Darryn Pollock

Two Bitcoin Addresses Named Enemies of the State — Good Regulatory Step for Crypto

A move by the US Government to sanction two BTC addresses is an interesting, but positive, precedent for the regulation of crypto
Two Bitcoin Addresses Named Enemies of the State — Good Regulatory Step for Crypto
Contents

While it may not sound like positive news, the fact that the U.S. Treasury's Office of Foreign Assets Control (OFAC) sanctioned two Bitcoin addresses is a positive step for the regulation of crypto, as it shows the governments believe they have the tools to handle this situation.

It is an unprecedented move for cryptocurrency addresses to be added to this sanction list, which at one stage also listed Osama Bin Laden, but even in the unprecedented move, there has been no new legislation needed to make this happen.

What this means is that the US government believes it has the tools at its disposal to enforce the law over dodgy Bitcoin addresses and that it is ready to put its foot down and bring under scrutiny problematic Bitcoin addresses, such as those that could be funding terrorism.

Stepping in, and stepping up

The sanctioning of the BTC addresses was a move against against two Iran-based individuals, Ali Khorashadizadeh and Mohammad Ghorbaniyan. These two individuals helped exchange Bitcoin ransom payments into Iranian rial on behalf of Iranian malicious cyber actors involved with the SamSam ransomware scheme, which damaged over 200 known victims.

“The Treasury is targeting digital currency exchangers who have enabled Iranian cyber actors to profit from extorting digital ransom payments from their victims. As Iran becomes increasingly isolated and desperate for access to U.S. dollars, it is vital that virtual currency exchanges, peer-to-peer exchangers, and other providers of digital currency services harden their networks against these illicit schemes,” said Treasury Under Secretary for Terrorism and Financial Intelligence, Sigal Mandelker.

Regulation ready to tackle anonymous and transparent addresses

Cryptocurrency lawyer Marco Santori explains in a Twitter thread why this move from OFAC is a positive one on behalf of regulators and law enforcers trying to get cryptocurrencies under control.

His summation is that the “OFAC believes, today, that it has the tools it needs to enforce the law. It didn't ask for more legislation, nor did it didn't propose new prohibitions. The Treasury is fighting crypto bad guys using the tools already at its disposal,” Santori explains.

This is clearly an important standpoint for this department of US legal enforcement. If it was that the OFAC had to enact new laws in order to combat these dodgy Bitcoin addresses, it would not only be a slow process, but potentially a less effective one.

By making this move, OFAC has essentially opened its legal interpretation to include these digital asset addresses, and they feel that they can handle controlling how they operate despite their quasi-anonymous nature.

What can actually be done?

What does need to be asked, though, is what can the OFAC actually do about these addresses? As it stands currently, they have simply publicised two addresses, and as Santori predicts, will probably see random, anonymous individuals sending BTC to them as a joke.

And, based on the anonymous nature of cryptocurrency sending, it is very possible that anyone sending BTC to these sanctioned addresses will remain hidden, and more so, the lack of centralised control means that the addresses can probably still withdraw the BTC and turn it into useful funding.

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Why Does Bitcoin Have Any Value?

📚 Wikicoin
Some naysayers believe that Bitcoin doesn’t have any value since it’s “just data,” but they seem to forget that we live in the era of digitalization
Why Does Bitcoin Have Any Value?
Contents

Back in 2013, when a famed American economist Paul Krugman wrote his infamous op-ed article “Bitcoin Is Evil” for the New York Times, it sparked a debate about whether Bitcoin has any value. In 2018, he wrote another article entitled “Bubble, Bubble, Fraud and Trouble” which states that Bitcoin fell by over 40 percent in merely weeks. Therefore, let’s figure out why Bitcoin has any value and what major factors determine it.

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Economics 101

So, why does Bitcoin have value? In order to determine why anything is valuable, it’s worth mentioning such basic economic terms as utility and scarcity. If there is something that is not commonly found (and it can be useful), it will create demand for this specific product, which would eventually push its price.

Gold, the best performing asset of the 21st century, is probably a textbook example of a valuable product since it has high scarcity (gold is not the rarest metal, but it is still hard to find and extract) and, yes, it is shiny, which drives consumer satisfaction.  

Bitcoin scarcity

It’s now clear that anything that has any value should check the following two boxes (scarcity and utility). Bitcoin naysayers claim that Bitcoin doesn’t have any value, but they are almost certainly wrong. Bitcoin has a fixed supply of 21 mln coins. In fact, Bitcoin seems to be the most desirable asset. If compared to gold, there won’t be another gold rush, which would enhance its supply and the market crash.

“There are potentially millions of times more gold underground than actually has been extracted," said Fundstrat’s Tom Lee.

