🤷 Opinions Alexander Goborov

Bitcoin Not Going Anywhere: Its Computing Power as Awesome as Ever

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While some may claim that Bitcoin’s reign is over, here we explain why it cannot possibly be the case
Bitcoin Not Going Anywhere: Its Computing Power as Awesome as Ever
Contents

Bitcoin’s price is now at around 4000 USD, the lowest figure in over a year, showing a sharp decline of 1500 USD only in the last three weeks. Some claim this is Bitcoin’s finale at last. They are dead wrong. And here is why.

Blockchain vs. Crypto

What must be made clear is that Bitcoin is a cryptocurrency, but more importantly, it is also a Blockchain. What’s the difference, some may ask? Well, a substantial one, in fact. While one (i.e. a crypto coin) depends on the other one (i.e. a Blockchain) for its very existence, they are not the same, and one does not necessarily imply the other.

Some companies might have their own Blockchain platforms but not have their own cryptocurrencies as such. Take Tether, for example, which is the eighth biggest cryptocurrency in the world by market cap and the second most traded one after Bitcoin. While Tether, indeed, has its own Blockchain, technically speaking, it lacks an own crypto coin in a true sense of the word, as its token USDT is a stablecoin pegged against the US dollar, which gives it a fixed value.

So, in actuality, while Tether is the biggest player on Bitfinex for all crypto to fiat exchanges, and it uses its own Blockchain to execute business, at the same time it relies not on its Blockchain but rather on the US Department of the Treasury and the Federal Reserve to provide value for its token. It is, therefore, a major Blockchain player with a hypothetical digitalized fiat currency.

In contrast, take Maker, for example, whose digital currency is the second most valuable currency in the world today after Bitcoin in terms of price. Apart from also having a USD-pegged stablecoin Dai in order to fight off volatility, Maker’s main crypto unit is its altcoin MKR, which is an independent cryptocurrency in its own right, and an expensive one at that. Be that as it may, Maker doesn’t have its own Blockchain: it is using Ethereum’s. The same goes for Electrify.Asia and its token. So, there are plenty of companies with their own cryptocurrencies that have no Blockchains of their own.

Bitcoin’s True Power Revealed

Now that we’ve made it clear that Blockchain and cryptocurrency are not one and the same, let’s look at Bitcoin again. While its current price is down, its Blockchain is as strong as ever. In other words, Bitcoin the crypto coin may be in decline, but Bitcoin the network is doing just fine. How fine exactly shows the graph below:

image

In order to move external data onto a Blockchain and form blocks, cryptographic hashing is used. It is a computational process of converting information into an arbitrary 256 character output, with one single output being equal to one hash. TH/s refers to one trillion such hashes per each second of computation. And as the graph reveals, Bitcoin’s average for this month is around 47 million trillion or 47 quintillion hashes. This is the number:

47 000 000 000 000 000 000 of 256-character hashes every single second.

This is a staggering figure by any standard. Bitcoin’s Blockchain is extraordinarily powerful, undoubtedly so. Yes, there is a drop from September’s and October’s averages, which were roughly 51 quintillion hashes per second. But Bitcoin’s hash rate today is as good as the one from this August; in fact, it is three times higher than the figure from this January when Bitcoin’s price, let’s not forget, was more or less at its all time highest. So, right now the price is down… but the power is way up.

Conclusion  

To make things even more straightforward, let’s use a simple analogy. A Blockchain can be considered a stadium where a game is played, whereas a cryptocurrency is the actual game. This game can be a game of football (coin A) or rugby (coin B) or, say, polo (coin C) or anything else athletically appropriate, and it can be played on any stadium whose size and specs fit, i.e. on any suitable Blockchain.

Likewise, a stadium can have its own team playing a game on it (own cryptocurrency), or it can be rented out to other teams for their games (e.g. external tokens on Ethereum), or there might be a game with the constant score of 1:1, such as with stablecoins… or there might even be no active game at all, in theory.

