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Ethereum

Amazon and ConsenSys-Built Kaleido Launches Full-Stack Marketplace

kaleido

Blockchain software-as-a-service (SAS) project Kaleido has launched a marketplace to provide its users with a “full-stack enterprise platform.”

Their “Blockchain Business Cloud” now features a “new marketplace [of] trusted tools and services from Kaleido, AWS, and members of the new partnership program, all offered as plug-and-play.” The suite of services will feature oracles, wallet and ID services, supply chain tools and even legal contract software.

According to a company statement, “Clients now have access to native AWS integrations, popular services such as HD wallets for privacy and ID registries for organizational identity, as well as industry products such as Chainlink for smart contract oracles, Viant for supply chain management, OpenLaw and Clause.io for real-time legal contracts, and many others—all at the click of a button.”

Kaleido, which went live in May 2018, is one of many managed by ConsenSys. Built on Ethereum, the platform is a hybrid blockchain that allows enterprises to manage a private chain that can sync with the Ethereum mainnet, housing “several consensus algorithms (RAFT, POA, and IBFT) that its users can toggle between.” The software-as-a-service is available on Amazon Web Services (AWS), and it runs on AWS’ cloud framework.

Since its launch, the press release claims that “Kaleido has helped organizations create over 1,000 blockchain networks with its Blockchain Business Cloud.”

“The reality is only about 10 percent of an enterprise blockchain project is the blockchain itself. There are many other application, data and infrastructure components required to go into production. I’m very excited that we have a whole cloud of blockchain technologies pre-integrated for our clients to use. The Kaleido Marketplace is a one-stop shop for all things enterprise blockchain,” founder and CEO of Kaleido, Steve Cerveny, said in light of the announcement.

Kaleido is also launching a partnership program integrated with the marketplace, inviting third-party developers “to join the ecosystem by promoting their offerings in the Kaleido Marketplace, embedding Kaleido in their own blockchain solutions, or accelerating client engagements by using Kaleido.”

This article originally appeared on Bitcoin Magazine.

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South Africans really want to own bitcoin: new research

New research commissioned by Luno shows there is a great deal of interest among South Africans in owning at least one cryptocurrency. Original Link

Standardized Specifications for Enterprise Version of Ethereum Announced

EEA new specs: Devcon 4

On October 29, 2018, the Enterprise Ethereum Alliance (EEA) announced in Prague at DevCon 4 two new software specifications that will help businesses standardize future code developments on an enterprise version of the Ethereum blockchain.

The first specification, Client Specification V2, defines the implementation requirements for Enterprise Ethereum clients, including interfaces to the external-facing components of Enterprise Ethereum and how they are intended to be used.

The standardization of performance, permissioning and privacy demands of enterprise deployments are viewed as a necessary step by the EEA in order to help the growing number of vendors developing Ethereum clients to ensure that different clients can communicate with each other and all reliably work on an enterprise Ethereum network.

EEA Executive Director Ron Resnick stated that “using the EEA Specification, Ethereum developers can write code that enables interoperability, thus motivating enterprise customers to select EEA specification-based solutions over proprietary offerings”. It should be noted that, while Ethereum has been basis for the majority of enterprise blockchain projects, 2018 has also seen developments using Cardano, EOS, QTUM and TRON, among others.

Aside from digital currency, enterprise or platform tokenization remains a hotbed for blockchain-based startups, with the vast majority of those needing an ecosystem where users can change the software they use to interact with a running blockchain, disambiguating the need for single-vendor support.

The second specification, Off-Chain Trusted Compute Specification V0.5, specifies enabling APIs that support private transactions, allowing offloads for compute intensive processing and permitting attested oracles. The EEA believes these objectives can be achieved by executing some parts of a blockchain transaction off the main chain in an off-chain trusted compute. The EEA currently endorses three types of trusted compute for this specification including a trusted execution environment, zero knowledge proofs and trusted multi-party compute.

