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Bitcoin, Blockchain, Blockchain technology, Cryptocurrency

To understand cryptocurrency, you first need to understand the history of the virtual coin. Virtual coin, or digital currency, differs from traditional fiat currency in that there is no physical representation to accompany each unit of value. Long before the crypto craze of 2017, there were the pioneers of electronic cash.

These early financial freethinkers shaped the market and prepared the world for the digitization of the economy. Fast forward to today’s crypto market, and thanks to the efficiency of blockchain technology, you now see digital money experiencing increased adoption globally.

Virtual Coin Before Bitcoin

Over the last twenty years, virtual currency payment systems have flourished. These systems existed long before the advanced blockchain technology of today made virtual coins, such as Bitcoin, a household name.

Virtual currencies are not considered a legal tender in most countries for many reasons. Governments do not issue these coins. Instead, virtual currencies are issued by the platform’s developers. Today, there are many ways in which companies release virtual coins. Before cryptocurrencies, bonuses were the most popular form of issuing digital currency.

 

 

Problems with Early Virtual Coin

The problem with these early virtual coins was that they were too susceptible to attack from hackers or scammers. Additionally, the lack of any form of material confirmation left many businesses skeptical of the true value behind these concepts. Remember, this was 20 years prior to the emergence of blockchain technology. Many people didn’t even own a computer at this time.

Netherlands, 1980s

One of the first examples of an attempt to create a digital cash comes from the Netherlands in the late 1980s. Gas station owners were fed up with their businesses being robbed. The problem got so bad that someone decided it would be safer to find a way to place money onto smart cards. Trucking company owners could load these cards and give them to their drivers. The drivers would then use the cards at the participating gas stations.

Flooz.com

Another example of virtual coin usage before cryptocurrency is the internet currency Flooz. Flooz.com issued these virtual coins in 1998 as part of a marketing campaign. Each Flooz equaled one dollar in value.

Users would receive Flooz coin for purchases made on the Flooz.com website. Users could then spend their Flooz on more products on the site, or they could take their bonus earnings and shop at numerous other participating vendors.

The concept was well before its time, and despite a multi-million dollar advertising campaign, Flooz never achieved the level of adoption required to sustain the project. The platform also took heavy losses after a combination of Russian and Filipino hackers made purchases using stolen credit cards. The company is now defunct, but the inspiration of their project lives on in the digital currencies of today.

Blinded Cash

In 1981, an American cryptographer by the name of David Chaum released his now famous paper titled Untraceable Electronic Mail, Return Addresses, and Digital Pseudonyms. Chaum described an anonymous digital currency system. In 1989, Chaum developed his protocol into a working virtual coin known as DigiCash.

David Chaum via Quartz

David Chaum via Quartz

The protocol was revolutionary and introduced the world to the concept of blind signatures. Blind signatures disguise the content of a message and utilize a combination of a public and private password to verify the validity of the participants. Today, this concept is used in major cryptocurrencies in the form of public keys.

B-Money

A decade after DigiCash entered the market, a developer by the name of Wei Dai made waves in the cryptographic community after publishing a paper called B-Money Anonymous, Distributed Electronic Cash System. This virtual coin concept utilized a decentralized network, which included private sending capabilities and auto-enforceable contracts. While the technical aspects of this virtual coin were far from blockchain technology, and the project never gained enough momentum to take flight, the concept greatly influenced the future cryptocurrency market.

Bit Gold

Longtime virtual coin advocate, Nick Szabo, pioneered the proof-of-work system used today by cryptocurrencies such as Bitcoin with his Bit Gold protocol. Bit Gold helped to cement the concept of a decentralized network and the elimination of third-party verification systems. Satoshi borrowed many of Bit Gold’s concepts. So much so, that many people believed Satoshi Nakamoto to be Nick Szabo. It took a public denial by Szabo to finally convince people otherwise.

HashCash

Many crypto enthusiasts consider HashCash to be the direct inspiration for Bitcoin. HashCash was introduced in 1997 by cryptographer Adam Beck. Beck incorporated a proof-of-work protocol to verify the validity of a transaction. HashCash’s proof-of-work protocol previously saw use as a spam reduction technique before being adapted for virtual coins. The concept impacted Nakamoto to the point that he cites Beck in the Bitcoin white paper. However, HashCash lost relevance after suffering scalability issues due to increased network congestion.

Enter Bitcoin and the Wonders of Blockchain

Satoshi Nakamoto, the anonymous creator of Bitcoin, labels the world’s most successful cryptocurrency as “a peer-to-peer electronic cash system.” Unlike the virtual coins before Bitcoin, Satoshi had the backing of powerful new technology, blockchain.

Blockchain technology stores information in duplicate over a vast network of computers. Prior to any changes to the blockchain, fifty-one percent of the nodes must agree on the validity of the chain. This validation process references the previous blocks. The longest verifiable chain of transactions remains the valid chain. In this manner, blockchain technology eliminates the need for third-party verification systems such as banks.

Advantages of Virtual Coins

The advent of blockchain technology increased the benefits of virtual coins significantly. Users can transfer cryptocurrency in near instant time, and at a much cheaper rate than the traditional methods of global money transfer. Cryptocurrencies eliminate the need for verification systems, which saves you big time.

To put the level of savings experienced by crypto users into perspective, look at the traditional international money transfer methods. Today, your funds require verification from potentially thirty-six different third-party organizations when sent globally. And, each organization tacks on a fee for their services.

Virtual Coins Are Here to Stay

Now, the world has multiple legitimate virtual currency options to consider. These digital currencies continue to shape the economics of the future. Today, virtual coins are more common than ever, and for the first time in history, digital money receives recognition from traditional financial firms.

 
 
  This article was originally published at CoinCentral.com.
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Bitcoin, Blockchain, Blockchain technology, Cryptocurrency

Post Oak Motor Cars, the luxury automobile retailer which stocks Rolls-Royce, Bentley, and Bugatti vehicles has announced plans to accept Bitcoin and Bitcoin Cash payments at its dealership. The retailer is reportedly the first one in the U.S. to embrace the use of popular cryptocurrencies for retail payments.

The auto retailer will operate its crypto payment service via Bitpay, a popular payment service provider. According to Tilman Fertitta, renowned American businessman, and owner of Post Oak Motor Cars, the company is moving forward with this new plan to enhance the buying experience for its customers who are cryptocurrency holders or wish to use digital currencies for their own reasons. He also stated that crypto purchases will make it easier and faster for people to buy cars from the dealership.

The statement by Fertitta reads:

“Being a premier luxury car dealer, I always want to offer my customers the very best buying experience and this partnership will allow anyone around the world to purchase our vehicles faster and easier.”

In 2017, Fertitta opened up to reporters concerning his thoughts on Bitcoin, stating that people will most likely not buy it since it is not exactly insured by the Federal Deposit Insurance Corporation (FDIC). However, Bitcoin adoption has grown considerably since that statement was made and various corporations have risen to the task of catering to the ever-growing population of crypto investors. Currently, Post Oak Motor Cars is no exception.

According to the press release, Bitpay is embracing the dealership’s plan due to its reputation and the popularity of the luxury automobiles it stocks.

The statement by Sonny Singh, Chief Commercial Officer (CCO) of BitPay, reads:

“We’ve noticed people prefer to make larger purchases with bitcoin since it is a simple way to make payments. This partnership is timely with the increasing popularity of Rolls-Royce, Bentley and Bugatti vehicles. Post Oak Motors has a great reputation for selling the finest cars, and we are thrilled to be partnering with Tilman.”

THE POST OAK MOTOR CARS LUXURY EXPERIENCE

Like other Tilman Fertitta companies, Post Oak offers a luxury experience to its customers, that seeks to integrate them into its ecosystem, making them return several times. At its prestigious uptown/galleria area of Houston, the dealership welcomes customers looking to purchase Bentley, Rolls-Royce, and Bugatti vehicles.

