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SegWit is finally happening for Bitcoin

The year long civil war over how to scale Bitcoin seems to be moving towards SegWit adoption. Crypto exchanges are FINALLY starting to integrate SegWit into their daily operations with Coinbase, Bitfinex and Binance all announcing it this week via twitter.

There’s no other way to read this other than a major win for the users. Binance withdrawal fees were immediately reduced by 50% while Bitfinex’s fees were reduced by 25% with potentially more improvements on the way. Coinbase, one of the largest Bitcoin wallet providers in the world, has yet to announce implementation but all signs point to it coming soon.

The SegWit upgrade to the Bitcoin protocol attempts to reduce transaction fees and confirmation time, two things that have become a point of contention between Big Blockers and Bitcoin purists leading to huge divide in the community. With the recent announcements from industry leaders, it seems that more and more companies will begin to integrate SegWit or risk getting left behind by the industry. Coinbase initially announced SegWit in December but showed little progress in the following months leading to backlash from the community. When there CEO made some disparaging comments on Bitcoin, users started a petition urging the exchange to implement SegWit gaining over 12,000 signatures.

One of the largest remaining companies that has yet to implement the upgrade is Blockchain.info, the platform with the most online bitcoin wallets in the world. Lets see if the recent news pushes them to speed up the integration. Its been over 4 months since there last post on the topic.

One way or another upgrades are coming to Bitcon, adopt or get left behind.

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What is Zcash? A Beginner’s Guide

zcash

If you’ve been wondering about Zcash, prepare to wonder no more.

Privacy coins have become of increased interest as the ecosystem developers, and as newcomers realize that currencies like Bitcoin are actually pseudonymous, not anonymous as is often claimed by mainstream media.

What’s the difference?

Well, with BTC and most other currencies, it’s like this; you buy coins online, and unlike making a purchase with a credit card, there’s no digital record in the blockchain ledger with your name on it. Instead of your name, your public wallet key is used and permanently stored. The wallets don’t tend to store the names of their users on their servers, meaning you can open a wallet without using your real name (or any name), and transact using only the wallet key as a “signature”.

So…

No!

It’s not anonymous. Your name isn’t attached to the wallet or the ledger, but the public key number attached to your wallet (or wallets) are. Think of them like a pseudonym, or an assumed name – if someone finds out your wallet keys, they can go through the blockchain and find a detailed record of every transaction you’ve ever made.

How would this happen?

Well, you could be hacked, government authorities could seize your device or subpoena your information, etc. Cryptocurrency ledgers that store keys are more private than fiat currency in many ways, especially if users switch wallets a lot and take extra steps to protect their privacy (VPNs, encrypted browsers like Tor, etc). However, in another way they could be considered less private!

Online purchases and credit card purchases are one thing, but technically spending BTC or ETH is less private than spending cash. All someone needs to know how much money your spending is your wallet key or pseudonym, hence “pseudonymous”.

True anonymity is harder to come by, but coins like Zcash have done a great job of achieving it. It’s an interesting project, with a lot of forks in the road and quite a bit of controversy as well, so let’s get right to it.

 

What is Zcash? History and use case

Forking from Bitcoin, Zcash was launched in 2014 as “Zerocash”. However, the Zcash project wouldn’t be formally announced until 2016 as a development of that project, developed by US and Israeli cryptographers from MIT, Technion, and Tel Aviv University.

Zcash made history by being the first ever open-source zero-knowledge cryptographic currency.

 

Now, you either nodded sagely in agreement or your brain just shut down a little, right?

If you didn’t know, zero-knowledge proof cryptography is a system of authentication where no passwords are exchanged. In cryptocurrency, that means the network makes transactions without disclosing the parties or amounts involved. The ledger publicly shows that a transaction has been made, but that’s it – no names, no keys, no amounts.

Zcash uses zk-snark proofs, which stands for “Zero-Knowledge Succinct Non-Interactive Argument of Knowledge”.

Catchy!

So, the zk-snark proofs “prove” or verify transactions without exchanging any data. The result is a currency offering extremely heightened anonymity, protecting user data through shielded transactions while maintaining a secure distributed ledger. No passwords being exchanged also means no passwords can get hacked, making the process an appealing one all-round.

