What is cryptocurrency and why do we need it?

What is cryptocurrency and why do we need it?

cryptocurrency is a digital asset designed to work as a medium of exchange that uses strong cryptography to secure financial transactions, control the creation of additional units, and verify the transfer of assets.

Cryptocurrencies are a kind of alternative currency and digital currency (of which virtual currency is a subset).

Cryptocurrencies use decentralized control as opposed to centralized digital currency and central banking systems.

The decentralized control of each cryptocurrency works through distributed ledger technology, typically a blockchain, that serves as a public financial transaction database.

Bitcoin, first released as open-source software in 2009, is generally considered the first decentralized cryptocurrency. Since the release of bitcoin, over 4,000 altcoins (alternative variants of bitcoin, or other cryptocurrencies) have been created.

The first cryptocurrencies

The first decentralized cryptocurrency, bitcoin, was created in 2009 by pseudonymous developer Satoshi Nakamoto. It used SHA-256, a cryptographic hash function, as its proof-of-work scheme. In April 2011, Namecoin was created as an attempt at forming a decentralized DNS, which would make internet censorship very difficult. Soon after, in October 2011, Litecoin was released. It was the first successful cryptocurrency to use scrypt as its hash function instead of SHA-256. Another notable cryptocurrency, Peercoin was the first to use a proof-of-work/proof-of-stake hybrid. IOTA was the first cryptocurrency not based on a blockchain, using the Tangle instead.

On 6 August 2014, the UK announced its Treasury had been commissioned to do a study of cryptocurrencies, and what role, if any, they can play in the UK economy. The study was also to report on whether regulation should be considered.

How is a cryptocurrency defined?

According to Jan Lansky, a cryptocurrency is a system that meets six conditions:

  1. The system does not require a central authority, its state is maintained through distributed consensus.
  2. The system keeps an overview of cryptocurrency units and their ownership.
  3. The system defines whether new cryptocurrency units can be created. If new cryptocurrency units can be created, the system defines the circumstances of their origin and how to determine the ownership of these new units.
  4. Ownership of cryptocurrency units can be proved exclusively cryptographically.
  5. The system allows transactions to be performed in which ownership of the cryptographic units is changed. A transaction statement can only be issued by an entity proving the current ownership of these units.
  6. If two different instructions for changing the ownership of the same cryptographic units are simultaneously entered, the system performs at most one of them.

In March 2018, the word ‘cryptocurrency’ was added to the Merriam-Webster Dictionary.

What are an altcoin and a crypto token?

Stephanie Yang of The Wall Street Journal defined altcoins as “alternative digital currencies,” while Paul Vigna, also of The Wall Street Journal, described altcoins as alternative versions of bitcoin. Aaron Hankins of the MarketWatch refers to any cryptocurrencies other than bitcoin as altcoins.

A blockchain account can provide functions other than making payments, for example in decentralized applications or smart contracts. In this case, the units or coins are sometimes referred to as crypto tokens.

Cryptocurrency coin altcoins

How are cryptocurrencies designed?

Decentralized cryptocurrency is produced by the entire cryptocurrency system collectively, at a rate which is defined when the system is created and which is publicly known.

In centralized banking and economic systems such as the Federal Reserve System, corporate boards or governments control the supply of currency by printing units of fiat money or demanding additions to digital banking ledgers.

In the case of decentralized cryptocurrency, companies or governments cannot produce new units and have not so far provided backing for other firms, banks or corporate entities which hold asset value measured in it.

The underlying technical system upon which decentralized cryptocurrencies are based was created by the group or individual known as Satoshi Nakamoto.

As of May 2018, over 1,800 cryptocurrency specifications existed.

Within a cryptocurrency system, the safety, integrity and balance of ledgers are maintained by a community of mutually distrustful parties referred to as miners: who use their computers to help validate and timestamp transactions, adding them to the ledger in accordance with a particular timestamping scheme.

Read more about the Distributed Ledger Technology(DLT)

Most cryptocurrencies are designed to gradually decrease the production of that currency, placing a cap on the total amount of that currency that will ever be in circulation. Compared with ordinary currencies held by financial institutions or kept as cash on hand, cryptocurrencies can be more difficult for seizure by law enforcement. This difficulty is derived from leveraging cryptographic technologies.

what is the future of blockchain?

Blockchain and cryptocurrency

The validity of each cryptocurrency’s coins is provided by a blockchain. A blockchain is a continuously growing list of records, called blocks, which are linked and secured using cryptography. 

Each block typically contains a hash pointer as a link to a previous block, a timestamp and transaction data. By design, blockchains are inherently resistant to modification of the data. It is “an open, distributed ledger that can record transactions between two parties efficiently and in a verifiable and permanent way”.

For use as a distributed ledger, a blockchain is typically managed by a peer-to-peer network collectively adhering to a protocol for validating new blocks. Once recorded, the data in any given block cannot be altered retroactively without the alteration of all subsequent blocks, which requires collusion of the network majority.

Blockchains are secure by design and are an example of a distributed computing system with high Byzantine fault tolerance. Decentralized consensus has therefore been achieved with a blockchain. Blockchains solve the double-spending problem without the need of a trusted authority or central server, assuming no 51% attack (that has worked against several cryptocurrencies).

Read more on What is Bitcoin and how does Bitcoin work?

Blockchain and Timestamping

Cryptocurrencies use various timestamping schemes to “prove” the validity of transactions added to the blockchain ledger without the need for a trusted third party.

The first timestamping scheme invented was the proof-of-work scheme. The most widely used proof-of-work schemes are based on SHA-256 and scrypt.

Some other hashing algorithms that are used for proof-of-work include CryptoNightBlakeSHA-3, and X11.

The proof-of-stake is a method of securing a cryptocurrency network and achieving distributed consensus by requesting users to show ownership of a certain amount of currency. It is different from proof-of-work systems that run difficult hashing algorithms to validate electronic transactions.

The scheme is largely dependent on the coin, and there’s currently no standard form of it. Some cryptocurrencies use a combined proof-of-work/proof-of-stake scheme.

Cryptocurrency Mining

In cryptocurrency networks, mining is a validation of transactions. For this effort, successful miners obtain new cryptocurrency as a reward.

The reward decreases transaction fees by creating a complementary incentive to contribute to the processing power of the network.

The rate of generating hashes, which validate any transaction, has been increased by the use of specialized machines such as FPGAs and ASICs running complex hashing algorithms like SHA-256 and Scrypt. This arms race for cheaper-yet-efficient machines has been on since the day the first cryptocurrency, bitcoin, was introduced in 2009.

With more people venturing into the world of virtual currency, generating hashes for this validation has become far more complex over the years, with miners having to invest large sums of money on employing multiple high-performance ASICs. Thus the value of the currency obtained for finding a hash often does not justify the amount of money spent on setting up the machines, the cooling facilities to overcome the enormous amount of heat they produce, and the electricity required to run them.

Some miners pool resources, sharing their processing power over a network to split the reward equally, according to the amount of work they contributed to the probability of finding a block. A “share” is awarded to members of the mining pool who present a valid partial proof-of-work.

As of February 2018, the Chinese Government halted trading of virtual currency, banned initial coin offerings and shut down mining. Some Chinese miners have since relocated to Canada. One company is operating data centres for mining operations at Canadian oil and gas field sites, due to low gas prices.

In June 2018, Hydro Quebec proposed to the provincial government to allocate 500 MW to crypto companies for mining. According to a February 2018 report from Fortune, Iceland has become a haven for cryptocurrency miners in part because of its cheap electricity. Prices are contained because nearly all of the country’s energy comes from renewable sources, prompting more mining companies to consider opening operations in Iceland. The region’s energy company says bitcoin mining is becoming so popular that the country will likely use more electricity to mine coins than power homes in 2018.

In October 2018 Russia becomes home to one of the largest legal mining operations in the world, located in Siberia.

In March 2018, a town in Upstate New York put an 18-month moratorium on all cryptocurrency mining in an effort to preserve natural resources and the “character and direction” of the city.