The world of cryptocurrency is often characterized by the presence of millionaires, flashy cars and real estate. This is why it makes sense that Post Oaks sees an emerging class of cryptocurrency owners among its clients. By allowing this group of customers pay with their digital currency, the firm is retaining customers and opening its doors to even more customers within the field.

The firm aims to create the best possible automotive experience and in the past, this has meant post-delivery services, including major repairs, oil changes, brake repairs, and tire replacements. Now, however, this includes catering to its crypto crowd and ensuring that people are not restricted when paying for luxury items. This is especially convenient for investors since it is not easy to convert cryptocurrency back to fiat currency without any hassle.

Cryptocurrency acceptance is still minimal, seeing as there is still much development going on, in terms of stability, security, and regulation. This means that businesses accepting cryptocurrency are few. There are currently over 20 million active Bitcoin wallets and about 5% of Americans use cryptocurrency, so this presents a unique opportunity, just waiting for brands to snatch it up.

WHO IS TILMAN FERTITTA?

Tilman Joseph Fertitta is an American entrepreneur as well as the Chairman, Chief Executive Officer, and owner of Landry’s, Inc. With over $3.5 billion in assets, the company operates more than 500 restaurants, hotels, and casinos across various international locations, generating $3.4 billion in revenue annually.

Fertitta is also a TV personality, Chief Executive Officer at The Oceanaire, Inc., and Co-Chairman as well as Chief Executive Officer of Landcadia Holdings, Inc. He currently serves as Chairman at Houston Police Foundation, Houston Children’s Charity, Golden Nugget, Inc. and University of Houston System Board of Regents. He is worth an estimated $3 billion and is regarded as the richest restaurateur in the world.

Born in Galveston, Texas, in 1957, Fertitta spent part of his childhood learning the ropes at his father’s seafood restaurant. According to many reports, Tilman Fertitta began investing in stock as early as high school and successfully established his first business in his twenties. After graduating from high school he got into Texas Tech University and later transferred to the University of Houston, where he studied business administration and hospitality management.

By 23, a young Fertitta, still in college, took a loan of $6,000 to start a seaside hotel in Galveston. This was his first business. Soon, he was able to build a restaurant empire which he has continued to expand till date.

In September 2017, he signed an agreement to purchase popular NBA team, the Houston Rockets, for $2.2 billion. He is also credited as one of the original investors who helped shape the future of the Houston Texans as an NFL team although he eventually sold his franchise. He served as the director of NBA team, the Houston Rockets for a long time.

Tilman Fertitta was the star of the reality show “Billion Dollar Buyer” which aired on CNBC from 2016 and featured the businessman traveling across the country to test innovative hospitality products to be used in Landry’s, Inc.’s hotels and casinos. In 2004, Tilman Fertitta became the second-youngest Texan to be inducted into the Texas Business Hall of Fame.

WHAT ARE OTHER CAR BRANDS DOING WITHIN THE CRYPTOCURRENCY INDUSTRY?

Luxury Car,  Bitcoin

As cryptocurrency users continue to increase, the auto industry is making moves to promote adoption and incorporate blockchain technology into their operations. One example is Daimler AG, the Germany based automobile giant responsible for a range of luxury cars including Mercedes-Benz.

The firm recently created MobiCoin, its own digital currency, as a way to reward drivers for maintaining eco-friendly driving practices like low-speed driving. The vehicles will transmit data directly to Daimler AG which will allocate MobiCoins based on this data, all carried out via a mobile app.

Other examples are BMW, Renault, Ford, and General Motors, which are among 30 companies in the Mobility Open Blockchain Initiative (MOBI), including IBM and Bosch. These companies hope to accelerate blockchain adoption and promote new use cases in areas like ride-sharing.

Recently, Ford also filed a patent for a vehicle-to-vehicle communication system, involving the exchange of cryptocurrency tokens as a way to facilitate traffic flow.

FINAL THOUGHTS

Brands continue to push for cryptocurrency adoption due to the rising demand and secure ways to purchase items with these currencies. For several reasons including anonymity, and transaction speed, many people find it easier to spend cryptocurrency. This is why it is important for companies to map out ways to cater to this portion of their customer base.

Post Oak Motor Cars is no amateur when it comes to the convenience of its customers. Under the leadership of Tilman Fertitta, the company is showing that it is more than willing to go to great lengths to improve the buying experience for them.

This article was originally published at MinDice.com.

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Bitcoin, Blockchain, Blockchain technology, Cryptocurrency

Unlike the period in which Bitcoin first emerged, it is a lot easier to buy cryptocurrency today. The major upside of this is that users do not have to break their necks searching for a way to buy their favorite coin.

There are numerous ways to go about it, including exchanges and Bitcoin ATMs, as opposed to attending crypto meetups and hanging around chatrooms in the hopes of meeting people who are willing to sell their tokens. However, most exchanges have not completely figured out how to make it easy for users to buy Bitcoin using fiat currency. In fact, this is a major drawback since people mostly have fiat currency as their starting point for acquiring cryptocurrency.

Normally, fiat purchases can be carried out through third-party applications like Paypal. However, users have found it nearly impossible to do something as simple as buying some Bitcoin straight from their Paypal accounts. With the Paypal active user base falling to 250 million, this is a far-reaching problem.

Currently, attempting to buy cryptocurrency through Paypal is difficult and expensive, mostly due to the potential for users to take advantage of chargebacks. For example, a user could buy some Bitcoins on an exchange, directly from their Paypal account and use its support system to charge it back so that they receive a refund. This can be problematic for exchanges since they can’t request refunds from the Bitcoin wallets they’ve credited.

WAYS IN WHICH BITCOIN CAN BE PURCHASED WITH A PAYPAL ACCOUNT

Although they are few, there are still some other ways in which users can purchase Bitcoin directly from their Paypal accounts, including direct trade, Bitcoin loans, and centralized exchanges and Specialized payment apps.

1. P2P DIRECT TRADE

Since most exchanges do not accept Paypal payments in exchange for BTC, direct trade is the most efficient way forward for those bent on using the payment app.

This involves sites that facilitate peer-to-peer agreements to sell and purchase Bitcoin using Paypal. Essentially, one user connects with another, either in person or through the use of a decentralized exchange like Localbitcoins, Paxful or Cancoin. After connecting, both users can agree on Paypal as a method of payment for their mutual benefit.

LOCALBITCOINS

Localbitcoins is easily the most popular way to buy BTC from a Paypal account. It is a peer-to-peer marketplace that aims to connect buyers and sellers who want to carry out their transactions using Paypal.

The platform method has continuously proven to be an effective way to achieve this. However, users must be careful when choosing sellers to avoid any fraudulent issues. Traders can be filtered by looking at their trade volume and feedback.

PAXFUL

This is another popular marketplace which links buyers and sellers as well as provides escrow services. The fees on Paxful are higher than the market rate but may prove to be worth it. Its user interface bears some slight similarities to Localbitcoins. Apart from Paypal, the platform also conducts transactions via Skrill, Payoneer and gift cards. The site will only accept verified U.S. Paypal accounts.

CANCOIN

Cancoin is a relatively new, decentralized peer-to-peer exchange for Bitcoin traders. It facilitates transactions between users and allows them to carry out these transactions using Paypal. Cancoin greatly emphasizes its security and range of tools to make the user experience more convenient.

Some features include multiple escrow orders, multi-signature transactions, custom alerts via email, SMS, desktop or browser and Interactive price history graphs. Creating an account on the platform is free but sellers pay a 1% fee on each transaction apart from the normal Bitcoin transaction fees. Buyers on the other hand, do not pay fees.