The main point here is this: Bitcoin’s game may be down at present as its team is going through some rough times due to injuries and whatnot. However, most certainly, its stadium is a humongous architectural marvel. Granted, never say never, but, in all likelihood, this gargantuan structure is not going to be demolished any time soon. Bitcoin with its vast digital infrastructure is here to stay.

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Crypto Invest Summit Pulls a Huge Crowd in LA: Blockchain’s Future Looking Good

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Speakers like Steve Wozniak and Tim Draper bring over 6,000 attendees to the second Crypto Invest Summit even in the midst of a bear market
Crypto Invest Summit Pulls a Huge Crowd in LA: Blockchain’s Future Looking Good
Contents

When the first Crypto Invest Summit was announced in the spring of 2018, the organizers did not mince words, positioning the conference as the biggest crypto and Blockchain event on the West Coast. As it came to pass, even they may have been surprised by the turnout of about 4500 attendees: a laudable feat that also manifested some organizational problems. Extremely long lines for registration, a pre-party that very few were able to get into, and the lack of capacity in the main stage hall prompted some attendees to quip about the “Blockchain scaling problem as demonstrated at Crypto Invest.”

Valuable lessons were learned, and this year the organization was significantly improved, despite the number of participants rising to an astounding 6,100. If crypto conferences could be compared to colleges–some that specialize in one subject, some that offer a nice atmosphere or an incredible location, some that are known as party schools–then Crypto Invest Summit is surely a big university with a large variety of offerings, impressing with the sheer numbers. An expo floor with over 80 booths, 3 stages, 5 tracks, and thousands of attendees seem like solid evidence that Crypto Invest was able to defy the bear market.

Attendee registration at the Summit
Attendee registration at the Summit

From ICOs to sustainable investment

In May, many panels addressed ICO investment and the differences between security and utility tokens. This time, in the aftermath of a dissipating ICO hype and a crashed market, the focus was on sustainable investment in Blockchain technologies. In the context of this summit, “sustainable” meant long term investment in real products that reduce friction in the token economy and give users an easy interface with transparent incentives.

A second stage featured 5 additional tracks, or sub-conferences, that discussed specific topics including: Women of Crypto, Security Tokens, Crypto Trading, the Builder Track, and Healthcare on the Blockchain. During these tracks, participants could delve into the specifics of their particular field of interest, be it understanding crypto market movements, redesigning healthcare, listing tokens on exchanges, or bootstrapping network effects. A pitch stage in the concourse hall gave companies an opportunity to present their project to media, potential partners, and investors.

One of the expert panels at the Summit
One of the expert panels at the Summit

Main attractions

One of the great attractions of the Crypto Invest Summit is the lineup of prominent speakers. Venture capitalists Tim Draper and Adam Draper, always favored by crypto enthusiasts eager for investment advice, returned to the summit, having also appeared at the May event. Adam Draper predicted a significant jump in adoption, stating that in one year everyone at the conference will have 3 applications on their phone that will use Blockchain and cryptocurrency without the user having to think about it.

Tim Draper, who calls fiat “political currency”, reframed Bitcoin volatility for the audience: “1 Bitcoin is still 1 Bitcoin, it’s all the other currencies that are very volatile against it as they disappear from our earth.” He encouraged entrepreneurs to take risks with crypto and not give into the scaremongering of the incumbents of the global financial system. He also referred to institutions as “sheep” that are hesitant to enter the space, looking to other institutions for guidance. For Draper, it’s “much better to be the wolf and go in first!”

Billionaire Tim Draper speaking at the Summit
Billionaire Tim Draper speaking at the Summit

While not necessarily an expert in the space, Steve Wozniak understandably drew a big crowd. He clarified his position on Bitcoin, saying that he invested at one point for the purposes of experimenting with it, and has since sold most of his crypto. Nevertheless, he is excited to see how this technology develops and has become a co-founder of a Blockchain-focused venture capital fund EQUI Global. Wozniak reminded everyone that the human is always more important than technology since the user experience trumps any other engineering considerations. When asked what he meant by calling Bitcoin a bubble, he explained:

“The Internet was a bubble, but the thinking behind it was correct, it ended up being integral to our lives. Maybe with Blockchain it will be the same: it is a bubble, but in 10-15 years its value will show.”

