amount of capital invested by traditional Venture Capital firms. Sound impressive? This is only the beginning of the disruption that Blockchain is aiming to bring to the traditional Financial Sector of the global economy. From super cheap borderless payments to home mortgages, Blockchain based CryptoCurrencies have already made progress on vastly improving the way these services work.
In parts of the under-developed world, services like those mentioned above barely exist or are not even feasible. It is estimated that 2 Billion adults do not have a bank account today. However, with a simple CryptoCurrency wallet installed onto a Smarthphone, an unbanked adult can go from having no way to interact with the global economy to being at the technological cutting edge of global economic participation.
The furthest progress being made with the goal of turning unbanked people into banked is probably HumanIQ. Their goal is to allow users to create their own economies locally, and then to tie those economies into the global reach of the Ethereum Blockchain. HumanIQ (and other CryptoCurrencies with a similar goal) has a decent shot at leveling the playing field for folks in under-developed regions. What sets HumanIQ apart from prior attempts to accomplish this same goal though, is that the HumanIQ Coin is an ERC-20 Token. This means they are exclusive to the Ethereum Blockchain. A more thorough explanation of an ERC-20 Token will be given in the next section.
    3a. ERC-20 Tokens. In the last article, Part 2. What is Blockchain tech doing Today? it was mentioned that Ethereum supports a Programmable Element in addition to the typical Blockchain function of recording transfer of value transactions. One of the ways this Programmable Element has been used is in the creation of ERC-20 Tokens. These Tokens act like an entirely separate CryptoCurrency, but are able to be secured by the massive amount of users on the Ethereum Blockchain. This allows developers of new CryptoCurrencies to save time and money to get their idea off the ground, as the amount of work to create an entirely new and secure Blockchain is quite intense.
This option to use an existing Blockchain as the security for your CryptoCurrency has led to an explosion of new ideas that are all aiming to take advantage of Blockchain Tech. A few of the more notable use cases for ERC-20 Tokens are:
The Golem project: With the aim of creating a decentralized supercomputer, Golem uses an ERC-20 Token as a means of rewarding participants for linking their computer into the Golem supercomputer.
GigaWatt: Created an ERC-20 Token that will be used to rent Hardware space at their Hydro-powered CryptoCurrency mining farm in Washington state.
It is important to note that an ERC-20 Token does not directly gain any monetary value from the price of Ethereum. The advantages that the ERC-20 Token creator receives are:
  - Anywhere Ethereum is accepted, their ERC-20 Token can also be used.
  - Their ERC-20 Token is secured by the Hashing Power participating in the Ethereum Blockchain.
      3b. ICO's.The ease and advantages of creating an ERC-20 Token have also had the effect of promoting a new type of crowdfunding. The ICO, or Initial Coin Offering is when a CryptoCurrency Team allows a "Pre-sale" of the Coin they are creating for a project. Anyone who likes the goal of the Team can send Bitcoin, Ethereum, or any accepted CryptoCurrency to the Team in exchange for some amount of the Team's new Coin. After the Pre-sale is over the Team opens their Coin to the Public and the people who bought at the Pre-sale can either hold the Coin or sell it.
Currently, even though it is not required, a large amount of ICO's are happening with ERC-20 Tokens. This is mostly due to the easier method of creating an ERC-20 Token vs. building a Blockchain from the ground up.
As is the case with anything, tons of money being thrown at ICO's without any regulation creates some problems. The biggest issue that many people have with ICO's is accountability. An alarmingly high percentage of ICO's raise millions of dollars and have little to show for it, other than some proof they hired a team of developers and a Whitepaper (paper outlining their goal and how they will accomplish it).
Obviously not every great idea succeeds, but when the idea is backed by millions of dollars of other people's money, fiduciary responsibility becomes a central issue. The United States SEC (Securities & Exchange Commission) recently stated that:
"U.S. Securities Laws May Apply to Offers, Sales, and Trading of Interests in Virtual Organizations."
While this is not outright regulation, in my opinion it hints at some type of future restriction for ICO's. I am not a fan of the Guv'ment telling me what to do, but I have to admit if the Crypto-sphere doesn't regulate itself to a higher standard the long, fat, uninformed hand of bureaucracy is going to do it for us.