Similarly to Bitcoin, Zcash will have an eventual total sum of 21 million coins and halving every 4 years. The method of distribution and funding has been the source of much controversy – let’s take a look.

 

Funding and Distribution

I’ll get right to it – 20% of every block mined goes to the backers and developers.

It’s not technically a premine, but it’s similar. Instead of being open source, Zcash is set up like a company, and they take a very hefty cut of all tokens discovered by miners. They refer to this as the Founders Reward, and point out that their cut becomes incrementally smaller as time goes on, and the last chunk of Zcash coins will go to the miners only.

Generally speaking, this makes sense, right? A company has shares, and obviously the people behind the company are going to give themselves a significant amount. In fact, when a company has public shareholders, it’s generally a good idea for the team to hold most of the shares so they can control the decisions being made.

However, with a cryptocurrency where the “shares” and the “product” are one and the same, that’s kind of the problem.

As with premining,  an unequal distribution of tokens makes price manipulation much easier (potentially), leading to serious concerns among the community.

 

History and Backers

zcash history

So, after forking from Bitcoin in 2014, the Zerocash protocol became Zcash in 2016. After that, the difficult issue of the Founder’s Reward actually led to a hard fork and the creation of Zclassic later in the same year, much like with Ethereum and Ethereum Classic.

The following year 2017 saw Zclassic fork to Zencash!

It got a bit complicated, but they’re all essentially Bitcoin-based currencies with the additional features like anonymity and fungibility, or interchangeability with other goods or services. Miners use the Equihash Proof of Work algorithm to mine the currency, and that keeps the currency ASIC resistant, making it difficult for hackers or bad actors to perform Denial of Service (Dos) attacks.

As a Bitcoin fork, the system confirmation speed is technically the same. However, due to the popularity of Bitcoin, your Zcash transactions are likely to go through faster. Wake me up when the Lightning Network is here!

Zcash is backed by Roger Ver, CEO of Bitcoin.com, and Barry Silbert, who owns CoinDesk and a number of other major enterprises in the cryptosphere. Ver and Seibert both invested early in cryptocurrency, and their massive fortunes are only set to increase with the Founder’s Reward of Zcash, a coin currently worth $1.3 billion and currently number 24 on coinmarketcap.com.

The coin has been overtaken recently by other altcoins in terms of value, but Zcash undeniably has a real use case as an anonymous privacy coin, an increasingly relevant issue to privacy-concerned users.

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The Raven’s Dispatch – This week in cryptocurrency – March 2, 2018

The Raven's Dispatch
The Raven's Dispatch

The Raven's Dispatch

THIS WEEK IN CRYPTOCURRENCY

So much for the Bitcoin bears

The overall cryptocurrency market cap hasn’t made any drastic moves since last week and currently sits at $457bln (A mere 0.2% change from last we chatted). Sideways movement in the market is not a bad thing, it tends to indicate consolidation before we return to the previous trend. Let us never forget the wise words of a drunk man: #HODL. There never seems to be a calm week in the world of cryptocurrencies and this was no exception. Let’s get to it, shall we?

Bitcoin continues to find support around $10,100 and with the positive news that Segwit adoption is on the rise things are looking rosy for the king. BTC experienced a slight 0.12% decrease in price over the last 24 hours but is displaying an inverse head and shoulders pattern, giving investors on the fence something to think about.

Ehtereum has been rather boring this past week in terms of price finding some support at $845. In other news Porsche is launching an Ethereum based blockchain to help ‘smartify’ cars. Is that really a word now? Smartify? What is the world coming to. With a price of $863, ETH is up a staggering 1% from last week.

Litecoin experienced a slight retracement this week trying to settle around $200. Indicators are showing the uptrend it not at risk. We were also told, according to the Winklevii (yes they call themselves that), that Litecoin is not the silver to Bitcoins gold but merely a tesnet. I suppose the argument has merit, but it still doesn’t sit right. Anywho……

What’s new at Crypto is Coming

We’ve been busy little badgers this week. Actually, Conor has been the writing maching this week. You can tell he LOVES crypto. And that’s great for us and you.