Apple’s co-founder Steve Wozniak during his talk at the Summit

The live taping of Ran Neu-Ner’s CNBC Crypto Trader show was a big hit in the spring, and this summit’s show turned out to be even more exciting. Besides featuring Steve Wozniak, the Drapers, and Dan Morehead of Pantera Capital, NeuNer created a sensation by hinting at the details of Coinbase’s upcoming IPO, referencing a source close to the company. In a conversation with the CNBC host, Adam Draper revealed that despite Coinbase’s $8 billion valuation, he believes that the company is still undervalued and will be “the largest company on the planet.”

Save the date

While 2019 may become the year of the STO, most speakers seemed to agree that the bear market is the best time to get work done, i.e. start projects, build frameworks, and gather communities. The investors echoed this sentiment, encouraging entrepreneurs to focus on completing products that provide valuable solutions and reduce friction in Blockchain applications.

The Summit’s after-party
The Summit’s after-party

At the conference, it was clear that the crypto community is coming to a realization: if we are to see widespread crypto and Blockchain adoption, the technology must be running invisibly in the background, leaving an easy and engaging experience for the user. When Crypto Invest Summit returns in April 2019, there will be a chance to evaluate how well those goals are being accomplished. Judging by the first two events, the conference will continue to attract crowds of crypto experts, entrepreneurs, and enthusiasts no matter what the industry holds in store for us in the meantime.

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The Egg of Andy Weir

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Blockchain and sharing economy went public in 2009 and are a total success
The Egg of Andy Weir

If the name of Andy Weir does not sound outright familiar, then the movie The Martian will. Andy Weir is the novelist who wrote the book in 2011 that was made into the eponymous movie in 2015.

Weir’s most famous short story, however, that went through another round of popularity with the movie release and that he published on his website back in 2009 is “The Egg”. Tallying at around 1,000 words, the story has been translated into over 30 languages by readers and is still bringing today around 100,000 visits to Weir’s website monthly.

The gist of the story is this. A man dies in a car crash and emerges in a place of nothingness where he meets God. God tells the man he will be reincarnated as a Chinese peasant girl in 540 AD. Not only that, but that the man is constantly going through reincarnations through time and that every person the man ever knew directly, including his wife and kids, by proxy, or indirectly like Hitler and Jesus — they have always been reincarnations of this very man. Every person that ever existed in the universe is this man.

If you haven’t read the story, read it, it’s likely to be worth your time.

The quote of particular interest is where God explains to the man why the universe exists the way it does:

I looked you in the eye. “The meaning of life, the reason I made this whole universe, is for you to mature.”

“You mean mankind? You want us to mature?”

“No, just you. I made this whole universe for you. With each new life you grow and mature and become a larger and greater intellect.”

“Just me? What about everyone else?”

“There is no one else,” I said. “In this universe, there’s just you and me.”

You stared blankly at me. “But all the people on earth…”

“All you. Different incarnations of you.”

“Wait. I’m everyone!?”

“Now you’re getting it,” I said, with a congratulatory slap on the back.

“I’m every human being who ever lived?”

“Or who will ever live, yes.”

“I’m Abraham Lincoln?”

“And you’re John Wilkes Booth, too,” I added.

“I’m Hitler?” You said, appalled.

“And you’re the millions he killed.”

“I’m Jesus?”

“And you’re everyone who followed him.”

You fell silent.

“Every time you victimized someone,” I said, “you were victimizing yourself. Every act of kindness you’ve done, you’ve done to yourself. Every happy and sad moment ever experienced by any human was, or will be, experienced by you.”

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Sharing economy formation

Again, the “The Egg” is Weir’s most famous story and it was relatively popular before the book and the movie The Martian. Why though? I am going to try and give this a little perspective and whether it’s a stretch, of course, entirely up to you, but it might be worth a little ponder-over.