GPU demand is high for mining cryptocurrency: GPU price rise

GPU demand is high for mining cryptocurrency: GPU price rise

An increase in cryptocurrency mining increased the demand for graphics cards (GPU) in 2017. Popular favourites of cryptocurrency miners such as Nvidia’s GTX 1060 and GTX 1070 graphics cards, as well as AMD’s RX 570 and RX 580 GPUs, doubled or tripled in price – or were out of stock.

 A GTX 1070 Ti which was released at a price of $450 sold for as much as $1100. Another popular card GTX 1060’s 6 GB model was released at an MSRP of $250, sold for almost $500. RX 570 and RX 580 cards from AMD were out of stock for almost a year. Miners regularly buy up the entire stock of new GPU’s as soon as they are available.

Nvidia has asked retailers to do what they can when it comes to selling GPUs to gamers instead of miners. “Gamers come first for Nvidia,” said Boris Böhles, PR manager for Nvidia in the German region.

Cryptocurrency Wallets

An example paper printable bitcoin wallet consisting of one bitcoin address for receiving and the corresponding private key for spending

A cryptocurrency wallet stores the public and private “keys” or “addresses” which can be used to receive or spend the cryptocurrency. With the private key, it is possible to write in the public ledger, effectively spending the associated cryptocurrency. With the public key, it is possible for others to send currency to the wallet.

Blockchain Anonymity

Bitcoin is pseudonymous rather than anonymous in that the cryptocurrency within a wallet is not tied to people, but rather to one or more specific keys (or “addresses”). 

Thereby, bitcoin owners are not identifiable, but all transactions are publicly available in the blockchain. Still, cryptocurrency exchanges are often required by law to collect the personal information of their users.

Additions such as Zerocoin have been suggested, which would allow for true anonymity.

In recent years, anonymizing technologies like zero-knowledge proofs and ring signatures have been employed in the cryptocurrencies Zcash and Monero, respectively. Cryptocurrency anonymizing implementations such as Cloakcoin, Dash, and PIVX use built-in mixing services, also known as tumblers.

The Fungibility of Cryptocurrency 

Most cryptocurrency tokens are fungible and interchangeable. However, unique non-fungible tokens also exist. Such tokens can serve as assets in games like CryptoKitties.

The Economy of cryptocurrencies

Cryptocurrencies are used primarily outside existing banking and governmental institutions and are exchanged over the Internet.

Cryptocurrency Transaction fees

Transaction fees for cryptocurrency depend mainly on the supply of network capacity at the time, versus the demand from the currency holder for a faster transaction.

The currency holder can choose a specific transaction fee, while network entities process transactions in order of highest offered fee to lowest. Cryptocurrency exchanges can simplify the process for currency holders by offering priority alternatives and thereby determine which fee will likely cause the transaction to be processed in the requested time.

For ether, transaction fees differ by computational complexity, bandwidth use, and storage needs, while bitcoin transaction fees differ by transaction size and whether the transaction uses SegWit. In September 2018, the median transaction fee for ether corresponded to $0.017, while for bitcoin it corresponded to $0.55.

Cryptocurrency Exchanges

Cryptocurrency exchanges allow customers to trade cryptocurrencies for other assets, such as conventional fiat money, or to trade between different digital currencies.

Cryptocurrency Atomic swaps

Atomic swaps are a mechanism where one cryptocurrency can be exchanged directly for another cryptocurrency, without the need for a trusted third party such as an exchange.

Cryptocurrency ATMs

Jordan Kelley, the founder of Robocoin, launched the first bitcoin ATM in the United States on 20 February 2014. The kiosk installed in Austin, Texas is similar to bank ATMs but has scanners to read government-issued identification such as a driver’s license or a passport to confirm users’ identities.

 

Cryptocurrency Initial coin offerings (ICO)

Cryptocurrency Initial coin offerings (ICO)

An initial coin offering (ICO) is a controversial means of raising funds for a new cryptocurrency venture. An ICO may be used by startups with the intention of avoiding regulation.

However, securities regulators in many jurisdictions, including in the U.S., and Canada have indicated that if a coin or token is an “investment contract” (e.g., under the Howey test, i.e., an investment of money with a reasonable expectation of profit based significantly on the entrepreneurial or managerial efforts of others), it is a security and is subject to securities regulation.

In an ICO campaign, a percentage of the cryptocurrency (usually in the form of “tokens”) is sold to early backers of the project in exchange for legal tender or other cryptocurrencies, often bitcoin or ether.

According to PricewaterhouseCoopers, four of the 10 biggest proposed initial coin offerings have used Switzerland as a base, where they are frequently registered as non-profit foundations.

The Swiss regulatory agency FINMA stated that it would take a “balanced approach“ to ICO projects and would allow “legitimate innovators to navigate the regulatory landscape and so launch their projects in a way consistent with national laws protecting investors and the integrity of the financial system.”

In response to numerous requests by industry representatives, a legislative ICO working group began to issue legal guidelines in 2018, which are intended to remove uncertainty from cryptocurrency offerings and to establish sustainable business practices.

Cryptocurrency Legality

Cryptocurrency Legality

The legal status of cryptocurrencies varies substantially from country to country and is still undefined or changing in many of them.

While some countries have explicitly allowed their use and trade, others have banned or restricted it. According to the Library of Congress, an “absolute ban” on trading or using cryptocurrencies applies in eight countries: Algeria, Bolivia, Egypt, Iraq, Morocco, Nepal, Pakistan, and the United Arab Emirates. An “implicit ban” applies in another 15 countries, which include Bahrain, Bangladesh, China, Colombia, the Dominican Republic, Indonesia, Iran, Kuwait, Lesotho, Lithuania, Macau, Oman, Qatar, Saudi Arabia and Taiwan. In the United States and Canada, state and provincial securities regulators, coordinated through the North American Securities Administrators Association, are investigating “bitcoin scams” and ICOs in 40 jurisdictions.

Various government agencies, departments, and courts have classified bitcoin differently. China Central Bank banned the handling of bitcoins by financial institutions in China in early 2014.

In Russia, though cryptocurrencies are legal, it is illegal to actually purchase goods with any currency other than the Russian ruble. Regulations and bans that apply to bitcoin probably extend to similar cryptocurrency systems.

Cryptocurrencies are a potential tool to evade economic sanctions for example against Russia, Iran, or Venezuela.

In April 2018, Russian and Iranian economic representatives met to discuss how to bypass the global SWIFT system through decentralized blockchain technology. Russia also secretly supported Venezuela with the creation of the petro (El Petro), a national cryptocurrency initiated by the Maduro government to obtain valuable oil revenues by circumventing US sanctions.

In August 2018, the Bank of Thailand announced its plans to create its own cryptocurrency, the Central Bank Digital Currency (CBDC).

Cryptocurrency Advertising bans

Cryptocurrency Advertising bans

Bitcoin and other cryptocurrency advertisements were temporarily banned on Facebook, Google, Twitter, Bing, Snapchat, LinkedIn and MailChimp. Chinese internet platforms Baidu, Tencent, and Weibo have also prohibited bitcoin advertisements. The Japanese platform Line and the Russian platform Yandex have similar prohibitions.

Cryptocurrency U.S. tax status

On 25 March 2014, the United States Internal Revenue Service (IRS) ruled that bitcoin will be treated as property for tax purposes. This means bitcoin will be subject to capital gains tax. In a paper published by researchers from Oxford and Warwick, it was shown that bitcoin has some characteristics more like the precious metals market than traditional currencies, hence in agreement with the IRS decision even if based on different reasons.

The legal concern of an unregulated global economy

As the popularity of and demand for online currencies has increased since the inception of bitcoin in 2009, so have concerns that such an unregulated person to person global economy that cryptocurrencies offer may become a threat to society. Concerns abound that altcoins may become tools for anonymous web criminals.

Cryptocurrency networks display a lack of regulation that has been criticized as enabling criminals who seek to evade taxes and launder money.

Transactions that occur through the use and exchange of these altcoins are independent of formal banking systems and therefore can make tax evasion simpler for individuals. Since charting taxable income is based upon what a recipient reports to the revenue service, it becomes extremely difficult to account for transactions made using existing cryptocurrencies, a mode of exchange that is complex and difficult to track.

