Bitcoin Price Decline Sparks Rare Mining Difficulty Drop

3 months later. How the profitability of mining changed after halving

3 months later. How the profitability of mining changed after halving

3 months later. How the profitability of mining changed after halving
On May 11, the size of the Bitcoin mining reward fell by half. The next time it will be in 2024. What devices will be profitable by that time, and what to hope for owners of obsolete equipment.
In May 2020, a halving took place on the bitcoin network. The cryptocurrency mining reward has decreased from 12.5 to 6.25 BTC. This is a long-awaited event, which, according to the hopes of the crypto community, should lead to a strong increase in the value of the coin. For example, Anthony Pompliano, co-founder of investment company Morgan Creek Digital, predicted that the rate would rise to $100,000 by the end of 2021, primarily due to lower mining rewards.
So far, the bitcoin price hasn’t responded to the halving as much as expected. In mid-May, at the time of the reduction in the mining reward, the BTC rate was around $9,000. To date, the cryptocurrency has risen in price by 27%. This year’s high was set yesterday, August 18, at $12,400.
The hashrate of the cryptocurrency network showed a different dynamics. Its value fell immediately after the halving from 137.5 to 87 EH/s, according to bitinfocharts.com. Since mining bitcoins has become less profitable, some of the miners probably turned off their equipment. They could switch to mining other coins or completely abandon this activity due to its unprofitability.
Later, when the BTC rate began to rise, the amount of computing power in the coin’s network also began to increase. So, from late May to mid-August, the cryptocurrency hash rate increased from 87 to 130 EH/s. But over the past three days, the figure has dropped sharply by 20%, caused by floods in China. Torrential rains in Sichuan province caused power outages that interfered with the operation of mining farms.
Changes in hashrate and mining rewards have affected its difficulty. On May 11, at the time of the halving, this figure was at around 16.1 T. By the current moment, this value has increased to 16.9 T, in July rising to a maximum of 17.3 T.
The decline in the reward for mining cryptocurrency was partially offset by the increase in fees. Until May, a single BTC transfer cost the user an average of 50 cents. By the current moment, commissions have grown more than 10 times, to $5.5.
Mining profitability is now at around 0.114 THash/s. It fell sharply immediately after the halving from 0.16 to 0.08 THash/s. To date, the indicator has grown by 40%. This was due to the rise in BTC prices and higher fees.
Development Director at BitCluster Dmitry Shuvaev said that the profitability of the device for mining BTC s17–73Th/s is now about 8 thousand rubles per month (at an electricity price of 3.5 rubles per kWh). The payback period is about 15 months. Old devices, such as the Antminer S9, are now unprofitable to use, they do not bring profit. But this situation may change if the bitcoin rate rises to $15,000.
“We recommend our customers to buy the new generation S17 or S19 devices. It is these devices that will provide profitability until the next halving. Their break-even point is at $6,000 per bitcoin”, Shuvaev said.
In June, specialists from the research division of the BitMEX exchange announced that in the long term, 2–3 ASIC miner manufacturers will remain in the industry. Canaan’s Avalon devices were the first to hit the market in 2014. Three years later, in 2017, Bitmain took 75% of the market.
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DFINITY Research Report

DFINITY Research Report
Author: Gamals Ahmed, CoinEx Business Ambassador
ABSTRACT
The DFINITY blockchain computer provides a secure, performant and flexible consensus mechanism. At its core, DFINITY contains a decentralized randomness beacon, which acts as a verifiable random function (VRF) that produces a stream of outputs over time. The novel technique behind the beacon relies on the existence of a unique-deterministic, non-interactive, DKG-friendly threshold signatures scheme. The only known examples of such a scheme are pairing-based and derived from BLS.
The DFINITY blockchain is layered on top of the DFINITY beacon and uses the beacon as its source of randomness for leader selection and leader ranking. A “weight” is attributed to a chain based on the ranks of the leaders who propose the blocks in the chain, and that weight is used to select between competing chains. The DFINITY blockchain is layered on top of the DFINITY beacon and uses the beacon as its source of randomness for leader selection and leader ranking blockchain is further hardened by a notarization process which dramatically improves the time to finality and eliminates the nothing-at-stake and selfish mining attacks.
DFINITY consensus algorithm is made to scale through continuous quorum selections driven by the random beacon. In practice, DFINITY achieves block times of a few seconds and transaction finality after only two confirmations. The system gracefully handles temporary losses of network synchrony including network splits, while it is provably secure under synchrony.

1.INTRODUCTION

DFINITY is building a new kind of public decentralized cloud computing resource. The company’s platform uses blockchain technology which is aimed at building a new kind of public decentralized cloud computing resource with unlimited capacity, performance and algorithmic governance shared by the world, with the capability to power autonomous self-updating software systems, enabling organizations to design and deploy custom-tailored cloud computing projects, thereby reducing enterprise IT system costs by 90%.
DFINITY aims to explore new territory and prove that the blockchain opportunity is far broader and deeper than anyone has hitherto realized, unlocking the opportunity with powerful new crypto.
Although a standalone project, DFINITY is not maximalist minded and is a great supporter of Ethereum.
The DFINITY blockchain computer provides a secure, performant and flexible consensus mechanism. At its core, DFINITY contains a decentralized randomness beacon, which acts as a verifiable random function (VRF) that produces a stream of outputs over time. The novel technique behind the beacon relies on the existence of a unique-deterministic, non-interactive, DKG-friendly threshold signatures scheme. The only known examples of such a scheme are pairing-based and derived from BLS.
DFINITY’s consensus mechanism has four layers: notary (provides fast finality guarantees to clients and external observers), blockchain (builds a blockchain from validated transactions via the Probabilistic Slot Protocol driven by the random beacon), random beacon (provides the source of randomness for all higher layers like smart contract applications), and identity (provides a registry of all clients).
DFINITY’s consensus mechanism has four layers

Figure1: DFINITY’s consensus mechanism layers
1. Identity layer:
Active participants in the DFINITY Network are called clients. Where clients are registered with permanent identities under a pseudonym. Moreover, DFINITY supports open membership by providing a protocol for registering new clients by depositing a stake with an insurance period. This is the responsibility of the first layer.
2. Random Beacon layer:
Provides the source of randomness (VRF) for all higher layers including ap- plications (smart contracts). The random beacon in the second layer is an unbiasable, verifiable random function (VRF) that is produced jointly by registered clients. Each random output of the VRF is unpredictable by anyone until just before it becomes avail- able to everyone. This is a key technology of the DFINITY system, which relies on a threshold signature scheme with the properties of uniqueness and non-interactivity.

https://preview.redd.it/hkcf53ic05e51.jpg?width=441&format=pjpg&auto=webp&s=44d45c9602ee630705ce92902b8a8379201d8111
3. Blockchain layer:
The third layer deploys the “probabilistic slot protocol” (PSP). This protocol ranks the clients for each height of the chain, in an order that is derived determin- istically from the unbiased output of the random beacon for that height. A weight is then assigned to block proposals based on the proposer’s rank such that blocks from clients at the top of the list receive a higher weight. Forks are resolved by giving favor to the “heaviest” chain in terms of accumulated block weight — quite sim- ilar to how traditional proof-of-work consensus is based on the highest accumulated amount of work.
The first advantage of the PSP protocol is that the ranking is available instantaneously, which allows for a predictable, constant block time. The second advantage is that there is always a single highest-ranked client, which allows for a homogenous network bandwidth utilization. Instead, a race between clients would favor a usage in bursts.
4. Notarization layer:
Provides fast finality guarantees to clients and external observers. DFINITY deploys the novel technique of block notarization in its fourth layer to speed up finality. A notarization is a threshold signature under a block created jointly by registered clients. Only notarized blocks can be included in a chain. Of all RSA-based alternatives exist but suffer from an impracticality of setting up the thresh- old keys without a trusted dealer.
DFINITY achieves its high speed and short block times exactly because notarization is not full consensus.
DFINITY does not suffer from selfish mining attack or a problem nothing at stake because the authentication step is impossible for the opponent to build and maintain a series of linked and trusted blocks in secret.
DFINITY’s consensus is designed to operate on a network of millions of clients. To en- able scalability to this extent, the random beacon and notarization protocols are designed such as that they can be safely and efficiently delegated to a committee

1.1 OVERVIEW ABOUT DFINITY

DFINITY is a blockchain-based cloud-computing project that aims to develop an open, public network, referred to as the “internet computer,” to host the next generation of software and data. and it is a decentralized and non-proprietary network to run the next generation of mega-applications. It dubbed this public network “Cloud 3.0”.
DFINITY is a third generation virtual blockchain network that sets out to function as an “intelligent decentralised cloud,”¹ strongly focused on delivering a viable corporate cloud solution. The DFINITY project is overseen, supported and promoted by DFINITY Stiftung a not-for-profit foundation based in Zug, Switzerland.
DFINITY is a decentralized network design whose protocols generate a reliable “virtual blockchain computer” running on top of a peer-to-peer network upon which software can be installed and can operate in the tamperproof mode of smart contracts.
DFINITY introduces algorithmic governance in the form of a “Blockchain Nervous System” that can protect users from attacks and help restart broken systems, dynamically optimize network security and efficiency, upgrade the protocol and mitigate misuse of the platform, for example by those wishing to run illegal or immoral systems.
DFINITY is an Ethereum-compatible smart contract platform that is implementing some revolutionary ideas to address blockchain performance, scaling, and governance. Whereas
DFINITY could pose a credible threat to Ethereum’s extinction, the project is pursuing a coevolutionary strategy by contributing funding and effort to Ethereum projects and freely offering their technology to Ethereum for adoption. DFINITY has labeled itself Ethereum’s “crazy sister” to express it’s close genetic resemblance to Ethereum, differentiated by its obsession with performance and neuron-inspired governance model.
Dfinity raised $61 million from Andreesen Horowitz and Polychain Capital in a February 2018 funding round. At the time, Dfinity said it wanted to create an “internet computer” to cut the costs of running cloud-based business applications. A further $102 million funding round in August 2018 brought the project’s total funding to $195 million.
In May 2018, Dfinity announced plans to distribute around $35 million worth of Dfinity tokens in an airdrop. It was part of the company’s plan to create a “Cloud 3.0.” Because of regulatory concerns, none of the tokens went to US residents.
DFINITY be broadening and strengthening the EVM ecosystem by giving applications a choice of platforms with different characteristics. However, if DFINITY succeeds in delivering a fully EVM-compatible smart contract platform with higher transaction throughput, faster confirmation times, and governance mechanisms that can resolve public disputes without causing community splits, then it will represent a clearly superior choice for deploying new applications and, as its network effects grow, an attractive place to bring existing ones. Of course the challenge for DFINITY will be to deliver on these promises while meeting the security demands of a public chain with significant value at risk.

1.1.1 DFINITY FUTURE

  • DFINITY aims to explore new blockchain territory related to the original goals of the Ethereum project and is sometimes considered “Ethereum’s crazy sister.”
  • DFINITY is developing blockchain-based infrastructure to support a new style of the internet (akin to Ethereum’s “World Computer”), one in which the internet itself will support software applications and data rather than various cloud hosting providers.
  • The project suggests this reinvented software platform can simplify the development of new software systems, reduce the human capital needed to maintain and secure data, and preserve user data privacy.
  • Dfinity aims to reduce the costs of cloud services by creating a decentralized “internet computer” which may launch in 2020
  • Dfinity claims transactions on its network are finalized in 3–5 seconds, compared to 1 hour for Bitcoin and 10 minutes for Ethereum.

1.1.2 DFINITY’S VISION

DFINITY’s vision is its new internet infrastructure can support a wide variety of end-user and enterprise applications. Social media, messaging, search, storage, and peer-to-peer Internet interactions are all examples of functionalities that DFINITY plans to host atop its public Web 3.0 cloud-like computing resource. In order to provide the transaction and data capacity necessary to support this ambitious vision, DFINITY features a unique consensus model (dubbed Threshold Relay) and algorithmic governance via its Blockchain Nervous System (BNS) — sometimes also referred to as the Network Nervous System or NNS.

