Altcoins

The blockchain could disrupt legal institutions….here’s how!

Blockchain is changing the world. We get it.

Wait, we do get it, right?

I’m not just talking about cryptocurrencies here. Cryptocurrencies are great and all, and blockchain was invented by Satoshi Nakomoto as the public ledger for the Bitcoin network, but it can do and is doing so much more than that. It’s being used as a financial instrument, but also being tested for voting, academic and medical record-keeping, tax auditing, and more.

These are all well-established systems that have been around for a while, and essentially pretty big things to be meddling with, but meddle we must if we want to move forward and find more efficient and innovative ways of doing things.

However, as people to seek new ways to improve all these systems it becomes clear that blockchain is miles ahead of world governments desperately scrabbling to keep up.

Smart contracts

What about smart-contracts – are they legally binding? A contract involves one party making an offer and another party accepting that offer based on the agreed conditions, but a smart-contract is actually a little different. It’s technically a set of conditions in a computer program, and both parties are consenting to that program operating as outlined. It’s a minor difference, but legal experts believe that many smart contracts are operating in a legal grey area and may not hold up in a court of law.

However, like everything I’m about to get into in this article, those experts are working on it. Once smart-contracts either find their way into the legal framework that already exists or prompt lawmakers to make new rules around them, think of the consequences there. Highly expensive legal fees could be done away with in situations where people just want to make a binding agreement without paying a middleman thousands of dollars to hold their hand while they do it.

Chain of Custody

Criminal records – on the blockchain! Sorry, I didn’t mean to make that sound fun, it’s not. At all.

It is, however, incredibly useful for legal proceedings. It’s not at all uncommon for legal cases to collapse on silly technicalities – in a criminal case it’s usually necessary that the paper trail for each document is meticulously kept. Lost, damaged, or even temporarily misplaced documents can mean the difference between life and death in some cases, literally.

At the moment most legal systems use paper records as well as computer records.

Practically this.

Using warehouses full of paper files and wifi-hackeable systems to store criminal records isn’t just inefficient, it’s vulnerable to crafty defense/prosecution teams poking holes in an otherwise iron-clad case. Imagine if someone stole your crypto portfolio only for the evidence to get lost before the trial? Will someone please think of the crypto?!

Intellectual Property

Content creators fight a constant battle against their work getting stolen. The game ‘Monopoly’ was actually invented by left-wing economics advocate Elizabeth Magie to demonstrate the negative aspects of late-stage capitalism and industrial monopolies on society, as evidenced by the many crises caused by banks and other businesses having free reign due to lack of competition, and also by every family argument resulting in a rage-quit board-flip in every Monopoly game ever played, ever.

The game was then stolen, however, by a man named Charles Darrow who sold the rights and became the first ever board game millionaire, enriched by a stolen game now owned and globally distributed by Hasbro corporation. Case in point, eh?

The issue stems from record keeping – how do you prove that something you made is yours? Blockchain is being investigated as a solution to intellectual property theft by projects like NKOR which proof technology called ‘anchoring’ linking data to a transaction on a blockchain, Anyone with the proof can verify the data’s integrity and timestamp without relying on a trusted authority, something that could help independent creators who don’t have the time or means to file a patent or create legal copyrighting to protect their work.

You know, as long as Charles Darrow doesn’t steal it and enter it into the blockchain first.

But wait – seriously, what if that happens?

I mean, the reverse is also true, right? What if a company is using a public ledger and someone inserts copyrighted material into it? Are they in breach of copyright law? This is actually a major issue in blockchain law at the moment. The blockchain is supposedly immutable, and for legal records the whole point is that it can’t be altered or tampered with.

Issues surrounding breach of copyright and data protection are huge. The EU just passed the GDPR (General Data Protection Regulations) which many of you may have been made aware of recently when you received a million emails in one day from every subscription service or company you’d ever given your email address to. Recently companies were required to confirm with customers that they were OK with the company storing their data (along with a bunch of other data regulations). What if something like that happpens again further down the line when blockchain is more widely adopted?