Systems of anonymity that most cryptocurrencies offer can also serve as a simpler means to launder money. Rather than laundering money through an intricate net of financial actors and offshore bank accounts, laundering money through altcoins can be achieved through anonymous transactions.

Cryptocurrency: Loss, theft, and fraud

In February 2014 the world’s largest bitcoin exchange, Mt. Gox, declared bankruptcy. The company stated that it had lost nearly $473 million of their customers’ bitcoins likely due to theft. This was equivalent to approximately 750,000 bitcoins, or about 7% of all the bitcoins in existence. The price of a bitcoin fell from a high of about $1,160 in December to under $400 in February.

Two members of the Silk Road Task Force—a multi-agency federal task force that carried out the U.S. investigation of Silk Road—seized bitcoins for their own use in the course of the investigation. DEA agent Carl Mark Force IV, who attempted to extort Silk Road founder Ross Ulbricht (“Dread Pirate Roberts”), pleaded guilty to money laundering, obstruction of justice, and extortion under colour of official right, and was sentenced to 6.5 years in federal prison. U.S. Secret Service agent Shaun Bridges pleaded guilty to crimes relating to his diversion of $800,000 worth of bitcoins to his personal account during the investigation, and also separately pleaded guilty to money laundering in connection with another cryptocurrency theft; he was sentenced to nearly eight years in federal prison.

Homero Josh Garza, who founded the cryptocurrency startups GAW Miners and ZenMiner in 2014, acknowledged in a plea agreement that the companies were part of a pyramid scheme, and pleaded guilty to wire fraud in 2015.

The U.S. Securities and Exchange Commission separately brought a civil enforcement action against Garza, who was eventually ordered to pay a judgment of $9.1 million plus $700,000 in interest. The SEC’s complaint stated that Garza, through his companies, had fraudulently sold “investment contracts representing shares in the profits they claimed would be generated” from mining.

On 21 November 2017, the Tether cryptocurrency announced they were hacked, losing $31 million in USDT from their primary wallet. The company has ‘tagged’ the stolen currency, hoping to ‘lock’ them in the hacker’s wallet (making them unspendable). Tether indicates that it is building a new core for its primary wallet in response to the attack in order to prevent the stolen coins from being used.

In May 2018, Bitcoin Gold (and two other cryptocurrencies) were hit by a successful 51% hashing attack by an unknown actor, in which exchanges lost estimated $18m. In June 2018, Korean exchange Coinrail was hacked, losing US$37 million worth of altcoin. The fear surrounding the hack was blamed for a $42 billion cryptocurrency market selloff. On 9 July 2018, the exchange Bancor had $23.5 million in cryptocurrency stolen.

The French regulator Autorité des marchés financiers (AMF) lists 15 websites of companies that solicit investment in cryptocurrency without being authorised to do so in France.

Cryptocurrency Darknet markets

Cryptocurrency is also used in controversial settings in the form of online black markets, such as Silk Road. The original Silk Road was shut down in October 2013 and there have been two more versions in use since then.

In the year following the initial shutdown of Silk Road, the number of prominent dark markets increased from four to twelve, while the number of drug listings increased from 18,000 to 32,000.

Darknet markets present challenges in regard to legality. Bitcoins and other forms of cryptocurrency used in dark markets are not clearly or legally classified in almost all parts of the world. In the U.S., bitcoins are labelled as “virtual assets”.

This type of ambiguous classification puts pressure on law enforcement agencies around the world to adapt to the shifting drug trade of dark markets.

top 20 cryptopcurrency

How are cryptocurrencies regarded as?

Cryptocurrencies have been compared to Ponzi schemes, pyramid schemes and economic bubbles, such as housing market bubbles. Howard Marks of Oaktree Capital Management stated in 2017 that digital currencies were “nothing but an unfounded fad (or perhaps even a pyramid scheme), based on a willingness to ascribe value to something that has little or none beyond what people will pay for it”, and compared them to the tulip mania (1637), South Sea Bubble (1720), and dot-com bubble (1999).

While cryptocurrencies are digital currencies that are managed through advanced encryption techniques, many governments have taken a cautious approach toward them, fearing their lack of central control and the effects they could have on financial security.

Regulators in several countries have warned against cryptocurrency and some have taken concrete regulatory measures to dissuade users. Additionally, many banks do not offer services for cryptocurrencies and can refuse to offer services to virtual-currency companies.

 Gareth Murphy, a senior central banking officer has stated: “widespread use [of cryptocurrency] would also make it more difficult for statistical agencies to gather data on economic activity, which are used by governments to steer the economy”. He cautioned that virtual currencies pose a new challenge to central banks’ control over the important functions of monetary and exchange rate policy.

While traditional financial products have strong consumer protections in place, there is no intermediary with the power to limit consumer losses if bitcoins are lost or stolen.

 One of the features cryptocurrency lacks in comparison to credit cards, for example, is consumer protection against fraud, such as chargebacks.

An enormous amount of energy goes into proof-of-work cryptocurrency mining, although cryptocurrency proponents claim it is important to compare it to the consumption of the traditional financial system.

There are also purely technical elements to consider. For example, technological advancement in cryptocurrencies such as bitcoin results in high up-front costs to miners in the form of specialized hardware and software.

Cryptocurrency transactions are normally irreversible after a number of blocks confirm the transaction. Additionally, cryptocurrency can be permanently lost from local storage due to malware or data loss. This can also happen through the destruction of the physical media, effectively removing lost cryptocurrencies forever from their markets.

The cryptocurrency community refers to pre-mining, hidden launches, ICO or extreme rewards for the altcoin founders as a deceptive practice. It can also be used as an inherent part of a cryptocurrency’s design. Pre-mining means the currency is generated by the currency’s founders prior to being released to the public.

Paul Krugman, Nobel Memorial Prize in Economic Sciences winner does not like bitcoin, has repeated numerous times that it is a bubble that will not last and links it to Tulip mania. American business magnate Warren Buffett thinks that cryptocurrency will come to a bad ending.

In October 2017, BlackRock CEO Laurence D. Fink called bitcoin an ‘index of money laundering’. “Bitcoin just shows you how much demand for money laundering there is in the world,” he said.

Source wikipedia.org

What is VeChain?

What is VeChain?

What is VeChain?

According to their official website:

VeChain aims to connect blockchain technology to the real world by providing a comprehensive governance structure, a robust economic model as well as advanced IoT integration, and pioneers in real world applications.

The vision is stated in the Vechain whitepaper:

Building a trust-free and distributed business ecosystem platform to enable
transparent information flow, efficient collaboration, and high-speed value
transfers.

VeChain is a blockchain firm focused on goods and data. In its own words, VeChain “strives to build a trust-free and distributed business ecosystem, which is self-circulating and scalable”.

The VeChain product

It entails assigning a product that a special ID and fitting it with a VeChain smart chip tracker, like an NFC chip or RFID tracker so the particulars of any item could be gathered, stored and readily reviewed. This permits companies and individuals to track things through a distribution chain, confirm the validity of products and combat counterfeiting.

VeChain’s technologies are currently being used in regions like cold-chain logistics, luxury goods, health care, fashion and lots of different businesses.

But, with the impending launch of its blockchain, VeChain can be put to evolve into a stage for enterprise-grade dapps. This will definitely see it compete with other dapp platforms like Ethereum and EOS.

How Does VeChain Work?

VeChain started primarily as a blockchain distribution chain business but has since evolved into a full-scale DApp.

Supply Chain Trust

VeChain utilizes a mixture of blockchain technology and their in-house constructed smart processor to track things during their lifecycle. The chip could be implemented in various IoT things like NFC chips, RFID trackers, or QR codes.

Even though this might not seem like very fascinating technologies, it serves an essential function in ensuring product quality across sectors.

The luxury goods sector is wrought with imitation things — around $450 billion value. Having a product such as a Louis Vuitton handbag changing hands many times through distribution and production, you will need to trust the person before you’re passing along something true.

Traditional Supply Chain

VeChain, such as other blockchain providers, eliminates the requirement for this confidence. At each step along with the procedure, you are able to scan the wise chip on every item to ensure you are receiving everything you need to be. Since the blockchain is an immutable ledger, you can expect that you are receiving accurate advice.

