Archives for December 2017

 

These days all of the talk surrounds different Blockchains, However there is a different technology being developed by a man named Dr. Leemon Baird, it’s called the Hashgraph Consensus Algorithm and Baird is the CTO of Swirlds Inc (Shared Worlds for those wondering what that means), a platform for Distributed Applications. Swirlds is a software platform designed to build fully-distributed applications that harness the power of the cloud without servers. What’s interesting about this technology is that a centralized server does not need to be trusted in order for it to work.

“The Swirlds platform enables developers to create both permissioned and permissionless distributed applications with high transaction throughput, low consensus latency, and fairness in transaction order, without the burdensome costs of Proof-of-Work.”

Like what is currently on the Blockchain, some of the use cases would be Cryptocurrency, Gaming, Public Ledger, and Identity. Today’s applications are said to be not trusted due to centralization and other factors. Swirlds claims that it can use Cloud to run these applications without the centralized servers. Swirlds argues that Blockchain technology is limited in scope because “Blockchain can’t enforce fairness and can be challenged with high latency and probabilistic consensus, and often requires costly, wasteful mining.”

Is It All About Trust?

In a world with massive populations, trust has worn thin. Blockchain technology aims to create environments of transparency through a distributed ledger. However, the Blockchain has been facing challenges from the mainstream adopting it. Similar to the early days of the internet, it takes time for people to grow accustomed to new things. I can remember in 2007 when iPhones were introduced and most people stuck to their old flip phones, refusing to adopt to the new touch screen phones, fast forward to nearly 2018, and it’s a rarity to see one. Hashgraph is already challenging the Blockchain with it’s tech, but will it be able to deliver? I have to say, the ideology behind this project is fantastic, a fair world for everyone to do business in without the need to trust a centralized entity.

How Does It Actually Work?

This image above illustrates the beginning of the Hashgraph. The 4 grey dots represent Nodes in the network, or imagine they are 4 different people. Each member begins an event which is just a piece of data. For these grey dots to begin moving, a consensus or agreement needs to take place with a timestamp.

“Gossip Protocol” Each person in the group will have to sync with each other. The graph of events forms a record of how the members have communicated with each other.

Through this visual, it’s easier to understand what Hashgraph actually means. These events taking place within the structure will form a chain and keep growing. “This is a graph connected by cryptographic hashes, so it is called a hashgraph.” according to Swirlds.

Although Hashgraph is far more complicated mathematically and harder to explain in full detail, this simplified explanation will help more people understand how the system works at a very basic level. Is it possible that Hashgraph could oust Blockchain technology and dominate the space? Only time will tell. Trust is sort of important (Sarcasm) when doing transactions between people (and machines).

 

 

Bluzelle Networks Pte Ltd, a company based in Singapore and spearheaded by Pavel Bains, aims to disrupt the data storage industry in a decentralized fashion. Ethereum projects have been launching at rapid rates but we do not see a solution to storing all of this data and this could create quite a demand for what Bluzelle has to offer. Bluzelle Networks Pte Ltd, was started in 2014 and it’s first big project was launching the Canadian Ripple Gateway connected to the Canadian banking debit network. They then repositioned in Singapore where they began to raise seed funding through global ventures. The company currently provides IT solutions for Zag Bank, KPMG, Microsoft, HSBC, MUFG and other large organizations worldwide already. The CEO, Pavel, spent 13 years prior to starting Bluzelle at M2SIX ventures, an advisory and consulting firm for both startups and larger firms. He also started Storypanda in 2011 which focused on building relationships between investors. Bluzelle also has a somewhat large team: Neeraj Murarka (CTO) and former CSA of San Francisco based Digital Infinity Systems Inc., Nitin Cunha (Systems Analyst) for 1.3 years at Bluzelle. Prior to joining Bluzelle he was a talent manager at TEEMA Consulting Group. Scott Burch, Mehdi Abdeh Kolahchi, Richard Nistuk, Dmitry Mukhin, Fatma Ahmed, Leandro Bark, and Yingyao Xie are also onboard.