Both specifications were lauded by Brian Behlendorf, executive director of Hyperledger, who lent his support to the announcements. The EEA and Hyperledger joined each other’s organizations as associate members on October 1, 2018.

Behlendorf stated, “We are pleased to see the EEA reach and release its V2 and Off-Chain Trusted Compute V.05 specifications. Both organizations believe standards, specifications and certification all help with the adoption of enterprise blockchain technologies by helping customers commit to implementations with confidence …”

The new specifications are backed by the EEA’s 500+ global membership, notably including banks like Santander and J.P. Morgan Chase; blockchain startups like blk.io; and traditional tech companies like Accenture, Intel and Microsoft.

This article originally appeared on Bitcoin Magazine.

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Three Years Later, Ethereum’s Hottest DApps Are (Still) ICOs and Cats

Ethereum DApp use

With Ethereum’s launch in 2015 came a flurry of excitement over the future potential of smart contracts.

Utilizing a more flexible scripting language than Bitcoin, the platform’s decentralized applications (DApps) were touted by proponents as unlocking a plethora of formerly untapped use cases for the blockchain. From tokenized assets and blockchain-based legal contracts to healthcare records and supply chain tracking, DApps are going to remold traditional industries in their image, solve bottlenecks and revolutionize enterprise inefficiencies out of existence.

More than three years later, and we’re still waiting for the revolution.

The Hard Truth of Modern DApp Use

Taken in sum, Ethereum’s top 10 smart contract addresses account for just over 29 million transactions. Sounds substantial, as though the network is cracking on toward mainstream adoption, yeah?

The reality: this transaction volume went to DApps that are used for token sales, decentralized exchanges and trading digital kittens.

DApp Use

Source: SFOX 

This is according to research by SFOX, a cryptocurrency prime dealer for high net worth individuals with backing from the likes of the Digital Currency Group and Blockchain Capital. The data was compiled on behalf of SFOX’s clients, the firm told Bitcoin Magazine, as it “regularly reviews the usage of blockchains of the crypto assets [it] supports.” 

Using Jupyter Notebook to pull data from Google’s public dataset for Ethereum, the firm compiled a list of the most popular Ethereum smart contract addresses to see which DApps were gaining traction among the community.

DApp use

Source: SFOX

The results are in line with a common qualm amongst the community’s more discerning and critical voices, namely that DApps are used for little more than token speculation and exchange. Out of the 10 smart contracts that merited SFOX’s attention, only one was a tokenized use case that wasn’t either an exchange or an ICO contract.

In fact, the two most popular DApps were decentralized exchange (DEX) contracts for Ether Delta (now known as Forked Delta) and IDEX, respectively. As this data shows, the two DEXs are go-to hubs to trade ether and ERC-20 tokens, the most common token standard for minting assets on the Ethereum blockchain. Ether Delta has accounted for 10,354,398 transactions since its inception, while IDEX clocks in at 4,590,376.

In a show of irony, the third most popular smart contract was used to fund Ethereum’s leading competitor, EOS. Before launching its mainnet in June 2018, smart contract platform EOS held a continuous token sale, a year-long ICO that drew in billions in funding through 2,952,885 transactions. Two other Ethereum-based ICOs, Tron and OmiseGo, also made the list with 1,967,331 and 1,350,274 transactions, placing the cryptocurrency platforms at fifth and tenth, respectively.

The only smart contract on the list that doesn’t involve speculating or supporting exchange infrastructure comes in the form of what some have called “digital Beanie Babies.” Depending on the angle you take, even these could be considered a vessel for investment. CryptoKitties, a blockchain-based game for trading, breeding and collecting digital cats, has seen 2,568,983 transactions since it launched last November.

Built on the ERC-721 standard for non-fungible assets, each kitty is unique and sports its own distinct traits. The game grabbed headlines in the weeks following its release last year as enthusiasm for the pixilated felines drove prices for some of the rarer kitties to tens of thousands of dollars. This frenzied-demand clogged the Ethereum network, driving up transaction times and costs.