Bitcoin scarcity

Bitcoin utility

Once we’ve figured out that Bitcoin is actually scarce, let’s get down to Bitcoin’s utility. Of course, Bitcoin’s utility lies in its decentralized nature since not a single person can preside over the network, unlike centralized banking institutions. Another important feature of Bitcoin is that it can be used for making practically any kinds of transactions– from buying candies to purchasing real estate since the coin is trivially divisible. Earlier, U.Today reported about Australian homeowners selling their houses for Bitcoin.

However, now we get down to another popular talking point of Bitcoin critics who claim that Bitcoin doesn’t have intrinsic value. Yes, gold is shiny and appealing to people who want to feel the sense of wealth, but one should not forget that it is also a metal that is commonly used in numerous industries (dentistry, electronic and so on). On top of that, some individuals assume that paper money has intrinsic value as well because you can do plenty of things with banknotes (kindling, making notes and so on). However, if you dig deeper, you will realize that jewelry accounts for more than 50 percent of global gold demand, according to the statistical data provided by the World Gold Council. Meanwhile, barely 15 percent of gold is used in other industries, including electronics and dentistry.

Bitcoin utility

As U.Today reported earlier, Krugman, a vocal Bitcoin skeptic, said that Bitcoin may overtake gold since he thinks that the former has much more potential in the long run.   

It gets even worse when with paper money. The Federal Reserve states that it takes only 13.2 cents to produce a $100 bill, which represents the intrinsic value of this banknote. The remaining $99.87 depending on how much trust people put in the US dollar.

Bitcoin utility

Global IT behemoths in the likes of Facebook, Apple and other companies purely rely on digital trust. Not long time ago, one wouldn’t believe that Amazon could be worth more than $1 tln.

Bitcoin is not wealth

Many people fail to understand the concept of Bitcoin because they have no idea how money works. Money just serves as a facilitator for exchanging wealth, but it does not have any value per se. People do not actually like digital coins or paper banknotes– people like things that they can buy with them.

What gives Bitcoin value? Yes, Bitcoin is just data, but that’s all money is about– transferring information. At the same time, Bitcoin has numerous advantages over ordinarily fiat currencies because of its decentralized nature:

  1. It eliminates the possibility of inflation since a centralized body cannot control the issuance of the coins.

  2. Your bank account cannot be frozen. Earlier, UK cycling merchant complained that his private and business bank accounts had been suspended due to the fact that he would engage in cryptocurrency trading.     

  3. Bitcoin is not the first decentralized currency since we already have gold, but physical gold is extremely inefficient in making day-to-day transactions.

Bitcoin is unique in a sense that this is the first digital currency that is not issued by a centralized governing body. As mentioned above, Bitcoin is rarer than gold because of its finite supply. On top of that, the flagship currency offers more flexibility and privacy than modern banking systems.   

Where does Bitcoin get its value? Once we have already figured out that Bitcoin does have value, it is essential to figure out what exactly determined it. It is worth mentioning that Bitcoin value shouldn’t be confused with Bitcoin price (the momentary cost of the currency). Bitcoin value can be:

  • scientific (Bitcoin’s creator Satoshi Nakamoto has managed to solve the double-spending problem),

  • technological (Bitcoin is a decentralized currency, and this technology cannot be reversed),

  • social (Bitcoin changes the way separate individuals deal with money because they don’t have to be trusted anymore).

Why is Bitcoin price so volatile?

Bitcoin price is determined by the current market sentiment. The demand for the coin– the higher price. Just like with any goods at your local supermarket or a bar of gold. Bitcoin is known for its huge fluctuations. Even though the currency’s volatility has recently reached its two-year low, Bitcoin price is still wont to erratically move up and down.  

Why is Bitcoin price so volatile?
(Source: Fortune)

Speaking of volatility, it is important to mention that stocks, oil and other commodities are volatile as well. However, Bitcoin (along with other cryptocurrencies) have more dramatic price swings because the scope of the cryptocurrency industry is still small compared to other huge industries, so it is still prone to market manipulations.  

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Can Bitcoin price go to zero?

While it’s clear why cryptocurrencies have value, there are plenty of speculations of whether the biggest cryptocurrency in the world can become completely worthless. Back in December 2017 (during the Bitcoin’s peak), Morgan Stanley’s James Faucette came up with a prediction that Bitcoin price could eventually go zero.  

“If nobody accepts the technology for payment then the value would be 0,” Faucette said in his analysis.

Over the course of history, there have been numerous currencies that would become completely worthless. The German Mark is one of the salient examples. The Zimbabwean dollar is considered to be a modern example of such a currency. Bitcoin, with its slew of innovative features, is really looking like a disruptive force, but no currency is safe from going underwater. On the flip side, Bitcoin enthusiasts will soon celebrate the currency’s ten anniversary, which is a rather extensive period of time to say that Bitcoin is here to stay.  

As a basic rule of thumb, no currency is considered completely safe. Sure, Bitcoin is more volatile than the majority of fiat currencies, but no one can definitively state what is going to happen to the coin in the nearest future. If you want to see what the industry’s top experts have to say about, check out our top Bitcoin price predictions.