Thats all for today, hope you enjoyed the article! Thanks again for reading, and please comment below. Parts 1-4 can be found here.
submitted by artlimber to denvercryptogroup [link] [comments]

Debunking exaggerations of the security of Cosmos peg zones. Copy of #cosmos debate between rilly and ashgreen
rilly 4:14 AM (I'm trying to migrate a conversation from the ourchain.slack) @ebuchman I wanted to ask about how Cosmos peg zones compare with BTC Relay. Here is what tendermint said on reddit. "Cosmos keeps the Bitcoin bridge as a separate zone because we want to keep the Cosmos Hub a simple blockchain agnostic to PoW verification logic. If you have Ethereum act as a hub ala BTC Relay, how do you deal with future forks where e.g. Dogecoin change the PoW/consensus algorithm? Also, AFAIK there are functional limitations to BTCRelay as compare to Cosmos Bitcoin pegs." (edited)
rilly 4:21 AM I'm not sure how you would deal with a hard fork. Maybe this would mean you would have to "hard fork" (reissue and recreate) every token and contract that depends on BTC Rely? That is the price you pay for making things "read-only". For these sorts of things you need an alert system to let everyone know to upgrade. Bonded messaging is a decentralized alert system where bonds are used to ensure the receiver appreciates the message (if enough of them disapprove the bond is taken). 4:23 Who does a Cosmos zone trust to decide which forks to follow? ebuchman 4:31 AM i dont think btc relay provides a peg, its just a light client for bitcoin (edited) 4:31 the cosmos bitcoin pegzone will actually be a peg to bitcoin 4:32 handling forks is somewhat unresolved/unspecified. it will depend on the conditions 4:32 eg if bitcoin hard forks, the peg zone will need to upgrade the mechanics of the peg to keep up - its effectively a bitcoin client like anyone else (edited) rilly 4:42 AM Will Cosmos Hub validators all be signatories of a Bitcoin multisig wallet to hold the Bitcoins to back the pegs? (edited) 4:46 Or are these the sorts of pegs that aren't actually backed by Bitcoins, ie they use ATOM or something and hope the price stays in a certain range? (edited) krzysiekj 10:05 AM joined #cosmos. Also, @gxinterest joined, @dthn joined. ashgreen 12:30 PM @rilly Bitcoins on Cosmos Hub will be backed by actual Bitcoins on the main chain 12:31 it is really important to make the software in a way that people even can not tell which one is which 12:32 Once btc on both of the chains feels the same, the whole blockchain industry is ready to integrate into the Cosmos ecosystem starting from any services using btc. (edited) rilly 1:55 PM @ashgreen I'm such an idiot I believed that the "bitcoins" were so pricey at Mt Gox because they were the most trusted exchange. Now I understand what I was seeing. The BTC-IOUs became more valuable than the USD-IOUs because Gox was redeeming more of the BTC-IOUs than the USD-IOUs but eventually they stopped redeeming both. Therefore I think it really important to make a very clear distinction between IOUs and the actual bitcoin in your own wallet. Thus my solution is bonded messaging alerting people to upgrade. ashgreen 1:58 PM @rilly Cosmos btc peg is more than just an IOU. It is technical guarantee that btc on Cosmos represents the ownership of btc on the main chain 1:59 but yes your concern is very important and that is why Cosmos also wants to build a hybrid style distributed exchange 1:59 so that MT.Gox won’t happen again rilly 2:17 PM @ashgreen If you tell us how it works will it undermine the sacred trust? Maybe we need to write "In God We Trust" on these tokens LOL AFAIK bitcoin scripts cannot hold bitcoin in contracts to be released when an IOU is redeemed on a "sidechain" so I believe this "technical guarantee" you speak of is not as strong as BTC Relay. Here you can find a list of less secure "technical guarantees" for redeeming IOU tokens on "sidechains" (edited) ashgreen 2:22 PM I think we are considering a bunch of ways and you can join the discussion on Reddit. Not a certain solution Cosmos team can tell at this moment. 