1.2 DFINITY COMMUNITY

The DFINITY community brings people and organizations together to learn and collaborate on products that help steward the next-generation of internet software and services. The Internet Computer allows developers to take on the monopolization of the internet, and return the internet back to its free and open roots. We’re committed to connecting those who believe the same through our events, content, and discussions.

https://preview.redd.it/0zv64fzf05e51.png?width=637&format=png&auto=webp&s=e2b17365fae3c679a32431062d8e3c00a57673cf

1.3 DFINITY ROADMAP (TIMELINE) February 15, 2017

February 15, 2017
Ethereum based community seed round raises 4M Swiss francs (CHF)
The DFINITY Stiftung, a not-for-profit foundation entity based in Zug, Switzerland, raised the round. The foundation held $10M of assets as of April 2017.
February 8, 2018
Dfinity announces a $61M fundraising round led by Polychain Capital and Andreessen Horowitz
The round $61M round led by Polychain Capital and Andreessen Horowitz, along with an DFINITY Ecosystem Venture Fund which will be used to support projects developing on the DFINITY platform, and an Ethereum based raise in 2017 brings the total funding for the project over $100 million. This is the first cryptocurrency token that Andressen Horowitz has invested in, led by Chris Dixon.
August 2018
Dfinity raises a $102,000,000 venture round from Multicoin Capital, Village Global, Aspect Ventures, Andreessen Horowitz, Polychain Capital, Scalar Capital, Amino Capital and SV Angel.
January 23, 2020
Dfinity launches an open source platform aimed at the social networking giants

2.DFINITY TECHNOLOGY

Dfinity is building what it calls the internet computer, a decentralized technology spread across a network of independent data centers that allows software to run anywhere on the internet rather than in server farms that are increasingly controlled by large firms, such as Amazon Web Services or Google Cloud. This week Dfinity is releasing its software to third-party developers, who it hopes will start making the internet computer’s killer apps. It is planning a public release later this year.
At its core, the DFINITY consensus mechanism is a variation of the Proof of Stake (PoS) model, but offers an alternative to traditional Proof of Work (PoW) and delegated PoS (dPoS) networks. Threshold Relay intends to strike a balance between inefficiencies of decentralized PoW blockchains (generally characterized by slow block times) and the less robust game theory involved in vote delegation (as seen in dPoS blockchains). In DFINITY, a committee of “miners” is randomly selected to add a new block to the chain. An individual miner’s probability of being elected to the committee proposing and computing the next block (or blocks) is proportional to the number of dfinities the miner has staked on the network. Further, a “weight” is attributed to a DFINITY chain based on the ranks of the miners who propose blocks in the chain, and that weight is used to choose between competing chains (i.e. resolve chain forks).
A decentralized random beacon manages the random selection process of temporary block producers. This beacon is a Variable Random Function (VRF), which is a pseudo-random function that provides publicly verifiable proofs of its outputs’ correctness. A core component of the random beacon is the use of Boneh-Lynn-Shacham (BLS) signatures. By leveraging the BLS signature scheme, the DFINITY protocol ensures no actor in the network can determine the outcome of the next random assignment.
Dfinity is introducing a new standard, which it calls the internet computer protocol (ICP). These new rules let developers move software around the internet as well as data. All software needs computers to run on, but with ICP the computers could be anywhere. Instead of running on a dedicated server in Google Cloud, for example, the software would have no fixed physical address, moving between servers owned by independent data centers around the world. “Conceptually, it’s kind of running everywhere,” says Dfinity engineering manager Stanley Jones.
DFINITY also features a native programming language, called ActorScript (name may be subject to change), and a virtual machine for smart contract creation and execution. The new smart contract language is intended to simplify the management of application state for programmers via an orthogonal persistence environment (which means active programs are
not required to retrieve or save their state). All ActorScript contracts are eventually compiled down to WebAssembly instructions so the DFINITY virtual machine layer can execute the logic of applications running on the network. The advantage of using the WebAssembly standard is that all major browsers support it and a variety of programming languages can compile down to Wasm (not just ActorScript).
Dfinity is moving fast. Recently, Dfinity showed off a TikTok clone called CanCan. In January it demoed a LinkedIn-alike called LinkedUp. Neither app is being made public, but they make a convincing case that apps made for the internet computer can rival the real things.

2.1 DFINITY CORE APPLICATIONS

The DFINITY cloud has two core applications:
  1. Enabling the re-engineering of business: DFINITY ambitiously aims to facilitate the re-engineering of mass-market services (such as Web Search, Ridesharing Services, Messaging Services, Social Media, Supply Chain, etc) into open source businesses that leverage autonomous software and decentralised governance systems to operate and update themselves more efficiently.
  2. Enable the re-engineering of enterprise IT systems to reduce costs: DFINITY seeks to re-engineer enterprise IT systems to take advantage of the unique properties that blockchain computer networks provide.
At present, computation on blockchain-based computer networks is far more expensive than traditional, centralised solutions (Amazon Web Services, Microsoft Azure, Google Cloud Platform, etc). Despite increasing computational cost, DFINITY intends to lower net costs “by 90% or more” through reducing the human capital cost associated with sustaining and supporting these services.
Whilst conceptually similar to Ethereum, DFINITY employs original and new cryptography methods and protocols (crypto:3) at the network level, in concert with AI and network-fuelled systemic governance (Blockchain Nervous System — BNS) to facilitate Corporate adoption.
DFINITY recognises that different users value different properties and sees itself as more of a fully compatible extension of the Ethereum ecosystem rather than a competitor of the Ethereum network.
In the future, DFINITY hopes that much of their “new crypto might be used within the Ethereum network and are also working hard on shared technology components.”
As the DFINITY project develops over time, the DFINITY Stiftung foundation intends to steadily increase the BNS’ decision-making responsibilities over time, eventually resulting in the dissolution of its own involvement entirely, once the BNS is sufficiently sophisticated.
DFINITY consensus mechanism is a heavily optimized proof of stake (PoS) model. It places a strong emphasis on transaction finality through implementing a Threshold Relay technique in conjunction with the BLS signature scheme and a notarization method to address many of the problems associated with PoS consensus.

2.2 THRESHOLD RELAY

As a public cloud computing resource, DFINITY targets business applications by substantially reducing cloud computing costs for IT systems. They aim to achieve this with a highly scalable and powerful network with potentially unlimited capacity. The DFINITY platform is chalk full of innovative designs and features like their Blockchain Nervous System (BNS) for algorithmic governance.
One of the primary components of the platform is its novel Threshold Relay Consensus model from which randomness is produced, driving the other systems that the network depends on to operate effectively. The consensus system was first designed for a permissioned participation model but can be paired with any method of Sybil resistance for an open participation model.
“The Threshold Relay is the mechanism by which Dfinity randomly samples replicas into groups, sets the groups (committees) up for threshold operation, chooses the current committee, and relays from one committee to the next is called the threshold relay.”
Threshold Relay consists of four layers (As mentioned previously):
  1. Notary layer, which provides fast finality guarantees to clients and external observers and eliminates nothing-at-stake and selfish mining attacks, providing Sybil attack resistance.
  2. Blockchain layer that builds a blockchain from validated transactions via the Probabilistic Slot Protocol driven by the random beacon.
  3. Random beacon, which as previously covered, provides the source of randomness for all higher layers like the blockchain layer smart contract applications.
  4. Identity layer that provides a registry of all clients.

2.2.1 HOW DOES THRESHOLD RELAY WORK?

Threshold Relay produces an endogenous random beacon, and each new value defines random group(s) of clients that may independently try and form into a “threshold group”. The composition of each group is entirely random such that they can intersect and clients can be presented in multiple groups. In DFINITY, each group is comprised of 400 members. When a group is defined, the members attempt to set up a BLS threshold signature system using a distributed key generation protocol. If they are successful within some fixed number of blocks, they then register the public key (“identity”) created for their group on the global blockchain using a special transaction, such that it will become part of the set of active groups in a following “epoch”. The network begins at “genesis” with some number of predefined groups, one of which is nominated to create a signature on some default value. Such signatures are random values — if they were not then the group’s signatures on messages would be predictable and the threshold signature system insecure — and each random value produced thus is used to select a random successor group. This next group then signs the previous random value to produce a new random value and select another group, relaying between groups ad infinitum and producing a sequence of random values.
In a cryptographic threshold signature system a group can produce a signature on a message upon the cooperation of some minimum threshold of its members, which is set to 51% in the DFINITY network. To produce the threshold signature, group members sign the message
individually (here the preceding group’s threshold signature) creating individual “signature shares” that are then broadcast to other group members. The group threshold signature can be constructed upon combination of a sufficient threshold of signature shares. So for example, if the group size is 400, if the threshold is set at 201 any client that collects that many shares will be able to construct the group’s signature on the message. Other group members can validate each signature share, and any client using the group’s public key can validate the single group threshold signature produced by combining them. The magic of the BLS scheme is that it is “unique and deterministic” meaning that from whatever subset of group members the required number of signature shares are collected, the single threshold signature created is always the same and only a single correct value is possible.
Consequently, the sequence of random values produced is entirely deterministic and unmanipulable, and signatures generated by relaying between groups produces a Verifiable Random Function, or VRF. Although the sequence of random values is pre-determined given some set of participating groups, each new random value can only be produced upon the minimal agreement of a threshold of the current group. Conversely, in order for relaying to stall because a random number was not produced, the number of correct processes must be below the threshold. Thresholds are configured so that this is extremely unlikely. For example, if the group size is set to 400, and the threshold is 201, 200 or more of the processes must become faulty to prevent production. If there are 10,000 processes in the network, of which 3,000 are faulty, the probability this will occur is less than 10e-17.

2.3 DFINITY TOKEN

The DFINITY blockchain also supports a native token, called dfinities (DFN), which perform multiple roles within the network, including:
  1. Fuel for deploying and running smart contracts.
  2. Security deposits (i.e. staking) that enable participation in the BNS governance system.
  3. Security deposits that allow client software or private DFINITY cloud networks to connect to the public network.
Although dfinities will end up being assigned a value by the market, the DFINITY team does not intend for DFN to act as a currency. Instead, the project has envisioned PHI, a “next-generation” crypto-fiat scheme, to act as a stable medium of exchange within the DFINITY ecosystem.
Neuron operators can earn Dfinities by participating in network-wide votes, which could be concerning protocol upgrades, a new economic policy, etc. DFN rewards for participating in the governance system are proportional to the number of tokens staked inside a neuron.

2.4 SCALABILITY

DFINITY is constantly developing with a structure that separates consensus, validation, and storage into separate layers. The storage layer is divided into multiple strings, each of which is responsible for processing transactions that occur in the fragment state. The verification layer is responsible for combining hashes of all fragments in a Merkle-like structure that results in a global state fractionation that is stored in blocks in the top-level chain.

2.5 DFINITY CONSENSUS ALGORITHM

The single most important aspect of the user experience is certainly the time required before a transaction becomes final. This is not solved by a short block time alone — Dfinity’s team also had to reduce the number of confirmations required to a small constant. DFINITY moreover had to provide a provably secure proof-of-stake algorithm that scales to millions of active participants without compromising any bit on decentralization.
Dfinity soon realized that the key to scalability lay in having an unmanipulable source of randomness available. Hence they built a scalable decentralized random beacon, based on what they call the Threshold Relay technique, right into the foundation of the protocol. This strong foundation drives a scalable and fast consensus layer: On top of the beacon runs a blockchain which utilizes notarization by threshold groups to achieve near-instant finality. Details can be found in the overview paper that we are releasing today.
The roots of the DFINITY consensus mechanism date back to 2014 when thair Chief Scientist, Dominic Williams, started to look for more efficient ways to drive large consensus networks. Since then, much research has gone into the protocol and it took several iterations to reach its current design.
For any practical consensus system the difficulty lies in navigating the tight terrain that one is given between the boundaries imposed by theoretical impossibility-results and practical performance limitations.
The first key milestone was the novel Threshold Relay technique for decentralized, deterministic randomness, which is made possible by certain unique characteristics of the BLS signature system. The next breakthrough was the notarization technique, which allows DFINITY consensus to solve the traditional problems that come with proof-of-stake systems. Getting the security proofs sound was the final step before publication.
DFINITY consensus has made the proper trade-offs between the practical side (realistic threat models and security assumptions) and the theoretical side (provable security). Out came a flexible, tunable algorithm, which we expect will establish itself as the best performing proof-of-stake algorithm. In particular, having the built-in random beacon will prove to be indispensable when building out sharding and scalable validation techniques.

2.6 LINKEDUP

The startup has rather cheekily called this “an open version of LinkedIn,” the Microsoft-owned social network for professionals. Unlike LinkedIn, LinkedUp, which runs on any browser, is not owned or controlled by a corporate entity.
LinkedUp is built on Dfinity’s so-called Internet Computer, its name for the platform it is building to distribute the next generation of software and open internet services.
The software is hosted directly on the internet on a Switzerland-based independent data center, but in the concept of the Internet Computer, it could be hosted at your house or mine. The compute power to run the application LinkedUp, in this case — is coming not from Amazon AWS, Google Cloud or Microsoft Azure, but is instead based on the distributed architecture that Dfinity is building.
Specifically, Dfinity notes that when enterprises and developers run their web apps and enterprise systems on the Internet Computer, the content is decentralized across a minimum of four or a maximum of an unlimited number of nodes in Dfinity’s global network of independent data centers.
Dfinity is an open source for LinkedUp to developers for creating other types of open internet services on the architecture it has built.
“Open Social Network for Professional Profiles” suggests that on Dfinity model one can create “Open WhatsApp”, “Open eBay”, “Open Salesforce” or “Open Facebook”.
The tools include a Canister Software Developer Kit and a simple programming language called Motoko that is optimized for Dfinity’s Internet Computer.
“The Internet Computer is conceived as an alternative to the $3.8 trillion legacy IT stack, and empowers the next generation of developers to build a new breed of tamper-proof enterprise software systems and open internet services. We are democratizing software development,” Williams said. “The Bronze release of the Internet Computer provides developers and enterprises a glimpse into the infinite possibilities of building on the Internet Computer — which also reflects the strength of the Dfinity team we have built so far.”
Dfinity says its “Internet Computer Protocol” allows for a new type of software called autonomous software, which can guarantee permanent APIs that cannot be revoked. When all these open internet services (e.g. open versions of WhatsApp, Facebook, eBay, Salesforce, etc.) are combined with other open software and services it creates “mutual network effects” where everyone benefits.
On 1 November, DFINITY has released 13 new public versions of the SDK, to our second major milestone [at WEF Davos] of demoing a decentralized web app called LinkedUp on the Internet Computer. Subsequent milestones towards the public launch of the Internet Computer will involve:
  1. On boarding a global network of independent data centers.
  2. Fully tested economic system.
  3. Fully tested Network Nervous Systems for configuration and upgrades

2.7 WHAT IS MOTOKO?

Motoko is a new software language being developed by the DFINITY Foundation, with an accompanying SDK, that is designed to help the broadest possible audience of developers create reliable and maintainable websites, enterprise systems and internet services on the Internet Computer with ease. By developing the Motoko language, the DFINITY Foundation will ensure that a language that is highly optimized for the new environment is available. However, the Internet Computer can support any number of different software frameworks, and the DFINITY Foundation is also working on SDKs that support the Rust and C languages. Eventually, it is expected there will be many different SDKs that target the Internet Computer.
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XLM can reach $0.10 soon – here's why