If Bitcoin adoption grows, there is a practical limit on where its price may go. The US dollar is the only currency that accepted by the government in order to pay taxes, “intrinsic value” and it is widely used in commerce, so it may take decades for Bitcoin to get on this level of adoption.      

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How to Make Your Native Advertising Most Effective with U.Today

📚 Wikicoin
We could fix you a media cocktail with just the right mixture of ingredients. Pour, shake and serve!
How to Make Your Native Advertising Most Effective with U.Today
Contents

U.Today is one the most fast-growing media outlets in Blockchain and cryptocurrency industry today. 

U.Today offers not only advertising that consists of a variety of services, including native advertising, but also full PR support and promotion for your business among the Blockchain and cryptocurrency audience.

Contact us right now: [email protected] and get the most beneficial offer.

Our Services

Press Releases

You got this very special product you want to promote and you want to get the most for your money. With U.Today, there’s nothing easier.

Just click https://u.today/press-release/submit and fill out a simple form. It lets you select at your convenience the timing of publication which allows you to get maximal exposure. In just a few moments, you could upload your logo and all the information you think will appeal most to your prospective audience.

Our Press Releases section has a prominent position on the landing page so you can be certain our readers won’t skip it.

Sponsored stories

Of course, writing effective advertising texts is a special art that requires knowing some nuts and bolts of the trade. Also, we are all consumers ourselves and we know what it is like to be bombarded with advertising messages throughout the day.

We’re not waking up in the morning just wondering when the next press release is going to come. So you may need to get prepared to find that unique differentiator that makes your story more important than every other story coming. If that’s what you honestly lack don’t worry.

U.Today will help you find professionals with special competences who can make your story shine. They will lead you through all the snags and make sure to highlight all advantages of your product to your target audience.

Our best authors who focus on just what you consider special and distinctive about your business will write a full feature story starting from 400 words or, when needed, their series.

Our account managers will help you through the whole process, take your feedback and send you the story for final approval. All the details will be considered and accounted for, and if you got your own text as a basis for a rewrite, we’ll help you improve it to be most effective.

The resulting story will appear on the site in an appropriate section, marked as sponsored.

Native advertising articles

Of course, you can create a still more effective content using the approaches of native advertising, that is making your story newsworthy by its own merits as a part of larger trends important to your prospective customers.

By doing so, you will put the readers’ interests first as the content that you create is going to resonate with them much more fully and really have a much bigger impact.

Our staff is ready to help you do exactly that. We will conduct market research to fully observe the trends and problems facing your prospective customers.

Then our best-handpicked authors with an established reputation will write a 500-words or more featured story or a series and make your product a part of the solution.

Analytics and long reads

You don’t want to create something that’s relevant for a week and then drops off the map. So the analytics piece or a unique long read is probably what you need.

Our analytics will make a thorough study of the market and the niches where your business interests are presented.

Note that our journalists can make a difference by their professional skills of finding reputable sources, research studies, expert quotes or data to back up what you’re saying.

Other native advertising options

You may think that writing is not rocket science but in fact, thinking like a journalist is one of those things that’s kind of hard to teach, and a good story is close to impossible to write without this gut feeling.

Our staff is ready to help make your content the most effective by providing it with all professional tools of the trade. For example, good infographics can render complex hi-tech products in a simple visual manner, making it stick to mind.

Quizzes, games and other tools for creating the high-quality content can also be offered to highlight the better sides of your product.

Outsource your content creation

You may need to solve a bigger problem then preparing a story or its series, especially if you get a flow of information to be used in your product promotion.

We can help your PR department to create any number of materials of any complexity to be published in various media outlets across the globe, including the most respected ones, and in the social media.

Complex PR campaigns

The maximal impact could be achieved only by smart usage of various formats and media channels. We could fix you a cocktail with just the right mixture of nature advertising different ingredients. Pour, shake and serve!

Our team

U.Today is a close-knit team of professionals founded by editors with extensive experience in both high-quality journalism and the crypto industry.

Tens of our staff and contributors come from the US, Europe, Asia and all corners of the globe. They have covered all aspects of the industry and community and developed some very successful media projects.

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BTC vs. XBT: What’s the Difference Between Bitcoin Symbols?

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CoinMarketCap, a touchstone for cryptocurrency research data, displays the BTC ticker, but U.Today tries to determine what other Bitcoin symbols you may stumble upon
BTC vs. XBT: What’s the Difference Between Bitcoin Symbols?
Contents

Understanding crypto tickers

Despite some common beliefs, no one registers a cryptocurrency ticker (they are not protected under copyright law). It pertains to all known crypto tickers, including the ubiquitous BTC and ETH. They are perceived as the standard ones due to the fact that they come straight from Satoshi’s and Vitalik’s respective white papers.