2:22 How are they different? Pegging by sidechain and btc relay? don’t they both use multi sig? rilly 2:30 PM The problem is that you can't put a light client for a "sidechain" on Bitcoin. You can't make scripts/contracts on bitcoin that execute when your BTC IOUs are redeemed on the sidechain. But with BTC Relay you can have a decentralized exchange with half an order book. The ETH seller can put ETH on the order book, go offline, and people can buy the ETH with BTC, only trusting the contracts. You can't put BTC-IOU on the order book and go offline without trusting the signatories of a multisig. If you have a multisig that is as large as your validator set you have similar security. Thus I asked whether Cosmos Hub validators would all be a part of a BTC multisig wallet. I believe the answer is, "no". ebuchman i dont think btc relay provides a peg, its just a light client for bitcoin Posted in #cosmosApril 25th at 4:31 AM rilly 2:45 PM @ashgreen "Pegging by sidechain and btc relay? don’t they both use multi sig?" BTC Relay might be used by someone claiming to peg an IOU to actual BTC but the closest thing to a "technical guarantee" for a BTC IOU is a token backed by far more ETH/ATOM than the value of the BTC that is to be redeemed. That is probably more expensive that it is worth and it only guarantees the IOU until the price of ETH vs BTC hits a certain value. You cannot guarantee that (during a TheDAO hack, for example) the ETH can be automatically traded for BTC on a decentralized exchange, to force redemption of the IOU before the orders can be taken off the exchange. (edited) krzysiekj 2:58 PM left #cosmos ashgreen 3:26 PM @rilly 1) you only need to go through the signatories when you pull out btc onto the mainnet, the transfer between blockchains, not when you trade and the signatories are supposed to run the nodes 24hours. If the ecosystem including the PG companies move over to Cosmos, the IOU wouldn’t be IOU anymore, which I don’t think is IOU in the first place. It will have its own value. 2) maybe you are mentioning about Atomic swap but Cosmos Dex is hybrid. The trade can get settlement finality in realtime using the hybrid feature (see the github note for the detail). (edited) rilly 4:12 PM @ashgreen PG = peg? Mainnet = Bitcoin blockchain? "If the ecosystem including the PG companies move over to Cosmos" Are you assuming major exchanges will choose to run on Cosmos zones (like Open Transactions was/is hoping for with voting pools) (if you offer them enough ATOM)? How many are interested thus far? "the IOU wouldn’t be IOU anymore, which I don’t think is IOU in the first place. It will have its own value" Yes these "non-mainnet bitcoins" could have a radically different price from actual bitcoins so I suggest we not call them "bitcoins" nor create any illusions or exaggerations of a "technical guarantee" to maintain a peg without a way to enforce this via blockchain contract. Of the two blockchain pegging mechanisms I am aware they both have been broken already and this is with a stable asset unlike BTC. BitUSD on Bitshares and NuBits which I think is on the Peercoin blochain. rilly 4:21 PM "2) maybe you are mentioning about Atomic swap but Cosmos Dex is hybrid. The trade can get settlement finality in realtime using the hybrid feature (see the github note for the detail)." I barely understand atomic swaps or state channels. I'm reading up on that. subtillion 4:43 PM joined #cosmos. Also, @akibabu left. ashgreen 6:48 PM @rilly PG = Payment Gateways such as Bitpay or Circle, the major Bitcoin users or service makers. Mainnet = Yes, Bitcooin main blockchain. 1) If there are enough and clear incentives for the service providers, it is possible that they immigrate to Cosmos. I think faster transaction speed, smart contract availability for BTC using smart contract zone, way cheaper transaction fee, and unlimited scalability should be the incentives strong enough to convince them to join. They are not individuals. They are business operators. If something proves to maximize the profit and streamline the processes, they will take a proper managerial decisions. 2) Yes. You can say that btc on mainnet and Cosmos Hub are different. If a right tech and safe pegging architecture is implemented, the difference between those two should be only a “location” where btc is getting confirmed. In that case, it is not IOU, it is btc itself. If it is not the case, yes it is something different and will have different names with a proper explanation about risks and how it works which I don’t deem as a good thing to use. If btc on Cosmos Hub is just an IOU, I personally don’t put much value on even creating it. 3) Pegging solutions that use a reserve fund such as BitUSD(bitshares), Steem dollar(Steem), Tether(with HongKong bank reserve), Labor Hour(Chronobank), and other stable currencies, these are NOT IOU nor the pegging subject itself. They merely back a certain token’s value pegged to a subject with a reserve fund. This value pegging system using reserve funds can always break down when facing high degree of fluctuations and steady price trend that goes only one way(mostly trend going downwards). 4) Unlike the value pegging system with reserve funds, Cosmos Hub pegs the token itself on the main blockchain physically and technically. If the peg is not guaranteed technically in a safe way and the way people agree to come onboard, I don’t see any improvements Cosmos brings to this decentralized world, at least in that sector. However, if it does, I think it will be strong enough to reconstruct the whole industry. (edited)