XLM can reach $0.10 soon – here's why
Stellar is firmly occupying the 13th spot on the list of the cryptocurrencies with the largest market cap. Last week, we witnessed yet another proof of lumens’ potential: as all the coins dropped on June 02, it was XLM to recover faster than others.
There was a veritable crypto massacre on June 2, when the price of Bitcoin fell by 8% in just five minutes. As usual, other coins followed, with Stellar also losing 8%:
https://xlmwallet.co/
The Bitcoin sell-off was predictable. As soon as BTC makes a move beyond the psychologically important $10,000 mark, whales start selling. Plus, we feel that there are still many miners who have been stashing their mining proceeds for the past few months, waiting for a rally. They decided to hold on to their coins just after the halving, when the expected price explosion didn’t happen.
In fact, data suggests that over 60% of all Bitcoins in active circulation haven’t moved for several months. This is a major indicator of a HODLing sentiment in the market. But as soon, as there’s a bullish move, HODLers jump on the opportunity and sell.
As we’ve said, XLM dropped 8% from $0.083519 to $0.076917. That was a major disappointment to many traders and investors, as Stellar had been on a roll for the whole preceding week since May 26. During that period, it gained an amazing 29%, going from $0.06459 to $0.08352. There were all the reasons to expect a move above $0.10 — a very important mark for XLM.
However, after the ‘massacre’ it was finally Stellar’s time to shine. If you look at the chart for the past month, you can see that the drop was just the deepest among the many recent corrections on the way to a local peak of $0.085514 on June 4:

https://xlmwallet.co/
This marked an overall rise by 32% in just 10 days — an amazing result for a top-20 coin.
What about the slight downward movement that came after? It represents another 7% slump, but from a much higher peak. In the opinion of the XLMwallet analysts, this is nothing more than a regular correction before a new bullish stretch.
The key resistance level to break through will be $0.088. If Stellar manages to overcome it, there’s hardly any obstacles on the way to $0.10.
On the fundamentals side of things, there isn’t much to report: the Stellar Foundation has kept quiet in the past couple of weeks. Therefore, we can expect the price of XLM to largely follow that of Bitcoin. Here, there are more reasons to expect further growth, as BTC miners are quickly returning to the network. The average block time is now at its lowest since 2014: a bit over 8.5 minutes. Of course, mining difficulty will be soon adjusted upward, but generally such ‘difficulty runs’ are a very bullish sign.
Bloomberg updated its BTC price forecast to $20,000 by the end of 2020. A doubling of the BTC price can produce a rise of at least 80% in the price of XLM, taking it all the way to $0.18 or even higher. Therefore, our advice to everyone who is holding lumens in their XLMwallet remains the same: hold.
Don’t get us wrong: we love it when you use our fast, light-weight wallet to send XLM to your friends or pay for goods and services online. Stellar is indeed one of the best cryptocurrencies for payments. But right now the wisest thing is to HODL. If you need to pay in crypto, rather pay in stablecoins.
Do you agree with our analysis? Write your own XLM price forecast in the comments! And if you don’t have an XLMwallet yet, hop over to https://xlmwallet.co/ and activate one right now — it takes only 10 seconds!
Website — https://xlmwallet.co/
Medium — https://medium.com/@XLMwalletCo
Teletype — https://teletype.in/@XLMwalletCo
Twitter — https://twitter.com/XLMwalletCo
Reddit — https://www.reddit.com/XLM_wallet/
submitted by Stellar__wallet to XLM_wallet [link] [comments]

Crypto-Currency: A Guide to Common Tax Situations

STATUS: Majority of questions have been answered. If yours got missed, please feel free to post it again.
Introduction
All,
Based on the rapid increase in popularity and price of bitcoin and other crypto currencies (particularly over the past year), I expect that lots of people have questions about how crypto currency will impact their taxes. This thread attempts to address several common issues. I'm posting similar versions of it here, in several major crypto subs, and eventually in the weekly "tax help" threads personalfinance runs.
I'd like to thank the /personalfinance mod team and the /tax community for their help with this thread and especially for reading earlier versions and offering several valuable suggestions/corrections.
This thread is NOT an endorsement of crypto currency as an investing strategy. There is a time and a place to debate the appropriateness of crypto as part of a diversified portfolio - but that time is not now and that place is not here. If you are interested in the general consensus of this sub on investing, I would urge you to consult the wiki while keeping in mind the general flowchart outlining basic steps to get your finances in order.
Finally, please note that this thread attempts to provide information about your tax obligations as defined by United States law (and interpreted by the IRS under the direction of the Treasury Department). I understand that a certain portion of the crypto community tends to view crypto as "tax free" due to the (actual and perceived) difficulty for the IRS to "know" about the transactions involved. I will not discuss unlawfully concealing crypto gains here nor will I suggest illegal tax avoidance activities.
The Basics
This section is best for people that don't understand much about taxes. It covers some very basic tax principles. It also assumes that all you did during the year was buy/sell a single crypto currency.
Fundamentally, the IRS treats crypto not as money, but as an asset (investment). While there are a few specific "twists" when it comes to crypto, when in doubt replace the word "crypto" with the word "stock" and you will get a pretty good idea how you should report and pay tax on crypto.
The first thing you should know is that the majority of this discussion applies to the taxes you are currently working on (2017 taxes). The tax bill that just passed applies to 2018 taxes (with a few very tiny exceptions), which most people will file in early 2019.
In general, you don't have to report or pay taxes on crypto currency holdings until you "cash out" all or part of your holdings. For now, I'm going to assume that you cash out by selling them for USD; however, other forms of cashing out will be covered later.
When you sell crypto, you report the difference between your basis (purchase price) and proceeds (sale price) on Schedule D. Your purchase price is commonly referred to as your basis; while the two terms don't mean exactly the same thing, they are pretty close to one another (in particular, there are three two ways to calculate your basis - your average cost, a first-in, first-out method, and a "specific identification" method. See more about these here and here). EDIT - you may not use average cost method with crypto - see here. If you sell at a gain, this gain increases your tax liability; if you sell at a loss, this loss decreases your tax liability (in most cases). If you sell multiple times during the year, you report each transaction separately (bad news if you trade often) but get to lump all your gains/losses together when determining how the trades impact your income.
One important thing to remember is that there are two different types of gains/losses from investments - short term gains (if you held an asset for one year or less) and long term gains (over one year; i.e. one year and one day). Short term gains are taxed at your marginal income rate (basically, just like if you had earned that money at a job) while long term gains are taxed at lower rates.
For most people, long term capital gains are taxed at 15%. However, if you are in the 10% or 15% tax bracket, congrats - your gains (up to the maximum amount of "unused space" in your bracket) are tax free! If you are in the 25%, 28%, 33%, or 35% bracket, long term gains are taxed at 15%. If you are in the 39.6% bracket, long term gains are taxed at 20%. Additionally, there is an "extra" 3.8% tax that applies to gains for those above $200,000/$250,000 (single/married). The exact computation of this tax is a little complicated, but if you are close to the $200,000 level, just know that it exists.
Finally, you should know that I'm assuming that you should treat your crypto gains/losses as investment gains/losses. I'm sure some people will try and argue that they are really "day traders" of crypto and trade as a full time job. While this is possible, the vast majority of people don't qualify for this status and you should really think several times before deciding you want to try that approach on the IRS.
"Cashing Out" - Trading Crypto for Goods/Services
I realize that not everyone that "cashes out" of crypto does so by selling it for USD. In fact, I understand that some in the crypto community view the necessity of cashing out itself as a type of myth. In this section, I discuss what happens if you trade your crypto for basically anything that isn't cash (minor sidenote - see next section for a special discussion on trading crypto for crypto; i.e. buying altcoins with crypto).
The IRS views trading crypto for something of value as a type of bartering that must be included in income. From the IRS's perspective, it doesn't matter if you sold crypto for cash and bought a car with that cash or if you just traded crypto directly for the car - in both cases, the IRS views you as having sold your crypto. This approach isn't unique to crypto - it works the same way if you trade stock for something.
This means that if you do trade your crypto for "stuff", you have to report every exchange as a sale of your crypto and calculate the gain/loss on that sale, just as if you had sold the crypto for cash.
Finally, there is one important exception to this rule. If you give your crypto away to charity (one recognized by the IRS; like a 501(c)(3) organization), the IRS doesn't make you report/pay any capital gains on the transaction. Additionally, you still get to deduct the value of your donation on the date it was made. Now, from a "selfish" point of view, you will always end up with more money if you sell the crypto, pay the tax, and keep the rest. But, if you are going to make a donation anyway, especially a large one, giving crypto where you have a big unrealized/untaxed gain is a very efficient way of doing so.
"Alt Coins" - Buying Crypto with Crypto
The previous section discusses what happens when you trade crypto for stuff. However, one thing that surprises many people is that trading crypto for crypto is also a taxable event, just like trading crypto for a car. Whether you agree with this position or not, it makes a lot of sense once you realize that the IRS doesn't view crypto as money, but instead as an asset. So to the IRS, trading bitcoin for ripple isn't like trading dollars for euros, but it is instead like trading shares of Apple stock for shares of Tesla stock.
Practically, what this means is that if you trade one crypto for another crypto (say BTC for XRP just to illustrate the point), the IRS views you as doing the following:
  • Selling for cash the amount of BTC you actually traded for XRP.
  • Owing capital gains/losses on the BTC based on its selling price (the fair market value at the moment of the exchange) and your purchase price (basis).
  • Buying a new investment (XRP) with a cost basis equal to the amount the BTC was worth when you exchanged them.
This means that if you "time" your trade wrong and the value of XRP goes down after you make the exchange, you still owe tax on your BTC gain even though you subsequently lost money. The one good piece of news in this is that when/if you sell your XRP (or change it back to BTC), you will get a capital loss for the value that XRP dropped.
There is one final point worth discussing in this section - the so called "like kind exchange" rules (aka section 1031 exchange). At a high level, these rules say that you can "swap" property with someone else without having to pay taxes on the exchange as long as you get property in return that is "like kind". Typically, these rules are used in real estate transactions. However, they can also apply to other types of transactions as well.
While the idea is simple (and makes it sound like crypto for crypto should qualify), the exact rules/details of this exception are very fact specific. Most experts (including myself, but certainly not calling myself an expert) believe that a crypto for crypto swap is not a like kind exchange. The recently passed tax bill also explicitly clarifies this issue - starting in 2018, only real estate qualifies for like kind exchange treatment. So, basically, the vast majority of evidence suggests that you can't use this "loophole" for 2017; however, there is a small minority view/some small amount of belief that this treatment would work for 2017 taxes and it is worth noting that I'm unaware of any court cases directly testing this approach.
Dealing with "Forks"
Perhaps another unpleasant surprise for crypto holders is that "forks" to create a new crypto also very likely generate a taxable event. The IRS has long (since at least the 1960s) held that "found" money is a taxable event. This approach has been litigated in court and courts have consistently upheld this position; it even has its own cool nerdy tax name - the "treasure trove" doctrine.
Practically, what this means is that if you owned BTC and it "forked" to create BCH, then the fair market value of the BCH you received is considered a "treasure trove" that must be reported as income (ordinary income - no capital gain rates). This is true whether or not you sold your BCH; if you got BCH from a fork, that is a taxable event (note - I'll continue using BTC forking to BCH in this section as an example, but the logic applies to all forks).
While everything I've discussed up to this point is pretty clearly established tax law, forks are really where things get messy with taxes. Thus, the remainder of this section contains more speculation than elsewhere in this post - the truth is that while the idea is simple (fork = free money = taxable), the details are messy and other kinds of tax treatment might apply to forks.
One basic practical problem with forks is that the new currency doesn't necessarily start trading immediately. Thus, you may have received BCH before there was a clear price or market for it. Basically, you owe tax on the value of BCH when you received it, but it isn't completely clear what that value was. There are several ways you can handle this; I'll list them in order from most accurate to least accurate (but note that this is just my personal view and there is ongoing disagreement on this issue with little/no authoritative guidance).
  • Use a futures market to determine the value of the BCH - if reliable sources published realistic estimates of what BCH will trade for in the future once trading begins, use this estimate as the value of your BCH. Pros/cons - futures markets are, in theory, pretty accurate. However, if they are volatile/subject to manipulation, they may provide an incorrect estimate of the true value of BCH. It would suck to use the first futures value published only to have that value plummet shortly thereafter, leaving you to pay ordinary income tax but only have an unrealized capital loss.
  • Wait until an exchange starts trading BCH; use the actual ("spot" price) as the value. Pros/cons - spot prices certainly reflect what you could have sold BCH for; however, it is possible that the true value of the coin was highelower when you received it as compared to when it started trading on the exchange. Thus this method seems less accurate to me than a futures based approach, but it is still certainly fairly reasonable.
  • Assume that the value is $0. This is my least preferred option, but there is still a case to be made for it. If you receive something that you didn't want, can't access, can't sell, and might fail, does it have any value? I believe the answer is yes (maybe not value it perfectly, but value it somewhat accurately), but if you honestly think the answer is no, then the correct tax answer would be to report $0 in income from the fork. The IRS would be most likely to disagree with this approach, especially since it results in the least amount of income reported for the current year (and the most favorable rates going forward). Accordingly, if you go this route, make extra sure you understand what it entails.
Note, once you've decided what to report as taxable income, this amount also becomes your cost basis in the new crypto (BCH). Thus, when you ultimately sell your BCH (or trade it for something else as described above), you calculate your gain/loss based on what you included in taxable income from the fork.
Finally, there is one more approach to dealing with forks worth mentioning. A fork "feels" a lot like a dividend - because you held BTC, you get BCH. In a stock world, if I get a cash dividend because I own the stock, that money is not treated as a "treasure trove" and subject to ordinary income rates - in most cases, it is a qualified dividend and subject to capital gain rates; in some cases, some types of stock dividends are completely non taxable. This article discusses this idea in slightly more detail and generally concludes that forks should not be treated as a dividend. Still, I would note that I'm unaware of any court cases directly testing this theory.
Ultimately, this post is supposed to be practical, so let me make sure to leave you with two key thoughts about the taxation of forks. First, I believe that the majority of evidence suggests that forks should be treated as a "treasure trove" and reported as ordinary income based on their value at creation and that this is certainly the "safest" option. Second, out of everything discussed in this post, I also believe that the correct taxation of forks is the murkiest and most "up for debate" area. If you are interested in a more detailed discussion of forks, see this thread for a previous version of this post discussing it at even more length and the comments for a discussion of this with the tax community.
Mining Crypto
Successfully mining crypto coins is a taxable event. Depending on the amount of effort you put into mining, it is either considered a hobby or a self-employment (business) activity. The IRS provides the following list of questions to help decide the correct classification:
  • The manner in which the taxpayer carries on the activity.
  • The expertise of the taxpayer or his advisors.
  • The time and effort expended by the taxpayer in carrying on the activity.
  • Expectation that assets used in activity may appreciate in value.
  • The success of the taxpayer in carrying on other similar or dissimilar activities.
  • The taxpayer’s history of income or losses with respect to the activity.
  • The amount of occasional profits, if any, which are earned.
If this still sounds complicated, that's because the distinction is subject to some amount of interpretation. As a rule of thumb, randomly mining crypto on an old computer is probably a hobby; mining full time on a custom rig is probably a business.
In either event, you must include in income the fair market value of any coins you successfully mine. These are ordinary income and your basis in these coins is their fair market value on the date they were mined. If your mining is a hobby, they go on line 21 (other income) and any expenses directly associated with mining go on schedule A (miscellaneous subject to 2% of AGI limitation). If your mining is a business, income and expenses go on schedule C.
Both approaches have pros and cons - hobby income isn't subject to the 15.3% self-employment tax, only normal income tax, but you get fewer deductions against your income and the deductions you get are less valuable. Business income has more deductions available, but you have to pay payroll (self-employment) tax of about 15.3% in addition to normal income tax.
What if I didn't keep good records? Do I really have to report every transaction?
One nice thing about the IRS treating crypto as an asset is that we can look at how the IRS treats people that "day trade" stock and often don't keep great records/have lots of transactions. While you need to be as accurate as possible, it is ok to estimate a little bit if you don't have exact records (especially concerning your cost basis). You need to put in some effort (research historical prices, etc...) and be reasonable, but the IRS would much rather you do a little bit of reasonable estimation as opposed to just not reporting anything. Sure, they might decide to audit you/disagree with some specifics, but you earn yourself a lot of credit if you can show that you honestly did the best you reasonably could and are making efforts to improve going forward.
However, concerning reporting every transaction - yes, sorry, it is clear that you have to do this, even if you made hundreds or thousands of them. Stock traders have had to go through this for many decades, and there is absolutely no reason to believe that the IRS would accept anything less from the crypto community. If you have the records or have any reasonable way of obtaining records/estimating them, you must report every transaction.
What if I don't trust you?
Well, first let me say that I can't believe you made it all the way down here to this section. Thanks for giving me an honest hearing. I would strongly encourage you to go read other well-written, honest guides. I'll link to some I like (both more technical IRS type guides and more crypto community driven guides). While a certain portion of the crypto community seems to view one of the benefits of crypto as avoiding all government regulation (including taxes), I've been pleasantly surprised to find that many crypto forums contain well reasoned, accurate tax guides. While I may not agree with 100% of their conclusions, that likely reflects true uncertainty around tax law that is fundamentally complex rather than an attempt on either end to help individuals unlawfully avoid taxes.
IRS guides
Non-IRS guides
submitted by Mrme487 to personalfinance [link] [comments]