“Just like decentralized services like Filecoin and Storj are needed for file storage & management; there is a need for data storage & management. Bluzelle is a decentralized, on-demand, scalable database service for dApps. Bluzelle fills a need and is complementary to the other components to make the decentralized Internet complete. Without these decentralized components, the decentralized Internet would not be able to run efficiently and scale to massive use.” -Bluzelle 

The Oracle of Blockchain?

Blockchain is in need of data storage, and currently the centralized web has Oracle. Filecoin, another project on the Blockchain is planning to cover the file storage market. Seeing Blockchain as the future of the web, Pavel and Neeraj thought that data storage was a need that need to be filled. If it is true that in 5 years 20 Billion devices will require data storage, particularly on the Blockchain, Bluzelle could serve a massive purpose. Further research has also suggested that the DBaas market could grow to $14 Billion by 2019. I personally think that IOT will serve a large portion of this data and not including Apps, or even (D)apps (Decentralized Applications) which are built on the Blockchain. The way this will look can be seen in the image below:

Currently there are many negatives with the Centralized Cloud model. There is a single source of failure, scaling is expensive, privacy is not provided, no immutability, performance limitations. The decentralized Blockchain model allows no point of failure, efficient scaling, high levels of privacy, immutability, no performance limitations. This is why the decentralized model is changing the world. As it can be clearly seen, it has the capability of being the most efficient system as opposed to relying on 1 source controlling the network. The SWARM is how this will happen. Swarms allow for large groups of computers (Nodes) to store the data. If one goes down due to a variety of problems that could occur, the next one will pop up keeping the network alive and well. If you look at the image above, you can clearly see this illustrated. Multiple swarms (groups of Nodes) will further strengthen the network as well. One key feature I like is the replication of data in a single leaf swarm. So it’s a no fail way to protect the data in the event of natural disasters which can cause electrical outages. The data is is basically stored in tiny amounts and distributed across the volunteer Nodes. The data cannot be altered because it’s stored on the Blockchain. The volunteers cause the cost to be very low because it’s distributed across a network of Nodes in Swarms.

 

The Future of Bluzelle?

Besides traditional data, Blockchain data will include AI (Artificial Intelligence) such as that of predictive markets like Enigma or Cindicator, Cryptocurrency exchange protocols like 0x that use “Relayers” can benefit from Bluzelle’s storage database. Data streaming networks that need to store information on the Blockchain. Most of these projects are in development now but in 2018, we will see many Alphas being born in the Blockchain world. Bluzelle also has very ambitious regional and partnership goals like Asia Pacific region, Canada, Microsoft and Google. If they are able to cooperate with these organizations we could see an explosive growth of this (D)app. Bluzelle also has a Token model that will reward trusted Nodes (BLZ holders) and a wallet integration system that will use Ethereum as a Smart Contract and bridge BLZ Gateway between 2 wallets. Bluzelle states that they are going to charge a small withdraw fee for these transactions to take place for BLZ holders. The “Karma” reward program gives an incentive to Nodes with a good reputation using their Ethereum public address as an identifier. As an investment, I see Bluzelle having big potential if it manages to build the connections needed for expansion, and volunteer Nodes. I also believe that Bluzelle will not be the only player in the space, so they would need a first mover advantage.

 

 

Decentralized trading platforms have seen an increase in demand because of privacy concerns and security. Currently the most popular decentralized exchange is Ether Delta. The exchange is a good resource for those seeking deals after an ICO has ended because it’s usually the first place an ERC-20 Standard Token will go after an Initial Coin Offering (ICO) has ended. For those who are newer to Cryptocurrency, ERC-20 simply means a Token was built for Ethereum. According to Wikipedia, ERC-20 defines a common list of rules that an Ethereum token has to implement. Giving developers the ability to program how new tokens will function within the Ethereum network. The biggest complaint that Ether Delta users have is the user interface. It’s not a fast exchange and can be behave buggy. The other problem with centralized exchanges are that you are putting your trust in the owners of the exchange. Over the years, many exchanges have been hacked and Bitcoins stolen from it’s users. One of the most famous incidents was of Mt. Gox which at one point handled over 70% of Bitcoin transactions worldwide. Over 744,408 BTC were claimed to have been “lost” in 2014. This of course lead to a drop in the Bitcoin price and also started a chain of doubt in centralized exchanges.