For ICO issuers, it is a mundane practice to specify the name and the ticker of the token to avoid confusion. In order to list stocks, bonds or other securities on the NYSE, there is an approval process involved, but there are no geographical restrictions, which essentially means that the same ticker could work in another country. However, when it comes to the decentralized world of cryptocurrencies, it is not an easy feat — there are certain coins in the likes of Nimiq’s NET that fail to get listed on exchanges because it coincides with another cryptocurrency.

The tale of two Bitcoin tickers

Before Bitcoin hit the mainstream, the only existing Bitcoin ticker was BTC (the logical shorthand that doesn’t raise any additional questions). As mentioned above, the BTC ticker was created by Bitcoin’s elusive creator Satoshi Nakamoto, so there was no need to come up with another variant — everyone perfectly understands what BTC is.         

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So, what is XBT? When the popularity of the flagship currency started skyrocketing (along with its price), there was a need for a currency code, but the problem was that the ‘BTC’ ticker name actually violated the ISO 4217 standard. According to these rules, the first two letters of the currency symbol are supposed to represent the country (case in point: USD where ‘US’ stands for the United States). When it comes to Bitcoin, there was an issue with Bhutan — the ngultrum (BTN), the country’s national currency, created roadblocks given that its very first letters coincide with that of Bitcoin.  

That eventually prompted the appearance of a brand-new Bitcoin code: XBT (it is still not considered to be the official ticker of Bitcoin). Apart from the vast majority of national currencies, ISO 4217 also provides codes for the so-called ‘super currencies’ that are not restricted to a certain currency and pose as a global medium of exchanging money. These currencies are also dubbed ‘X currencies’ due to the fact that they always begin with this very letter:

  • gold (XAU);

  • palladium (XPD);

  • platinum (XPT).

image

Why not XBC?

Given that Bitcoin is an international currency, it is now crystal clear why it starts with X, but the third letter of the new abbreviation might still seem rather confusing for uninitiated traders. XBC is by far the most obvious variant if you take into account the name of the currency (‘bit’ and ‘coin’). The answer is simple: there is already a currency with this ISO 4217 currency code that stands for a European Unit of Account.

The state of adoption  

Now that you know the origin of the ‘XBT’ ticker (if you knew about its existence in the first place), let’s compare it with BTC, the old-timer that has been associated with Bitcoin since its very inception in 2008. For instance, if you want to google the price of Bitcoin, BTC is your best bet (however, the XBT cryptocurrency will work just fine as well).  

There is no consensus between different cryptocurrency exchanges on what Bitcoin ticker should be universally accepted. For instance, Coinbase, a major San Francisco-based cryptocurrency exchange whose valuation has recently exceeded $8 bln, sticks to BTC. Meanwhile, Kraken, Coinbase’s biggest competitor in the fiat-to-crypto niche, was one of the first exchanges to give edge XBT edge over the more established abbreviation.

image
In a brief post, Kraken explains that establishing one common standard contradicts the idea of decentralization, which is why there is no officially accepted ticker. They claim that the Satoshi-proposed ticker enjoyed the widest use in the crypto space, but the new abbreviation is particularly important for cryptocurrency adoption since it places the fledgling asset class in gold as a global currency that is gradually gaining legitimacy.

Having a currency code in a centralized system may not seem like a big deal. However, it makes a world of difference when it comes to the Bitcoin adoption problem — the green light given by ICOs allows Bitcoin to enter the databases of major clearing networks (PayPal, SWIFT, etc.). Needless to say, the new ticker also boosted the recognition of Bitcoin on Wall Street (Bloomberg terminals were among the first to adopt the new XBT abbreviations).  

XBT subunits

After coming up with an alternative Bitcoin symbol, another top-level issue consists in determining subunits.

One XBT coin has eight subunits, but this is not the final division given that the number of decimals would have to increase over time. Still, only three subunits have managed to achieve mainstream adoption in the crypto space:

Subunit

Symbol

Value (of 1 BTC)

'millibit'

mBTC

1/1000

‘bit’

μBTC

1⁄1000000

‘satoshi’

satoshi

1⁄100000000

NB! Some exchanges have long been displaying BTC price in bits, leaving only two decimals on the right.

Things are getting even more complicated — prepare for more tickers

If you are dealing with huge economic sites such as the likes of Yahoo! Finance, you won’t likely see either of those abbreviations. They normally use the NYXBT ticker that represents the NYSE Bitcoin Index created by the New York Stock Exchange back in 2015.
image
It is worth mentioning that the index is not quite convenient for cryptocurrency traders since it updates only once a day (at 6 p.m. EST). Due to the volatile nature of cryptocurrencies, the exchanges (Coinbase and others) that update data in real time would be by far a better choice. The current prices are also displayed on U.Today (at the very top of the website).        