With the upcoming Ethereum Classic hard fork creating the Callisto blockchain we decided to look into why the ETC chain exists in the first place. Do you know why the hard fork was originally proposed? It was a rather contentious debate at the time which split the community.

Big players in the cryptocurrency space are made some important moves this week. With the news the Digital Curency Group bought the crypto friendly Silvergate bank, we also learned that Circlepay purchased Poloniex. That’s interesting news because Poloniex, once a top dawg in the altcoin exchange space, was losing steam and trade volume for a while. Will this injection of capital turn things around for the once popular exchange?

Have you evern wondered why it’s so difficult to trade cryptocurrencies? Not just the act of buying and selling, but getting your money onto an exchange, then having to purchase BTC, then move the BTC to an exchange that has the cryptocurrency you want to purchase, then execute your purchase. It’s a pain. How will interoperability play a role in 2018? 

Cryptocurrency news from around the internets

What the hell happaned to ZClassic this week? The price of ZCL has crashed 89% in the past week and shows no signs of hitting a bottom. This coin is sinking like the Hindenburg, and we all know how that ended. This is a crazy turn around after the altcoin exploded at the end of December 2017. It all has to do with the new BTC hardfork Bitcoin Private, and the fact that the devs from Zclassic seemed to have all jumped ship. Ever wonder what a shitcoin was? Now ya know.

NEO, NEO, NEO the “Chinese” Ethereum. As of this post NEO is now the 6th largest altcoin based on marketcap totaling $8.3bln. It’s been quite a week for the platform spiking 17% this week. With more ICOs and coin listings to come that are based on the NEO blockchain you can expect the price to continue it’s upward march.

On the “you disclosing that BTC interest in yo taxes?” front, Curtis James “50 Cent” Jackson III has claimed during his bankruptcy hearing that the media reports of his BTC fortune are falsely stated. This meme says otherwise, Fiddy.

Porsche is throwing their hat into the blockchain mix by “blockchenifying cars in a partnership with Xain”. Why these writers find the need to invent a lame word like “blockchainify” is beyond me. Anyhow the concept seems interesting from opening your doors faster (uhh ok), to cars communicating via smart contract. It’s amazing how the blockchain can have so many applications.

Thanks for joining us this week! Good luck on your journeys through Crypteros. May the seven guide you.

 

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INTEROPERABILITY Coming to Crypto

 

If there’s one thing holding back mainstream crypto adoption, it’s lack of interoperability. If you want to buy altcoins, the process is pretty arduous. First you have to either buy crypto with a credit card for an increased rate or wire transfer fiat currency to a major exchange – then you have to exchange that fiat for BTC, ETH, or LTC, and then you may have to move your new cryptocurrency to another exchange to trade it for your desired altcoin.

There are a lot of steps, and it takes time – time in which the value of your Bitcoin could be significantly less than when you bought it! It’s slow, risky, and unappealing to new users still learning the ropes. Don’t worry though – as with all crypto problems, solutions are on the way, and interoperability may be around the corner.

 

What is Interoperability?

Well, there are two types of interoperability with different meanings. Cross-chain atomic swaps, and cross-chain message relays.

 

Cross-chain atomic swaps

 

Unlike the name, the concept is relatively simple. Instead of all the centralized exchanges acting as “middlemen”, cross-chain atomic swaps allow value exchange between different blockchains directly. Users trade coins amongst themselves, straight from the chain with no third party involvement and no requirement of trust and the accompanying risk that entails.

 

The first cross-chain atomic swap in crypto took place fairly recently between Litecoin and Decred. It may take a one or two years before the system is fully proofed and ready for mainstream launch, but it’s getting there. No bank, no centralized exchange. Just direct exchange of value between private parties.

How would that work exactly?

Cross-chain atomic swaps are where decentralized exchanges will really have their chance to shine. Exchanges like Omisego are 100% decentralized, meaning the order book for the whole exchange is completely on-chain. Order matching, price discovery – the decentralized exchanges will act as user interfaces to exchange currency from one exchange to another without having to leave the safety of the blockchain.