The Inroads of Speculation and Innovation

The only other notable smart contract that made SFOX’s list comes from Bitcoinereum, the self-proclaimed “first bitcoin mineable ERC-20 token,” ringing up 1,451,763 transactions by paying out mining rewards through the token’s smart contract. As for the rest, Bittrex’s and Poloniex’s wallet reserves for managing and trading ether and tokens account for more than 5 million shared transactions.

Of course, Ethereum DApps aren’t the only DApps in use today. EOS has emerged as a powerful rival, and, depending on the day, the platform surpasses Ethereum in transaction volume and users.

Still, the use cases on EOS are the same. If they’re not being used for exchange, EOS tokens are used to power smart contract-enabled games or gambling, two gaming applications it shares with its number one competitor Ethereum.

Even if they do feed gambling habits and fuel speculation, these gaming DApps are fine use cases in their own right. In correspondence with Bitcoin Magazine, SFOX CEO Akbar Thobhani believes that “CryptoKitties is doing a great job, and it’s clear that they continue to have traction.”

But the technology is still very much in its infancy, and the smart contracts being used today are a far cry from the ones that optimistic futurists say will underwrite loans, settle legal contracts and tokenize anything from equities to personal data. As Thobhani put it, “It’s hard to say anything especially conclusive about broader DApp adoption” from the sample size, even if it did represent the most-used DApps to date.

These baby steps are the preliminary amblings of an ambitious technology that’s still learning to walk. But they are steps. Day to day, smart contracts and DApps are still functioning for their intended use cases, no matter how niche or inconsequential these uses may be. They’re laying a foundation for a future that may be a long time coming as the space grows up, as developers will have plenty of pain points to address, including smart contract security holes and scalability headaches, before smart contracts become consumer and enterprise grade for a mainstream audience.

So until that future comes, token-curated craps shooting and packs of digital cats will have to do for now.

This article originally appeared on Bitcoin Magazine.

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Growing calls for bitcoin, other cryptos to be regulated

After the crypto crash, the industry wants governments to confer legitimacy on digital currencies whose enthusiasts originally boasted of being outside the system. For some operators, the alternative could be bleak. Original Link

Decentralization Gains Traction: Go-Ethereum Fifth Most Active on Github

Go Ethereum Github

Bear markets refine industries. Overall sentiment becomes negative from all angles, and naysayers proclaim that crypto is “dead.”

Underneath all the fear, uncertainty and doubt, though, developers are still building.

Case in point, Go-Ethereum (or geth), a command-line interface for running an Ethereum node using the Go programming language, is now the fifth fastest growing open-source project in GitHub.

The other projects above go-ethereum on the list are azure-docs from Microsoft Azure, pytorch from Facebook, godot from the GoDot Gaming Engine and nuxt.js, a Javascript framework.

For the uninitiated, geth is the official Go implementation of the Ethereum protocol. At the time of writing, go-ethereum has over 10,000 commits on GitHub as well as over 21,000 stars, indicating the amount of developer interest for the project in this iteration is high.

Why Geth Over Eth and Pyethapp?

Go, commonly referred to as Golang, was developed by Google engineers Robert Griesemer, Rob Pike and Ken Thompson. Per the golang.org website, “Go was born out of frustration with existing languages and environments for the work we were doing at Google.”

The language enables higher productivity than languages in an era of complex processors and large computer networks. Consequently, it has been adopted by developers around the world.

Go-ethereum is by far the most active project in the Ethereum ecosystem, but there are several important projects that are not far behind. There are other client languages including eth, a C++ client and pyethapp, a python-friendly client.

“Aleth,” Ethereum’s official C++ client, and “EIPs,” the official Ethereum Improvement Proposal repository, are two of the most active repositories behind go-ethereum when looking at indicators like commits, forks, stars and contributors. Solidity, Ethereum’s smart contract programming language, is also highly active. Activity can be difficult to measure sometimes, so it is important to understand what these indicators mean.