“We had weaknesses in our system, and our bitcoins vanished. We’ve caused trouble and inconvenience to many people, and I feel deeply sorry for what has happened.” – Mark Karpeles CEO (2014) 

Mt. Gox was not the only place where people had their Bitcoins stolen, it has happened again and again from multiple exchanges. The biggest conflict is storing one’s Cryptocurrency under a centralized organization who controls your Bitcoin, and submitting multiple forms of ID which contradicts the philosophy of why Bitcoin or other Cryptocurrencies even exist.

The Rise of Decentralized Exchanges

In the summer of 2017, 0x was introduced and backed by big names in Silicon Valley including executives from Coinbase which is currently the world’s largest Bitcoin bank and where the mass adopters go to buy Bitcoin, Ethereum and Litecoin. The Initial Coin Offering (ICO) was launched in August 2017 and was assisted by identity App Civic and raised $24 Million Dollars. It was also backed by Polychain Capital, Pantera, Blockchain Capital, Fintech Blockchain Group, and Jen Advisors. 0x also partnered with projects like Augur, Aragon, Maker, and MelonPort. Aside from 0x, another decentralized exchange ICO was launched called Kyber Network which raised $60 Million Dollars in just 2 days. Interestingly, Kyber was one of the first ICO’s with a stringent KYC (Know Your Customer) process which required an ID or Passport to be scanned along with a personal address to prove they do not have citizenships in countries like the United States. While the decentralized space does have a bit of competition, there is much room for improvement and we are seeing that with different solutions such as instant trades through liquidity reserves and partnerships with Crypto banks. In 2000, at the beginning of the mass adoption of the internet, many people began to use Napster and Limewire which were a P2P file exchange, usually movies or music. I predict we are going to see an explosion of Decentralized Tokens trading, and all sorts of projects reach exponential levels and this is why we will see a number of Decentralized trading platforms emerging. It is possible that 0x will be the go-to place, or at least a very popular place to trade, but I would not write off any other projects under development now, such as Kyber Network and others that have no launched yet. Let us not forget that the rise of Google came from the ashes of Prodigy, Altavista, AOL, etc.

The Mechanics of 0x

0x, the first major decentralized exchange Initial Coin Offering will be examined a bit more. 0x will be focusing on ERC-20 Standard Token trading. They will be a platform which other projects can build on top of the network, and this can allow for massive expansion. The following projects have already begun: Ethfinex, Radar, Paradex, The 0cean, DYDX, MelonPort, Maker, Dharma, Lendroid, District0x, Aragon, Blocknet, Status, Augur, Open ANX, Auctus, Request Network, Ethix, KinAlpha, Amadeus, Decent Ex, Dextroid and many other projects are in development and planning stages. One of the key features of 0x is what’s called “Off-Chain Relay” and “On-Chain Settlement” this means that orders are transported off-chain reducing gas costs, and Blockchain congestion. Relayers help broadcast orders and collect a fee each time they facilitate a trade. This is open source, and any organization can build their own Relayer. The exchange is Trustless, with no centralized point of failure. Trades are settled atomically and without counterparty risk. Liquidity pools can be aggregated with a standard API. 0x will also enable the following features: Decentralized Governance, using Tokens to represent ownership and guide governance logic, Prediction Markets, Decentralized Loans, and Fund Management. According to their Whitepaper, 0x governance will be a Multi-Signature contract that will be used “until a more sophisticated DAO is developed.”

 

Rootstock, which has been in development for many years now is probably one of the most important projects for the Bitcoin ecosystem because it will allow Turing-Complete Smart Contract participation and near instant payments. For those who do not undertand what this means: In computability theory, a system of data-manipulation rules (such as a computer’s instruction set, a programming language, or a cellular automaton) is said to be Turing complete or computationally universal if it can be used to simulate any Turing machine. Much has been said about what Bitcoin lacks the past year, and Rootstock will solve a lot of these issues. Another benefit of Rootstock is that it can scale to 100 transactions per second, which is the same as PayPal.