Andy Weir published the story on his website in 2009, and the date is almost at the crest of the wave of the sharing economy formation as a concept and roughly at the foot of the sharing economy implementation in various models.

The term ‘sharing economy’ started appearing in the early 2000s and some sources attribute the first use of the term in public to professor Lawrence Lessig.

Sharing economy was a novel idea and required a leap of trust that took a lot of people to make, and it took years for a lot of users and investors to grow on.

What’s interesting though is that the concept took a firm root around the same time when the global financial crisis peaked in 2008. When the trust went away from the vertical structures — institutions — and splashed into the state of distributed, social, and horizontal.

If we list a few examples of companies that immediately come to mind when we talk sharing economy, the dates of when they started are telling:

  • Kickstarter — founded in April 2009

  • Uber — founded in March 2009

  • Airbnb — founded in August 2008

  • Indiegogo — founded in 2007

  • BlaBlaCar — founded in September 2006

With the collapse of the vertical trust flow came the great new realization of distributed trust models in which people made the great leap and started trusting each other — allowing complete strangers into their apartments, sharing long-distance car rides with someone they never knew, and giving money to people through a website simply because they liked the idea of what was promised and didn’t need or want corporations to shove a new product down their throats.

Did people shortcut the empathy distance and realize they were all more or less similar and closer to each other with the rise of the sharing economy? They arguably did.

This was the time when Andy Weir published “The Egg”, the story that says:

“Every time you victimized someone, you were victimizing yourself. Every act of kindness you’ve done, you’ve done to yourself. Every happy and sad moment ever experienced by any human was, or will be, experienced by you.”

What’s extremely interesting is that the Bitcoin network went live in January 2009. It’s fascinating how much time the humankind and the ideas move in unison and do so without realizing it. The implementation of Blockchain, a trustless public ledger, that should be — or already is, depending on what project you follow — the backbone of the distributed, social, and horizontal trust happened at the same time that the implementation of the sharing economy started. Both the Blockchain technology and the sharing economy became a success.

When you check the timeline and put “The Egg”, the collapse of vertical trust, the sharing economy, and the Blockchain technology in the same row, you realize we are talking the same thing. U°Community believes the next wave of development and progress is in establishing transparent and immutable paths for the flow of the energy of trust for the communities — which are the now of the world progress — to truly thrive.

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Let Them Regulate Cryptocurrencies: Soon It Won’t Matter Anyway

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Governments have taken even greater interest in regulating cryptocurrencies in recent month. That’s okay because eventually, they won’t be able to anymore.
Let Them Regulate Cryptocurrencies: Soon It Won’t Matter Anyway
Contents

Regulation of cryptocurrency has been in the news a great deal over the past month. As the price of digital currencies has dropped since their peak, some officials are beginning to worry about investor losses. Others are bringing up the age-old bugaboos of money laundering, terrorist financing and drug dealing. Still, others are talking nonsense about how cryptocurrency may undermine the economy one day.

Nonsense!

But wait...what if that’s not nonsense after all? I have a theory, and I’ll start by saying this: let them regulate crypto as much as they want. Let them tax our gains. Let them enforce their anti-money laundering (AML) and know your customer (KYC) laws. Let them warn about volatility, let them regulate ICOs. Let them do their best.

Why? Because the government cannot regulate cryptocurrency.

I’ll say it again: the government is incapable of regulating digital currency.

Border zone

What the government can regulate is fiat money, meaning they can regulate the transition area between crypto and fiat. Governments can require exchanges to follow AML/KYC laws, and they can make banks file suspicious activity reports. Governments can make you pay taxes on your gains and send you to jail if you don’t. These are the laws they can actually enforce.

However, authorities can’t do anything about your favorite crypto. No central authority can tell you what you can or cannot do on the Bitcoin network. Nobody can force you to file paperwork or pay taxes on crypto-only transactions. The network is uncensorable, and particularly if you use a privacy-centric currency, is untraceable.