To make things even more confusing, there is one more ticker called $BCOIN that is specifically designed for the website StockTwits. Meanwhile, investors who trade Bitcoin on the stock market are certainly familiar with the Bitcoin Investment Trust ticker (GBTC). There is also yet another Bitcoin stock symbol, BITCF (it stands for First Bitcoin Capital Corp).    

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Same issues with Bitcoin’s stepbrother  

Remarkably enough, Bitcoin is not the only coin with multiple confusing tickers. Bitcoin Cash, the offspring of the world’s largest cryptocurrency, initially used the logical BCC symbol, but there was already the BitConnect token with the exact same symbol. Eventually, the BCH ticker symbol appeared, but some exchanges still stick to BCC.
image
Recently, it provoked a heated discussion on one of the biggest crypto-related subreddit, with users calling out Binance for failing to update the old symbol. Due to the big scope of the controversy, Binance CEO Changpeng Zhao himself had to comment on the situation, claiming that the change of the ticker would cause at least a two-hour long trading halt.

“We felt the tradeoff is not worth it. Thank you for your understanding.” – CZ, the CEO of Binance.  

Conclusion

One has to realize that both of these tickers are interchangeable, and both of them are here to stay. Hence, the BTC vs. XBT discussions are futile.

While BTC has already become a staple in Bitcoin’s community, XBT saw a wider adoption by traditional financial institutions along with some crypto exchanges such as the likes of Kraken

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Plain Payment System Slightly Dressed Up: Past ICO Review

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Plain Payment System Slightly Dressed Up: Past ICO Review
Contents

Trust. It is the glue that binds the world together. Without it, we would not be where we are today. However, trust in trade between a buyer and a seller has been a challenge stemming from ancient times: is the product going to work? Will the buyer pay in full? Is this a scam? These are some of the questions that are always running through the minds of buyers and sellers.

Monetha is a refreshingly new take on an age-old problem in a desert full of generic payment solutions all vying for your business. That’s what they want you to think, but after close inspection, there is nothing revolutionary here.

Pay to play, play to pay, don’t get played

Monetha raised $35 mln in a one-day token sale on Aug. 31, 2017. It’s sale token price was $0.16. The token entered the market 50 percent higher than the ICO price at $0.30 per token, hitting an all-time high of $0.55 in January 2017 before crashing down to $0.04 at the time of writing.

Despite raising more than $30 mln, the company’s market cap is only $8.8 mln, rather curious for a company that is going to revolutionize the payments sector.

On a further note, if you do the math, only 50 percent of the tokens issued in the ICO went to investors. Only half the tokens are in circulation, meaning that half are in the hands of the company.  In this model, investors are really only getting 16.5 percent of the revenue.

Invitation pending

Monetha has a functioning product, an app for iPhone and Android that allows the user to create a profile for buying and selling and gets rated on the deals done.

The rating helps other buyers and sellers know if the individual is reputable or not, but don’t most sites have this anyway?

The platform works with e-commerce sites.

However, the caveat here is that in order to make the transaction through Monetha, both users have to have accounts on the platform. If the buyer or seller wants to buy or sell something form/to someone who does not have the app, then they need to invite them to join to transact.

Something that is easier said than done. Imagine, you are are selling some items and you are asked by the buyer to set up an account to sell them. Most times, you are going to ignore that invitation, because:

1) You might not know what it is.

2) Being solicited by a stranger on the Internet to join something is the first sign of something being sketchy.

3) You might not have the time to be bothered to set up an account just to sell some old mirror from your house.

Fees, contracts, here come the problems

Monetha charges 1.5 percent fee on all transactions, of which one percent goes to the company and .50 percent to cover the “Voucher Smart Contract” which maintains the ecosystem.

They accept payments in many ERC20 tokens and reward users with Monetha for using the platform, but with prices as low as they are now, they better be giving away a lot, or it’s just going to seem like a worthless points system, where the points are worth fractions of a cent- not impressive.

We reached out for comments about how the rewards system works but did not get a response.

Not so special after all

Don’t judge a book by its cover, and that is true about websites and promotional materials. Always do your homework, and what looks too good to be true, usually is!

Monetha makes some pretty cool claims about what they can do, but when you get down to it, it’s really nothing that special that you can’t do with PayPal and eBay.

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Blockchain History: From Ancient Fei Stones to Disruptive Technology That Underpins Bitcoin and Other Cryptocurrencies

Blockchain history before Bitcoin and Blockchain history after Bitcoin: Learn more about the nascent technology, Blockchain’s history, and the technology’s future
Blockchain History: From Ancient Fei Stones to Disruptive Technology That Underpins Bitcoin and Other Cryptocurrencies
Contents

Introduction to the state-of-the-art technology

Blockchain is a disruptive technology that is making waves throughout the globe, revolutionizing a slew of industries (from banking to the global shipping industry). Many pundits, including Zillow’s CEO, believe that this nascent technology has more potential than the Internet, while Binance’s founder believes that the idea of mainstream decentralization is not that far-fetched. In this article, we will take a closer look at the history of Blockchain to eventually make a prediction about what the future holds for this technology.