Although still not accessible, it is not crazy to suppose that this tech will probably be in the hands of customers soon. Shortly, you will have the ability to confirm the authenticity of these sketchy flea market rack sunglasses using a quick scan in the cell phone.

Supply Chain Logistics

Beyond bogus protection, VeChain additionally enhances logistics systems through simplified merchandise monitoring. Logistics is complicated and frequently includes several different systems that change across companies. As a result of this, monitoring goods in the distribution chain may be a massive pain. This is particularly true when information needs to be entered manually or if changing between procedures.

Utilizing VeChain, you simply scan the item’s clever processor to find all its related data. This provides companies with advice that is always present and a precise account of every product.

Integrating with IoT apparatus, VeChain also helps with quality control. This is particularly beneficial in the agriculture and food sector where something such as a temperature change of a few degrees could ruin a whole product batch.

VeChain Thor

In February 2018, VeChain rebranded to VeChain Thor. The rebrand moved the company beyond the supply chain into more general enterprise dapp solutions similar to Ethereum. The new platform utilizes two different components: VeChain Tokens (VET) and VeThor Tokens (VTHO).

VeChain’s Two Tokens

VeChain Tokens (VET)

Prior to the execution of this VeChain mainnet, the sole tokens on the system were VEN, an ERC20 substitute. When the group moved from Ethereum on for their blockchain, they swapped VEN tokens for VET in a 1:100 exchange.

VET is utilized by firms as the wise payment money to conduct company activities on the blockchain. Firms who maintain more VET are given greater priority and more faith to the blockchain.

VeThor Tokens (VTHO)

As a VET holder, you get VTHO which you could utilize to carry out wise contracts and operate programs on the blockchain. This mechanism resembles the manner NEO generates GAS because of its holders.

The bottom generation rate of VTHO for VET holders would be:

0.000432 VTHO per VET per day

This amount is the minimum the speed is going to be, and also the VeChain Foundation will commence votes to re-adjust it according to system use.

Proof of Authority

The VeChain team is not shooting a totally decentralized system.. Rather, they have implemented Proof of Authority (PoA) consensus where 101 known validators create cubes. The system depends on further nodes to keep up the blockchain ecosystem. All nodes get VTHO for a reward for keeping the network. There are four Kinds of nodes which are distinguished by their maturity and the Quantity of VET they hold:

  1. Strength Nodes – 10 day maturity period (minimum 1,000,000 VET)
  2. Thunder Nodes – 20 day maturity period (minimum 5,000,000 VET)
  3. Mjolnir Masternodes – 30 day maturity period (minimum 15,000,000 VET)
  4. Thrudheim (Authority) Masternodes – 12/21/17 maturity start date (minimum 25,000,000 VET)

The 3 varieties of financial nodes (Power, Thunder, and Mjolnir) receive benefits in your VeChain Foundation VTHO pool along with the ordinary benefit for holding VET.

The 101 jurisdiction nodes (Thrudheim) receive the very same benefits as economical nodes and 30% of VTHO absorbed by blockchain trades. The remaining 70% of VTHO is going to be burnt. Besides this maturity data and minimal VET demand, authority nodes need to pass KYC processes, create their identity people, and pass on further requirements determined by the VeChain Foundation. All these validators are assessed and picked by the VeChain Foundation and neighbourhood.

If you held a specific number of VET from March 20, 2018, then you’d be categorized as an X Node. For example an X Node, you get another benefit in the Bonus Pool in addition to exclusive early access to VeChain ICOs. The program was developed to reward early adopters.

Do not be intimidated by the quantity of VET required to turn into a node. It’s still true that you will get the daily THOR reward whatever the volume you hold.

Governance Model

The supply of VET tokens not just determines consensus but compels the VeChain governance version too. These stakeholders vote on the Board of Steering Committee. Subsequently, this committee makes decisions about the technologies, operations, as well as public relations amongst other facets.

 

vechain Governance Model

Governance Model

VeChain Team & Progress

VeChain began as a subsidiary of BitSe, among China’s biggest blockchain businesses. The Singapore-based staff is over 150 members strong and possess an assortment of talent in their top management.

VeChain 2018 Roadmap

In June 2018, the VeChain group reached a critical landmark in establishing the system’s mainnet. Together with the launch, the system moved from the Ethereum blockchain on its blockchain. And, the group started swapping VEN for VET. The following steps for the community would be to enlarge the ecosystem using more dapps and tactical venture partnerships.

The platform currently has a substantial number of dapps on it such as DNV GL’s My Story and BitOcean’s OceanEx.

The VeChain Team

Sunny Lu directs the group as CEO. For the vast majority of Lu’s livelihood, he has led IT and Information System jobs for many luxury brands. Most significantly, he had been the Chief Information Officer (CIO) to get Louis Vuitton China.

Other members of the management group comprise CFO Jie Zhang that has 17 years experience in IT confidence and Advisor Bo Shen, the creator of Fenbushi Capital.

VeChain Partnerships

The group was busy forming partnerships right together with the two most prominent being PwC and DNV GL. VeChain is a portion of this PwC incubator program providing them access to the company’s massive global network of customers.

DNV GL is a $20B firm that supplies solutions to oil & gas, electricity, maritime, and renewable businesses. The strategic partnership with DNV GL must open the doorway for VeChain to a huge number of possible customers.

Maybe above all, the Chinese government has selected VeChain to function as blockchain technology partner of the government of Gui’an. Having a government that is infamously hard on regulations, this can be an impressive accomplishment.

Short List of VeChain Partners

VeChain Competition

On the supply chain side, Waltonchain and Modum are using blockchain technologies in a similar approach to VeChain. But, logistics is a sizable business. Moreso, every one of those 3 firms is apparently focusing on distinct markets which help to avoid direct competitors.

In 2017, interest in business DApp platforms jumped with competitions such as Ethereum, Cardano, EOS, and NEO all climbing in cost. Though VeChain only recently published their mainnet, their absolute variety of ventures have helped to oppose them one of these greater market cap jobs.

Trading

VeChain started trading at the end of August 2017 at about $0.25 (~0.00005 BTC).

Starting in December 2017, the cost rose fast and recently struck all-time highs along with the remainder of the crypto marketplace. Apart from being in a bull market, the cost increase was driven by the information of more partnerships in addition to the statement of this VeChain Thor rebrand.

Regrettably, the change from VEN into VET and the shift in the distribution has made cost evaluation rather hard. However, it would not be surprising to find the cost increase as new spouses start utilizing the enterprise DApp platform.

Where to Buy VET

The recommended Location to Buy VET is to Binance in exchange for Bitcoin or even Ethereum. If you do not currently have, you can buy them utilizing USD on each GDAX or Gemini. From that point, move your Bitcoin or Ethereum into Binance and make the trade.

You may view a whole list of exchanges in which VET can be obtained on CoinMarketCap.

Where to Store VET

Now the VET tokens have substituted the ERC20 VEN tokens, the VeChainThor Wallet is the suggested place to store your own funds. The pocket can be found on iOS, Android, also together with Ledger wallets.

What is Zcash?

What is Zcash?

What is Zcash?

As the official Zcash website states:

Zcash is a privacy-protecting, digital currency built on strong science.

As the necessity for solitude enhanced as big data became easily accessible, cryptocurrency users started searching other digital monies that may fill the privacy gap which Bitcoin might not.
Digital monies like Dash and Monero provide complex anonymization techniques that obscure trades in addition to the parties involved with these trades.

Another digital currency, ZCash, seems to provide a far larger level of fungibility by allowing its users to remain completely anonymous.

The Zerocoin protocol has been improved and transformed into the Zerocash platform, which was then developed into the Zcash cryptocurrency in 2016.