An extreme example of this was the unpleasant revelation that links to underage pornography had been uploaded to the Bitcoin blockchain –  does that make node operators somehow

Different countries have different laws factoring in intent and knowledge of crimes like this one, and while it’s unlikely to put a stop to Bitcoin, it certainly raises an interesting legal question. The thing is, this is all so new that we’re essentially flying blind here while regulators and legal authorities figure out what the hell they’re doing.

Meanwhile, blockchain continues to make innovations in the legal world that seem likely to prove revolutionary very soon.

Blockchain, for better or worse, is going to really shake things up in the coming years –  so hold on to your hats folks, and try to look like you know what the hell is going on, OK?

Interested in other cool crypto posts….check out Mining Wars: Bitmain vs Dragonmint and The Price of Bitcoin vs Cost of Mining.

Follow us on twitter @cryptoiscomin

What is Ethereum? Beginner’s Guide

If you’re at all interested in cryptocurrency, you’ll need to learn about Vitalik Buterin’s Ethereum platform.

Described in the white paper as “A Next-Generation Smart Contract and Decentralized Application Platform”, this is a huge project that has totally changed the crypto/blockchain landscape.

The Ethereum token ETH is currently second in value only to Bitcoin, with a market cap of over $58 billion, more than twice that of XRP at number three. While ETH is almost the most valuable coin in the crypto ecosystem, Ethereum is about so much more than currency. The project has ramifications that affect blockchain adoption in a number of areas, and one could argue that it even has more real use cases than Bitcoin!

Ethereum is a blockchain-based software platform designed specifically to allow developers to build decentralised applications. Now, I did say beginners guide, didn’t I?

Blockchain


I’ll start with blockchain, which can be imagined as a spreadsheet or a ledger that records information. It’s “decentralized”, meaning it’s not stored in just one location. The ledger is stored on many different computers, and when new information enters the ledger, the system is updated on all the computers.

Why?

The main reason is security. Traditionally, if a company stores sensitive information like credit card details, that information is encrypted to increase security. The information is then stored on a computer server network and guarderd. If someone accesses that information, they can leak it or change it. Because there’s only one point of “attack”, the information is vulnerable.

However, with a decentralized ledger distributed across multiple computer networks, security is greatly increased. If you want to change the information, you need to break into every node at the same time and force them all to agree. With a system like Ethereum, which has 25,000 nodes distributed across the world, that’s no easy feat! Some would argue that it’s quite impossible.

Decentralized Applications

I’m going to say straight off the bat that these are applications that nobody owns, never need to stop working maintenance, and can never be shut down. Ever.

Interested?

OK. Now, you may think you’re not sure what an app is, but you probably use them all the time. Email software, text messaging…. let’s look at examples.

Think of an app, any app. Need inspiration? Check your phone! The typical smartphone has a number of apps (applications) that serve different functions. Does your phone have a calculator? That’s an app. Does it have social media software like Twitter and Facebook? Apps.

Really? OK. Well, if you get this then congratulations! You are the first neolithic cave person in history to learn about Ethereum’s decentralized applications, and we are all very proud of you. Well done.

The thing about the above applications is that they’re actually not decentralized, meaning that they have a central point of authority, and a central point of failure. One company or entity owns and controls those apps, right? The software developer for the calculator app could choose to remove his or her app from the app store.

Twitter and Facebook are companies that store sensitive personal info on their company servers, and an uncrupulous employee could potentially access that information. A natural disaster or tyrannical government could potentially destroy or shut down the servers and prevent the application from working. Under the command of one authority, and with one central point of data storage, which is a weakness no matter how well-guarded.

Decentralized applications are different.