Continuous Proof of Bitcoin Burn: trust minimized sidechains and bitcoin-pegs w/o oracles/federations today

Original design presented for discussion and criticism
originally posted here: https://bitcointalk.org/index.php?topic=5212814.0
TLDR: Proposing the following that's possible today to use for any existing or new altcoins:
_______________________________________

Disclaimer:

This is not an altcoin thread. I'm not making anything. The design discussed options for existing altcoins and new ways to built on top of Bitcoin inheriting some of its security guarantees. 2 parts: First, the design allows any altcoins to switch to securing themselves via Bitcoin instead of their own PoW or PoS with significant benefits to both altcoins and Bitcoin (and environment lol). Second, I explain how to create Bitcoin-pegged assets to turn altcoins into a Bitcoin sidechain equivalent. Let me know if this is of interest or if it exists, feel free to use or do anything with this, hopefully I can help.

Issue:

Solution to first few points:

PoW altcoin switching to CPoBB would trade:

PoS altcoin switching to CPoBB would trade:

We already have a permissionless, compact, public, high-cost-backed finality base layer to build on top - Bitcoin! It will handle sorting, data availability, finality, and has something of value to use instead of capital or energy that's outside the sidechain - the Bitcoin coins. The sunk costs of PoW can be simulated by burning Bitcoin, similar to concept known as Proof of Burn where Bitcoin are sent to unspendable address. Unlike ICO's, no contributors can take out the Bitcoins and get rewards for free. Unlike PoS, entry into supply lies outside the alt-chain and thus doesn't depend on permission of alt-chain stake-coin holders. It's hard to find a more bandwidth or state size protective blockchain to use other than Bitcoin as well so altcoins can be Bitcoin-aware at little marginal difficulty - 10 years of history fully validates in under a day.

What are typical issues with Proof of Burn?

Solution:

This should be required for any design for it to stay permissionless. Optional is constant fixed emission rate for altcoins not trying to be money if goal is to maximize accessibility. Since it's not depending on brand new PoW for security, they don't have to depend on massive early rewards giving disproportionate fraction of supply at earliest stage either. If 10 coins are created every block, after n blocks, at rate of 10 coins per block, % emission per block is = (100/n)%, an always decreasing number. Sidechain coin doesn't need to be scarce money, and could maximize distribution of control by encouraging further distribution. If no burners exist in a block, altcoin block reward is simply added to next block reward making emission predictable.
Sidechain block content should be committed in burn transaction via a root of the merkle tree of its transactions. Sidechain state will depend on Bitcoin for finality and block time between commitment broadcasts. However, the throughput can be of any size per block, unlimited number of such sidechains can exist with their own rules and validation costs are handled only by nodes that choose to be aware of a specific sidechain by running its consensus compatible software.
Important design decision is how can protocol determine the "true" side-block and how to distribute incentives. Simplest solution is to always :
  1. Agree on the valid sidechain block matching the merkle root commitment for the largest amount of Bitcoin burnt, earliest inclusion in the bitcoin block as the tie breaker
  2. Distribute block reward during the next side-block proportional to current amounts burnt
  3. Bitcoin fee market serves as deterrent for spam submissions of blocks to validate
e.g.
sidechain block reward is set always at 10 altcoins per block Bitcoin block contains the following content embedded and part of its transactions: tx11: burns 0.01 BTC & OP_RETURN tx56: burns 0.05 BTC & OP_RETURN ... <...root of valid sidechain block version 1> ... tx78: burns 1 BTC & OP_RETURN ... <...root of valid sidechain block version 2> ... tx124: burns 0.2 BTC & OP_RETURN ... <...root of INVALID sidechain block version 3> ...
Validity is deterministic by rules in client side node software (e.g. signature validation) so all nodes can independently see version 3 is invalid and thus burner of tx124 gets no reward allocated. The largest valid burn is from tx78 so version 2 is used for the blockchain in sidechain. The total valid burn is 1.06 BTC, so 10 altcoins to be distributed in the next block are 0.094, 0.472, 9.434 to owners of first 3 transactions, respectively.
Censorship attack would require continuous costs in Bitcoin on the attacker and can be waited out. Censorship would also be limited to on-sidechain specific transactions as emission distribution to others CPoB contributors wouldn't be affected as blocks without matching coin distributions on sidechain wouldn't be valid. Additionally, sidechains can allow a limited number of sidechain transactions to happen via embedding transaction data inside Bitcoin transactions (e.g. OP_RETURN) as a way to use Bitcoin for data availability layer in case sidechain transactions are being censored on their network. Since all sidechain nodes are Bitcoin aware, it would be trivial to include.
Sidechain blocks cannot be reverted without reverting Bitcoin blocks or hard forking the protocol used to derive sidechain state. If protocol is forked, the value of sidechain coins on each fork of sidechain state becomes important but Proof of Burn natively guarantees trust minimized and permissionless distribution of the coins, something inferior methods like obscure early distributions, trusted pre-mines, and trusted ICO's cannot do.
More bitcoins being burnt is parallel to more hash rate entering PoW, with each miner or burner getting smaller amount of altcoins on average making it unprofitable to burn or mine and forcing some to exit. At equilibrium costs of equipment and electricity approaches value gained from selling coins just as at equilibrium costs of burnt coins approaches value of altcoins rewarded. In both cases it incentivizes further distribution to markets to cover the costs making burners and miners dependent on users via markets. In both cases it's also possible to mine without permission and mine at a loss temporarily to gain some altcoins without permission if you want to.
Altcoins benefit by inheriting many of bitcoin security guarantees, bitcoin parties have to do nothing if they don't want to, but will see their coins grow more scarce through burning. The contributions to the fee market will contribute to higher Bitcoin miner rewards even after block reward is gone.

Sidechain Bitcoin-pegs:

What is the ideal goal of the sidechains? Ideally to have a token that has the bi-directionally pegged value to Bitcoin and tradeable ~1:1 for Bitcoin that gives Bitcoin users an option of a different rule set without compromising the base chain nor forcing base chain participants to do anything different.
Issues with value pegs:
Let's get rid of the idea of needing Bitcoin collateral to back pegged coins 1:1 as that's never secure, independent, or scalable at same security level. As drive-chain design suggested the peg doesn't have to be fast, can take months, just needs to exist so other methods can be used to speed it up like atomic swaps by volunteers taking on the risk for a fee.
In continuous proof of burn we have another source of Bitcoins, the burnt Bitcoins. Sidechain protocols can require some minor percentage (e.g. 20%) of burner tx value coins via another output to go to reimburse those withdrawing side-Bitcoins to Bitcoin chain until they are filled. If withdrawal queue is empty that % is burnt instead. Selection of who receives reimbursement is deterministic per burner. Percentage must be kept small as it's assumed it's possible to get up to that much discount on altcoin emissions.
Let's use a really simple example case where each burner pays 20% of burner tx amount to cover withdrawal in exact order requested with no attempts at other matching, capped at half amount requested per payout. Example:
withdrawal queue: request1: 0.2 sBTC request2: 1.0 sBTC request3: 0.5 sBTC
same block burners: tx burns 0.8 BTC, 0.1 BTC is sent to request1, 0.1 BTC is sent to request2 tx burns 0.4 BTC, 0.1 BTC is sent to request1 tx burns 0.08 BTC, 0.02 BTC is sent to request 1 tx burns 1.2 BTC, 0.1 BTC is sent to request1, 0.2 BTC is sent to request2
withdrawal queue: request1: filled with 0.32 BTC instead of 0.2 sBTC, removed from queue request2: partially-filled with 0.3 BTC out of 1.0 sBTC, 0.7 BTC remaining for next queue request3: still 0.5 sBTC
Withdrawal requests can either take long time to get to filled due to cap per burn or get overfilled as seen in "request1" example, hard to predict. Overfilling is not a big deal since we're not dealing with a finite source. The risk a user that chooses to use the sidechain pegged coin takes on is based on the rate at which they can expect to get paid based on value of altcoin emission that generally matches Bitcoin burn rate. If sidechain loses interest and nobody is burning enough bitcoin, the funds might be lost so the scale of risk has to be measured. If Bitcoins burnt per day is 0.5 BTC total and you hope to deposit or withdraw 5000 BTC, it might take a long time or never happen to withdraw it. But for amounts comparable or under 0.5 BTC/day average burnt with 5 side-BTC on sidechain outstanding total the risks are more reasonable.
Deposits onto the sidechain are far easier - by burning Bitcoin in a separate known unspendable deposit address for that sidechain and sidechain protocol issuing matching amount of side-Bitcoin. Withdrawn bitcoins are treated as burnt bitcoins for sake of dividing block rewards as long as they followed the deterministic rules for their burn to count as valid and percentage used for withdrawals is kept small to avoid approaching free altcoin emissions by paying for your own withdrawals and ensuring significant unforgeable losses.
Ideally more matching is used so large withdrawals don't completely block everyone else and small withdrawals don't completely block large withdrawals. Better methods should deterministically randomize assigned withdrawals via previous Bitcoin block hash, prioritized by request time (earliest arrivals should get paid earlier), and amount of peg outstanding vs burn amount (smaller burns should prioritize smaller outstanding balances). Fee market on bitcoin discourages doing withdrawals of too small amounts and encourages batching by burners.
The second method is less reliable but already known that uses over-collateralized loans that create a oracle-pegged token that can be pegged to the bitcoin value. It was already used by its inventors in 2014 on bitshares (e.g. bitCNY, bitUSD, bitBTC) and similarly by MakerDAO in 2018. The upside is a trust minimized distribution of CPoB coins can be used to distribute trust over selection of price feed oracles far better than pre-mined single trusted party based distributions used in MakerDAO (100% pre-mined) and to a bit lesser degree on bitshares (~50% mined, ~50% premined before dpos). The downside is 2 fold: first the supply of BTC pegged coin would depend on people opening an equivalent of a leveraged long position on the altcoin/BTC pair, which is hard to convince people to do as seen by very poor liquidity of bitBTC in the past. Second downside is oracles can still collude to mess with price feeds, and while their influence might be limited via capped price changes per unit time and might compromise their continuous revenue stream from fees, the leverage benefits might outweight the losses. The use of continous proof of burn to peg withdrawals is superior method as it is simply a minor byproduct of "mining" for altcoins and doesn't depend on traders positions. At the moment I'm not aware of any market-pegged coins on trust minimized platforms or implemented in trust minimized way (e.g. premined mkr on premined eth = 2 sets of trusted third parties each of which with full control over the design).
_______________________________________