 

Now, with fully decentralized exchanges, there’s a problem. Speed. As we discussed in our decentralized exchanges article, it takes more time to get things moving when everything is done on the chain. With systems like 0x however, those limitations are bypassed and users can have their crypto cake and eat it too.

It works like this: all of the processes apart from the actual transaction are handled off-chain on the 0x network. Yes, this is slightly more vulnerable than fully decentralized systems, but it frees up the blockchain for increased liquidity. When it’s time for the important part, exchanging currencies, the trading is done securely on the chain.

0x and similar systems are essentially centralized/decentralized hybrids that seek to find a middle ground between utility and security without sacrificing too much of either, and they’re a very promising look into what the future might hold for crypto.

 

 

 

Cross-chain message relays

Interoperability blockchain

The other type of interoperability is achieved through cross-chain message relays.

Now we’re getting into the domain of projects like Polkadot which aims to be the blockchain for other blockchains. It’s a PoS system with a native token fundamental to its operation (the token must be staked in order to validate cross-chain transactions).

The main issue faced by this approach is the possibility of double-spending, one of the financial issues cryptocurrency was fundamentally invented to eliminate. The blockchain exists as a permanent, distributed record to demonstrate that nowhere has one coin been spent twice, and that nobody is “inventing” new coins for themselves, distinct from fiat currency which governments can choose to print more of, leading to inflation.

Cross-chain message relays send messages from one chain to another, but a possible flaw in the system could lie in orphaned forks – sections of blockchain that have permanently split off from the main chain and now have no “parent” chain. It’s possible that these could be exploited to double spend, or even lead to accidental double spending. Another issue is that while PoS is the protocol for systems like Polkadot, major currencies like Bitcoin may never leave the PoW protocol behind.

 

What ‘s next?

Interopera

image via medium.com

Instead of trying to improve and upgrade existing projects, the solution may well lie in new projects being designed from scratch with interoperability in mind. One such project is Wanchain, which aims to link as many currencies together as possible under one protocol. They’ve been gaining traction, and are currently backing an Interoperability Alliance comprised of Wanchain, ICON, and Aion.

The alliance seeks interconnectivity and fluidity between all currencies. No hacked exchanges tanking market value for years at a time. No fraudulent exchanges pulling inside jobs and scamming users. Just rock-solid blockchain transactions between private consenting parties, with no middleman messing things up.

If the Alliance succeeds in connecting existing chains together, adoption will follow as the process of buying and exchanging cryptocurrencies is made smooth and user-friendly, available to all. The sooner interoperability comes, the better – when currencies can be freely exchanged in a decentralized, anonymous and private way, the true vision of the original crypto creators will be coming to life at last.

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CIRCLE buys Poloniex!

Never a dull day in cryptoland

Circle, the self proclaimed peer-to-peer payments technology company has just announced the purchase of Poloniex.

“We’re proud to announce that Circle has extended its commitment to a new vision for global finance by acquiring Poloniex, a leading token exchange platform,” founders Sean Neville and Jeremy Allaire posted on the company’s website.

This is interesting because both companies were lagging behind the rest of the industry in the past year. Too scared to compete directly with the monster that is Coinbase, Circle pivoted away from Bitcoin on-boarding services to OTC trading. Poloniex, once the altcoin exchange of choice for crypto traders, has been passed by both Bittrex and Binance in recent months with rumors of insolvency making the rounds. Even more interesting are Circle’s investors…none other than Goldman Sachs Group. The company raised over $135 million in venture capital from 2013 to 2016 led by $50 million from Goldman.

Personally, I read this as extremely optimistic for Cryptocurrency in 2018 and beyond. Goldman Sachs is one of if not the most influential Wallstreet banking institution, regularly sending its execs to take up cabinet positions with newly elected Presidents. Its influence in Washington is big, and now they’re backing of the largest and most influential companies in the crypto industry. These types of investments don’t get made without extreme diligence and influence on upcoming legislation.

Get your moon suits ready, 2018 is gonna be wild ride.

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