Here are the criteria for what qualifies: An app has to be

  • open source
  • decentralized
  • Self-incentivized
  • Algorithmic

Those last two basically mean that the app has to have it’s own token which funds the running of the app. A digital asset that keeps the lights on basically, meaning that the app is powered by people using it and doesn’t need external support. dApps must run on an algorithm/software protocol that generates tokens and allows the user community to make consensus-based decisions.

So… cryptocurrencies? Sort of! Bitcoin is technically a dApp which allows peer to peer payments on an open source decentralized platform that produces it’s own tokens through miners solving proof of work algorithms. Not all cryptocurrencies are decentralized, but many could be considered dApps while others aren’t. However, while cryptocurrencies exchange value, dApps are more data-orientated, the bigger picture to the specific use case of blockchain as an currency platform.

These apps are developed using the Ethereum network, launched on the Ethereum platform, and then stored on all 25,000 nodes. let’s say you’re a software developer in a country with heavy censorship of media, and you create a social media app that people start using to combat government propaganda. If it’s centralized, the government can ban the application. They can raid any nationally-based offices, seize servers, and shut the whole thing down. If it’s decentralized, well… their job just got a lot more complicated.

According to the Ethereum white paper, there are three types of dApps. 

The first type is an app that manages money: finance management will be a huge use case for dApps, and Ethereum designed their system with an aim to facilitate financial agreements and contracts being fulfilled through their applications.

The second type of dApp concerns applications that need off-chain information to operate. They’re decentralized, but external info is required to keep things running. For example, fishermen could buy a derivative that pays out if their work is affected by storms. The weather update isn’t external, but the payout is autonomous – a contract that executes itself automatically is called a “smart contract”, and we’ll get to those a little later on.

The third type of app doesn’t concern finance at all, and the examples given in the white paper are voting software and decentralized governance. Now we’re starting to see the full scope of the project.

Smart Contracts

Smart contracts are a major aspect of the project. They’re designed to eliminate trust (which sounds kind of bad), or rather the need for trust (much better). Two parties enter an agreement, the agreement is cryptographically signed and entered into the Ethereum platform. The contract is then triggered by an event – such as the passing of a certain date. Once that happens, the contract is executed. Automatic monthly payments, for example. Weekly business reports. Warnings about dangerous driving conditions – it could be anything.

Now, these are all things that exist already, right?

The difference is, smart contracts are coded directly into the blockchain, and as we’ve already learned, once information is entered there it can never be removed or altered. Smart contracts are immune from censorship, fraud, and system downtime, which is… amazing, to be quite honest.

The Virtual Machine and the World Computer

Ethereum seeks to decentralize and even democratize the existing model of client-server data storage. Nodes replace clouds and traditional servers and nobody owns or sells your personal data. That’s the idea. One argument is that if anyone should be selling your data to advertisers, it should be you, not Facebook or Google.

A major breakthrough in crypto/blockchain technology was Ethereum inventor Vitalik Buterin’s concept of the EVM – Ethereum Virtual Machine. At a time when most other cryptocurrencies were (and still are) modeled from Bitcoin’s peer to peer payment blockchain design, Buterin could see platforms struggling to be anything more than a payment structure. He envisioned more applications, and instead of trying to bend Bitcoin codes and protocols to suit his needs he tore up the rulebook and made an entirely new blockchain system.

The EVM does use certain aspects of Bitcoin – there’s no doubt that the system design has influenced all that came after it. However, the EVM went far beyond the payment structure. The system is Turing Complete, meaning it’s capable of performing any logical step of the computational function. This allows it to be a computing platform, not just a payment system, and the while Ether (ETH) is the second most valuable cryptocurrency, its immediate use is actually to fuel the Ethereum plaftorm.

Ether and Gas

Ether is the currency, and it’s needed to power the whole platform. Just like we talked about earlier with dApps, the system powers itself – it “costs” a certain amount of Ether to carry out functions on the platform, and the cost of the fee is referred to as “gas”. Gas prices are decided via consensus, and the people who decide are called miners, or sometimes forgers.