Brief issues with current altchains options:

  1. PoW: New PoW altcoins suffer high risk of attacks. Additional PoW chains require high energy and capital costs to create permissionless entry and trust minimized miners that are forever dependent on markets to hold them accountable. Using same algorithm or equipment as another chain or merge-mining puts you at a disadvantage by allowing some miners to attack and still cover sunk costs on another chain. Using a different algorithm/equipment requires building up the value of sunk costs to protect against attacks with significant energy and capital costs. Drive-chains also require miners to allow it by having to be sidechain aware and thus incur additional costs on them and validating nodes if the sidechain rewards are of value and importance.
  2. PoS: PoS is permissioned (requires permission from internal party to use network or contribute to consensus on permitted scale), allows perpetual control without accountability to others, and incentivizes centralization of control over time. Without continuous source of sunk costs there's no reason to give up control. By having consensus entirely dependent on internal state network, unlike PoW but like private databases, cannot guarantee independent permissionless entry and thus cannot claim trust minimization. Has no built in distribution methods so depends on safe start (snapshot of trust minimized distributions or PoW period) followed by losing that on switch to PoS or starting off dependent on a single trusted party such as case in all significant pre-mines and ICO's.
  3. Proof of Capacity: PoC is just shifting costs further to capital over PoW to achieve same guarantees.
  4. PoW/PoS: Still require additional PoW chain creation. Strong dependence on PoS can render PoW irrelevant and thus inherit the worst properties of both protocols.
  5. Tokens inherit all trust dependencies of parent blockchain and thus depend on the above.
  6. Embedded consensus (counterparty, veriblock?, omni): Lacks mechanism for distribution, requires all tx data to be inside scarce Bitcoin block space so high cost to users instead of compensated miners. If you want to build a very expressive scripting language, might very hard & expensive to fit into Bitcoin tx vs CPoBB external content of unlimited size in a committed hash. Same as CPoBB is Bitcoin-aware so can respond to Bitcoin being sent but without source of Bitcoins like burning no way to do any trust minimized Bitcoin-pegs it can control fully.

Few extra notes from my talks with people:

Main questions to you:

open to working on this further with others
submitted by awasi868 to CryptoTechnology [link] [comments]

Thoughts on the current downturn

From https://forums.prohashing.com/viewtopic.php?f=11&p=23082#p23082:
---------------------------------------------

The current downturn in the cryptocurrency markets itself isn't very surprising. There have been many bubbles before, and there will be at least one more bubble after this. What surprises me about this cycle is how quickly the market has collapsed. Whereas previous cycles fell slowly after the long middle period where prices stalled, this time the bottom fell out in the course of a week. This post will review the consequences of the new market reality.

Bitcoins are holding up well
Perhaps the biggest shock of this cycle is how the price of bitcoins has held up so well compared to that of other coins. In June 2017, when we were deciding whether this pool could be a profitable business and how many people we should hire if it could be. We determined that the average case where the coins would settle was bitcoins at $1574, ETH at $110, and LTC at $30. ETH and LTC have already surpassed the average case decline we had projected, while BTC is holding above twice the projected bottom.

The reason for BTC holding up so well isn't obvious. Almost every other coin is superior to BTC in some way. For example, LTC and BCH are much cheaper to send money with, ETH is used for contracts, and Monero has anonymity.

I don't think that bitcoins will hold up for much longer. I think that the capitulation to $980 is still ahead, and the price after capitulation will be $1500 or so. The BTC network still hasn't reckoned with the lack of a realistic plan to increase its block size. At some point, the lightning network is going to be shown as a technical marvel that works well when people are running nodes, but that it's too difficult for ordinary users and that money transmission regulations will not permit most businesses to run nodes. The Core developers are still pressing on with their effort despite the money transmission regulations.

Right now, growth is being driven by people willing to experiment. Eventually, the lightning network will run out of hobbyists to adopt it and its growth will cease, because normal businesses like us won't touch it due to the legal risks. At that point, people will realize that there is no "Plan B" for Bitcoin, and perhaps that will cause capitulation and force the Core to reevaluate their path forward.


We should reevaluate how coins are valued
Another change in this crash from the previous crashes is the complete lack of news to explain it. During the $32 -> $2 downturn, it was quite possible that nobody would ever adopt cryptocurrencies. During the $266 -> $69 downturn, many believed that Mt. Gox's unreliability and instability would lead to the death of the industry. During the $1160 -> $160 bubble, China banned bitcoins every week. But during the past two weeks, there has been no news of any importance.

In particular, ETH prices are absurd. I really don't understand how people think that ETH is priced anything close to its real value. Gas prices continue to rise and people think it's worth 6% of what it was a year ago? If I were paid in dollars, I would be changing them to ETH as fast as I could right now.

Since these prices don't make sense with what many people and I think are the fundamentals, then we need to reevaluate our views on how coins are valued. It's quite possible that the idea that things like transaction capacity and features [i]don't actually matter[/i].

There was one news article that caught my attention a while back. It proposed that, during 2017, a lot of the buyers into coins came from "ordinary people" who knew very little about cryptocurrencies. These people talked about coins at parties and bought what their friends bought. Someone like me, who spends most of his time at home writing code for this business, who is not married, and who has fewer friends than the average person, would not have been exposed to enough instances to make a connection if it were true that someone talked about bitcoins at every social event. I'd also venture that many of the people discussing bubbles in Internet forums also engage in less socializing than the average person, so reading theories about what happened from them leads to inaccurate conclusions.

During the next bubble, I'm going to more strongly consider social issues rather than technical issues and see whether that increases the accuracy of my predictions.


IPOs of mining manufacturers were too slow
One way to predict that this would not be a quick recovery into another bubble like the first 2013 collapse was to look at the IPOs from the mining manufacturers. Businesses don't issue IPOs when they have plenty of money - why would you give up potential profits to get money now if you don't need it? Instead, executives at the companies were really smart and saw that the writing was on the wall. Their problem was that they moved too slowly to sell their stakes. I don't think that the IPOs will be able to raise sufficient capital at this point and they will probably be cancelled. Bitmain or one of the other big mining manufacturers will likely go out of business.

Mining manufacturing is an interesting business because there is zero demand for your product during times like these. The industry basically resets every few years with new companies. The bitcoin difficulty just fell 15% during the last period, and the market is flooded with the miners that were just shut down. Why would anyone buy a new miner when all these old miners are being given away at any cost?

It doesn't make sense that anyone would ever invest in these IPOs or in the rumored Coinbase IPO. All of these stocks are 100% dependent on the cryptocurrency market recovering. If cryptocurrencies settle at these prices indefinitely, Coinbase will be unable to support its operations and will collapse, so you'll lose a lot more money than if you invested in coins (which have no chance of ever being completely worthless anymore.) If cryptocurrencies increase in value, they will go up by 100-1000x and Coinbase's stock will go up by 5x or 10x. In both cases, buying an IPO in the cryptocurrency world never makes as much sense as buying the coins themselves. Either buy coins or buy stocks in some unrelated industry to diversify.


"Manipulation" is a buzzword people use to explain things they don't like
Whenever prices fall, people start complaining about "manipulation." They experienced a huge drop, so the people selling must have been "manipulating" the market to cause them to lose money. The latest theory is that Bitfinex is not being honest with its Tether reserves. Bitfinex clearly violated the law by serving US customers and not shutting down when it was insolvent, but there isn't any evidence that Tether is going to fail due to fraud.

Note that Tether may fail due to banks discontinuing Tether's accounts, but that is different than fraud where a misrepresentation is being made.

I don't believe that the cryptocurrency markets are "manipulated" like most people think. There are some scams, especially those where people create ICOs and don't deliver a product. I doubt that the SEC will bring any charges against Bitfinex, and most of these complaints about "manipulation" are simply people complaining because they lost money.


Businesses will start to fail
Now I can get to the consequence that I think is the most important to understand in predicting how the next cycle plays out.

One of the reasons that the next bubble is a while away is because there have not yet been a lot of businesses that have failed. One of the unfortunate aspects of cryptocurrency, and one that significantly delays its development, is how the bubble cycle causes good ideas to fail. For example, the ETCDEV team, which contributed to Ethereum Classic development, recently folded due to bankruptcy. While I don't hold much love for people who are willing to overlook something as heinous as the DAO theft, the ETCDEV team did seem like it would be a significant contributor to developing ETC, and that won't happen now.

In fact, it's more likely that honest, ethical businesses will fail during this coming down cycle than scammers and fraudsters. It doesn't cost much to be a scammer - you just register some fake accounts and announce a new project, then disappear with all the money. Operating an honest business is expensive. It will cost us $15,000 just to comply with the 1099-MISC regulations next month. That's why, as prices fall, we should expect disreputable people to start to again outnumber law-abiding citizens in this industry. We can already see that happening as people with criminal records like Craig Wright, Roger Ver, and Charlie Shrem are dominating the conversation more and more.

As prices fall, businesses will need to make a decision. Many of them will decide to "pivot" - which essentially means that the company is shutting down and is creating a new firm in a different industry. This was common in 2015. Remember that the level at which a company should quit working in cryptocurrencies is not determined by whether they are making money, but by whether they are making as much money as they could in another field. Most of the time, companies that "pivot" don't return to whatever they were doing before, because they either find the "pivot" field to be lucrative, in which case it makes sense to keep at it, or they go bankrupt in that field too and close down permanently.

They key issue with these "pivots" and outright bankruptcies is that talent leaves the industry and is permanently gone. It takes at least 6 months for a programmer to join a project and become familiar with a codebase, during which time that person's productivity is significantly reduced. The cost of training a new hire is often as much as that person's salary for an entire year, given that other people in the company need to slow down to train the new person. When people leave a company, they don't just come back if times get better. They get new jobs, with new responsibilities, and that knowledge is lost.

Suppose that there is a company that has created an amazing Ethereum-based marketplace that will eventually gain millions of simultaneous customers. The marketplace reaches completion, but in the downturn the company is forced to shut down until the market turns around again, because all their customers are gone. Even if the owner of the company retains the software and is available and willing to restart when the next bubble begins, years have passed and new employees are needed. It will take 6 months to get all the employees hired, another 3 to get them minimally trained, another 1 to upgrade all the development environments, packages, and tools that became obsolete during the stoppage to get everything up to current standards, and another 2 to redo the website design to do the same thing with different colors and designs because the Internet for some reason changed its mind on what makes "attractive" webpages again.

If the downturn lasts two years, then this project could have been out [i]three years earlier[/i] if it weren't for the bubbles. Not only that, but the project's suspension itself contributed to the long duration of the bubble cycle. There would have been more activity in cryptocurrencies if this system had been available.

This effect is why I believe that as prices decline, the length of the upcoming downturn will increase significantly. Over the next weeks and months, we're going to start to hear of promising projects fail, and that's going to reduce the value of coins, cascading into other projects' feasibility, and creating a ripple effect of "pivots" and bankruptcies.

This is why I think that the first 2013 bubble had a much different outcome than the second 2013 bubble. In the first 2013 bubble, prices never collapsed after the long period of stability, and businesses were able to keep moving forward during that time. During the second 2013 bubble, prices collapsed after that period of stability that ended in August 2014, and one can look back at news articles form the day listing failures and "pivots" that occurred in the subsequent months.

If it weren't for bubbles, the industry would be years ahead of where it is now. The smartphone, for example, rose from unknown to market saturation in 10 years. After 10 years, where are cryptocurrencies, which also arose in 2008? About 6 or 7 years behind where they could be, because every bubble requires a reset with new companies, given that most of the work from the previous bubble is wasted.


There will be a next bubble
Finally, there will definitely be a next bubble - of that, I'm 100% certain. If you're not sure of that, then consider a scenario where you live in a world that already uses cryptocurrencies for all transactions. One day, a government decides that it's going to create its own currency, which it will be able to inflate at will, and which will take hundreds of times longer to conduct transactions with.