Technically, the government can require you to pay taxes on capital gains whenever you exchange crypto for an item of value. Whether these laws are enforceable or not depends in part on what you’re buying. There’s no way the authorities will know if you bought some coffee with crypto, but they may figure it out if you pay for a house that way.

Of course, I don’t condone lawbreaking in any form, but I’m merely pointing out that in a totally crypto-based economy, regulation is nearly impossible.

Tale of two stages

Crypto adoption will come in two stages. The first is where we are now- investors generally realize gains on their digital currencies when converting to dollars. Not enough merchants accept crypto for day-to-day purchases, meaning that conversion to a more widely-accepted fiat currency is necessary.

However, one day this will no longer be the case. I’m reminded of a gentleman on Reddit who was asked at what price he would sell his Bitcoins. He replied that when it came time to “cash out,” fiat would be irrelevant and he’d spend his coins directly. Purists dream of an era where crypto is totally untouchable by governments. It will come.

Until then, let them regulate. Soon, it won’t matter.

 

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Crypto Trading Legend MasterLuc: “You Can Visit Cemetery of Dead Alts, Won’t Find Bitcoin There”

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The legendary trader MasterLuc is known in crypto community for his precise predictions. Here’s his exclusive interview
Crypto Trading Legend MasterLuc: “You Can Visit Cemetery of Dead Alts, Won’t Find Bitcoin There”

Bitcoin is experiencing tough times as it has suffered a severe correction of over 70 percent from the point of its peak value. Now is the time to worry about its future, so we decided it’s about time to turn to the anonymous trader MasterLuc, whose fantastic prediction skills made him a legend on Bitcointalk.

What made MasterLuc famous was his 2016 prediction of Bitcoin price all-time high at 20k, which was done at a time when no one could even imagine such figures.

MasterLuc shared with us his vision of the future of the crypto market, he explains why Bitcoin is strongly undervalued, and why most altcoins are going to die.

The interview was organized with the help of the blockchain scoring platform Prosphero.io.

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CryptoComes: Right now, we see a profound correction of the Bitcoin price. Are you going to give up on your famous prediction of Bitcoin continuing its significant rise in price?

ML: Are you interested in the technical answer to your question, or the emotional answer? From a technical point, everything is alright up until the 2,990 mark, any lower than that and you can start feeling strained. From an emotional side, the answer is no; bubbles don’t burst like that.

Enough of those bear traps need to pass so that the bulls сan principally lose their fear of a bitcoin dump.  

When the vast majority of bulls stop straining over a dump of Bitcoins, then you can expect trouble. However, at the time being people continue to be tense. This is merely a correction.

On the other hand, I expect a new strong bullish trend in Bitcoin not earlier than 2019.

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CC: How do you comment on the skeptics who are predicting the next death of Bitcoin… will it really survive under the pressure of these newer alts that are equipped with the latest modern technology “on steroids”?

ML: You can visit the cemetery of dead alts here.

But you won’t find Bitcoin there. Instead, there are hundreds of alts, and they will all eventually get there. Partly because no one yet has brought a revolutionary technology that resembles the scale of Bitcoin to the table. If we were to compare Bitcoin to the invention of the internal combustion engine (ICE) and cars, then yes, you could say that alts are attempting to improve something.

Like the car industry, they’re repainting the red to green, removing a piece from the edge, building up the wing of this new car, adding a liter to the tank, cramming in extra bells and whistles. But the ICE remains the only revolutionary invention that gave civilization a breakthrough.

And still, with so many alts, the next revolutionary step is for Bitcoin. I’m talking about Lightning Network. So why do we need these alts? I have many friends in the CryptoParty, and no matter whom I ask “why are you mining alts?”, the answer is always: “To sell them for Bitcoins.”

Alright, we’re pretty clear about altcoins, let’s say that they are an unnecessary part of the evolution of Bitcoin…

ML: … Hold on, I’m not saying that altcoins are unnecessary. It’s just that most alts are created and used for one goal—to get more Bitcoins.