According to the Zcash whitepaper:

Zerocoin: a decentralized mix. Miers et al. [MGGR13] proposed Zerocoin, which extends Bitcoin to provide strong anonymity guarantees. Like many e-cash protocols (e.g., [CHL05]), Zerocoin employs zero-knowledge proofs to prevent transaction graph analyses. Unlike earlier practical e-cash protocols, however, Zerocoin does not rely on digital signatures to validate coins, nor does it require a central bank to prevent double spending. Instead, Zerocoin authenticates coins by proving, in zero-knowledge, that they belong to a public list of valid coins (which can be maintained on the blockchain). Yet rather than a full-fledged anonymous currency, Zerocoin is a decentralized mix, where users may periodically “wash” their bitcoins via the Zerocoin protocol.

Development of protocol enhancements and also the reference implementation is directed from the Zerocoin Electric Coin Company, known as Zcash Company.

The founder and CEO of Zcash Company is Zooko Wilcox-O’Hearn. The cryptographer Matthew D. Green in Johns Hopkins University can be a part of the founding group. Roger Ver was among Zcash Company’s initial shareholders.

Zcash Technical details

Development
Initial release 28 October 2016
Code repository https://github.com/zcash/zcash
Development status Active
Website https://z.cash
Ledger
Hash function zk-SNARKs
Block explorer https://explorer.zcha.in/

How was Zcash founded?

Zooko Wilcox-O’Hearn set the basis of Zcash in October 2016 in a bid to tackle an open monetary system together with all the privacy feature that net users desired.

Bitcoin is a pioneer in the open monetary system, also ZCash attempts to keep the exact same structure but with solitude and fungibility included. Fungibility is the simplicity at which a commodity could be substituted for a second, which can be important in the crypto world since it ensures that a single consumer’s coin is like another.

It follows that while all transactions are listed on a blockchain, the transactions are encrypted and may only be seen by users which were granted access to them.

Most electronic currencies which provide anonymity like Monero, rely on personal keys that are constructed with alphanumeric characters. Users from the crypto world are also provided with a unique public address that functions exactly like an IP address.

The general public address must receive funds from a different user, meaning the sender needs to receive the speech so as to ease the transfer.

But with sufficient trades made over time, public addresses could be connected to those trades, which makes it simpler for inquirers to spot the public address holder. Additionally, this is where the amount of fungibility comes to play.

Why is Zcash different than Bitcoin?

If a vendor of a product can monitor a purchaser’s previous transactions dependent on the public address given to the seller from the purchaser, the seller might feel inclined to refuse payment from your purchaser when the disclosed purchase history of their purchaser doesn’t align with the seller’s faith or ethical stance.

ZCash uses a cryptographic instrument named Zero-Knowledge Proof that allows two users to participate in trades without either party showing their address.

Zero-Knowledge Proof makes ZCash transactions untraceable on its own blockchain by obfuscating the addresses of both parties, in addition to the amount required in every transaction.

Since the addresses listed on the blockchain are behaving like protection and aren’t the true user’s payment speech, it is near impossible to follow the route of any funds to its sender or recipient. That is similar to Bitcoin and several different blockchains which reveal the sum moved from one’s real public address to another.

Zero-Knowledge Proof gives a high degree of fungibility given that a party involved in a trade isn’t privy to another party’s individuality and consequently, payment history and thus can’t deny his coin repayment.

ZCash along with other exceptionally anonymized cryptocurrencies like Monero are usually criticized for possibly giving a safe harbour for untraceable transactions linked to illegal activity.

Why do we need a higher degree of privacy using cryptocurrency?

The usage of ZCash isn’t only for cybercriminals who take part in prohibited trades in the darknet. There are a lot of valid reasons why an individual could opt for anonymous cryptocurrencies like ZCash.

  • Someone having a chronic medical condition who’d like to buy his tablets online anonymously;
  • An organization who’d like to protect its trade secrets or supply chain information from rivals;
  • Someone who’d enjoy legal solutions for a personal matter for example insolvency;
  • people looking for anonymity for privacy reasons.

ZCash executed its first hard fork in June 2018, which had long been planned for the day that block 347500 had been successfully mined, and has scheduled a much larger hard fork for October of the same year.

In June 2018 took place the first hard fork of ZCash, which had been adjusted to match the mining of the 347500 blocks. In October 2018, a second and larger fork was scheduled.

zcash chart What is Zcash?

Image source coinmarketcap.com

What is Tezos?

What is Tezos?

What is Tezos?

According to Tezos official website:

Tezos is a new platform for smart contracts and decentralized applications.

Tezos’ is a blockchain project that aims to offer “the world’s first ‘self-amending’ cryptocurrency”.

Its 2017 first coin offering increased $232 million, which has been the biggest for this kind of offering to this date. The project experienced a control controversy over the use of raised funds which was clarified by a July 2018 Wired cover story because”the crypto world’s largest scandal” following its settlement.

Tezos established a Betanet on June 30th 2018 that became Mainnet on September 17th 2018.

Denominations
Plural Tezies
Ticker symbol XTZ
Development
Original author(s) Arthur Breitman, Kathleen Breitman
White paper “Tezos: A Self-Amending Crypto-Ledger Position Paper”
Initial release 30 June 2018 
Code repository https://gitlab.com/tezos/tezos
Development status Active
Written in OCaml
Operating system Clients available for LinuxmacOSPOSIXRaspbian
License MIT
Website tezos.com
Ledger
Ledger start 17 September 2018 (45 days ago)
Timestamping scheme Proof-of-stake (partial hash inversion)
Block explorer tzscan.io

Tezos History

Some reports suggest that Tezos genesis will return to 2014. In this interval, just Bitcoin has been functional. Ethereum was in its baby years. Therefore, the debate that when Tezos was built to be a rival, then the contest was Bitcoin.

But, because of the close nature of this platform with this of Ethereum, it’s regarded as the significant Ethereum competition. Ethereum smart contract has been manufactured in Solidity. However, Tezos intelligent contract is made in OCaml usable language.

OCaml Language

OCaml is a general programming language. The speech is strong. This signifies is that the language isn’t hard to debug and maintain. Additionally, language is powerful in things expressiveness and security.

Arguments have it the speech is best utilized in a method where one mistake contributes to good wins. Also, the language boasts of a broad base of development libraries and tools.

For that reason, it is not difficult to tell why Tezos decided to choose the language.

The Ethereum ‘Problems’ solved by Tezos

  • Security concerns in cryptography. The usage of Michelson from smart contracts is going to be an alternative.
  • Ethereum’s proof of work system. Ethereum’s evidence of performing system. Tezos perceives the Ethereum evidence of work as to be somewhat expensive and concentrated. Tezos solves this from the delegation of this evidence of bet mechanism.
  • Ethereum’s transaction language. Ethereum’s trade language. The language utilized by Ethereum lacks a fantastic deal in expressiveness. Tezos utilizes OCaml language for trades. The language is much more expressive than many others such as Solidity.
  • Coordination issues that make Ethereum have the inability to innovate.

By addressing these issues, Tezos development staff believe they can think of a much better blockchain platform.

tezos features

Image Credits: Tezos

Tezos Smart Contracts

In Tezos, smart contacts are stateful accounts which specify an executable code. Each account or instead a contract includes a supervisor. The supervisor will control the accounts. The contracts have two kinds of keys; both the public key and the private key.

Public keys are used for registering cubes and mining block.

The wise contract will probably be in Michelson programming language. The language will make it possible for developers to make wise contracts and DApps which are going to be immune to third-party hindrance or censoring.

Ethereum utilizes Solidity as the wise contract language kind. Contrary to Solidity, the new clever contract speech exploited by Tezos isn’t compiled with whatever. What’s the consequence of this?

It’s more akin to the EVM bytecode just with high-frequency constructs. These high tech constructs contain; maps, lambdas, contract and sets specific functionality. This, therefore, means that the language makes life simpler for people as studying it’s easy. The language is related to discovering answers for challenges that arise from the usage of Solidity.

Tezos Proof of Stake

The stage is a peer to peer system. Each user has a node. The Tezos evidence of bet process is a mechanism where nodes will come to a consensus about the condition of this blockchain. Many other blockchain technologies possess their own Proof of Stake systems. However, unlike other PoS mechanics, the Tezos system enables anybody to take part in the PoS. Anyone who participates in the procedure to achieve a consensus about the condition of Tezos is subsequently rewarded.