Do you think people would use that currency?
submitted by MattAbrams to BitcoinMarkets [link] [comments]

Cryptocurrency Investing

Cryptocurrency Investing
This article is provided for informational purposes only. Your decision to invest in cryptocurrency cannot be made on the basis of this text.
At the time when cryptocurrencies gather pace and many new altcoins appear, it seems hard to decide which one to choose for the investment. There are some notions that can help to make a decision.
https://preview.redd.it/49vonh8kv1y31.jpg?width=1024&format=pjpg&auto=webp&s=b6b1ec1e200632fedc1e56a7af8f4d5139852ce6
What affects the value of cryptocurrency?
The price of cryptocurrency depends on different factors. First of all, the basic economic principle of demand and supply works here. High demand for limited coins will raise their prices. The more coins are mined, the harder it is to get new ones. As a result, they become more precious.
Usefulness of coins also matters. When people understand that they can solve specific cases using cryptocurrency it may be in demand. For this reason, DASH became famous in countries which suffer difficulties with official banking system.
Mass media and historical events affect the value of cryptocurrency too. If negative publicity appears or the government puts a strict regulation against the use of coins, their price goes down. It works the opposite way too. Microsoft started accepting BTC as a payment method in 2014. They set an example for many other global companies and promoted the cryptocurrency.
Rise and fall
As it has already been mentioned, notable cases influence the market. In 2013 the Bitcoin price raised to 266$ but crashed and it costed 109$ in October. It happened because of the Silk Road arrest. This anonymous trading floor sold illegal goods and commonly used BTC for getting payments.
Cryptocurrency market has capped the climax several times in 2017. The price of BTC was growing from April and in the middle of December gained its maximum reaching 20 000 dollar mark. Meantime the price of BTC was close to 11 000$ at the beginning of September 2019 but came down to 8 000$ at the end of the month.
Coin market capitalization
Cryptocurrency capitalization is an integrated cost of all issued digital coins at the market. US Dollar usually serves as a monetary indicator. This characteristic helps to understand if cryptocurrency is attractive to invest in or not.
Two main factors affect the capitalization. One of them is a coin emission (the amount of coins in turnover) and another is a coin rate. In most cases, the emission always grows because of the mining process. The more coins have been mined the harder to get some new ones. This process affects the rate too. For example, this scheme works with BTC.
There are some cryptocurrencies (such as NXT) with initial emission. Capitalization here is directly related to the rate and market activity because the total amount of coins is unchangeable.
Who risks nothing, gains nothing?
When one tries to choose cryptocurrency for the investment, attention should be paid to its capitalization. High level of capitalization tells about better market fluctuation tolerance of the currency. It is more stable but a rapid increase in the rate can not be expected. On the other hand, assets with lower capitalization show significant swings in a short period of time.
Famous quotes
“It is not a speculative investment even though it is being used as such by other people. As Bitcoin network grows the value of Bitcoin grows. As people move into Bitcoin for payments and receipts they stop using US Dollars, Euros and Chinese Yuan which in the long-term devalues these currencies.” – Eric Schmidt, Executive Chairman of Google “Bitcoin is a technological tour de force.” – Bill Gates, Co-founder of Microsoft
Interesting fact
One of the world’s most famous and successful investment in cryptocurrency was made by Norwegian student Kristoffer Koch in 2009. He got to know about bitcoins while he was writing a thesis on encryption. Kristoffer purchased 5 000 bitcoins for 150 Krones ($26.60) and forgot about them soon afterwards. “Cryptography and computer security interests me: I’m a technical guy, not an investor. So I just bought a few at that time.” – said Mr. Koch. In 2013 cryptocurrency was vividly discussed in mass media and it made the Norwegian remember about his investment. The idea of how much his coins had come to be worth struck him. 150 Krones turned into 885 000 dollars and some part of this money was used to buy a spacious apartment in a prestigious district of Oslo.
Cryptocurrency investing can be really profitable. It bring its benefits if one takes into account all moments which influence the market and stays aware of changes in this sphere.
No matter which cryptocurrency you choose to invest in, you can always exchange one coin for another using StealthEX. It is an anonymous and limitless cryptocurrency exchange with the top concern about user’s privacy.
Follow us on Medium, Twitter, Facebook, and Reddit to get StealthEX.io updates and the latest news about the crypto world. For all requests message us via [[email protected]](mailto:[email protected])
submitted by Stealthex_io to NewbieZone [link] [comments]

Vitalik's response to Tuur

I interlaced everything between Vitalik and Tuur to make it easier to read.
1/ People often ask me why I’m so “against” Ethereum. Why do I go out of my way to point out flaws or make analogies that put it in a bad light?
Intro
2/ First, ETH’s architecture & culture is opposite that of Bitcoin, and yet claims to offer same solutions: decentralization, immutability, SoV, asset issuance, smart contracts, …
Second, ETH is considered a crypto ‘blue chip’, thus colors perception of uninformed newcomers.
Agree! I personally find Ethereum culture far saner, though I am a bit biased :)
3/ I've followed Ethereum since 2014 & feel a responsibility to share my concerns. IMO contrary to its marketing, ETH is at best a science experiment. It’s now valued at $13B, which I think is still too high.
Not an argument
4/ I agree with Ethereum developer Vlad Zamfir that it’s not money, not safe, and not scalable. https://twitter.com/VladZamfistatus/838006311598030848
@VladZamfir Eth isn't money, so there is no monetary policy. There is currently fixed block issuance with an exponential difficulty increase (the bomb).
I'm pretty sure Vlad would say the exact same thing about Bitcoin
5/ To me the first red flag came up when in our weekly hangout we asked the ETH founders about to how they were going to scale the network. (We’re now 4.5 years later, and sharding is still a pipe dream.)
Ethereum's Joe Lubin in June 2014: "anticipate blockchain bloat—working on various sharding ideas". https://www.youtube.com/watch?v=oJG9g0lCPU8&feature=youtu.be&t=36m41s
The core principles have been known for years, the core design for nearly a year, and details for months, with implementations on the way. So sharding is definitely not at the pipe dream stage at this point.
6/ Despite strong optimism that on-chain scaling of Ethereum was around the corner (just another engineering job), this promise hasn’t been delivered on to date.
Sure, sharding is not yet finished. Though more incremental stuff has been going well, eg. uncle rates are at near record lows despite very high chain usage.
7/ Recently, a team of reputable developers decided to peer review a widely anticipated Casper / sharding white paper, concluding that it does not live up to its own claims.
Unmerciful peer review of Vlad Zamfir & co's white paper to scale Ethereum: "the authors do NOT prove that the CBC Casper family of protocols is Byzantine fault tolerant in either practice or theory".
That review was off the mark in many ways, eg. see https://twitter.com/technocrypto/status/1071111404340604929, and by the way CBC is not even a prerequisite for Serenity
8/ On the 2nd layer front, devs are now trying to scale Ethereum via scale via state channels (ETH’s version of Lightning), but it is unclear whether main-chain issued ERC20 type tokens will be portable to this environment.
Umm... you can definitely use Raiden with arbitrary ERC20s. That's why the interface currently uses WETH (the ERC20-fied version of ether) and not ETH
9/ Compare this to how the Bitcoin Lightning Network project evolved:
elizabeth stark @starkness: For lnd: First public code released: January 2016 Alpha: January 2017 Beta: March 2018…
Ok
10/ Bitcoin’s Lightning Network is now live, and is growing at rapid clip.
Jameson Lopp @lopp: Lightning Network: January 2018 vs December 2018
Sure, though as far as I understand there's still a low probability of finding routes for nontrivial amounts, and there's capital lockup griefing vectors, and privacy issues.... FWIW I personally never thought lightning is unworkable, it's just a design that inherently runs into ten thousand small issues that will likely take a very long time to get past.
11/ In 2017, more Ethereum scaling buzz was created, this time the panacea was “Plasma”.
@TuurDemeester Buterin & Poon just published a new scaling proposal for Ethereum, "strongly complementary to base-layer PoS and sharding": plasma.io https://twitter.com/VitalikButerin/status/895467347502182401
Yay, Plasma!
12/ However, upon closer examination it was the recycling of some stale ideas, and the project went nowhere:
Peter Todd @peterktodd These ideas were all considered in the Treechains design process, and ultimately rejected as insecure.
Just because Peter Todd rejected something as "insecure" doesn't mean that it is. In general, the ethereum research community is quite convinced that the fundamental Plasma design is fine, and as far as I understand there are formal proofs on the way. The only insecurity that can't be avoided is mass exit vulns, and channel-based systems have those too.
13/ The elephant in the room is the transition to proof-of-stake, an “environmentally friendly” way to secure the chain. (If this was the plan all along, why create a proof-of-work chain first?)
@TuurDemeester "Changing from proof of work to proof of stake changes the economics of the system, all the rules change and it will impact everything."
Umm... we created a proof of work chain first because we did not have a satisfactory proof of stake algo initially?
14/ For the uninitiated, here’s a good write-up that highlights some of the fundamental design problems of proof-of-stake. Like I said, this is science experiment territory.
And here's a set of long arguments from me on why proof of stake is just fine: https://github.com/ethereum/wiki/wiki/Proof-of-Stake-FAQ. For a more philosophical piece, see https://medium.com/@VitalikButerin/a-proof-of-stake-design-philosophy-506585978d51
15/ Also check out this thread about how Proof of Stake blockchains require subjectivity (i.e. a trusted third party) to achieve consensus: https://forum.blockstack.org/t/pos-blockchains-require-subjectivity-to-reach-consensus/762?u=muneeb … and this thread on Bitcoin: https://www.reddit.com/Bitcoin/comments/59t48m/proofofstake_question/
Yes, we know about weak subjectivity, see https://blog.ethereum.org/2014/11/25/proof-stake-learned-love-weak-subjectivity/. It's really not that bad, especially given that users need to update their clients once in a while anyway, oh and by the way even if the weak subjectivity assumption is broken an attacker still needs to gather up that pile of old keys making up 51% of the stake. And also to defend against that there's Universal Hash Time.
16/ Keep in mind that Proof of Stake (PoS) is not a new concept at all. Proof-of-Work actually was one of the big innovations that made Bitcoin possible, after PoS was deemed impractical because of censorship vulnerability.
@TuurDemeester TIL Proof-of-stake based private currency designs date at least back to 1998. https://medium.com/swlh/the-untold-history-of-bitcoin-enter-the-cypherpunks-f764dee962a1
Oh I definitely agree that proof of work was superior for bootstrap, and I liked it back then especially because it actually managed to be reasonably egalitarian around 2009-2012 before ASICs fully took over. But at the present time it doesn't really have that nice attribute.
17/ Over the years, this has become a pattern in Ethereum’s culture: recycling old ideas while not properly referring to past research and having poor peer review standards. This is not how science progresses.Tuur Demeester added,
[email protected] has been repeatedly accused of /criticised for not crediting prior art. Once again with plasma: https://twitter.com/DamelonBCWS/status/895643582278782976
I try to credit people whenever I can; half my blog and ethresear.ch posts have a "special thanks" section right at the top. Sometimes we end up re-inventing stuff, and sometimes we end up hearing about stuff, forgetting it, and later re-inventing it; that's life as an autodidact. And if you feel you've been unfairly not credited for something, always feel free to comment, people have done this and I've edited.