Commits are defined as a moment when a developer saves their work at a specific point. Therefore, it can be misleading when a project is showing lots of commits, as it may just mean someone has been tediously saving their work every step of the way.

Forks, in GitHub, are copies of code made so that a developer can freely make edits to the code without affecting the original implementation. They are generally used for implementing future changes that will be proposed to the original code.

Stars can be viewed as a “favorite” button, used simply as a means of keeping tabs with a certain project as it develops, and contributors are a measure of how many individual GitHub accounts have, well, contributed in any way.

Go-ethereum currently has 10,200 commits, 7,332 forks, 21,229 stars and 345 contributors.

At the time of writing, aleth has 32,939 commits, 2,109 forks, 3,404 stars and 138 contributors. EIPs has 1,302 commits, 1,125 forks, 3,858 stars and 149 contributors. Solidity has 11,635 commits, 1,641 forks, 6,130 stars and 276 contributors.

This article originally appeared on Bitcoin Magazine.

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Dr Doom and Mr Ethereum debate crypto

Economist Nouriel Roubini, nicknamed Dr Doom for predicting the most recent global financial crisis, has crossed swords with cryptocurrency guru and ethereum founder Vitalik Buterin. Original Link

Why bitcoin could be poised for a significant rally

Bitcoin could finally be hitting a bottom before heading higher. The digital currency is lingering above both the price and trend lines and a buying divergence is forming, flashing a positive signal. Original Link

Dweb: Creating Decentralized Organizations with Aragon

In the Dweb series, we are covering projects that explore what is possible when the web becomes decentralized or distributed. These projects aren’t affiliated with Mozilla, and some of them rewrite the rules of how we think about a web browser. What they have in common: These projects are open source and open for participation, and they share Mozilla’s mission to keep the web open and accessible for all.

While many of the projects we’ve covered build on the web as we know it or operate like the browsers we’re familiar with, the Aragon project has a broader vision: Give people the tools to build their own autonomous organizations with social mores codified in smart contracts. I hope you enjoy this introduction to Aragon from project co-founder Luis Cuende.

– Dietrich Ayala

Introducing Aragon

I’m Luis. I cofounded Aragon, which allows for the creation of decentralized organizations. The principles of Aragon are embodied in the Aragon Manifesto, and its format was inspired by the Mozilla Manifesto!

Here’s a quick summary.

  • We are in a key moment in history: Technology either oppresses or liberates us.
  • That outcome will depend on common goods being governed by the community, and not just nation states or corporate conglomerates.
  • For that to happen, we need technology that allows for decentralized governance.
  • Thanks to crypto, decentralized governance can provide new means of organization that don’t entail violence or surveillance, therefore providing more freedom to the individual and increasing fairness.

Aragon logo

With Aragon, developers can create new apps, such as voting mechanisms, that use smart contracts to leverage decentralized governance and allow peers to control resources like funds, membership, and code repos.

Aragon is built on Ethereum, which is a blockchain for smart contracts. Smart contracts are software that is executed in a trust-less and transparent way, without having to rely on a third-party server or any single point of failure.

Aragon is at the intersection of social, app platform, and blockchain.

Architecture

The Aragon app is one of few truly decentralized apps. Its smart contracts and front end are upgrade-able thanks to aragonOS and Aragon Package Manager (APM). You can think of APM as a fully decentralized and community-governed NPM. The smart contracts live on the Ethereum blockchain, and APM takes care of storing a log of their versions. APM also keeps a record of arbitrary data blobs hosted on decentralized storage platforms like IPFS, which in our case we use for storing the front end for the apps.

Aragon architecture diagram

The Aragon app allows users to install new apps into their organization, and those apps are embedded using sandboxed iframes. All the apps use Aragon UI, therefore users don’t even know they are interacting with apps made by different developers. Aragon has a very rich permission system that allows users to set what each app can do inside their organization. An example would be: Up to $1 can be withdrawn from the funds if there’s a vote with 51% support.