2. P2P BITCOIN “LOANS”

Bitcoin lending is becoming increasingly popular and since a large number of users receive money through Paypal, several bitcoin lending platforms accept it as a payment method. In these systems, users who hold Bitcoin can decide to lend their tokens to other users in hopes of generating profits from interest.

Since Bitcoin lending is still a growing concept, there are not many lending platforms. As a result, the chances of finding one that accepts Paypal as a payment method are slim. xCoins has managed to stand out in this regard.

XCOINS

xCoins is a cryptocurrency exchange, which also serves as a peer-to-peer marketplace, offering additional services including Bitcoin lending. It primarily exists to act as a bridge between Bitcoin lenders and borrowers.

When users fund their xCoins account, they can decide on what interest rates they would like to charge their borrowers, with a starting point of 15%.

Borrowers on the platform are matched with loans, according to the needs they specify.

xCoins guarantees a high level of security through its internal rating system. This way, the credibility of users can be verified easily.

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3. CENTRALIZED CRYPTOCURRENCY EXCHANGES

A handful of centralized exchanges have also developed their own systems for ensuring security while accepting Paypal as a payment method. They include Virwox and eToro.

VIRWOX

VirWoX, an acronym for Virtual World Exchange, is a centralized cryptocurrency exchange which accepts Paypal payments. It was launched in 2007 as a digital currency exchange even though it precedes Bitcoin.

Currently, the platform has over 1 million registered users and uses an automatic order system to match them. Like almost any other exchange, a user must create an account to use the platform.

After this step, funds can be deposited in a virtual wallet using Paypal, credit cards, and a host of other options. Subsequently, buy-sell pairs, market limits or order limits can be created on the exchange page and submitted.

ETORO

eToro is a popular social trading and online forex platform where users can invest in several digital assets. The platform offers a wide array of cryptocurrencies and ensures that all user assets are managed in a single place.

It also eliminates the need for a digital wallet and claims to use high-quality encryption technology to secure investors’ funds. Unfortunately, fees on the Etoro platform are relatively high.

4. SPECIALIZED PAYMENT APPS

Some payment apps act as intermediaries to allow Paypal users access cryptocurrency from their accounts. One example is WirexApp which is not an exchange, yet facilitates the purchase of digital currency.

WIREXAPP

WirexApp allows users to set up consistent Paypal cryptocurrency payments. Unfortunately, a user’s first transaction takes about 1-2 days but all transactions after that are carried out instantly.

It is available in several countries including Bahamas, Bahrain, Iceland, Indonesia, Italy, Malaysia, Malta, Philippines, Romania, Saudi Arabia, and the United Arab Emirates among others.

To get started, users must create and verify a WirexApp account. This gets them a free virtual visa card which they have to deposit about $3 into. The card can be added to Paypal and used to pay for cryptocurrency transactions.

FINAL THOUGHTS

Buying cryptocurrency from a Paypal account has many upsides. But fraud, its major drawback seems to trump them all. Until major exchanges find a way around chargebacks, users may be stuck jumping through hoops just to buy cryptocurrency conveniently.

At the same time, platforms that currently offer this service are few and as a result, there is more profit to go around in the form of transaction fees. While this is great for these exchanges it does not do users any favors– since the scarcity of a Paypal payment option on cryptocurrency exchange will only drive up the existing transaction fees on the few platforms that offer this option. Hopefully, exchanges will become fiat-friendly in the next future and allow users to pay for cryptocurrency more conveniently.

This article was originally published at MinDice.com.

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Bitcoin, Blockchain, Blockchain technology, Cryptocurrency

What is Bitcoin Gold?

Only a few months after the Bitcoin Cash hard fork, the Bitcoin blockchain experienced another community-driven hard fork known as Bitcoin Gold (BTG).

Bitcoin Gold hopes to change the paradigm around mining on the Bitcoin blockchain. According to the founders, the Bitcoin blockchain has become too centralized. Large companies with huge banks of mining computers now mine the vast majority of Bitcoin. For the founders of Bitcoin Gold, having large companies control the Bitcoin network defeats the purpose of a decentralized ledger and peer-to-peer currencies.

In response, they’ve initialized the Bitcoin Gold project. It’s an alternate fork of the Bitcoin blockchain that implements changes that make mining more equitable. The goal of Bitcoin Gold is to create a network where anyone can become a miner with only basic hardware. As a result, Bitcoin Gold mining would be spread among many miners, instead of a few large companies.

In this guide, we cover all things Bitcoin Gold such as:


Decentralizing the Bitcoin Blockchain

In the very early days of Bitcoin, ordinary computers verified and completed the proof of work needed to power the Bitcoin blockchain. However, the past several years have seen rapid development in the hardware used to mine Bitcoin.

What started as normal computers on the original Bitcoin network soon graduated to specialized rigs with graphics processing units (GPUs) installed to hash the proof of work faster.

Today, the hardware has advanced even further. Application-specific integrated circuits (ASICs) now perform nearly all of the mining on the Bitcoin blockchain. These are devices built specifically for Bitcoin mining that are 1,000,000 times better at mining than your home computer. Buying, installing, and running ASICs has a high startup cost, making it difficult for the average user to get involved.

[Editor’s note: The more expensive mining becomes, the fewer people can actually do it. This means that the mining network becomes that much more centralized. The argument Bitcoin Gold wants to make is to make mining Bitcoin something everyone can do, therefore keeping the mining as decentralized as possible.]

In addition, most successful Bitcoin mining operations today involve entire rooms or warehouses full of ASICs running 24/7. Small time miners simply can’t compete.

Mining Farm

Mining farm. Photo by Marco Krohn – Creative Commons

Bitcoin Gold’s motto, “Make Bitcoin Decentralized Again,” is a tongue-in-cheek reference to Donald Trump’s election campaign slogan. However, it also references Satoshi’s original vision for Bitcoin of a peer-to-peer network where anyone could take part in the mining process. In order to change Bitcoin mining into something more equitable, Bitcoin Gold proposes changing the blockchain to eliminate ASIC mining.

SHA-256 vs Equihash

The fundamental change in Bitcoin Gold is choosing a different hashing algorithm that makes proof of work more difficult for ASICs. This is accomplished when a hashing algorithm requires more memory (RAM) to complete. Since ASICs are about pure processing power, requiring more memory bottlenecks their processing ability. This makes small-time mining on GPUs competitive once again.

The current, ASIC-driven Bitcoin blockchain uses a hashing algorithm known as SHA-256 for its proof of work. The founders of Bitcoin Gold instead use another algorithm known as Equihash. Alex Biryukov and Dmitry Khovratovich developed Equihash as an ASIC-resistant algorithm, and it has already seen success powering other cryptocurrencies, the most famous of which is Zcash.

Ultimately, changing to Equihash would make Bitcoin mining more distributed, and that’s really the only change that Bitcoin Gold proposes for the network. While mining centralization is an issue on the Bitcoin blockchain, with miners blacklisting some users or giving preference to certain transactions, there’s a limit to how much power these central miners can wield. It’s not clear that mining centralization has had an overly negative impact on Bitcoin.

If it ever did, the Bitcoin core developers could implement Equihash themselves, essentially firing all the current ASIC miners on the Bitcoin blockchain. The prospect of losing the hundreds of thousands of dollars they invested in their mining hardware with an algorithm change is enough to keep most miners on the network honest.


Who Received Bitcoin Gold?

Since Bitcoin Gold is a fork of the original Bitcoin blockchain, everyone who owned BTC before the fork received the same amount of BTG, at a 1:1 ratio. You didn’t need to do anything special to receive the BTG, but claiming it may have gotten tricky depending on how you had your wallet set up.

You’re able to trade BTG on nearly 20 exchanges. The most popular options are HitBTC, OKEx, Bitfinex, and Binance.