Ethereum was originally a Proof of Work system, meaning that miners had to solve complex computer algorithms in exchange for ETH. The ETH was given as a reward for the work (hence, proof of work). This is the system that many other currencies also use to distribute their currencies, and doing it like this helps prevent inflation of prices.

How?

Well, as more miners compete for ETH, the algorithms become more difficult to solve, meaning they require more time and computational power.

So, people download the entire blockchain to their computers and run algorithms – when their computer guesses the correct number, they get paid. By doing this they’re actually running a node, and their node helps verify transactions – once a certain amount of transactions are mutually verified, they form a “block” of newly-verified data which is then entered into the chain.

Ethereum actually changed fro Proof of Work to a newer system, Proof of Stake. There were a number of reasons, among them being the high cost of electricity and energy required to decrypt new blocks as time went on. Proof of Stake is cheaper – thousands of times cheaper, in fact! Instead of requiring miners to crack codes, rewards are given in a deterministic way based on how much currency the community miners already own (or what their “stake” is).

Instead of block rewards, they’re given transaction fees, and the whole process tends to run a lot smoother. Ethereum actually forked a number of times, meaning the community couldn’t agree on certain issues and split into two different currencies. Ethereum Classic still uses the original Ethereum coding and the Proof of Work system to mine coins.

Decentralized Network of the Future

Ethereum is a fascinating project, and while there’s more to explore, hopefully this has given you a good working knowledge not just of how it operates, but why it could be useful. The Ethereum platform’s aims to be a World Computer are ambitious, and met with skepticism by many who feel that such worldwide decentralization will never be allowed to happen. That may be so, but the effort to get there is sure to see more and more innovations and breakthroughs in the world of blockchain development.

What is EOS?

What is EOS and why all the hype?

Commonly known as Ethereum’s biggest rival, EOS has had a very busy 2017.

A lot of cryptocurrency projects were and numerous ICOs were launched in different sectors of the economy this year but only a few Cryptos were able to keep up with the jet-speed pace of the industry.

Among this few elite band of cryptocurrencies stands EOS. EOS was founded by Dan Larrimer and it was announced at the Consensus 2017 event held in New York. Larrimer also had a hand in creating BitShares, Steem and Graphene technologies.

EOS is a blockchain-based cryptocurrency which is essentially like Ethereum (details to come). It launched its ICO on June 26, 2017. Its code is available on GitHub at https://github.com/EOSIO.

Features and Value Proposition of EOS

So why is EOS considered the Ethereum killer? How does EOS improve on the ETH model? EOS has a lot of important features, performance optimizations and also made a lot of improvements compared to Ethereum. They are:

Parallel Processing: This makes it easier to perform operations in simultaneous, quicker transaction speeds and even better scalability.

Room for Future Advancement: Presently, the EOS software gives room for a 5% inflation rate, which would be used in improving the network further.

A Constitution: This consists of a collection of rules and guidelines which every user has agreed to abide by. They form the regulatory basis of EOS block mining.

Decentralised Operating System: EOS functions like a decentralised operating system. What this implies is that developers can build decentralised applications (commonly known as DApps) on EOS.

As a developer on the EOS chain as long as you have the EOS coins, you can use part of the server resources. To build and run DApps, it is necessary for developers to possess EOS coins before they can be granted license to the EOS blockchain. However, the coins will not be used as a sort of payment for the server resources, all they need to do is show proof of having EOS coins.

The decentralised operating system will be hosted on servers which will also create blocks. Servers hosting EOS applications will get their main incentive in form of block rewards (that is, they will be allowed to mine EOS). All applications running on this decentralised operating system will communicate freely with each other, but there will be contingencies put in place for “firewall” applications.

Decentralised applications have common features such as user login and details, user interfaces, database and file management. This means that frameworks and libraries can be created within EOS, which applications can share to make development a lot faster, improve the security and make it easy to write the code. For instance, decentralised applications can create secure databases and host their files on EOS.