Aragon tech stack diagram

Hello World

To create an Aragon app, you can go to the Aragon Developer portal. Getting started is very easy.

First, install IPFS if you don’t have it already installed.

Second, run the following commands:

$ npm i -g @aragon/cli
$ aragon init foo.aragonpm.eth
$ cd foo
$ aragon run

Here we will show a basic counter app, which allows members of an organization to count up or down if a democratic vote happens, for example.

This would be the smart contract (in Solidity) that keeps track of the counter in Ethereum:

contract Counter is AragonApp {
/**
* @notice Increment the counter by 1
*/
function increment() auth(INCREMENT_ROLE) external {
// ...
} /**
* @notice Decrement the counter by 1
*/
function decrement() auth(DECREMENT_ROLE) external {
// ...
}
}

This code runs in a web worker, keeping track of events in the smart contract and caching the state in the background:

// app/script.js
import Aragon from '@aragon/client' // Initialize the app
const app = new Aragon() // Listen for events and reduce them to a state
const state$ = app.store((state, event) => {
// Initial state
if (state === null) state = 0 // Build state
switch (event.event) {
case 'Decrement':
state--
break
case 'Increment':
state++
break
} return state
})

Some basic HTML (not using Aragon UI, for simplicity):

<!-- app/index.html !-->
<!doctype html> <button id="decrement">-</button>
<div id="view">...</div>
<button id="increment">+</button>
<script src="app.js"></script>

And the JavaScript that updates the UI:

// app/app.js
import Aragon, { providers } from '@aragon/client' const app = new Aragon(
new providers.WindowMessage(window.parent)
)
const view = document.getElementById('view') app.state().subscribe(
function(state) {
view.innerHTML = `The counter is ${state || 0}`
},
function(err) {
view.innerHTML = 'An error occurred, check the console'
console.log(err)
}
)

aragon run takes care of updating your app on APM and uploading your local webapp to IPFS, so you don’t need to worry about it!

Learn More

You can go to Aragon’s website or the Developer Portal to learn more about Aragon. If you are interested in decentralized governance, you can also check out our research forum.

If you would like to contribute, you can look at our good first issues.

If you have any questions, please join the Aragon community chat!

The post Dweb: Creating Decentralized Organizations with Aragon appeared first on Mozilla Hacks – the Web developer blog.

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DevCon 4 Will Set the Stage for Ethereum’s Next Milestone: Constantinople

DevCon4 Sets the Stage for Ethereum’s Next Milestone: Constantinople

Ethereum is embracing the Constantinople milestone at the end of November 2018, after DevCon4 in Prague. Constantinople is the latest Ethereum release, introduced through a hard fork, that will include five Ethereum Improvement Proposals (EIPs):

  • Bitwise shifting instructions (EIP 145) in the Ethereum Virtual Machine (EVM) allow for direct manipulation of bytes on the EVM layer.
  • Skinny CREATE2 (EIP 1014) adds a new opcode that creates a contract but determines the deployed address differently to the existing CREATE opcode.
  • The EXTCODEHASH opcode (EIP 1052) adds an opcode which returns the keccak256 hash of a contact’s byte code.
  • Net gas metering for SSTORE (EIP 1283) introduces a new gas cost scheme for the SSTORE opcode.
  • The difficulty bomb delay (EIP 1234) stabilizes block times and issuance by keeping block times at approximately 15 seconds for another 12 months and reducing block rewards to 2 ETH.

To the regular application user, these updates offer nothing noticeably different, except perhaps an update to their Ethereum clients. For developers, these EIPs provide extended capabilities to the EVM, allowing for improved flexibility for smart contract development. All of these changes are backward compatible, ensuring previously deployed smart contracts remain usable and secure.