rilly 10:56 PM @ashgreen @faddat @eudu @asmodat "4) Unlike the value pegging system with reserve funds, Cosmos Hub pegs the token itself on the main blockchain physically and technically." That appears to be nonsense. On Ethereum you can write a contract that is a Cosmos client just like BTC Relay is a Bitcoin client. The Cosmos client contract can trigger an IOU contract release actual ETH when the ETH IOUs are sent to the corresponding contract on the Cosmos exchange. Bitcoin scripts can't run a Cosmos client, so you have to hold Bitcoin in multisig wallets. Am I wrong so far? Who are the signatories? I don't fully understand atomic swaps or state/payment channels but I don't think that matters because I think these still require someone to hold bitcoins if they are to be backing for a token on another blockchain. Atomic swaps require both parties to be online at the time of the swap and state/payment channels mitigate this somehow with a third party. I thought I saw a video of Buterin arguing that state channels were insecure from network failure, but maybe I have it confused. (edited) ashgreen 11:05 PM @rilly you are right. Bitcoin has to have signatories since it doesn't support smart contracts. Think in this way. Smart contracts on Ethereum rely on Ethereum miners, the signatories. So basically every blockchain model has to put a trust in the native validator set. Of course they will act exactly on the protocols written in advance but they still can influence the system. Having signatory doesn't mean it is any bad but rather means the operation of signatories has to be put in an agreed and safe way. Cosmos is working on how to empower the signatories in a way that secures trust and safe. I believe that Jae will write something about it and then we can discuss further about the methodologies. rilly 11:33 PM "Having signatory doesn't mean it is any bad but rather means the operation of signatories has to be put in an agreed and safe way." It is not bad unless you are pretending it is more secure and trustless than it is. 11:33 If the DEX is deployed according to the projected timeline, Tendermint will only have been tested for 4 months on a public blockchain, and DEX will be completely untested in this reality. So you have all the possible vulnerabilities of Bitcoin plus the unknown vulnerabilities of Cosmos. You decided to put a cap on the fundraiser presumably because you didn't want to take on too much responsibility but here you are hyping this thing like it can't fail. Bitcoins are more secure than a peg/IOU token but these tokens can be put on order books and traded faster and cheaper. It can distribute trust for making instant exchanges in comparison with Shapeshift or Changelly (at the cost of privacy?). (edited) 11:33 "Cosmos is working on how to empower the signatories in a way that secures trust and safe. I believe that Jae will write something about it and then we can discuss further about the methodologies." Maybe you haven't decided who the signatories would be. If it is just exchanges that may be less secure than if it is all the Hub validators. But either way exchanges may not trust anyone else to hold their bitcoins. It doesn't necessarily give you better security if your security is better than the others in the multisig. Having many independent exchanges means that many can get hacked without jeopardizing the most secure ones. The more Bitcoins you put in a single multisig the higher the bounty for hacking it. Some of what I was reading sounded like anyone could make a peg zone so couldn't they have one signatory or pick whoever they want? (edited) ashgreen 11:43 PM @rilly nobody is pretending anything. It is just an obvious and simple thing that we need to make it secure and trustless to the level that we can actually commercialize and open up to public with all risks clarified. (edited) balibalo 11:46 PM joined #cosmos rilly 11:51 PM "In that case, it is not IOU, it is btc itself." They should be called pegs, IOUs, or something other than bitcoins. (edited) ashgreen 11:52 PM @rilly right 11:54 pegs sound good rilly 3:36 AM Someone should make a proposal to the on-chain gov to use the validator's atom bonds to back the multisig wallets.
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