“Since the creation of Bitcoin there has been a race for faster transaction confirmations. Instant payments allow new use cases, such as retail store payments, and transactions in online games. RSK carefully chosen parameters and new theoretical protocols (such as DECOR+GHOST) allow creating blocks at 10 seconds average interval, with low stale block rate, and no additional centralization incentives..”

Use Cases

Turing-Complete Smart Contracts were proposed by Nick Szabo in 1993. Rootstock will be implementing this, allowing for compatibility for Ethereum developers.

• Micropayment Channels – allow two parties to make secure regular low valued payments without paying fees for each payment, but only one time when the channel is closed.
• P2P Distributed Exchange – Exchanging Crypto Assets without 3rd parties.
• Retail Payment Systems – To allow for more global adoption of Bitcoin. As most BTC users know, transaction times can take 10 minutes or more. RSK aims to solve this problem, with transactions taking just a few seconds. This is one of the most important elements of the project and also one of the most discussed topics regarding BTC. The RSK network, using the DÉCOR+ protocol, allows to process over the Bitcoin Blockchain up to 300 tps (twice as much as Paypal).
• Escrow Services – Oracles will sign, or not, a transaction defining whether or not it should be executed without having any contact with the funds under escrow.
• Crypto Assets Creation – RSK supports the creation of Altcoins secured on the Bitcoin network.
• Decentralized Remittances – Important for developing countries.
• IP Protection – Proof-of-Existence.
• Voting – Digital voting.
• Micro Lending – 50% of human civilization does not have access to the global financial system. RSK will allow for the growth of Micro Lending Contracts for developing nations.
• Supply Chain – The origins of a variety of things like food for example can be traced using the Bitcoin Blockchain at an extremely low cost.
• Online Identity – Digital global registries of people in developing countries who do not have access to traditional identification documents.

 

Will Rootstock be Revolutionary for Bitcoin?

Is it possible that Blockchain is the 4th industrial revolution? Rootstock and it’s contribution to the Bitcoin Blockchain could impact the world tremendously. With all of the RSK projects proposed, if implemented, could be a massive shift in terms of global finance.

 

In New York City at a major Blockchain conference held in bustling Times Square, it was announced that potential Blockchain giants, Aion, ICON Foundation and Wanchain would be joining forces. In Blockchain land, it’s not uncommon for specific projects to compliment each other for further expansion. Icon, which is based in Korea, is aiming to build one of the largest decentralized networks in the world. Aion is “A multi-tier blockchain system designed to address unsolved questions of scalability, privacy, and interoperability in blockchain networks” and Wanchain, seeking to create a new distributed financial infrastructure, connecting different blockchain networks together to exchange value. A lot of Blockchain investors were calling Wanchain the “Asian Ripple” and even calling ICON the “Korean NEO” which created massive hype and ultimately a very successful ICO (Initial Coin Offering). For those who are newer to Blockchain world, Ripple “connects banks, payment providers, digital asset exchanges and corporates via RippleNet to provide one frictionless experience to send money globally”. NEO is a Blockchain network similar to Ethereum and currently one of the top Blockchain projects in existence. It can be confusing to try and understand all of these different projects but keep in mind, many projects are launched by people from different nations, so we may see multiple projects doing the same thing but in different countries, like any other business.

The president of Wanchain Dustin Byington said “The Blockchain Interoperability Alliance will play a crucial role in increasing the connectivity of our digital assets and our lives.” Some of the features of Wanchain are Digital multi-currency payments and settlements, digital asset transactions, digital asset investing and financing, Cryptocurrency loans, a Cryptocurrency exchange, and a distributed cross-blockchain transaction mechanism. 

“ICON already boasts communities comprised of reputable institutions – banks, securities, insurance, hospitals, universities, and more. ICON’s decentralized applications (DAPPs), including Blockchain ID and Payment & Exchange, can benefit current and future communities.” Another positive for investors about ICON is that they are partnering with a major bank in Korea and they have developed AI called ‘DAVinCI’. A this point, all of these projects are speculative. Investors are expecting to see results in December 2017 and January 2018. The roadmap ahead seems exciting, and we are all anticipating the growth of these 3 projects.