Along with the simple fact that anybody can take part, the PoS mechanism in Tezos is significantly less costly. Therefore, it’s readily accessible.

Tezos Signing Block

Tezos employ the notion of registering cubes to suppress selfish mining. What signing cubes imply is that if a block has been minted, it’s delegated 16 arbitrary signing rights. The 16 stakeholders that are delegated the registering rights will detect the entire minting process and submit an application to confirm the cubes.

The registering stakeholders are subsequently incentivized. The entire procedure for registering cubes is called Tezos Baking.

Is Mining possible on Tezos?

Yes. The system allows for the mining of rolls. The mining is called baking. A stakeholder can mine a block following a moment and the next block after two minutes and the trend persists.

In scenarios where a customer sees a chance to mine a top priority block, Tezos permits for deposits. Security deposit offers you an upper hand at the mining of a top priority bet. In circumstances where there’s a security deposit, and no mining happens the machine refunds the safety deposit to the customer’s wallet.

What’s a Tezos Roll?

Rolls are a set of tokens whose monitor is stored on the Tezos ledger. The tokens are utilized to pick which delegates are chosen to bake. A roster has 10000 tokens.

Baking is pretty simple to work. But, there are a few requirements required for baking.

The blockchain actions a baker with the duty to produce the cubes they’re baking. After creating the cubes, they will have to validate the cubes. This may take up ample storage bandwidth and space. Anyway, a secure and secure online connection is crucial for the baker.

Next, they want security for those cubes they’re baking. The Tezos platform provides bakers incentives for procured blocks. There are 3 big ways whereby the bakers will secure their surgeries.

Primarily, preventing and mitigating intrusion that’s ensuring that no distant shell may obtain access into the baking procedure. Second, DDOS immunity, a manner where clever bakers will inject their own cubes from over just one IP address. Finally, for safety, the baker needs to safeguard the personal key.

Tezos Tokens for the Baker

For a baker to serve as a delegate for baking they must at all times have at least 8.25% of the tokens delegated to them.

The State of Delegation on Tezos

Delegation is mainly the supply of baking benefits. The machine can perform the delegation mechanically. What’s the Condition of this delegation on Tezos?

There are approximately 33.33% busy Tezos tokens. From the amount, the blockchain delegates that a massive chunk up to 90% of those 33.33% busy tokens. With these particular figures, an individual can argue that the delegation process is oversaturated and oversubscribed. The oversubscription could be credited to:

  • Optimism around the profits of the delegation
  • Tezos public baking mechanism is easily accessible and has a relatively low barrier to entry
  • A low exchange of the tokens as the token holders have decided to store.

 Potential Developments on Tezos

Since the development team always attempts to produce the system bigger and larger.  A few probable developments are:

  1. Non-Interactive Zero-knowledge Proofs of Knowledge. This is going to be a fantastic attribute in maintaining the trades untraceable. On the other hand, the challenges that have to be jumped to the fruition of the NIZKPoK is going to be the foundation on CRS versions. And, lack of sufficient study and proof of the achievement of this machine in the blockchain world. The CRS version is only going to signify that the machine must return to the trusted party program. As a reliable party will be supplying the CRS model.
  2. Ring signature. Well, CyptoNote developed ring puzzles to get solitude. Thus, a customer can spend his Tezos coins without exposing the customer’s address.

Tezos’ Governance

Tezos includes a governance structure where the participation of every stakeholder is essential. The stage comes with an election cycle along with a state in alterations to this protocol. This is a movement to have the customers feel involved with the advancement of the cryptocurrency since it attempts to grow. Additionally, the movement allows for tracking malicious efforts to amend the routine.

The Tezos Self-amendment concept explained

When programmers perform an update on a blockchain stage, the stage divides. We refer to this split procedure a ‘forking.’ Typically, people think of forking like a disruption of this community, community branch and also shift in the incentive programs of the customers.

What is NEM?

What is NEM?

What is NEM?

According to the NEM website:

Blockchain technology offers a fundamentally streamlined method of maintaining a secure ledger of transactions compared to a traditional database.

The NEM vision is stated from the beginning of their whitepaper, which is referred to as a Technical reference.

NEM is a movement that aims to empower individuals by creating a new economy based on the principles of decentralization, financial freedom, and equality of opportunity.
We would like to thank the contributors and the many people who have inspired us. . .
BloodyRookie gimre Jaguar0625 Makoto

Denominations
Subunit
0.000001 µXEM (microXEM) – smallest unit
0.001 mXEM (milliXEM) – thousandth unit
Plural XEM
Symbol XEM
Demographics
Date of introduction 31 March 2015
User(s) Global
Issuance
Issuer Fixed Decentralized
peer-to-peer consensus
Website NEM
Valuation
Genesis Block Production Fixed 8,999,999,999 XEM total
Block time                     1 minute
Technology                  Blockchain

New Economy Movement (NEM) is an enterprise-grade solution to power the impending blockchain market. Initially meant to be a branch of NXT, but the NEM community chose to go with an entirely new codebase with an alpha version published June 25, 2014, and also the initial stable release March 31, 2015.

Focus on constructing just what you require, whether that is a fintech system, monitoring logistics, an ICO, record notarization, decentralized authentication, or even a whole lot more.

The Smart Asset System

The NEM blockchain powers what they call the Smart Asset System.

This system is meant to become an open, customizable blockchain alternative for virtually any variety of use cases assembled in addition to easy, effective API calls. The blockchain is procured and trades are processed with a worldwide network of nodes operating the NEM core applications, and the system is employed as an API Gateway server.

This means developers seeking to build blockchain powered programs do not have to conduct any distinctive NEM applications as each the NEM performance can be found by obtaining API calls.

This allows for a great deal of flexibility in regards to system design and the way many apps are using this NEM network. Programs can get the NEM API directly, get into another server as well as creating NEM asks, or current servers may be adapted to use NEM in the backdrop.

A mobile app directly using the NEM Blockchain

Using the NEM network in addition to an existing server

A legacy system using the NEM blockchain

 

Programmers define NEM Addresses that act as containers for resources and could be upgraded and altered over time. An Address could signify simply a pocket holding coins or something more complex like a record which needs an election that’s collecting votes.

The programmer would then produce Mosaics: indistinguishable, transferable resources which represent the signatures, coins, or votes which will live in the Addresses. This system of adaptive addresses and configurable mosaics is feasible for countless use instances, and because each one the NEM performance is obtained via the NEM API, anyone can construct any type of system that they wind up and hook it in the NEM blockchain with relative ease.

Proof-of-Importance and Harvesting

The NEM Blockchain employs a Proof-of-Importance algorithm (as opposed to Bitcoin’s Proof-of-Work or PIVX’s Proof-of-Stake) to achieve consensus through a process that incentivizes active participation in the network.

This generates a decentralized, nimble community of well-behaved nodes.

Part of the system operates by vesting coins: whenever you put coins on your pocket, they begin as unvested coins.

As time passes, your coins will start to vest or rely on the significance of your accounts.

This region of the system functions like staking coins in PoS instalments but is just 1 part of calculating your own importance.

Along with monitoring vesting, the trade chart of the NEM system is continually analyzed to give information on which nodes are leading and which aren’t. This usually means that the more trades you send to other customers and the longer you use the system generally, the more important you become. The vesting procedure and transaction metrics lead to a significance score for every node, and these scores are utilized to scale the odds of your node harvesting XEM.

Since PoI isn’t hardware intensive, so it permits full nodes to be run on just about any machine irrespective of electricity, preventing centralization of harvesting to people with the largest machines.

As it takes a time commitment via the vesting procedure, it prevents the”rich get richer” effect of numerous staking systems wherein individuals with the most cash instantly turn into the largest earners and cannot be outpaced.

In certain systems such as Bitcoin, mining cubes and directing a community node are different. From the NEM system, running a node to guarantee the system and reaping coins is accomplished by precisely the exact same applications, incentivizing conducting a complete node and contributing to more decentralization over time since harvesting becomes more rewarding.

The PoI process is exceptional and can be an alternative to conventional consensus methods that come with their share of advantages and flaws.