How to Mine Bitcoin Gold

If you’re interested in how to mine Bitcoin Gold, we’ve got good news. The set-up process is relatively simple, and you mine with just a GPU – no ASICs required.

First, you need to join a mining pool. You’ve got over ten to choose from with pool.gold as one of the most popular options. Next, download the mining software from the pool that you joined. Pool.gold has mining software available for NVIDIA and Radeon.

If you don’t have a BTG wallet, set one up. Your options include BTGWallet.online, the Bitcoin Gold Core Wallet, or any exchange that supports BTG.

Continuing with pool.gold as the example, you have separate instructions based on your GPU:

  • NVIDIA: Edit the start.bat file to include your Bitcoin Gold wallet address followed by the worker name.
  • Radeon: Edit the config.txt file to include your Bitcoin Gold wallet address followed by the worker name.

Finally, double-click “start.bat” and begin mining.


When Did It Go Live?

The Bitcoin Gold hard fork occurred on October 24, 2017, with block 491,407 on the Bitcoin blockchain.When that happened, Bitcoin Gold took a snapshot of all the balances and transactions on Bitcoin up to that point. The new blockchain began from there.

Is Bitcoin Gold a Competitor to Bitcoin?

Although Bitcoin Gold is a hard fork of the original Bitcoin blockchain, it’s not really a competitor to Bitcoin. While other hard forks, like Bitcoin Cash, cannibalized some miners from the Bitcoin network to work on the new blockchain, Bitcoin Gold’s anti-ASIC algorithm means virtually none of Bitcoin’s current miners will want to switch to mining BTG.

Instead, Bitcoin Gold competes with other anti-ASIC cryptocurrencies like Ethereum for mining power. Mining on such networks comes in the form of smaller-scale GPU mining. The problem for Bitcoin Gold is those other anti-ASIC cryptocurrencies have a longer history and are more predictable for miners. It’s not clear why a miner would want to switch to BTG, unless the price per BTG surges.

The one advantage that Bitcoin Gold has is wide dispersal. Everyone on the Bitcoin network received will receive BTG, so there’s potential for widespread adoption.

Bitcoin Gold vs Bitcoin, Bitcoin Cash, & SegWit2x

With so many forks on the Bitcoin blockchain in such quick succession, it can be confusing to keep track of the differences. Here’s a table to help you out:
 BitcoinBitcoin GoldBitcoin CashSegWit2x (cancelled)
PoW TypeASICASIC-resistant (GPU)ASICASIC
Block Time~10 mins~10 mins~10 mins~10 mins
Difficulty adjustment~2 weeksEach block~2 weeks~2 weeks
SegWitYesYesNoYes
Replay ProtectionYesYesNo
Total Coin Supply21 million21 million21 million21 million
Bitcoin Gold is the only Bitcoin fork to date to implement a new ASIC-resistant proof of work algorithm. Along with that new hashing algorithm, Bitcoin Gold implements a new difficulty adjustment with every block, gradually increasing the difficulty based on past block times. Finally, Bitcoin Gold is one of the only Bitcoin forks to support both Segregated Witness (SegWit) technology and replay protection. SegWit increases the number of transactions possible per block and replay protection prevents fraudulent parallel transactions on two forks.

Replay Protection After a Fork

hard fork

A hard fork.

Replay protection is critical when implementing a fork of an existing blockchain. The shared code and wallet addresses between BTC and BTG make it possible to implement a replay attack. Basically, if you want to conduct a transaction on both BTC and BTG at the same time, you’re fine. However, if you want to pay someone in BTC and keep your BTG, you’re open to an attack. An attacker could send a false signal between the forks that causes you to lose both currencies when you only meant to send one.

Bitcoin Gold offers full replay protection on BTG to prevent such attacks. The solution involves a SIGHASH_FORK_ID mechanism that rehashes transactions, meaning they can’t be transferred across from BTC to BTG.

What People are Saying About Bitcoin Gold

Most new cryptocurrencies involve ASIC-resistant hashing algorithms, and it’s becoming something of an industry standard to promote decentralization. In that respect, Bitcoin Gold holds a lot to be excited about. At its core, it’s about transitioning the Bitcoin network to more decentralized mining.

However, as we saw above, there’s not much evidence that the current Bitcoin mining system is broken. There have been some small complaints, and it’s not ideal that the network is so centralized. Nevertheless, miners on Bitcoin have a lot to lose if they wield their power too aggressively. There are also new entrantsto the Bitcoin mining community that are decentralizing control from a few key ASIC farms.

The general consensus from Bitcoin experts is there’s not enough new in Bitcoin Gold to warrant an independent investment. While it certainly doesn’t hurt to hold onto your free BTG that you receive as a result of the fork (if you owned Bitcoin before Oct 24), wait until the dust settles before deciding whether to buy more.

  This article was originally published at CoinCentral.com.
 
 
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Bitcoin, Blockchain, Blockchain technology, Cryptocurrency

Bitcoin was all the rave last year, with its high-profit margins and an influx of new investors. However, it is safe to say that over the span of one year, it has matured considerably. Like Ethereum founder Vitalik Buterin told CNBC, Bitcoin may never have as much hype as it did in 2017 because so many people are now aware of cryptocurrency and how it works.

A lot of things have changed in the cryptocurrency sector since over-the-top forecasts were made in 2017, including a $160,000 price estimation for Bitcoin. One of such changes is the introduction of Bitcoin Futures which control the price of BTC by allowing large investors to exert pressure on it.

This means that predictions of large price values like the one above are unlikely to be met in the near future. Another change is the start of Bitcoin institutional investing. For example, both the Bakkt and the Nasdaq platforms claim to be open to offering cryptocurrency investing to institutions.

While stakeholders struggle to keep the BTC price at bay, one daunting question still looms: Will Bitcoin crash again in 2019 or will it peak and stabilize at a better price point than it currently has?

WHAT DOES THE FUTURE LOOK LIKE?

The last major cryptocurrency crash which followed the December 2017 peak brought about a need for an evolution in Bitcoin investment. Where Ethereum had ICOs as a new way to pour funds into the cryptocurrency industry, Bitcoin lacked one.

Soon, industry experts like the Winklevoss twins started looking towards exchange-traded funds (ETFs) to create long-term sustenance of Bitcoin as an investment vehicle. Unfortunately, these ETFs cannot function without approval from the Securities and Exchange Commission, so the industry is at a crossroads: evolve and survive, or continue at the same pace and end in a bubble burst.

 

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AN EMPHASIS ON NON-PHYSICAL BITCOIN ETFS

An exchange-traded fund is a security that tracks underlying real-world assets like gold, equities, oil, bonds, commodities or cryptocurrency. It allows investors to buy into it and earn dividends from their investment. Such shares are easy to trade like stocks and can get rid of any barriers faced by investors when trying to purchase those underlying assets themselves.

The submitted ETFs proposals describe funds that are primarily derivatives. They can be shorted or coordinated with a Bitcoin future. Only physical Bitcoin ETFs are currently a good fit for the Bitcoin market since derivatives bring about the unfavorable market to another state.

Bitcoin exchange-traded funds have been in the headlines lately, mostly for their rejections. Just recently, theWinklevoss twins faced a rejection of their own. This has not deterred other parties who are bent on seeing this new form of investment come to life.

Unfortunately, the SEC is building up quite a track record of rejections with a toll of up to 15 rejected Bitcoin ETFproposals since 2013.

BITCOIN PRICE FORECAST VS. BITCOIN USAGE     

One major factor to consider when looking at the possibility of another crash is the adoption rate of Bitcoin. Currently, ownership is still quite low, only a few points higher than last year. This implies stagnation and also that investors have found other coins which they deem more competitive. The younger generation is generally more bullish on Bitcoin usage since they consider it a product of their age, but the older generation remains skeptical.