18/ One of my big concerns is that sophistry and marketing hype is a serious part of Ethereum’s success so far, and that overly inflated expectations have lead to an inflated market cap.
Ok, go on.
19/ Let’s illustrate with an example.
...
20/ A few days ago, I shared a critical tweet that made the argument that Ethereum’s value proposition is in essence utopian.
@TuurDemeester Ethereum-ism sounds a bit like Marxism to me:
  • What works today (PoW) is 'just a phase', the ideal & unproven future is to come: Proof-of-Stake.…
...
21/ I was very serious about my criticism. In fact, each one of the three points addressed what Vitalik Buterin has described as “unique value propositions of Ethereum proper”. https://www.reddit.com/ethereum/comments/5jk3he/how_to_prevent_the_cannibalism_of_ethereum_into/dbgujr8/
...
22/ My first point, about Ethereum developers rejecting Proof-of-Work, has been illustrated many times over By Vitalik and others. (See earlier in this tweetstorm for more about how PoS is unproven.)
Vitalik Non-giver of Ether @VitalikButerin: I don't believe in proof of work!
See above for links as to why I think proof of stake is great.
23/ My second point addresses Ethereum’s romance with the vague and dangerous notion of ‘social consensus’, where disruptive hard-forks are used to ‘upgrade’ or ‘optimize’ the system, which inevitably leads to increased centralization. More here:
See my rebuttal to Tuur's rebuttal :)
24/ My third point addresses PoS’ promise of perpetual income to ETHizens. Vitalik is no stranger to embracing free lunch ideas, e.g. during his 2014 ETH announcement speech, where he described a coin with a 20% inflation tax as having “no cost” to users.
Yeah, I haven't really emphasized perpetual income to stakers as a selling point in years. I actually favor rewards being as low as possible while still being high enough for security.
25/ In his response to my tweet, Vitalik adopted my format to “play the same game” in criticizing Bitcoin. My criticisms weren't addressed, and his response was riddled with errors. Yet his followers gave it +1,000 upvotes!
Vitalik Non-giver of Ether @VitalikButerin: - What works today (L1) is just a phase, ideal and unproven future (usable L2) is to come - Utopian concept of progress: we're already so confident we're finished we ain't needin no hard forks…
Ok, let's hear about what the errors are...
26/ Rebuttal: - BTC layer 1 is not “just a phase”, it always will be its definitive bedrock for transaction settlement. - Soft forking digital protocols has been the norm for over 3 decades—hard-forks are the deviation! - Satoshi never suggested hyperbitcoinization as a goal.
Sure, but (i) the use of layer 1 for consumer payments is definitely, in bitcoin ideology, "just a phase", (ii) I don't think you can make analogies between consensus protocols and other kinds of protocols, and between soft forking consensus protocols and protocol changes in other protocols, that easily, (iii) plenty of people do believe that hyperbitcoinization as a goal. Oh by the way: https://twitter.com/tuurdemeestestatus/545993119599460353
27/ This kind of sophistry is exhausting and completely counter-productive, but it can be very convincing for an uninformed retail public.
Ok, go on.
28/ Let me share a few more inconvenient truths.
...
29/ In order to “guarantee” the transition to PoS’ utopia of perpetual income (staking coins earns interest), a “difficulty bomb” was embedded in the protocol, which supposedly would force miners to accept the transition.
The intended goal of the difficulty bomb was to prevent the protocol from ossifying, by ensuring that it has to hard fork eventually to reset the difficulty bomb, at which point the status quo bias in favor of not changing other protocol rules at the same time would be weaker. Though forcing a switch to PoS was definitely a key goal.
30/ Of course, nothing came of this, because anything in the ETH protocol can be hard-forked away. Another broken promise.
Tuur Demeester @TuurDemeester: Looks like another Ethereum hard-fork is going to remove the "Ice Age" (difficulty increase meant to incentivize transition to PoS). https://www.cryptocompare.com/coins/guides/what-is-the-ethereum-ice-age/
How is that a broken promise? There was no social contract to only replace the difficulty-bombed protocol with a PoS chain.
31/ Another idea that was marketed heavily early on, was that with ETH you could program smart contract as easily as javascript applications.
Tuur Demeester @TuurDemeester: I forgot, but in 2014 Ethereum was quite literally described as "Javascript-on-the-blockchain"
Agree that was over-optimistic, though the part of the metaphor that's problematic is the "be done with complex apps in a couple hours" part, NOT the "general-purpose languages are great" part.
32/ This was criticized by P2P & OS developers as a reckless notion, given that every smart contracts is actually a “de novo cryptographic protocol”. In other words, it’s playing with fire. https://bitcointalk.org/index.php?topic=1427885.msg14601127#msg14601127
See above
33/ The modular approach to Bitcoin seems to be much better at compartmentalizing risk, and thus reducing attack surfaces. I’ve written about modular scaling here...
To be fair, risk is reduced because Bitcoin does less.
34/ Another huge issue that Ethereum has is with scaling. By putting “everything on the blockchain” (which stores everything forever) and dubbing it “the world computer”, you are going to end up with a very slow and clogged up system.
Christopher Allen @ChristopherA: AWS cost: $0.000000066 for calc, Ethereum: $26.55. This is about 400 million times as expensive. World computer? https://hackernoon.com/ether-purchase-power-df40a38c5a2f
We never advocated "putting everything on the blockchain". The phrase "world computer" was never meant to be interpreted as "everyone's personal desktop", but rather as a common platform specifically for the parts of applications that require consensus on shared state. As evidence of this, notice how Whisper and Swarm were part of the vision as complements to Ethereum right from the start.
35/ By now the Ethereum bloat is so bad that cheaply running an individual node is practically impossible for a lay person. ETH developers are also imploring people to not deploy more smart contract apps on its blockchain.
Tuur Demeester @TuurDemeester: But... deploying d-apps on the "Ethereum Virtual Machine" is exactly what everyone was encouraged to do for the past 4 years. Looks like on-chain scaling wasn't such a great idea after all.
Umm.... I just spun up a node from scratch last week. On a consumer laptop.
36/ As a result, and despite the claims that running a node in “warp” mode is easy and as good as a full node, Ethereum is becoming increasingly centralized.
@TuurDemeester Finally a media article touching on the elephant in the room: Ethereum has become highly centralized. #infura https://www.coindesk.com/the-race-is-on-to-replace-ethereums-most-centralized-layeamp?__twitter_impression=true
See above
37/ Another hollow claim: in 2016, Ethereum was promoted as being censorship resistant…
Tuur Demeester @TuurDemeester: Pre TheDAO #Ethereum presentation: "uncensorable, code is law, bottom up". http://ow.ly/qW49302Pp92
Yes, the DAO fork did violate the notion of absolute immutability. However, the "forking the DAO will lead to doom and gloom" crowd was very wrong in one key way: it did NOT work as a precedent justifying all sorts of further state interventions. The community clearly drew a line in the sand by firmly rejecting EIP 867, and EIP 999 seems to now also be going nowhere. So it seems like there's some evidence that the social contract of "moderately but not infinitely strong immutability" actually can be stable.
38/ Yet later that year, after only 6% of ETH holders had cast a vote, ETH core devs decided to endorse a hard-fork that clawed back the funds from a smart contract that held 4.5% of all ETH in circulation. More here: ...
See above
39/ Other potential signs of centralization: Vitalik Buterin signing a deal with a Russian government institution, and ETH core developers experimenting with semi-closed meetings: https://twitter.com/coindesk/status/902892844955860993 …,
Hudson Jameson @hudsonjameson: The "semi-closed" Ethereum 1.x meeting from last Friday was an experiment. The All Core Dev meeting this Friday will be recorded as usual.
Suppose I were to tomorrow sign up to work directly for Kim Jong Un. What concretely would happen to the Ethereum protocol? I suspect very little; I am mostly involved in the Serenity work, and the other researchers have proven very capable of both pushing the spec forward even without me and catching any mistakes with my work. So I don't think any argument involving me applies. And we ended up deciding not to do more semi-closed meetings.
40/ Another red flag to me is the apparent lack of relevant expertise in the ETH development community. (Check the responses…)
Tuur Demeester @TuurDemeester: Often heard: "but Ethereum also has world class engineers working on the protocol". Please name names and relevant pedigree so I can follow and learn. https://twitter.com/TuurDemeestestatus/963029019447955461
I personally am confident in the talents of our core researchers, and our community of academic partners. Most recently the latter group includes people from Starkware, Stanford CBR, IC3, and other groups.
41/ For a while, Microsoft veteran Lucius Meredith was mentioned as playing an important role in ETH scaling, but now he is likely distracted by the failure of his ETH scaling company RChain. https://blog.ethereum.org/2015/12/24/understanding-serenity-part-i-abstraction/
I have no idea who described Lucius Meredith's work as being important for the Serenity roadmap.... oh and by the way, RChain is NOT an "Ethereum scaling company"
42/ Perhaps the recently added Gandalf of Ethereum, with his “Fellowship of Ethereum Magicians” [sic] can save the day, but imo that seems unlikely...
Honestly, I don't see why Ethereum Gandalf needs to save the day, because I don't see what is in danger and needs to be saved...
43/ This is becoming a long tweetstorm, so let’s wrap up with a few closing comments.
Yay!
44/ Do I have a conflict of interest? ETH is a publicly available asset with no real barriers to entry, so I could easily get a stake. Also, having met Vitalik & other ETH founders several times in 2013-’14, it would have been doable for me to become part of the in-crowd.
Agree there. And BTW I generally think financial conflicts of interest are somewhat overrated; social conflicts/tribal biases are the bigger problem much of the time. Though those two kinds of misalignments do frequently overlap and reinforce each other so they're difficult to fully disentangle.
45/ Actually, I was initially excited about Ethereum’s smart contract work - this was before one of its many pivots.
Tuur Demeester @TuurDemeester: Ethereum is probably the first programming language I will teach myself - who wouldn't want the ability to program smart BTC contracts?
Ethereum was never about "smart BTC contracts"..... even "Ethereum as a Mastercoin-style meta-protocol" was intended to be built on top of Primecoin.
46/ Also, I have done my share of soul searching about whether I could be suffering from survivor’s bias.
@TuurDemeester I just published “I’m not worried about Bitcoin Unlimited, but I am losing sleep over Ethereum” https://medium.com/p/im-not-worried-about-bitcoin-unlimited-but-i-am-losing-sleep-over-ethereum-b5251c54e66d
Ok, good.
47/ Here’s why Ethereum is dubious to me: rather than creating an open source project & testnet to work on these interesting computer science problems, its founders instead did a securities offering, involving many thousands of clueless retail investors.
What do you mean "instead of"? We did create an open source project and testnet! Whether or not ETH is a security is a legal question; seems like SEC people agree it's not: https://www.cnbc.com/2018/06/14/bitcoin-and-ethereum-are-not-securities-but-some-cryptocurrencies-may-be-sec-official-says.html
48/ Investing in the Ethereum ICO was akin to buying shares in a startup that had “invent time travel” as part of its business plan. Imo it was a reckless security offering, and it set the tone for the terrible capital misallocation of the 2017 ICO boom.
Nothing in the ethereum roadmap requires time-travel-like technical advancements or anything remotely close to that. Proof: we basically have all the fundamental technical advancements we need at this point.
49/ In my view, Ethereum is the Yahoo of our day - an unscalable “blue chip” cryptocurrency:
Tuur Demeester @TuurDemeester: 1/ The DotCom bubble shows that the market isn't very good at valuing early stage technology. I'll use Google vs. Yahoo to illustrate.
Got it.
50/ I’ll close with a few words from Gregory Maxwell from 2016,: https://bitcointalk.org/index.php?topic=1427885.msg14601127#msg14601127
See my rebuttal to Greg from 2 years ago: https://www.reddit.com/ethereum/comments/4g1bh6/greg_maxwells_critique_of_ethereum_blockchains/
submitted by shouldbdan to ethtrader [link] [comments]