This hard fork does not address scalability yet. Layer 1 scaling solutions, such as sharding + casper or Shasper, are still in the research phase and will not be addressed before the Serenity milestone which is not expected to be deployed to Ethereum until 2020 or later.

A more tangible change to the Ethereum user experience is the use of Plasma chains and state channels. They are currently in development and some are being tested in experimental production environments. For regular users, this means the first Layer 2 scaling solutions will be available soon, allowing for a higher rate of transactions that are crypto-economically ensured, which is an important step toward faster and cheaper transactions.

Making the Decisions

For a closer look into how the decisions on the accepted proposals were made, the Ethereum Foundation live-streams core developer calls on LivePeer and YouTube after posting a public agenda and call for participation on GitHub prior to the meeting. More technical information specifically about the Constantinople release can be found at Constantinople Progress Tracker on GitHub containing an overview of Ethereum client teams implementing each of the accepted proposals.

Miners, investors and other community members were invited to a call to state their opinions during the last Ethereum Core Devs Meeting 45. This was done to get an idea of what the different stakeholders that make up the network think. A week later, Ethereum Core Devs Meeting Constantinople Session #1 was spent largely debating EIP 1234. A majority of the developers were in agreement that, although current signaling mechanisms for ascertaining consensus are not optimal, the best option is to have the conversations openly.

The nature of the Constantinople session was constructive, as Afri Schoedon, technical communications engineer at Parity Technologies, concluded:

“What we are doing here is not [trying] to dictate a new block reward, but we are trying to find a compromise, somewhere in the middle. Agreeing on 2 ETH per block is the best thing we can do.”

Another more important discussion point was Programmatic Proof of Work (ProgPoW), a modified version of Ethash. Consensus algorithms resistant to Application-Specific Integrated Controllers (ASICs) have become relevant due to concerns from community members and small miners regarding current progress made to ASICs targeting the Ethereum network and interfering with current mining incentives. There is a strong community sentiment in favor of changing the algorithm.

The main conclusion of the developer meeting was that much more work has to be done on testing and integration before a move to a new consensus algorithm in an upcoming hard fork is realistic. The main decisions concluded upon in the August 31 session can be summed up through a quote by Piper Merriam, core developer with the Ethereum Foundation:

“I believe this is us making the decision to reduce issuance to 2; to do another hard fork 8 months after Constantinople; and to push the difficulty bomb to 12 months after Constantinople.”

Developers are looking forward to a subsequent hard fork in summer 2019, the Istanbul milestone, when we can expect to see more improvements and potentially a change to the Ethash consensus algorithm. In summary, Constantinople is an important step forward for Ethereum in optimizing the Ethereum Virtual Machine and the tools for the future of Ethereum contract and DApp development.


Thank you Hatcher Lipton and Greg Markou for helping with edits..

This article originally appeared on Bitcoin Magazine.

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Crypto wipeout deepens to $640-billion

The cryptocurrency bear market has plumbed a fresh 10-month low, led by a tumble in bitcoin’s biggest rival. Original Link

Cryptocurrency slump deepens as bitcoin falls of a cliff

Cryptocurrencies dropped sharply for the second time in less than 24 hours, sinking toward a nine-month low amid concern that broader adoption of digital assets will take longer than some anticipated. Original Link

Bitcoin drops 3% in 10 minutes, ethereum plunges 12%

The market’s biggest digital coins dropped sharply on Wednesday amid a report that Goldman Sachs Group is pulling back on near-term plans to set up a cryptocurrency trading desk. Original Link

Bitcoin roars back after touching multi-month lows

Bitcoin recovered from the lowest level since June and scores of smaller digital tokens rallied as concern eased that investors are giving up on the virtual alternatives to cash after this year’s collapse in prices. Original Link

Bitcoin rallies strongly as big-name investors pile in

Bitcoin is headed for its biggest increase in two weeks on Monday amid a steady drip of news reports suggesting some of the biggest names in investing are starting to embrace digital currencies.