Blockchain

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Decentralization: A 1,000-year-old concept

Before we begin discussing the history of Blockchain in detail, we would like to share with you an outlandish suggestion made by cultural anthropologist Natalie Smolenski, who believes that Blockchain could have actually appeared almost 1,000 years ago (of course, not in the form of a distributed ledger). Smolenski says this is one of the “old wine in a new bottle” situations when the already established transitions of some ancient tribes have a lot of in common with (you guessed it) Blockchain.  

“Like all breakthroughs, Blockchains are a profoundly new way of doing old things,” Natalie Smolenski

In 500AD, the tribe of the Yap Island used gargantuan Fei stones as their form of currency, but they had to tackle the problem of mobility: these stones were too bulky to move around. Subsequently, they came up with an idea to create what could be considered the very first decentralized ledger in history — every tribe member knew exactly who owned a specific stone, which would eliminate the need for further disputes.  

Remarkably enough, such ‘transactions’ lasted up to the 19th century on Yap Island. Then the villagers ditched this tradition and switched to the US dollar. It is also worth mentioning that such a practice was never adopted outside of the tiny island. It actually represents what exactly Blockchain is today; instead of a mental ledger, there is a mental one, which binds together millions of computers around the globe. Most probably, the Yap villagers never realized that they’d come up with a truly revolutionary technology.

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Philosophical and technical bases behind Blockchain  

While claiming that the inhabitants of the Yap Island might indeed be responsible for the emergence of Blockchain technology sounds far-fetched, the seeds of this state-of-the-art invention may go back directly to the 1940s. During the peak of the World War II, genius British cryptographer Alan Turing made a breakthrough by deciphering the Enigma machine.

1974 Nobel Prize winner Friedrich Hayek, who became famous because of his magnum opus ‘Decentralization of Money’, is considered to be one of the biggest philosophical influencers in the history of the cyberpunk movement. Ayn Rand was among other inspirations: she came up with the idea of ‘Galt’s Clutch’, a secluded community that would one to distance himself from corrupt institutions.

This magnum opus predicted the decentralization of money, which would help stomp out government-backed monopolies. Bitcoin, the first privately issued money, is a stepping stone for the implementation of Hayek’s vision.

When it comes to technical bases, Bitcoin — as well as the technology that underpins it — is based on cryptography (a huge chunk of information is shared between encrypted computers worldwide). In 1976, the Diffie-Hellman algorithm allowed securely exchanging cryptographic keys by dividing them into private keys and public keys. Ralph Merkle, in turn, is responsible for the creation of public-free cryptography (Merkle Tree). These inventions were essential for the establishment of Blockchain technology.

Philosophical and technical bases behind Blockchain

In 1991, way before Blockchain became the ultimate ‘buzzword’ of recent years, Haber and Stornetta published a paper entitled “How to Time-Stamp a Digital Document”. The document describes a tamper-proof method of time stamping, which would make it impossible to stamp an inaccurate date on a document. This seemingly groundbreaking technology went unused, and the patent expired in 2004, remaining a remnant of history.   

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Blockchain’s public debut in Satoshi’s white paper  

Since then, the development of the Blockchain technology remained in limbo. In 2008, however, everything has changed for good with Satoshi Nakamoto introducing the white paper of Bitcoin, the first decentralized digital currency that later took the whole by storm. The rest is history.  

Blockchain’s public debut in Satoshi’s white paper  

(Source: Bitcoin.com)

Bitcoin became the first known use case of Blockchain technology in history (if we don’t count the aforementioned Fei stones). After the release of the white paper, the first open source client of Bitcoin appeared back in January 2009.

The term “Blockchain” made its first public appearance only in Satoshi’s ubiquitous white paper.  It is worth mentioning that Satoshi didn’t use the term ‘Blockchain’ in his work — the technology was actually represented by two separate words (‘block’ and ‘chain’).

While there were some remotely similar technologies, there is no doubt that Satoshi (whoever this elusive creator is) can be regarded as the founder of Blockchain. There is also an alternative opinion that Blockchain wasn’t created by anyone, and it simply represents an evolution of a technology that combines three elements (cryptography, distributed networks, and consensus protocols).

The thing is, Satoshi’s white paper actually suggests that Blockchain and cryptocurrencies are two inextricably connected notions, and there was no life for this technology outside of the digital money space (despite almost a decade-old history).

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Blockchain separates from Bitcoin

While Bitcoin remains the biggest use case of Blockchain, more and more companies and organizations are inching closer towards decentralization in order to increase their efficiency.