However, this brief stagnation does not prove that Bitcoin will crash. If anything, the introduction of Futures and the demand for ETFs make up for it and shows that Bitcoin is here to stay.

It also shows that users are serious about integrating it into their daily transactions, which may eventually save the pioneer digital currency.

The introduction of stable coins like tether and application-tolerant platforms like Ethereum and EOS have given Bitcoin a serious run for its money. The high price point, which has been Bitcoin’s most attractive feature in the past has also turned out to be its Achilles’ heel.

Percentage increases in profit are simply not as good as those in cryptocurrencies with lower prices. For example, a user who buys $2000 worth of XRP at $0.3 can afford to purchase 6666 tokens while the same amount will only purchase about 0.3 BTC at $6000 per unit. While XRP can easily rise by 100% to $0.6, it will take a lot more for BTC to hit $12,000. This makes it more profitable to buy into smaller cryptocurrencies.

But what about the earlier forecasts of Bitcoin? How do they tie in with this new usage information? Simple, they do not. Several forecasts were made with assumptions of an ideal situation in which adoption would progress quickly and at a steady rate. Some of these forecasts have been revisited, with extended timelines that seem more realistic in light of Bitcoin’s recent performance.

WHAT ARE THE BITCOIN PRICE PREDICTIONS FOR 2019 AND 2020?

The recent issues faced by Bitcoin have not stopped industry figures from making future predictions about its price. Industry predictions generally fall between $25,000-$29,000 as a realistic price point for Bitcoin.

This is especially because it has been trending in its transition band, in which it will trade most of the time, since May 2018. This signifies an imminent major bull run in the cryptocurrency industry.

Some other significant Bitcoin price predictions for 2019 include:

  • $28,000 by the end of 2019, according to Ronnie Moas, crypto bull and founder of Standpoint Research, in a report published by Cointelegraph.
  • $36,000 by the end of 2019, according to Sam Doctor, Quantamental Strategist at Fundstrat Global Advisors, who based his prediction on the historical average 1.8x P/BE multiple.
  • $25,000 according to Thomas Lee, Co-Founder and Head of Research at Fundstrat Global Advisors
  • $1 million, according to John McAfee, Founder of McAfee Associates, who earlier predicted a $500,000 price point before modifying it. McAfee claims that he used the same model which was used to predict $5000 at the end of 2017.
  • $10,000-$100,000 in the next 5 years, according to Joe DiPasquale, CEO of BitBull Capital.
  • $10,000 by the end of 2020 according to Fred Schebesta, Co-Founder and CEO of Finder.
  • $61,900 by the end of 2020 according to Bobby Ullery, CTO of Waysay who also predicted a shared market capitalization of $4.5 trillion between Ethereum and Bitcoin.
  • $30,000 by the end of 2020, according to Matias Dorta, Founder of ICO Informer, who also sees several countries adopting Bitcoin as a reserve currency by 2030.
  • $30,000 by the end of 2020, according to Craig Russo, Co-founder of sludgefeed.com
  • $75,000 by the end of 2020 and a market capitalization of $1.3 trillion, according to Brandon Quittem, a cryptocurrency analyst & writer.

FINAL THOUGHTS

Due to all the factors discussed above, including pending ETF proposals, stagnation, the introduction of Bitcoin futures and the competition among cryptocurrencies, it is difficult to say whether Bitcoin will indeed crash again in 2019. Considering its current performance, the leading cryptocurrency is at a point where it could either crash again or blossom into a widely accepted medium of exchange and investment.

As with almost everything else in this relatively new industry, the future of Bitcoin is shrouded in unpredictability and falls heavily in the hands of investors and regulators. However, there is no denying that Bitcoin is evolving every day as more people become exposed to it, including those who are not direct users.

This article was originally published at MinDice.com.

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Bitcoin, Blockchain, Blockchain technology, Cryptocurrency

Have you ever thought about how blockchain could affect the diamond industry? Probably not, right? But now diamond blockchain technology could improve how we track diamonds, from the mine to the jewelry store.

But there’s an issue with diamonds. As with any popular industry, the diamond market isn’t exactly squeaky clean. Some diamonds, known as conflict diamonds, are illegally traded to fund wars abroad. You may not know this due to the high demand for diamonds. Almost 50 percent of the demand for diamonds come from the US — and it isn’t a surprise. After all, it is the go-to jewel of engagements and weddings. And because of its hardiness, diamond is ideal for industrial use.

That said, mining for diamonds can be a violent affair. The 2006 hit Blood Diamond, starring Leonardo DiCaprio, introduced the travesties related to diamond mining in Africa to the world’s stage.

Regardless, stakeholders in the diamond industry rightfully want to stop the trade of conflict diamonds, and blockchain might be the solution.

What Is a Conflict Diamond?

For those who don’t know, a conflict diamond is an uncut diamond that is mined in an armed conflict zone. The diamond is then traded, and the funds are used to finance the fighting. These blood diamonds are usually associated with conflicts in central and western Africa.

According to CNN, about 4 percent of the world’s diamond population came from Sierra Leone during its civil war (1991-2002). And that’s from just one country! In an article by CBS, experts suggested that blood diamonds could make up 15 percent of the diamond trade.

Despite these statistics, there are measures in place that attempt to smother the illegal industry. The primary actor is the Kimberley Process. This certification scheme connects local governments and international organizations to solve the problem. Their solution: Ensure every shipment of diamonds from these areas has certification.

Does It Work?

The Kimberly Process says it does and claims a 99.8 percent success rate.

But with so many intermediaries, and so many steps between mining and selling the diamonds, fraud is still highly probable. Many believe the process could be more effective, including the diamond giant De Beers.

The Diamond Blockchain

The De Beers Group, which owns over 30 percent of the diamond market, has recently announced its intent to pursue blockchain tech. That’s right. One of the industry leaders wants to utilize the blockchain to curb conflict diamonds.

From what we knew about blockchain, it should work. Cataloging diamonds on the blockchain will create transparency. Only a select few will have access to the ledger, in order to ensure that each individual in the process does their job correctly. You no longer need to trust governments, the mines, the shipment team. If the diamond is certified on the blockchain, it’s legit.

De Beers plans to track the diamonds from initial mining to final sale. That way, you can trace every move of the diamond on the digital ledger.

Their blockchain venture, Tracr, launched in January 2018. Despite being founded by De Beers, the company stresses that it has no access to the data unless it’s shared by the data owner. Using the Kimberly Process as a guide, they’ve invested with diamond offices, producers, graders, retailers, and other stakeholders to make the project a reality.

Diamond Blockchain: A screenshot from the Tracr website, listing the problems of supply chain

A screenshot from Tracr’s homepage. These supply chain vulnerabilities are exploited by the trade of conflict diamonds.

But they aren’t the only ones using blockchain to kill conflict diamonds.

In 2015, Everledger was used to securely track diamonds. It came back in 2017 with a new Diamond Time-Lapse plan (DDLP). This new initiative tracks the whole process, from mining to certification, in real time.

But Everledger isn’t completely unrelated to De Beers, either. This tech was built by Dharmanandan Diamonds, a trust of the DDPL and a sight holder of De Beers. In other words, the creators of Everledger are authorized purchasers of rough diamonds by De Beers.

Is De Beers the Solution?

IBM joined the diamond-tracking trade in April of 2018, partnering with various jewelry firms, and they weren’t alone. In fact, a Canadian NGO, Impact, left the Kimberly Process altogether, citing that the De Beers solution was unsatisfactory.

If this is true, there could be more room for blockchain tech development in the diamond industry.

Summary

Saying conflict diamonds are an issue is an understatement. The funds from these illicitly traded gems are funding violence and terror. Blockchain offers a stunning solution.