There is also a quite functional form of alts, for example, Litecoin. It appeared at a time when people were tweaking some constant in Bitcoin’s source code to quickly release a new alt. Litecoin did precisely that, but it also changed the basic hashing algorithm from SHA2 to the experimental algorithm Scrypt.

In theory, Litecoin would have died just as the others had. But what makes it special? People are actively testing new features on it and then merging them into Bitcoin. The most significant achievement for Litecoin was its implementation of SegWit. Yes, this was a huge benefit, but again for Bitcoin.

Let’s face the truth, Litecoin is experimental, it’s like someone who voluntarily takes powerful medication for research purposes. After the testing and debugging are conducted on the experimental subject, it is added to Bitcoin. We are indeed in need of those types of altcoins.

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Alright, we’re going down the list– why do you have such revulsion toward Ether?

ML: The founder of Ether did something unacceptable—he has censored the network. He also does not hide his central role in the project, calling himself the “kind dictator.”

Understand that the revolution of Bitcoin consists of Blockchain technology, which helped eliminate the need for an intermediary institution, such as a bank, between Alice and Bob during exchanges of money. Blockchain is needed to exclude a central “dictator” who maintains the exclusive right to inspect coins, and who merely is granted this right because he is in the middle of every exchange.

The founder of Ether became that central entity. Ethereum is centralized, and it has one point of failure—the founder, who forks its chain left and right. Why? He just does what he wants, let’s not even discuss the motives of this nonsense. I don’t know why he uses Blockchain technology in this case since the technology was created to counter entities like himself.

Ether is centralized just like EOS. Both compete against other digital currencies like PayPal. However, the latter does not hide behind the mask of Blockchain. All of them love to block other accounts (even with the price of a hardfork), but this isn’t about Blockchain at all.

Again, the idea of Blockchain is simple: Blockchain is essential in places where no center or regulation is needed. If there is a center of any kind- like some office, leader, or something else that you can just close or fire- then there is no need for Blockchain. Ether and EOS (and some others) have a center, Blockchain, and even a project CEO. All of this put together is a project of insanity.

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You also don’t take ICO seriously, could you explain why?

ML: Oh, this is just a dot-com. This is how Wall Street entertained themselves in 1999. They would create imitations of online stores, issue shares of stock, sell out for millions, then repeat the cycle. Only a few companies survived during the dot-com hysteria, and they have since become the current giants such as Google, eBay, Amazon, etc. The remaining 95 percent of projects were washed away by the wave following the collapse of this pyramid. History is repeating itself with ICO.

Alright, let’s return to Bitcoin proper. Many believe that it is an outdated technology, at least regarding its ability to scale.

ML: Those people are merely undervaluing what will someday become of Bitcoin. They don’t understand its essence. Concerning its ability to scale, there is a short answer—Lightning Network. Just find out how much this solution outweighs all of those pathetic attempts to only-increase-the-block.

Let’s take a closer look at the problem of scaling and the importance of Lightning since it is the real future of Bitcoin.

ML: There are two different points of view on the solution of the potential problem of scaling the network.

  1. Quantitative. You need to slowly increase the maximum size of the block, or make it adaptively float. But for this, you need a hardfork—a strict division of the network.
  2. Qualitative. You can go to a new level of developing the network where there will be no room for this problem. Similarly, there will be no place for several other issues.

The second option is Lightning Network. This is the next level of development akin to the OSI model. Here’s an analogy that is understandable to sysadmins: Bitcoin is the first physical layer (a cable), and Lightning is the data link layer (ethernet protocol). There are higher levels—network, transport, and application. They have not yet been developed, but that is the logic of the development.

Just so you know, in that same Ethernet, there are outrageous limitations on the size of the datagram– 1,500 bytes (with much difficulty, you can achieve 9,000).

In other words, within all our networks today, on any path from any website to you– there is a 1,500-byte limitation on the size of the transmission through the data link layer of OSI. Don’t believe it? Google the size of MTU. It’s true. How is it then possible that you can watch multi-megabyte videos on servers like YouTube?