Blockchain separates from Bitcoin

(Source: Bitcoin.com)

The very first precedent was set by a startup dubbed Namecoin that wanted to democratize the current management system. The domain names are mainly controlled by centralized entities, and they have long been a matter of grave concern for Internet freedom advocates. There have already been a couple of occasions when the US government would seize the site’s domain. By storing all domains on a distributed ledger, Namecoin would make it impossible to correct the registration data. The government would need an encryption key in order to seize this domain.

As the popularity of cryptocurrencies began to grow, many people started confusing Bitcoin and Blockchain, the technology that underpins all decentralized digital assets. During 2013-2014, when Bitcoin started showing the first signs of mainstream adoption, Blockchain also appeared in the limelight, and many realized that its use cases might extend far beyond crypto with this technology being actively applied in a myriad of industries (healthcare, transportation, etc.). Individual companies and even whole countries started pouring money into Blockchain. For instance, the South Korean budget is set to allocate a staggering $925 mln to further develop the Blockchain technology (one of the biggest fintech-related investments in recent history).      

The rise of Ethereum

The next era in the development of Blockchain is associated with one name: Vitalik Buterin, one of the developers behind the Bitcoin codebase who decided to come up with his own project due to numerous programming limitations. While he saw the Bitcoin ecosystem forming a distinctive shape, he realized that many crypto projects that were still in a stage of inception needed the common ground to build on.

As a result, Ethereum, the second public Blockchain, appeared on the horizon along with a groundbreaking invention of the so-called ‘smart contract’. The 2013 Ethereum white paper already went down in history. In mid-2014, the Ethereum yellow paper was released, with Gavin Wood specifying the modus operandi of the Ethereum virtual machine (EVM).  

The rise of Ethereum

(Source: Getty Images)

The major advantage of the Ethereum Blockchain consists of the ability to record various kinds of assets, not being restricted strictly to cryptocurrencies. Smart contracts have already witnessed a widespread adoption with tech giants such as Microsoft using it to cut red tape. Even critics who argue that Ether (the currency) is doomed to fail, they admit that the Ethereum, which embodies the second-generation Blockchain system, is here to stay. There are hundreds of active projects that were built on the Ethereum Blockchain, representing a huge imprint on the history of the technology.     

Apart from smart contracts, Ethereum birthed the concept of the so-called decentralized organizations (DAO), which represent the whole corporations that are operating with the help of smart contracts.   

The creation of Ethereum eventually resulted in the ability of developers to create the applications that run inside it. Decentralized application (dApps) represents the next logical step in the development of the technology — there are already hundreds of such applications that are powered by Ethereum. Instead of Twitter or Spotify with a centralized governing model, dApps offer more freedom to users, enhancing stability and eliminating numerous censorship issues. Still, there are numerous caveats that are linked to their adoption: dApps fail to grow their user base due to their poor usability.  

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In general, the evolution of Blockchain could be described in several stages:

Stage 1: Bitcoin

At first, the Blockchain was solely used as an underlying technology for Bitcoin (and later other cryptocurrencies). Bitcoin became the first decentralized digital currency in history.      

Stage 2: Ethereum Blockchain

With the implementation of smart contracts, a slew of assets could be recorded on a distributed ledger. Furthermore, the technology gave a huge boost to the adoption of Blockchain outside of cryptocurrencies.

Stage 3: DApps

Blockchain is inching closer towards run-of-the-mill users with decentralized applications that are supposed to come as a viable replacement for traditional applications.   

Stage 4: Cross-Blockchain

The scenario when Blockchain finally becomes usable in the real world, disrupting many industries.  

Transition to proof-of-stake Blockchain consensus algorithm

If you are somehow familiar with cryptocurrencies, you are definitely now new to the concept of cryptocurrency mining. This is a process of cooperating Bitcoin many nodes on the network. Blockchain technology allows recording all the data on a distributed ledger, which basically means that it is stored on a gargantuan number of computers around the globe. For the whole network to function properly, there should be a robust consensus mechanism in place.

The original consensus mechanism is called Proof-of-Work (PoW). The peculiar thing is that the PoW mechanism dates back to the 90s, long before Satoshi came up with a ubiquitous Bitcoin white paper (the actual term was proposed by Markus Jakobsson). Still, this consensus algorithm became commonly known along with Bitcoin. According to the white paper, PoW would help solve security concerns, preventing the much-feared 51 percent attack. There is a block reward involved for every cryptographic puzzle solved by an individual miner or a group of miners.

However, due to numerous disadvantages of PoW (huge energy consumption, geographical limitations, etc.), a new consensus algorithm emerged on the horizon: Proof-of-Stake (PoS). When it comes to proof of stake, the creator of a new block is defined based on his stack of coins.

Transition to proof-of-stake Blockchain consensus algorithm

The currencies that are based on this consensus algorithm do not presuppose a block reward; miners profit off transaction fees. Hence, the PoS algorithm is a significantly more cost-effective option. PoS-based coins help to tackle the problem of energy saving that has always been an issue as far as Bitcoin mining is concerned. As U.Today reported earlier, Bitcoin mining has such a great impact on the environment that it could potentially boost climate change.