NEM Blockchain Features

NEM employs a customized version of the Eigentrust++ algorithm which implements a”reputation system” for nodes on the community. Fundamentally, every node keeps track of the data that it receives from other nodes (fresh cubes, trades, etc.) and subsequently confirms this information.

If the information shows valid, the standing of the supplying node increases, and when it is bad information the standing will decrease. The reputations of nodes are passed across the community and updated inside each node. This allows for automatic load balancing and eliminating bad nodes in the community, keeping the system running as easily and fast as possible.

Additional Features:

  • Constructed spam filters Which prevent Junk transactions from Flood the System and clogging up the Functions
  • A P2P time synchronization system Which Allows the System to Keep accurate timestamps without relying upon any External servers for Assessing time
  • Encrypted messaging onto the blockchain without Breaking Trade fields to Transmit Info like other coins
  • Multisignature addresses Enable Programmers to Specify shared addresses and multiparty control over Resources and containers

Information on the technology described here and can be found on the NEM technology page and in more technical detail in their technical reference.

Public vs. Private

Everyone may use the people NEM blockchain by taking advantage of their API calls, but also for programs that need more privacy or want to store things in house, a personal version of the NEM blockchain may be provisioned to operate on servers that are internal and just take advantage of predefined nodes of their consumers’ choosing. On such trusted, personal node networks, a few characteristics of this public network which are in place to stop bad nodes from inducing difficulties can be eliminated or reused in extent, allowing for much quicker transactions (to the thousands/second) at a closed box installation.

NEM Public BlockchainNEM Private blockchain

 

These personal blockchain deployments may be used to power anything from loyalty points plans to transport fleet logistics, without exposing the trade information and supplying unparalleled speed and safety. This creates a good deal of sense for businesses which are looking to utilize the blockchain to power their present internal tools and also do not require the additional performance of their general public series. Use cases for the NEM system private and public are researched on their site at http://nem.io/enterprise/.

What is Ethereum Classic?

What is Ethereum Classic?

What is Etherium Classic?

According to the Etherium Classic website:

Ethereum Classic (ETC) is a smarter blockchain, it is a network, a community, and a cryptocurrency that takes digital assets further. In addition to allowing people to send value to each other, ETC allows for complex contracts that operate autonomously and cannot be modified or censored.

Ethereum Classic facilitates smart contracts by providing the advantage of decentralized governance. There’s not any necessity or chance of any outside disturbance, tracking, manipulation, or censoring the functioning of these programs.

Ethereum Classic appeared as a fork version of the Ethereum‘s Blockchain. The fork happened following a hack Ethereum in June 2016, which resulted in a $50 million worth of capital stolen.

Development
Initial release July 30, 2015; 3 years ago
Code repository https://github.com/ethereumproject
Development status Active
Forked from Ethereum
Written in C++GoRustScala
Operating system Clients available for LinuxWindowsmacOSPOSIX
License Multiple open-source licenses
Website ethereumclassic.org
Ledger
Timestamping scheme Proof-of-work
Hash function Ethash
Block reward 4 ETC
Block explorer gastracker.io
Valuation
Exchange rate 11$(as of 17 September 2018)
Market cap 1.1 Billion(as of 17 September 2018)

 

How was Etherium Classic born?

The conflict involving Ethereum and Ethereum Classic is both a moral and ethical one. Before we begin explaining the simple difference between both let us dig a little into the background.

The Formation of The DAO

The entire ecosystem of Ethereum works on the basis of smart contracts.

Smart contracts are essentially the way that things get done on the Ethereum eco-system.

The DAO (Decentralized Autonomous Organization) was an intricate smart contract that was going to reevaluate Ethereum forever. It was essentially going to become a decentralized venture capital fund that was going to finance all future DAPPS produced in the eco-system.

In the event that you wished to have any say in the management DAPPS that could get financed, then you may need to purchase “DAO Tokens” in exchange for Ether. The DAO tokens were an indication that you’re now formally a part of this DAO system.

How were DAPPS likely to be established and a method y which they would be approved? Primarily they will need to be whitelisted by curators, who’ve essentially known figureheads from the Ethereum world. If the proposal receives a 20% acceptance from the vote, then they are going to find the funds to start.

The possibility of DAO and its versatility, the control and total transparency which it provided was unprecedented; folks jumped into receiving their share of this pie. Within 28 days of its creation, it gathered around $150 million worth of ether at a crowdsale. At that moment, it had 14% of ether tokens issued thus far.

That is all great but how can one get out from this DAO? Imagine if some DAPP becomes accepted that you’re not a massive fan of, just how can you get out of this DAO then?

With this function, you’d return the ether you’ve spent and, in the event that you so wanted, you might even make your personal “Child DAO.” In reality, you can split off with numerous DAO token holders and make your Child DAO and begin accepting proposals.

But, if you decided to get out of the Dau, you would have to keep your Ether for 28days before you could use them. This was the condition of the contract. But there was just one small issue. A good deal of folks saw this potential loophole and pointed out it. The DAO founders promised this wasn’t likely to be a matter. The only issue is that it has been, which generated the whole storm which divides Ethereum to Ethereum and Ethereum Classic.

The DAO Attack

On 17th June 2016, a person exploited this loophole from the DAO and derailed 30% of the DAO’s funds. That is roughly $50 million bucks. The loophole the hacker(s) found was fairly straightforward.

 

What is Ethereum Classic? Ethereum vs Ethereum Classic

If you wanted to get out of the DAO, then you could do this by sending a petition. The dividing function will then follow the next two steps:

  • Give the user back his/her Ether in exchange for their DAO tokens.
  • Register the transaction in the ledger and update the internal token balance.

What the hacker did was that they left a recursive function from the petition, so this is how the dividing purpose went:

  • Take the DAO tokens from the user and give them the Ether requested.
  • Before they could register the transaction, the recursive function made the code go back and transfer even more Ether for the same DAO tokens.

This went on until $50 million value of Ether were removed and stored at a Child DAO as you’d expect, pandemonium went throughout the total Ethereum community.

Note: The hack occurred due to an issue from the DAO not due to any problems from the Ethereum itself. Ethereum runs in the background whereas DAO runs onto it.

As Gavin Wood, the co-founder of Ethereum puts it, blaming Ethereum for the DAO hack is like saying “The Internet is broken” every time a website goes down.

The aftermath of the DAO Attack

While Ethereum is in no form or shape to blame for what occurred with the DAO, the episode shattered the people’s beliefs in cryptocurrency.

Though the hacker did eliminate $50 million in value on Ether, it was sitting at the child DAO, and he could not yet access them since the DAO intelligent contract specifically said that any of those spent ether taken from the DAO would not be available for 28 days. With this in mind that the Ethereum team and community chose to do it and three possible answers were pointed out:

  • Nobody Does Anything.
  • Soft Fork.
  • Hard Fork.

Nobody Does Anything

Some people contended that making any modifications will go contrary to the nature and underlying doctrine of Ethereum itself.

Many people were not pleased with this, but so the bulk voted to go with a soft Fork.

What’s a Soft Fork?

Each time a string has to be upgraded there are two means of doing this: a gentle fork or a tough fork. Think of fork as an upgrade in the program that’s backwards compatible.

What exactly does that mean? Suppose you’re in charge of MS Excel 2005 in your notebook and you wish to start a spreadsheet constructed in MS Excel 2015, you’re still able to open it as MS Excel 2015 is backwards compatible.

 

What is a soft fork

Image credit: Vitalik Buterin

BUT, having said that there’s a difference. Each of the upgrades which you could enjoy from the more recent version will not be visible to you in the old version. Going back into our MS Excel analogy, assume there’s a feature that allows installing GIFs from the dictionary from the 2015 variant, you will not find those GIFs from the 2005 version. So essentially, you will observe all of the text but will not find the GIF.

That’s what Ethereum intended to perform with their blockchain, a soft fork wherein it is your choice whether you would like to update or maybe not, but no matter the updated users as well as also the non-updated users might still interact with one another. The thought was to lock the ether which was stolen from the hacker by dismissing and segregating any cubes which have a transaction that will assist the hacker move round their stolen ether.