EOS uses a performance-based language known as Web Assembly, which they adopted through a lot of testing and benchmarking. At first, the favorite was Wren but when Dan ran a test with an empty contract, the transaction speed was around 1000 transactions per second. In terms of performance, this was very low compared to what Dan had in mind for his project.

He eventually came across Web Assembly and adopted it for EOS. Web Assembly enables web developers to compile a lot of programming languages (e.g. C, C++, Rust, Solidity), which will enable them to quickly port a lot of codebases over to EOS – as long as it’s done correctly.

Ethereum Or EOS? 

The EOS blockchain will allow developers to create decentralised applications which will be interactive and user-friendly. User experience and interaction on Ethereum is not up to par, which is one of the many things EOS has improved on.

EOS’ direct rival, Ethereum, collects a fee (GAS) – no matter how small – on every transaction performed on the platform. EOS will not do so. This will increase adoption.

Also, EOS is much faster in handling transactions. It’s also more scalable, being able to reach millions of transactions per second, compared to Ethereum (and Bitcoin) which only handles a few thousand transactions per second.

Because EOS has a constitution every transaction performed on the blockchain must follow set rules. There will be no deviations on user transactions, ensuring an open and provable blockchain. This creates stability and trust in the chain.

EOS Smart Contracts

Just like Ethereum, EOS has smart contract capabilities, though it’s more extensive. EOS differs from Ethereum in that while Ethereum is more hard for developers to code, EOS makes it dead easy to build apps.

Before a developer can build an app on Ethereum, s/he must first write the code, then change it to machine language. Only then can they proceed to build the app.

It’s much easier with EOS. You don’t even need smart contracts to interact with apps on the EOS blockchain. This implies that users have no need to pay transaction fees before they can interact with DApps on EOS.

For instance, it makes perfect sense for Steemit. I mean, who wants to spend money to write and publish content (on the open Internet?!)

EOS provides basic functions on its platform such as database management, account management and other services so developers don’t have to rewrite the code for those functions.

On Ethereum, you’d have to rewrite all of the code for the standard features. All the basic functions are already a part of the EOS blockchain.

The major disadvantage is that it could take a long time to create an EOS Blockchain, a lot of things can happen in the mean time.

EOS Tokens and ICO

ERC-20 like tokens can be created on EOS, which implies that EOS can host ICOs.

The EOS ICO runs for about 12 months (actually, it’s 341 days). This was done to boost audience reach and distribution, which should increase adoption.

Most ICOs and token distributions only have a few participants. However, the EOS Token was distributed in such a way as to allow people who want(ed) to participate enough time to make a decision, and also allow the general public to follow up on the development of the EOS.IO Software before deciding whether or not they want to purchase EOS Tokens.

A total of one billion tokens were made available, which were and/or would be distributed as follows:

  • Two hundred million tokens (20 percent of the total amount) were distributed across 5 days, starting from June 26, 2017 at 13:00 UTC and ending on July 1, 2017 at 12:59:59 UTC.
  • Seven hundred million tokens (70 percent of the total amount) were divided equally into 350 consecutive 23-hour periods, which means 2,000,000 EOS tokens (two million tokens) would be distributed every 23 hours, from July 1, 2017 at 13:00:00 UTC.
  • One hundred million tokens (10 percent of the total amount) will be reserved for block.one and will not be available for trading or transfer to other users on the Ethereum network.

EOS’s ICO raised a whopping $150 million in the first 5 days, setting a new record for most funds raised in a short period. Also, EOS was made available for trading on the Bitfinex exchange, boosting its price by over 200% in just a few hours! The ICO ends on June 1, 2018.

A lot of people are branding EOS “the Ethereum killer”, but what really matters is that EOS is definitely at the frontline of decentralised applications and scalability in blockchain technology.

EOS Whitepaper

Follow me on Twitter: @bryancrossland