So far, we’ve seen industry leaders accept the new tech with open arms, but there’s still room for the technology to grow, and the process can still evolve.

But one thing is certain: These initiatives are making us think about how we can prevent the trade of blood diamonds and pave the way to peace.

 This article was originally published at CoinCentral.com.
 
 
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Bitcoin, Blockchain, Cryptocurrency

Eminem recently turned heads when Bitcoin was referenced on hip hop song “Not Alike,” his recently released song featuring Royce da 5’9” on Spotify. Part of Kamikaze, his 2018 surprise album released on the 31st of August, the song has quickly become a hit on several streaming platforms including Apple Music.

On the Bitcoin line from the song, Royce da 5’9” states “Remember everybody used to bite Nickel, now everybody doing Bitcoin.” This is a direct comparison that shows how the world has moved on from the traditional way of handling finance and encapsulates all that cryptocurrency is currently achieving. It also points to the notion that cryptocurrencies and other distributed ledger technologies are set to usurp fiat currencies as the primary global means of exchange.

In pop culture, Eminem is seen as one of the most influential voices, with 15 Grammy Awards to prove it. More than 700,000 tickets for his 2018 tour were sold out in minutes thanks to his large active fanbase. Naturally, his fanbase consists mainly of Generation Z and millennials who are gradually showing far more enthusiasm for cryptocurrencies than the older generations.

By referencing Bitcoin in his hip hop song, Eminem is contributing to making it more popular among his audience. Following the release of the song, Bitcoin saw a 5% weekly increase. For now, blockchain and digital assets still have a dissociative aura to them, where they are seen as a new phenomenon that people should be cautious of.

Those who already hold virtual currencies are likely to find them more relatable when they hear their favorite rapper mentioning it casually on a song. Even the members of his audience who do not know much about cryptocurrency may be motivated to find out more about it. Combining these factors, this small move by Eminem does a lot for the adoption of cryptocurrency.

Although like most Eminem songs, “Not Alike” contains profanity and violence, it is a major way that cryptocurrencies have made an appearance in pop culture. The line of the song containing Bitcoin shows its growing importance and popularity. It also shows its utility beyond scams and fraudulent get-rich-quick schemes.

WHO IS EMINEM?

Eminem is one of the most highly decorated, yet controversial American rappers. He is also a celebrated record producer and actor. Easily one of the best selling artists of the 21st century, he has accumulated a huge following over the years. He has contributed to pop culture since the 2000s, including coining the term “stan” which is now popular among fans.

He was Born on October 17, 1972, in St. Joseph, Missouri as Marshall Bruce Mathers III and attended Lincoln High School in Warren, Michigan. He had a turbulent childhood and eventually dropped out of school at the age of 17 due to his inability to pass his classes.

Although he performed poorly at school, he always had an affinity for language and studying the dictionary. As a teenage dropout, Eminem identified with the emerging rap scene of the 90s and frequently participated in rap battles. He continued to penetrate the Detroit rap scene, despite being white when rap was a predominantly black genre of music. Soon he became one of the most prominent rappers in Detroit’s underground scene. A while later, he was discovered by Dr. Dre, a legendary rapper and former producer of N.W.A at the time.

DISCOGRAPHY

By early 1999, he had released his first album, The Slim Shady LP, which achieved multi-platinum status and earned him two Grammy Awards and four MTV Video Music Awards. The following year, he released The Marshall Mathers LP which is famous for its status as the fastest-selling album in the history of rap.

Ten years later, he released Recovery, another Grammy Award-winning album which documented his struggle with addiction and his subsequent journey to rehabilitation. His fourth album titled Marshall Mathers LP 2 was released in 2013, earning him numerous awards and a positive reception. This was followed by Revival in 2017 and Kamikaze, his latest album, in 2018.

Eminem also ventured into acting with a small role in The Wash, a 2001 film, after a brief stint as a music video extra in 1998. However, he made his big Hollywood debut in 2002, with a leading role in 8 Mile, a quasi-autobiographical film showcasing his later childhood in Detroit. The movie included various original soundtracks like “Lose Yourself” which won the 2003 Academy Award for Best Original Song. It also set the record as the longest-running No. 1 hip-hop single.

The rapper also voiced the character of a corrupt police officer on the 50 Cent: Bulletproof video game as well as the Slim Shady show, a web cartoon at the time. He was offered the lead role in Elysium, a 2013 Sci-Fi film but turned it down due to disagreements with the director.  He also had a cameo appearance in The Interview, a 2014 satire film about the North Korean leader.

Eminem has never been afraid to speak boldly on the topics that interest and bother him. He has been at the forefront of rap music for decades and still remains relevant in the industry.

WHICH OTHER CELEBRITIES HAVE MADE CRYPTOCURRENCY AND BLOCKCHAIN MORE MAINSTREAM?

Virtual currencies are becoming a normal part of everyday life, in part because of celebrities that serve as influencers. Although Eminem’s mention of Bitcoin has caused excitement in the community, he is not the first notable celebrity to reference cryptocurrency in pop culture. Through movies, TV shows, celebrity interviews, and music, digital assets are gaining more exposure and adoption every day. The following are instances in which cryptocurrency has been referenced in pop culture:

  • Crypto, a new Hollywood movie, is scheduled for release in 2019. It centers around the cryptocurrency money laundering efforts of Gilmore Girls star Alexis Bledel and Kurt Russell.
  • Big Bang Theory, a prominent science comedy show, aired an episode during the Bitcoin peak of 2017. In the episode, the characters had to find a laptop containing Bitcoin that they mined some years before. When they finally found it, they discovered that the Bitcoin was downloaded to a flash drive that was eventually lost. The seventh season of the show had an average of 20.4 million viewers per episode.
  • In 2014, Tatiana Moroz, a singer-songwriter, launched a virtual currency called “Tatiana Coin.” Her aim is to connect artists and their fans using blockchain technology and she originally raised funds with Adam B. Levine of Let’s Talk Bitcoin. She also organized an ICO through CoinPowers.
  • John Barrett, a popular country singer, wrote “Ode to Satoshi” to honor Satoshi Nakamoto, the legendary founder of Bitcoin, stating that he “came to save the day.”

FINAL THOUGHTS

Popular culture is clearly reflecting the rising awareness of cryptocurrency and blockchain technology. In today’s world, where influencer marketing is a billion dollar market, free press from figures as influential as Eminem is highly valuable. The mention of Bitcoin on his song could be the push that several of his fans need to start investing in it.

The gradual referencing of cryptocurrencies in media plays a huge role in future mainstream adoption. But even more, it shows how far the industry has come since the creation of Bitcoin. Since new developments continue to emerge every day, it is easy to understate the progress that has been achieved so far. Soon, the placement of digital currencies may become the norm, instead of the exception.

This article was originally published at MinDice.com.

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Bitcoin, Blockchain, Blockchain technology, Cryptocurrency

The cryptocurrency market is a high-octane playground for day Lambo dreamers and investors. It has made some super-rich, almost overnight and reduced others to the brink of bankruptcy. And of course, amid all these chaotic happenings is a rambunctious side of the industry, where questionable practices make the market tremendously murky.

The cryptocurrency exchange has led to the fast rise of one too many companies. Two-year-old exchanges are now trading billions of dollars worth of cryptocurrencies every day, something which many traditional financial institutions have struggled to achieve for over a century.

BitForex, for example, handles over $5 billion in transactions daily, while the London stock exchange, a global force that has been in existence for over two centuries still struggles to consistently match its figures. The platform also beats its more popular competitors in trade volume, despite it having contrastingly less traffic.

That said, a recent investigation carried out by Bloomberg on cryptocurrency exchange services such as Bitforex paints a rather skewed picture. It found that most crypto exchange networks with huge trade volume discrepancies allow users to abuse the system or encourage the inflation of trade volumes.