This looked like a fantastic strategy and vast majority of those Ethereum community had been on board, but a problem surfaced, a difficulty that brought the whole community into a different dilemma. Implementing a soft fork would result in a “Denial Of Service” (DoS) attack vector.

Understanding The Soft Fork DoS.

Any and all mining activities are rewarded by “Gas” in the Ethereum ecosystem. That’s the primary way by which miners are protected from DoS attacks.

Suppose someone makes the decision to flood the Ethereum network with transactions which require difficult computations. The miners could sit down and apply those computations in addition to though they do not finish them they will locate a gas score that’s equivalent to numerous computations they’ve done. So longer intensive and challenging the computation, the additional gasoline they collect, and at the specific same period, the Attacker may want to devote a great deal of the money to make these strikes.

But what occurs is the moment this fork becomes implemented the attacker will stumble upon a run throughout this specific system. The attacker can flood the neighbourhood with transactions that interact with the DAO and make the miners do boundless complex computations for little to no gasoline price and at no monetary cost to the attacker.

This meant there was only 1 way for the Ethereum community, and it was the “Hard Fork.”

What Is A Hard Fork?

The primary difference between a soft fork and a hard fork is that it is not backwards compatible. Once it is utilized, there is absolutely no going back whatsoever.

If You Don’t update to the new blockchain, then You Don’t get access to all of the newest upgrades or interact with consumers of this new system whatsoever.

What is Ethereum Classic? Ethereum vs Ethereum Classic

How the hard fork in Ethereum is likely to function? It’s a branch which separates from the primary block series at a specific stage (in this instance before the DAO assault ). Up till that point  (block 1,920,000) the older series and also the new chain is exactly the same, but immediately following the hard fork, the 2 chains become very different entities.

This tricky fork was mostly made to repay all of the money that’s been taken from everybody by the DAO via a refund contract that had the sole purpose of “withdraw”. This suggestion caused a massive controversy in the area, and also there was a separation. The ones who had been “Anti-Hard Fork” refused to switch to the brand new blockchain and opted to stay at the older blockchain naming it “Ethereum Classic” or “ETC”.

And that is where we arrive at the battle that’s raging on in the Ethereum community because we talk, the struggle between ETC and ETH.

This conflict is intriguing since it is an ethical and ideological one. This is the moment that Gavin Wood, the co-founder of all Ethereum, has predicted “the single most important moment in cryptocurrency history since the birth of Bitcoin.

What is Ethereum Classic? Ethereum vs Ethereum Classic

People who were opposed to the hard fork decided to stick with the original chain calling it “Ethereum Classic.” As of writing Ethereum Classic stands at $8.96 per coin (according to CoinMaketCap).

what is ethereum classic etc chart

Why did people stick with an old chain when all the Ethereum heavy hitters, including founders Vitalik Buterin and Gavin Wood, moved onto the new chain?

The reply to this is a philosophical one. After Ethereum, and cryptocurrency, generally, premiered, it had been assumed to become a stance against corruption. The main reason the blockchain was created immutable was that they needed the machine to be resilient from individual whims.

This is the reason why, to numerous ETC sympathizers, the hard fork is also a handy cop-out, if you’re changing the whole series by a single hack then completely defeats the purpose of Ethereum at the first location. You’re demonstrating the blockchain may be impacted by individual whims.

And this has resonated with a lot of “crypto-idealists.” Some pretty big hitters like Barry Silbert, the CEO of Grayscale, have gotten behind ETC.

Today, all that seems good and well, however, there are a number of issues using Ethereum Classic which only can’t be ignored.

The Problems with Ethereum Classic 

The main problem with the ETC is the lack of backward compatibility with the Ethereum Hard Fork. All the heavyweights of the Ethereum community have moved on to the new chain, which means that anyone who is part of the ETC won’t be able to access any of the updates done by the ETH.

The perfect example is ETH’s move from Proof Of Work (PoW) To Proof of Stake (PoS). ETC won’t be able to implement that because their software simply doesn’t allow the use of updates.

But more that’s not the end of it; there are far more nefarious problems with ETC some of which borders on conspiracy. Many consider ETC to be an attack against Ethereum itself. What does that mean?

Post hard fork when the community was split and vulnerable, many say that the anti-Ethereum camp openly supported ETC, just to cause disruption in the community. Even more, prominent bloggers like David Seaman have reported that:

Classic is an insecure orphan chain being promoted in a way that would be illegal if Ethereum were a publicly traded company, which it could eventually be.

Ethereum Hard Fork (ETH)

ETH is the result of the hard fork and what is now considered the “new Ethereum.” As of writing, ETH stands at $197.42 (according to CoinMarketCap).

eth chart

 

The market cap for ETH currently stands at a staggering $20 billion and is currently the 2nd most expensive cryptocurrency in the world behind bitcoin.

ETH is the new form of Ethereum. The original heavy hitters are all part of the system, and ETH also happens to be the one going through the most revolutionary changes (like the aforementioned switch from POW to POS).

ETH was formed for one reason and one reason alone – to return the funds stolen by “the DAO attacker” back to the rightful owners.

ETH represents so much more than what it appears to be on the surface; it represents a victory for the Ethereum community. They came together after facing the worst hack in cryptocurrency history, stuck together and made something that is stronger than its predecessor.

But having said that, as we have mentioned before, there is one problem with ETH, and according to Pro-ETC fans, it is an ideological one.

Problems with ETH

The formation of ETH goes against the idea of the immutability of the blockchain and the philosophy of “code being law.” In the eyes of anti-ETH folks, the hard fork was a cop out from Ethereum, and they should have accepted the main blockchain for what it was.

Another issue that was raised was how was anyone going to know for sure that no more hard forks were going to take place in the future subject to human whims? What if there are multiple hard forks creating different versions of Ethereum? What if there are hundreds of different versions of Ethereum running at the same time? Won’t that greatly devalue it and cryptocurrency in general? (Even though a majority vote of the Ethereum community would be required to make such monumental changes).

PROs and CONs of both Ethereum Classic & Ethereum

Ethereum Classic

Pros

  • Stays true with the philosophy of the immutability of the blockchain.
  • Has recently got the backing of a few big players

Cons

  • Doesn’t get access to all the new updates made in the ETH chain (e.g. The move from POW to POS).
  • All the heavyweights of the Ethereum have moved on to ETH.
  • Considered an insult and an attack on the Ethereum community.
  • Is know to be full of scammers.

Ethereum

Pros

  • Is growing at an exponential pace.
  • Has the majority of the original founders who have created Ethereum in its corner.
  • Has reversed the DAO hack and given back the stolen money to its rightful owners (the DAO token holders).
  • Is being constantly updated with the latest changes.
  • Has a higher hash-rate than ETC.
  • A powerful example of what the Ethereum community is capable of when it comes together to solve a problem.
  • ETH is backed by a powerful group of over 200 corporations called the Enterprise Ethereum Alliance (EEA) which aims to use the blockchain technology to run smart contracts at Fortune 500 companies. Members include: Microsoft, JP Morgan, Toyota, ING, etc.

Cons

  • Goes against the policy of immutability.

what is ethereum classic?

Conclusions on Ethereum vs Ethereum Classic

Ethereum has made a spectacular comeback from an absolute disaster, and it looks like it’s going to fulfil all the expectations that people had had in it when it started. More than anything, the true power of Ethereum lies in its full scope. It is not just a currency; it is a platform on which people can build projects which will dictate the future. If decentralization is indeed the future, then Ethereum is going to be in the front and centre of it.

Now, this begs the question: What does this mean for ETH and ETC? ETH has all the lead developers on its side and is going to grow from strength to strength. Now with the backing of the EEA, it is only going to get better. The value of any currency comes from the trust that people has on it, and because of all these factors, the trust in ETH is only going to grow. A lot of experts are predicting that ETH will be the first cryptocurrency since Bitcoin to break the $1000 barrier.

For ETC, unfortunately, the same can’t be said. In the eyes of the people, ETC is always going to be black sheep of the Ethereum family. As of right now, ETH is nearly 15 times more valuable than ETC, and it really isn’t going to get any better.