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Tackling the scalability trilemma with altcoins

The next logical step in the history of Blockchain development consists of finding new scaling solutions. Some naysayers bash Blockchain because transactions take a very long time to be conducted compared to more established financial systems (VISA, Swift). With Bitcoin Blockchain, it is only seven transactions per second (TPS). Ripple, on the other hand, shows much more impressive results with 1,500 TPS, but there is still much homework that needs to be done in order to match the processing power of the VISA network that is able to process 24,000 TPS (although, Ripple is already six times faster than PayPal). Ripple shouldn’t be confused with the actual cryptocurrency (XRP) — it’s a Blockchain-powered startup that is currently getting a big number of banking clients on board with its new xRapid product.  

Coming up with a scalable Blockchain solution is an easy feat due to what is known as the scalability trilemma. The essence of this trilemma is that the Blockchain network is only capable of having only two out of the following three features: decentralization, security, and scalability. Blockchain and Ethereum put emphasis on the first two, which takes a toll on the speed of transactions. Still, a scaled Blockchain that would be able to outperform them — conducting millions of transactions in a snap — is yet to be done in history, but some promising projects are already in the offing.

Altcoins with separate Blockchain seems like a plausible solution to the scalability problem since it would significantly reduce the user base. Notably, there is a full stack of scalable Blockchains in the offing, with Ethereum 2.0 leading the way. Cardano, on the other hand, is already here: the reputed project spearheaded by Charles Hoskinson is considered to be the third generation of Blockchain because of its scalability and interoperability.

Other third-generation Blockchains to watch in 2018:

  • Zilliqa;

  • EOS;

  • ArcBlock;

  • Aion.  

Each of the aforementioned third-generation Blockchains aim to tackle the main issues of Bitcoin and Ethereum in their own way with a major emphasis being placed on scalability.   

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The growth of Blockchain: talking numbers

According to one of Deloitte’s research papers — which aims to illustrate the evolution of Blockchain with the help of GitHub data — there have been more than 87,000 Blockchain-related projects. Perhaps the most striking finding actually pertains to the number of currently working projects; the longevity in the Blockchain industry is very poor, with only 8 percent of projects still being maintained by their developers.

Nevertheless, there is still a very positive trend when it comes to the number of projects developed by  commercial organizations: it has skyrocketed since 2009, serving as a clear indicator of wider Blockchain adoption. It is especially important for the industry because such projects tend to be updated more often while holding more significance.  

The growth of Blockchain: talking numbers

However, Blockchain adoption is still rather snail-paced with regulatory uncertainty being the main issue. A new PwC survey showed that 27 percent of CEOs think that lack of legal clarity remains the main hindrance with lack of trust among users coming in second place (25 percent).

The future of Blockchain  

As mentioned above, a lot of banking institutions (including such behemoths like Morgan Stanley, are already jumping on board with Blockchain adoption since the technology has the potential to increase the efficiency transaction processing. However, it doesn’t stop there — dozens of industries are already unitizing it. Whether it’s giving refugees a chance to restore their identity or preventing food poisoning, there’s one ‘magic wand’ that helps to modernize everything with the help of decentralization.
Since no one is able to alter data on a Blockchain, it’s a perfect solution for record keeping, and there is a myriad of future use cases where Blockchain could come in handy. Ironically, there’s even a Europe-based startup called Kapu that puts the whole history on a Blockchain in order to have a risk-proof source of all kinds of historical data.   

With that being said, Blockchain has many critics (and their list not limited to the unhinged Bitcoin opponent Nouriel Roubini). They claim the technology is overhyped, and cryptocurrencies still remain the only major use case. dApps (decentralized applications) fail to get a grip of a real user base while many Blockchain-related projects are only in a trial phase. While it is partially true, it is quite reasonable to assume that the mass adoption of Blockchain won’t happen overnight – it would take years or even decades for the technology to catch up, and there has been a lot of progress since the inception of Bitcoin. Case in point: it took the Internet almost four decades for this technology to break into the mainstream (its foundations were created as early as in the 60s).  

Meanwhile, the US — the current leading market for Blockchain development — is expected to cede ground as early as 2023. China, which retains its hawkish stance towards crypto, is betting big on Blockchain, going as far as issuing Blockchain-related guidelines for its officials. Remarkably, the UK’s current 5 percent share in the crypto space is expected to shrink to just 2 percent.

The future of Blockchain  

One also cannot exclude the possibility that Blockchain might not be the same technology that we know today. A lot of companies, for instance, are already trialing so-called ‘private’ Blockchains that allow sharing data only within a small circle of individuals, and there is always a chance that another groundbreaking invention will turn Bitcoin and Ethereum into history.

No matter what future holds for Blockchain, one thing is crystal clear: the world will never be the same after its invention.

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