Overview of Major Risks of Buying Nyancoins - Version 6

This is the sixth version of the NYAN risks document (based on v5 (v4 (v3 , v2 and original)). These are obsoleted periodically as the old ones get archived to allow for comments again via a new post, to re-examine the risks in light of changes, and for greater visibility.
The purpose of these documents is to provide a best-effort discussion of major risk factors in gambling on NYAN, modeled on the risks disclosure in a 10k (annual report) which is mandated for publicly traded companies in the United States. This document is provided with no guarantee that major risk factors have not been missed, and it is important to recognize my (coinaday) personal bias from holding about one-third of the total supply of NYAN.
Please comment on any risks which are not mentioned here or additional aspects of risks here you think should be further emphasized or any other possible disclosure you think would be helpful to a person considering gambling on NYAN.
Executive summary
Nyancoins have no exchange, no core developer at the moment, uncertain demand, have had inconsistent blocks, are very vulnerable to 51% attacks, have the potential for serious bugs, an uncertain legal situation, concentrated ownership, low liquidity, depend upon the Internet, may be addictive, and could make you wealthy, which has been alleged to lead to more problems.
Introduction: This is my best attempt to collect every major risk factor from buying Nyancoins, although I can offer no warranty of fitness for this information for any purposes. I believe in honesty and forthrightness. Having this available and obvious is a simple matter of basic decency. Much, hopefully all, of this information has been discussed previously in /nyancoins, but this document in particular is about being up-to-date and central. This page will be updated clearly as appropriate if situations change on a best-effort basis (which may mean updates do not happen for months at times, unfortunately; please ping for faster updates).
If you believe that I am missing something, please note any other major risks you see in the comments.
Exchanges:
Nyancoins are not currently traded on any exchange. It may be listed on one minor exchange but have no volume there. Obviously an unlisted cryptocurrency is in a bad situation. I hope to see us gain a listing on an exchange which supports low volume coins in 2020 but I have no current prospect of this and it should be considered a longshot at best.
Previously we traded on Trade Satoshi and prior to that on Cryptopia and prior to that on Cryptsy. All three exchanges failed us (Trade Satoshi delisted without allowing withdrawal; Cryptopia delisted and failed to provide withdrawal and then went bankrupt; Cryptsy went bankrupt). This is a further reminder that exchanges are a major risk and one should be extremely careful to not keep more coins on there than one can comfortably afford to lose.
In theory, there are decentralized exchange technologies, notably CATE; however, I think we currently lack some needed APIs for this. I'm not certain but we haven't demonstrated the capability yet. On-Reddit exchanges are also possible with tipbots, but require trust as they are not atomic. It should be possible to build an "exchangebot" similarly, although I'm not currently aware of one, but my concept would still have the bot as a trusted central party.
Atomic cross-chain transactions seem to me like a very promising core technology ultimately for building exchanges which can be more proveably secure. They could also allow exchanges to share a common listing protocol as well without having to trust the other exchanges (at least, beyond the core protocol development and maintenance; tanstaafl). This is not yet accomplished though and in the meantime we remain vulnerable to periodic exchange failures.
Core developer: Although we have good general tech support in this community and have put up supporting infrastructure, there is not anyone officially currently working on core client code. This is a significant problem for the long-term, although we are not in any immediate known need of changes.
ImASharkRawwwr has returned to the community and may do future client updates, but I'm leaving the lack of core developer risk unchanged until there is an update released. This is not intended as a slight in any way but merely being cautious in the risks document and recognizing that we aren't certain when or if there will be a next release.
Demand: NYAN was introduced in 2014 and during the second half of that year had so little demand that it almost died out. In January 2015 I got involved in the coin and for most of 2015 and 2016 I was the majority of the buying pressure. I base these statements on my recollection of the trading history so far and the fact that I have acquired more than 120 million coins, somewhere around 41% of the coins (latest hodling report, June 2017), as well as my observations that I had usually had the leading major bid, and usually the leading bid regardless of size.
In 2017, I have generally not been a major factor in the demand, as I haven’t had money to spare to gamble on NYAN. In June 2017, we have had a spike in buying from an unknown source.
It is unknown whether significant demand for NYAN will continue. Because its value is purely speculative, it is entirely possible that demand for NYAN could simply end. This is a fundamental risk in gambling on NYAN; it is entirely possible that its value will go to zero and not recover.
By the end of 2019, we lost exchange listing. I know of no current demand for NYAN. I hope to see us listed and demand exist in the future but should not be relied upon. NYAN last traded around 9 satoshi according to coinmarketcap but it may well not even trade that high even if relisted someday - there could be a flood of selling and no buyers.
Inconsistent blocks:
Although NYAN is designed to produce a block every minute, there have been times where there has been more than 24 hours between blocks. This results because of an imperfect difficulty function and low base hashing, along with price fluctuations, which can combine to have a low difficulty making the coin attractive for a flood of hashing power which can lead the difficulty function to overcompensate, leaving it stuck with a high difficulty no longer profitable to mine.
I haven’t observed this lately, that is, I don’t recall incidents of this in 2017, but I’ve been paying far less attention to it as well. It is entirely possible for this to recur, as the difficulty function is not fixed (it would require a hard fork to fix it). We seem to have more baseline hashing which helps to avoid this, but it is possible for us to lose that.
A workaround is to use large transaction fees (I've set my client to 337 NYAN) which is enough to cause pools to generally solve a block even if the chain were otherwise stuck. It may be possible to include a better difficulty function in a hard fork client, but it is unknown when if ever this would be done and it's not yet clear what design improvement if any would fix this.
51% attack: Because of the generally quite low hashing power on NYAN, it is highly vulnerable to a 51% attack. Either a leading pool or a new one could choose to do a denial-of-service attack, whether for extortion, lulz, or some other reason (like coinaday being annoying). Such an attack is capable of preventing any transaction processing for as long as it is sustained. I consider this a relatively low risk since I expect we would simply wait it out (and potentially not even notice such an attack for quite a while given the low volume of transactions currently), but it is definitely a potential vulnerability.
Bugs: It is possible that there are bugs in the underlying code. I have never read through all of the bitcoin or nyancoin code, of any version, nor even studied the original bitcoin whitepaper in depth (by the way, we oughta make up a nyancoin whitepaper or ten someday), meaning I have no professional or technical knowledge about whether or not the system is fundamentally sound. I've been going based on "it seems to be working, so it's probably fine", which is, shall we say, more of an engineering than scientific approach.
I have heard reference to a "time warp" bug vulnerability in the KGW difficulty function which Nyancoins has. I do not know details and my understanding is a fix to this would require a fork to change the difficulty function, so I do not anticipate a fix before NYAN3, the term for an eventual hard fork, but it is unknown when if ever this would be done. I consider this vulnerability to be likely to be related to the fundamental weakness to difficulty spikes after large amounts of hashing jumps on the network. Hostile (or simply passing interest with large capacity) hashing does degrade the performance of the network. As a workaround, this class of attack can be mitigated with a transaction to 'unstick' the chain after, since the difficulty function will adjust in the next block after enough wall-time has passed since the last block (so only need one high difficulty solve which can be triggered by a transaction fee).
Legal: Bitcoin faces uncertain legal situations in almost every country. Nyancoin is even more uncertain, as people tend to consider bitcoin and not address impacts on altcoins. Between the potential tax implications and banking regulations and currency laws, there are a wide variety of ways a person could make a felony-level mistake. This can be somewhat mitigated by merely buying and holding, as you won't be responsible for KYC/AML presumably (although an argument could be made in your purchase), and presumably unrealized capital gains wouldn't be taxable (but I am neither a lawyer nor accountant nor any sort of expert on the relevant accounting laws in any country).
Somehow getting legal opinions for Nyancoins in every country would be very useful in my opinion. If Bitcoin and altcoins are well-studied in a given country it should be relatively easy to adapt those opinions and research to Nyancoins, but it would still require some pro bono work in any case. So...hopefully we'll get some lawyer Nekonauts someday who are willing to semi-officially give us an opinion. In the meantime...hope that common sense can save you. If you sell Nyancoins directly, you're going to need to comply with the KYC/AML types of laws of your country. If you're going to do banking operations...may the central bank have mercy on your soul.
I think the best advantage we have is the same bitcoin had for its first years: we're too small for anyone to care. But since we plan to grow significantly, we need to be aware of our legal issues upon scale. Which is to say, whether or not you're allowed to sell 10,000 NYAN to your friend probably has a lot to do with whether your friend legally acquired whatever is being offered in exchange, and whether the value of what you get in return is above a certain level or not. I'm not going to try guessing that level precisely because I know I'll be wrong. $1 is probably fine. $10,000 is probably illegal without some significant licensing. I would suggest either not touching fiat or else deliberately capping it without verification after getting an independent local expert legal opinion.
concentration: The fact that I hold about 41%(? not sure the exact percentage as of Dec 2017 ; need to do updated survey to check; 41% sounds slightly high to me but I'll see...I'll try to update by the end of the year or shortly after) of the currently outstanding NYAN could be a major risk factor, particularly if I do not act in the best long-term interests of the strength of Nyancoins. For instance, I could pull my bids, sell only a small part of my holdings, crash the market, and potentially buy a lot of volume for a lower price. While I cannot foresee any circumstance under which I would do this, it is certainly conceivable that I could be financially, legally, or morally obligated to do so if I were to become insolvent.
Liquidity: There is very little trading activity in NYAN. Therefore, large purchases will drive the price up and large sales will drive the price down. This means that entering and exiting a position is likely to result in "slippage", so even if the price has increased slightly overall since the time before one entered a position to the time before one exits it, it is quite possible that the overall trade will be neutral or negative as a result of the pressure on the market. For an extreme example, my own position would be essentially impossible to exit from the market without crashing the price, and even so it would likely be difficult to find buyers even at a satoshi, based on that I currently am the majority of the bids on the market. This is closely tied to the concentration risk but if I were to exit NYAN for any reason or simply fail to continue to renew bids the liquidity would dry up even further.
At the end of 2019, having no exchange, there is functionally zero liquidity. In theory peer to peer trading could still be done but I’m unaware of any.
Internet outage: if the Internet goes down, we hit a very nasty scenario. We can't process transactions, and all the miners go into a race to make 'useless' blocks on their own. If the Internet were never to come back up, Nyancoins would be dead. If there is a daylong internet outage, the longest blockchain discovered after, presumably representing the most hashing power dedicated to empty blocks during that outage, will win. So I suppose the block rewards in that case are for having the faith in Nyancoins to keep hashing and storing the blockchain during the day without the Internet.
addictive: This was a curiosity to me when I started. Now it's an obsession for me. I'm constantly thinking about how I can help to smooth the path for Nyancoins to grow stronger and better and more valuable. You may find that once you start to realize the impact you can have upon Nyancoins, and that Nyancoins can have upon you, that you start to become addicted as well. It is possible to substitute another addiction in its place, such as dogecoins or pcp, but it is not recommended.
Nyancoin addictions are considered 'mostly harmless'. The exception is if you go 'full coinaday' and start to accumulate more than 10% of your assets in Nyancoins. In this, this is essentially a variety of gambling addiction. I would argue that it beats roulette because you can tilt the odds in your favor, but then, I would argue that, wouldn't I?
mo' nyan mo' problems: Some people have claimed that more money leads to more problems. Since nyan is money, it follows as a consequence of the conjecture. Should this be the case, your increasing nyan could potentially lead to such problems in the future as: enhanced attention from revenue collection services of all kinds (governmental and private), swarms of fake friends and gold-diggers, excessive risk-taking as a result of feelings of invincibility, an increase in certain varieties of targeted marketing, possible disqualification for asset-based welfare for you (or even your children, for instance college financial assistance), an inability to remember how many houses you own, or other serious problems.
Conclusion
The lack of any exchange trading Nyancoins is a major risk factor in its future survival. If it is listed, the lack of development is likely the next most serious. The coin currently survives but whether it will continue to do so in the future is far from certain. If those of us who have found or come back to NYAN choose to keep it alive, I believe it still has a chance at surviving into a stronger future.
This self-certified infallible message has been brought to you as a Public Service Announcement of the NYAN Public Relations Council, a transparent front organization of notoriously lovable philanthropist and major NYAN hodler coinaday.
submitted by coinaday to nyancoins [link] [comments]

Cryptocurrency Investing

Cryptocurrency Investing
This article is provided for informational purposes only. Your decision to invest in cryptocurrency cannot be made on the basis of this text.
At the time when cryptocurrencies gather pace and many new altcoins appear, it seems hard to decide which one to choose for the investment. There are some notions that can help to make a decision.
https://preview.redd.it/i390wllao1y31.jpg?width=1024&format=pjpg&auto=webp&s=edf040c91bbb928dad681c9c091733475bb00139
What affects the value of cryptocurrency?
The price of cryptocurrency depends on different factors. First of all, the basic economic principle of demand and supply works here. High demand for limited coins will raise their prices. The more coins are mined, the harder it is to get new ones. As a result, they become more precious.
Usefulness of coins also matters. When people understand that they can solve specific cases using cryptocurrency it may be in demand. For this reason, DASH became famous in countries which suffer difficulties with official banking system.
Mass media and historical events affect the value of cryptocurrency too. If negative publicity appears or the government puts a strict regulation against the use of coins, their price goes down. It works the opposite way too. Microsoft started accepting BTC as a payment method in 2014. They set an example for many other global companies and promoted the cryptocurrency.
Rise and fall
As it has already been mentioned, notable cases influence the market. In 2013 the Bitcoin price raised to 266$ but crashed and it costed 109$ in October. It happened because of the Silk Road arrest. This anonymous trading floor sold illegal goods and commonly used BTC for getting payments.
Cryptocurrency market has capped the climax several times in 2017. The price of BTC was growing from April and in the middle of December gained its maximum reaching 20 000 dollar mark. Meantime the price of BTC was close to 11 000$ at the beginning of September 2019 but came down to 8 000$ at the end of the month.
Coin market capitalization
Cryptocurrency capitalization is an integrated cost of all issued digital coins at the market. US Dollar usually serves as a monetary indicator. This characteristic helps to understand if cryptocurrency is attractive to invest in or not.
Two main factors affect the capitalization. One of them is a coin emission (the amount of coins in turnover) and another is a coin rate. In most cases, the emission always grows because of the mining process. The more coins have been mined the harder to get some new ones. This process affects the rate too. For example, this scheme works with BTC.
There are some cryptocurrencies (such as NXT) with initial emission. Capitalization here is directly related to the rate and market activity because the total amount of coins is unchangeable.
Who risks nothing, gains nothing?
When one tries to choose cryptocurrency for the investment, attention should be paid to its capitalization. High level of capitalization tells about better market fluctuation tolerance of the currency. It is more stable but a rapid increase in the rate can not be expected. On the other hand, assets with lower capitalization show significant swings in a short period of time.
Famous quotes
“It is not a speculative investment even though it is being used as such by other people. As Bitcoin network grows the value of Bitcoin grows. As people move into Bitcoin for payments and receipts they stop using US Dollars, Euros and Chinese Yuan which in the long-term devalues these currencies.” – Eric Schmidt, Executive Chairman of Google
“Bitcoin is a technological tour de force.” – Bill Gates, Co-founder of Microsoft
Interesting fact
One of the world’s most famous and successful investment in cryptocurrency was made by Norwegian student Kristoffer Koch in 2009. He got to know about bitcoins while he was writing a thesis on encryption. Kristoffer purchased 5 000 bitcoins for 150 Krones ($26.60) and forgot about them soon afterwards. “Cryptography and computer security interests me: I’m a technical guy, not an investor. So I just bought a few at that time.” – said Mr. Koch. In 2013 cryptocurrency was vividly discussed in mass media and it made the Norwegian remember about his investment. The idea of how much his coins had come to be worth struck him. 150 Krones turned into 885 000 dollars and some part of this money was used to buy a spacious apartment in a prestigious district of Oslo.
Cryptocurrency investing can be really profitable. It bring its benefits if one takes into account all moments which influence the market and stays aware of changes in this sphere.
No matter which cryptocurrency you choose to invest in, you can always exchange one coin for another using StealthEX. It is an anonymous and limitless cryptocurrency exchange with the top concern about user’s privacy.
Just go to StealthEX.io and follow these easy steps:
  • Choose the pair and the amount for your exchange. For example, BTC to ETH.
  • Press the “Start exchange” button.
  • Provide the recipient address where the coins will be transferred.
  • Move your cryptocurrency for the exchange.
  • Receive your coins.
Follow us on Medium, Twitter, Facebook, and Reddit to get StealthEX.io updates and the latest news about the crypto world. For all requests message us via [email protected]
submitted by Stealthex_io to StealthEX [link] [comments]

Why Bitcoin Mining Bitcoin Intermediate Term Bearish Expectation 5th January 2014 Bitcoins Are Dumb Turn Key Bitcoin Mining Solution Bitcoin Price Prediction by Experts (Long Term)

Bitcoin difficulty is also expected to undergo an imminent increase of 8% or so this week if it hasn’t already (charts are lagging a day or so). LongHash has been looking into the trends to see if there is any correlation between these metrics and bitcoin prices. The higher incentives of Bitcoin Cash came per unit time from its faster blocks and as soon as the difficulty returned to equilibrium, Bitcoin regained its position as the highest incentive SHA256 coin. Figure 4: Litecoin (LTC) versus Dogecoin (DOGE) mining incentive (USD per day) versus hash-rate share in 2014. Transaction fees were not ... Bitcoin-BTC-1 difficulty adjustments continue to perfectly track the 2016 halving, ... This flew in the face of those who expected miners to call it quits in December when BTC's price action went south in late 2014. On Nov. 15, the difficulty plunged by seven percent but Bitcoin's hashrate, which gauges of the power of the entire Bitcoin network, never followed suit. As predicted by PlanB, the ... An experiment pushing the boundaries of crypto payments, bitcoin's Lightning Torch is suffering liquidity issues due to its success. As 2014 comes to a close, the news in the bitcoin mining industry seems to be as constant as ever. The mining industry as a whole has continued to grow over the course of the year, even as the bitcoin price has not been able to get back to its highs from late 2013. Let’s take a look at some of the biggest news stories in bitcoin mining from the past few weeks.

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Why Bitcoin Mining

For more info concerning Bitcoin wallet card, litecoin wallet card, please visit internet site here: http://www.cryptocoinwalletcards.com/ Tags: asic bitcoin... Turn Key Bitcoin Mining Solution BITCOIN PRICE , BITCOIN FUTURE in doubt http://youtu.be/eO-yrpQpIT8 What is NAMECOIN BITCOIN'S First Fork http://youtu.be/oB... 2018 for bitcoin wasn’t something we expected, but there is the reason why it happened what it happened. Bitcoin was in the bubble in 2017, it skyrocketed by 1,800% reaching its all time high ... To read more with regards to bitcoin paper wallet, check out internet site below: http://www.cryptocoinwalletcards.com/ Tags: asic bitcoin miner, asic bitcoi... Very short term, we are in strong bear market rally in the form of wave B, of ABC correction (possibly flat). On completion of wave B, we expect wave C decline in 5 wave which could retest the 450 ...

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