It’s very simple. The limitation exists on the second layer of OSI, but when you like a video, that exists on the seventh layer. On the third layer, the limitation has already been handled quite elegantly. On the fourth layer, nobody even knows that it is there anymore.

On to the point of this… those who offer to change the size of the block are offering a quantitative solution, which could potentially lead to another similar obstruction in the future, and then someone will want another block that is even bigger in size. In option one we are merely pushing the problem into the future, not fundamentally solving it in any way. For example, this is the approach of BCash. They offer growth in one dimension, but they reject a complex multidimensional development of the network, as seen in the OSI model.

Therefore, while lamenting about “problems of scaling Bitcoin”, think about the MTU data link layer of 1,500 bytes. It exists in any network. It is terribly little for our times. This limitation was put in place 40 years ago, and to this day nobody wants to hardfork the Internet to change the limit. Everything works excellent because a complex adaptive network model was created. Lightning Network is exactly the next big step in the right direction.

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Finally, I would like to discuss your critique of PoS, the consensus algorithm that many believe is the future of crypt, outweighing PoW. What’s wrong with PoS?

ML: First, let’s answer the initial question of why PoW was invented (HashCash originally). And why has Satoshi implemented this into Bitcoin?

HashCash was invented for the fight against spam. When sending a message, the sender would have to include his hash in the header. In no way did this complicate the lives of regular users because they needed to calculate only one hash. It did, however, seriously complicate the lives of spammers, who needed a new unique hash for each message, and they sent millions of those messages.

In other words, this technology, which opposes the centralization and virtualization of resources, opposes one person doing the work that should be performed by many people under normal circumstances. For example, sending messages, or verifying transactions and so on. This technology, unfortunately, does not entirely prevent the adverse effects, but it does impede the occurrence of these problems rather well.

Now about PoS. Even a cursory glance at this technology reveals its significant drawbacks in the fight against centralization. The higher your initial balance, the higher your chances are at sealing a block and getting more money in return.

To understand the absurdity of this idea, imagine an analogous situation where a PoW-miner has extra video cards and ASICs materialize on their own out of thin air while working on a network. They configure themselves on the fly, connect to the server, and begin working. That is precisely what happens to those with quite a wealthy wallet under the PoS framework.

Besides that, I believe PoS is wild centralization and deflation in one bottle. If the concentration of a fixed amount of money generates new money on its own, then PoS-systems, if they ever become popular, will spawn an especially exaggerated breed of hodlers. PoS will maintain a strong deflationary motive by just sitting on bags of money. But how will a real economy work in such a system? After all, it is paralyzed by the lack of moving money. PoS is a system that generates a passive revenue from fixed money, in other words, money that is taken out of circulation.

Finally, separate from the centralization and virtualization of resources is PoW.

It is real work that creates a decent load on the system. You will not be able to properly mine Bitcoin and Litecoin from one computer, this idea is initially meaningless (it is intended to be that way).

On the other hand, with PoS you can unleash an entire zoo of different PoS-systems, making a profit from all of them immediately and simultaneously. Drawing a parallel, you can participate in 10 or 100 networks at the same time. Now return to the initial example about spam and the story of why PoW came to be for Bitcoin to understand why the situation of PoS is absurd.

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The Fight For Democracy in the Crypto Space

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Democracy, in terms of the Blockchain protocol is supposed to be a key feature, but as it stands there is more radicalism happening
The Fight For Democracy in the Crypto Space
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Democracy has been a core pillar of society since the days of the ancient Greeks, and since those days it has never abated, merely adjusted and evolved. The idea that the majority have the overall say transcends all facets of life and is an important and fair governance system.

Thus, because of its ability to quash any form of centralized and unfair control, it has also become an important part of Blockchain protocols and their decentralized nature. Governance of Blockchain, especially when it comes to Proof of Work and Delegated Proof-of-Stake, is based entirely on democracy.