The result is that investors are unsuspecting investors are likely to be lured in by the impressive trade volumes, which give false credibility to an exchange through artificial activity. However, the reality of what’s actually going on hits clients once they try to cash out, which can turn out to be a major headache.

This is because such platforms incentivized users to carry out mirrored transactions, and so few users are actually interested in buying or selling crypto within the platform. According to Garrett Jin, BitForex’s Vice President, the exchange’s high trade volume is a result of its reward system that encourages transactions.

He revealed this via an email to Bloomberg. The exchange’s transactional mining system allegedly pays out $1.20 in digital tokens for every $1 paid in transaction fees. This promotes wash-trading, the practice of repeatedly buying and selling crypto assets to inflate activity.

According to the VP, the system is designed to reward Bitforex users to encourage them to trade among themselves. He also highlighted that the company is against all forms of market-manipulation and abuse, and said that the present reward system will end soon anyway.

Garrett highlighted the complexities of preventing wash-trading saying all it takes are users with two accounts to start trading with themselves. Exchange clients are allowed to have multiple accounts and carry out trades with whomever they choose to, hence the loophole.

Numerous other platforms also feature similar incentivized programs and they include, DOBI Trade, CoinSuper, FCoin, and CoinBene. In Bitforex’s case, it is not regulated by the Monetary Authority of Singapore and operates in an opaque market where there are no guarantees for investors. This is according to a statement issued by MAS, which also revealed that the network may not have enough buyers and sellers, which results in significant withdrawal issues.

Hard to Clamp Down on the Cryptocurrency Exchange Practices

Wash-trading is a practice that is hard to stop because there are trades that look similar to it that are undertaken for legitimate reasons. In a recent interview with Unchained, Binance’s CEO, Changpeng Zhao, also known as CZ highlighted the complexities of curbing the practice as well as other market-manipulation activities.

He spoke about measures undertaken by his company to curb market-manipulation and insider-trading, and revealed that Binance requires employees who buy cryptocurrency to hold the digital funds for 30 days before selling. The company apparently discourages its employees from day-trading trading, which is not a productive endeavor anyway, according to the crypto exec.

Binance cryptocurrency exchange CEO, Changpeng Zhao (right) with Singapore Prime Minister, Lee Hsien Loong (left).

He also talked about the wash-trading problem affecting the market, asserting that there has never been any evidence in regard to insider-trading or market-manipulation at Binance. He also explained that there is a difference between wash-trading and manipulation.

According to the CEO, it is not easy to determine the stage at which wash-trading becomes market-manipulation, stating, ” So like conceptually yes, if Bitcoin is $6,300 on other exchanges right now and it is trading at $7,000 on others, then most likely there is some type of manipulation but how do you define that, how do you prevent that?”

Asked about his views on the recent move by ShapeShift to introduce stringent Anti Money Laundering (AML) and (Know Your Customer KYC) after being accused of indulging in market-manipulation prices, CZ declined to comment saying it is hard to judge allegations from the outside.

On the company’s move to adopt new policies following the market-manipulation claims, he said that there are many internal factors taken into consideration when making such decisions. He expressed confidence that Erik Tristan Voorhees, ShapeShift’s co-founder most likely made the best decision for his company.

This article was originally published at CoinCentral.com.

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Bitcoin, Blockchain, Blockchain technology, Cryptocurrency

While cryptocurrency is currently the center of the hype in the finance sector, most big industry players are gravitating towards its underlying technology: blockchain. Several top-tier executives like Warren Buffett have been pushing the “Blockchain not Bitcoin” mantra which other’s have adopted.

Such executives believe that cryptocurrencies like Bitcoin are a bubble which will burst, leaving their underpinning technology behind. The technology, which has been applied in problem-solving processes within several industries including agriculture and real estate is quickly gaining traction in the finance industry as well. It has recently been used to solve several complex payment problems, including bartering.

WHAT IS BARTERING?

Bartering involves the exchange of goods and services for other goods and services of perceived equal value. Today, money is a generally acceptable means of exchange, but before the creation of money, bartering was the primary means. People could barter exchange things like clothes for food, and services like a shoe repair in exchange for a cleaning service and so on.

This method was one of mankind’s most significant inventions, but like any other invention, it became obsolete with the arrival of a better option. However, several individuals and businesses still practice bartering to date.


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WHAT ARE THE ADVANTAGES OF A BARTER SYSTEM?

Although the barter system is no longer commonplace, it worked efficiently when it was. During the Great Depression of the 1930s, it was a popular means of exchange due to the lack of money. It worked great for many reasons:
  • The system is easy to use. While the modern day monetary system may seem simple to a person who has used it for a long time, it is still leagues ahead of a barter system in complexity. A lot of the problems associated with today’s financial system were avoided during the bartering period.
  • Since bartering caters to the specific needs of society, there is no point in producing more or less than needed. As a result, there is never an issue of overproduction, underproduction or artificial scarcity in a barter system. It has a moderation that is difficult to recreate with the current financial industry standards.
  • A barter system focuses on the exchange between people within the same vicinity, so there is no international trade. This means that bartering helps people avoid the issues typically linked with international trade.
  • Another major advantage is that due to the nature of goods and services exchanged within the system, economic power is shared evenly. Since they cannot be stored, there is no accumulation of excess wealth. Unlike today’s system, there is no concentration of economic power among a small group.
  • The system minimizes the occurrence of waste and maximizes the use of natural resources. This is because things cannot be bought, only exchanged for items of equivalent value.
  • The barter system also promotes division of labor which leads to better results than in a system where people practice several trades without mastering any.

WHAT ARE THE DISADVANTAGES OF A BARTER SYSTEM?

Like any system, the barter system also has its drawbacks, seen below:
  • People who want to exchange one item or service for another must find other people who are in need of what they are offering. This situation is known as a double coincidence of wants and leads to a waste of time and effort. It is also inconvenient especially when a person can’t immediately find someone whose wants coincide and may have to make several third-party exchanges in the process.
  • Although barters take place between items of equivalent value, there is no unit to determine what is equal and what is not. This creates a huge problem because irrespective of perceived worth, one unit of an item is equal to what the receiver of that item determines it to be. For example, in a typical barter exchange, one unit of strawberries can be equal to one unit of wheat depending on the receiver of the strawberries.
  • Another disadvantage of the barter system is that due to the absence of a conventional means of exchange (money), there is no divisibility. For example, a cow may be equal to the cost of 12 pairs of shoes. A person who wants to exchange a cow for just 2 pairs cannot divide it into smaller cows. In a modern financial system, dealing with such an issue would only require payment and the receiving of change.
  • Under a barter system, it is difficult for individuals and businesses to accumulate wealth because there is no system of storage. Since the items exchanged are not predetermined, the transactions within the system are random. This leads to the absence of real purchasing power and extra bartered expenses to store specific goods like food for long periods.
  • Since each item being exchanged is different, it is difficult to draft contracts concerning deferred and installment payments. It is also difficult to take loans as well as transfer wealth to someone else. This is because the quality and value of goods and services being swapped may change in the future.
  • In a barter system, it is difficult to transport goods from one place to another, as opposed to the cost of transporting money in a modern system.

HOW DOES BLOCKCHAIN SOLVE THESE ISSUES?

A blockchain is a distributed digital ledger on a peer-to-peer network, which records every transaction carried out on it. To effectively use the technology, most blockchain platforms have their own cryptocurrencies which serve as means of exchange.

By allowing traders to barter using a consensus mechanism that allocates values to specific goods and use, the network digital asset as a means of exchange, many of the issues associated with bartering can be solved. Several companies are already working on such solutions, and one prominent example is MYTC.

WHAT IS MYTC?