However, democracy is not all in Blockchain, nor in general society, as there are a few ways in which to bend this governance system, and as such, we are seeing a new movement in the Blockchain space.

Blockchain governance and its democracy is starting to become far more radical rather than more inclusive and open as the space grows. However, for the cryptocurrency communities, the desire is now for a real working democracy on the human level welded with proper machine level. People want a fair democracy and this can happen when supported on the Blockchain protocol level.

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Breaking tradition

One of the core thoughts of Francis Fukuyama in his 1992 book "The End of History and the Last Man" was that democracy was the final form of human governance and that it was easier to see a radical converting to a Democrat than vice versa. But time proved he was wrong.

But, he also added: "What we may be witnessing … is the end point of mankind's ideological evolution and the universalization of Western liberal democracy as the final form of human government,” leading us to believe that no further improvements are left to be made upon democracy.

Now, in the Blockchain space, we have seen a rapid microcosm of democracy and its evolution. Blockchains, in their original form, such as Bitcoin and its Proof-of-Work algorithm, proved a democratic standing as crypto-anarchists worked in communities.

Anyone who supported the Bitcoin network early on was given a chance to gain more Bitcoins through the PoW algorithm. People received fair rewards for being part of the network and keeping it live. A fair reward for fair effort.

This was then later done differently, but under the same principles when Dan Larimer proposed and implemented the Delegated Proof-of-Stake (dPoS) algorithm, such as in EOS. The idea behind dPoS was voting and democracy. Also a fair system.

EOS’s developers say that by delegating the responsibility for processing transactions to just 21 “block producers,” which are to be elected by the community of token holders, the system will be able to achieve thousands of transactions per second (compared with just 15 per second for rival Ethereum).

These basic principles of democracy in PoW and dPoS are enshrined in order to enact a fair system for communities to operate democratically. However, through the nine years of Blockchain being in existence, the growth of the space has led to a degeneration to radicalism, and even in the newer dPoS system, we are already seeing a movement away from democracy, counter to what Fukuyama predicted.

Importance of democracy

Blockchain’s protocol and its democracy underlying it comes from an important key feature of cryptocurrencies in general, the decentralization and the removal of centralized authorities. Thus, it is understandable why there is such an importance placed on democracy in the Blockchain protocol.

Ethereum founder, Vitalik Buterin explains:

“Over the last half-decade, each of us has, in his own way, been working on a part of an alternative solution: to find ways to harness markets and technology to radically decentralized power of all sorts and shift our reliance from authority and to formal rules.”

He further continues that, Bitcoin and other cryptocurrencies emerged directly as a reaction to the perceived excesses of the traditional financial system.

Democracy may be an essential facet of Blockchain, but it is also key as to how it works. An easy example is provided by Josh Zerlan, VP of Product Development at Butterfly Lab:

“There are thousands of miners around the world, all collectively trying to process various transactions. Although not widely utilized currently, miners have the ability to accept or reject certain transactions. They can choose to refuse to process transactions. Let’s think about that for a moment. An individual miner can choose to not process a transaction, but someone else will, therefore that individual miner’s choice doesn’t make a lot of difference. <...> But what if more than half the miners decided to stop processing transactions from an entity they disagree with? Now the choice of those miners has an impact. If more than half of the network decides something does not belong on the network, the transactions will never make it into the blockchain, effectively being ignored by the bitcoin universe.”

While the democracy in the Blockchains may be moving towards radicalization, it is important to remember why these key democratic features are prevalent and abound.

The grassroots movement and drive is there and it’s strong — projects like Telos and UCOMMUNITY fork the EOS code to create their own consensus algorithms with the objective of fair distribution and voting rights. We are going to see more and more movement in this direction.

The want and ability to have democracy

It is dangerous for those involved in the Blockchain space to become too radical and to leave out democracy as a core concept in the space. There is indeed a fight going on for democracy in blockchain, and with this fight, people are showing that they do indeed want a fair democracy and this can happen when supported on the Blockchain protocol level.

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