MYTC is a blockchain startup that is creating a decentralized platform to support trade and bartering activities. Small and medium enterprises on the platform can easily carry out barter without worrying about any of the issues associated with a typical barter system. The MYTC blockchain platform aims to give merchants the chance to automate their exchanges so that more time can be spent focusing on their businesses and sales. It will also serve as an upgrade for the outdated financial technology used by vendors.

HOW CAN MYTC BLOCKCHAIN HELP SOLVE BARTERING ISSUES?

The MYTC blockchain uses its own form of digital currency that solves the problem of double coincidence. Since all trade will be done using the company’s tokens, there is no need to conduct a manual search for an exchange partner. The tokens also serve as a common measure of value for any barters that take place.

The platform allows its users to store divisible tokens in a wallet and retains a balance which is debited. As a result, there are no divisibility restrictions. The tokens can also be transferred, and wealth can be accumulated.

MYTC tokens are also easily transported on the network and contracts can be arranged for deferred payments as participants see fit. Another advantage of the MYTC platform is that its digital currency can be used from anywhere in the world. This eliminates location barriers and promotes international trade.

FINAL THOUGHTS

Like any other system, barter systems are not close to perfect. However, with digital enhancements such as blockchain technology, they can work well. MYTC is one of the companies ensuring that businesses are free to choose whether to deal with money or goods and services. This freedom to choose is part of the core principle behind decentralized systems and currencies. Hopefully, with a more efficient and cost-effective system, bartering will become widely accepted again.

This article was originally published at MinDice.com.

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Bitcoin, Blockchain, Blockchain technology, Cryptocurrency
Venezuela has suffered from egregious economic issues for decades. Hospitals lack necessary supplies, people are struggling to find each meal, and the national currency—the bolivar—lost 96 percent of its valuein 2017. In an effort to combat Venezuela’s dire situation, its government became the first country in the world to implement a national cryptocurrency (and declare it as its primary currency) earlier this year. It was undoubtedly a bold move, intriguing blockchain advocates around the globe. So how is the cryptocurrency, known as the Petro, faring? Truthfully, not well. The Petro is still young, and numerous doubts and concerns are circulating around its execution. While some members of the Venezuelan government are fierce proponents of the Petro, others (along with international parties) regard it with suspicion, which negatively influences the public’s willingness to take it seriously.
President Nicolás Maduro — image courtesy of Wikimedia Commons

President Nicolás Maduro — Image Courtesy of Wikimedia Commons

Off to a Rocky Start

The Petro’s initial announcement was broadcast during a television Christmas special in 2017. The President, Nicolás Maduro, noted his belief that the cryptocurrency would improve issues of financial sovereignty.

Daniel Pena, the executive secretary of Venezuela’s Blockchain Observatory, said that he expected the Petro to positively impact the nation’s economy within three to six months after inception:

“There are many advantages, among them is that the inflationary scheme of the Venezuelan economy breaks down… It is a digital currency that is safe to handle and has more functionality. The intermediaries will disappear; it will be a directional purchase. The waiting time for transactions will be reduced, because it will be faster than the banking system.”

What Pena describes, though, are the fundamental elements of general cryptocurrency. The Petro itself has failed to deliver.

The cryptocurrency’s launch was fraught with misinformation and controversy. In January, the National Assembly of Venezuela declared the cryptocurrency illegal, believing that it intends to circumnavigate financial sanctions and legitimize illicit transactions. Parliamentarians voted “absolute nullity” on issuing the Petro, stating that the Assembly would deliberately make efforts to prevent the public from accepting the cryptocurrency as legitimate.

Despite the government’s rejection, President Nicolás Maduro ordered all government institutions to recognize the Petro as legal tender in April, giving them 120 days to comply. The President claimed that the Petro raised $735 million during the first day of its pre-sale, but no other experts or sources have found evidence supporting this statement.

What Supports the Petro?

There is also confusion surrounding the Petro’s platform. At one point, the official whitepaper stated that it would be an ERC-20 token but later changed to say that NEM was involved with the cryptocurrency. NEM confirmed in a tweet that the Venezuelan government intended to use its blockchain application.

The NEM technology is freely open to any individual or organization that wants to use it. The NEM Foundation abstains from political endorsements. We can confirm that the Venezuela Government is intending to use the NEM Blockchain.

Prensa Presidencial@PresidencialVen
 

#ANUNCIO “Hemos firmado dos convenios fundamentales para que circule El Petro en las plataformas más avanzadas del mundo, gracias a la confianza de las empresas Zeus y NEM” declaró @NicolasMaduro #AlFuturoConElPetro

View image on Twitter
However, the Petro’s whitepaper has reverted to its original statement that it is an ERC-20 token on the Ethereum blockchain platform. This back-and-forth doesn’t exactly inspire confidence in the Petro. If its developers cannot make up their minds about its foundation, will people already wary of economic changes feel comfortable using it? Supposedly, Petro coins are backed by Venezuela’s expansive oil reserves. Individual tokens are worth the equivalent of one barrel, of which there are said to be five billion. Forbes notes that at the end of May, the West Texas Intermediate was trading at about $67 per barrel with a 52-week high of $72.83 and a low of $42.06.

Working with the Petro

President Maduro ordered an initial 100 million tokens for distribution (valued at over $6 billion USD). He made 82.4 million available upon pre-sale on February 20, which closed March 19.

The Venezuelan government, however, pre-mined Petro coins. Unlike cryptocurrencies such as Bitcoin, residents cannot mine Petros by solving complicated math problems. Instead, they can only purchase them from the government.

This raises the question: Is Petro a cryptocurrency at all? If the government controls it, it’s not decentralized.

Another red flag: You cannot purchase Petro with Venezuelan bolivars—only dollars and other cryptocurrencies.

Venezuela’s impoverished population does not have much (if any) access to dollars, so the Petro is consequently out of reach. The people the cryptocurrency is intended to help cannot actually obtain it, and the people who can obtain it have little to no incentive to use it.

Oil doesn’t back the Petro in practice, either. The Venezuelan government will value coins at whatever price it calculates oil to be. According to legislator Jorge Milan, “This is not a cryptocurrency, this is a forward sale of Venezuelan oil. It is tailor-made for corruption.”

Oil in metal barrels

Oil in metal barrels — Image Courtesy of Wikimedia Commons


Foreign Reactions

Foreign responses to the Petro have been mixed. Before its release, 133 countries, including China, expressed intention or interest to invest in the cryptocurrency. Brazil, Poland, Honduras, Norway, Denmark, and Vietnam also noted earlier this year that they would be willing to accept Petro in exchange for food and medicine.

Other nations are much more suspicious if not outright condemnatory. Senators Bob Menendez (D-NJ) and Marco Rubio (R-FL) composed an open letter to Secretary of the Treasury Department, Steven Mnuchin, which says:

“Maduro has proven that he will use every tool at his disposal to perpetuate his authoritarian objectives… As such, we are concerned that a cryptocurrency could provide Maduro a mechanism by which to make payments to foreign lenders and bondholders in the United States, actions that would clearly thwart the intent of US-imposed sanctions.”

U.S. President Donald Trump went so far as to sign an executive order banning Americans from investing in or buying Petro. Not only did U.S. advisors warn that the original ICO was a scam, but dealing with the Petro could potentially violate international sanctions.

Conclusion

While the Petro is proving itself seemingly useless to the Venezuelan populace, numerous families in the capital city of Caracas are opening Bitcoin mining rigs, despite doing so being illegal.

They only make a few dollars per day, but with the country’s cheap electricity, taking advantage of other cryptocurrencies is the only way some residents are finding a way to survive.

The Petro is still young, but it has so far failed to make a difference for its people while the bolivar continues to decline. Though other countries are experimenting with national cryptocurrencies, Venezuela has not established itself as a pioneer on the front.

This article was originally published at CoinCentral.com.

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