The largest crypto coin advanced 3% to US$6 371 as of 9.48am in London, according to composite prices on Bloomberg. Rival coins ripple, ethereum and litecoin all climbed at least 2%. Bitcoin hasn’t notched a one-day gain of at least 2% since 2 July.

BlackRock has formed a team to look into ways the world’s largest asset manager can take advantage of the cryptocurrency market and blockchain, London’s Financial News reported. The company said afterward in a statement that its focus was largely on blockchain, the technology underlying bitcoin.

Last week, billionaire investor Steven Cohen was said to have put money into a hedge fund focusing on cryptocurrencies and blockchain-based companies. In Europe, the owner of Switzerland’s securities exchange in Zurich said it’s creating a platform for trading digital assets.  — Reported by Todd White, with assistance from Edward Robinson, (c) 2018 Bloomberg LP

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Enjin Coin CTO Creates ERC-1155, a New Token Standard for Ethereum

Witek Radomski — co-founder and CTO of Enjin Coin — has developed ERC-1155, a new standard for defining video game tokens on the Ethereum blockchain.

Radomski’s journey to improve the gaming experience began 12 months ago in June 2017, when he created code for the first non-fungible token. It was released on GitHub two months later, and it led to the creation of the ERC-721 token, which is widely considered the standard for blockchain-based gaming and digital art. Several decentralized applications (DApps) have implemented the ERC-721 onto their platforms to create a wide array of gaming collectibles.

Unfortunately, ERC-721 was found to exhibit several limitations, and Radomski knew he had to take the standard to the next level.

“The non-fungible tokens being used today have defined a new class of user-owned virtual items,” he explained. “However, there are many problems with the existing token model. It is very expensive and inefficient to deploy large databases of items that mainstream game developers use.”

Radomski explains in a blog post that the new ERC-1155 protocol allows for an infinite number of both fungible and non-fungible items to be deployed through a single contract. It is also lightweight and easy for most networks to handle.

“If this does take off, the gaming industry alone will require tens of millions of new items — but the application of this standard is by no means limited to the games market,” he commented. “ERC-1155 tokens could be used to certify all forms of ownership, tangible or digital.”

In the past, individual tokens were defined by single contracts. In addition, item swapping between game players would often require as many as four separate steps because Ethereum’s network approves and processes each traded item separately. ERC-1155 could alleviate wait times between swaps by grouping multiple items together, so several trades could potentially occur at once and cut down the once four-step process to two steps. This would also reduce both congestion and gas costs on the Ethereum blockchain.

Prior to the introduction of ERC-721 tokens, ERC20 tokens were predominantly used in gaming, though they were later deemed inefficient as they were minted by the millions for use as currency. Each token was virtually identical, which meant each one contained repeat data. You also could not add a provenance, history or identity to any coin.

ERC-721 tokens allowed users to create unique, one-of-a-kind coins, but ERC-1155 works to combine the best of both ERC20 and ERC-721 by giving game developers a choice in whether they mass produce a specific kind of token or build unique metadata that cannot be replicated.

ERC-1155 has been posted to Ethereum’s GitHub as a discussion thread. Executives are looking for feedback from users before submitting it as a “pull request.”

“After a year of working to develop ERC-1155, this is a very proud day for my team,” Radomski explained. “We hope to see some amazing inventions born out of this token standard, so if any projects need assistance implementing it, they should feel free to contact us at Enjin.”

Founded in 2009 and stationed in Singapore, Enjin is a gaming company that boasts two core products: Enjin Coin and the Enjin Network. Enjin Coin is built for developing blockchain games and cryptocurrencies, while the latter is a gaming-focused content management system (CMS) and e-commerce platform that serves up to 20 million users.

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Bitcoin hovers near year’s lows

Bitcoin traded above US$6 000 on Monday morning after dropping below that level for the first time since February over the weekend, with the digital currency heading for a second straight quarterly decline.

The cryptocurrency was trading at $6 148.22 at 2.23pm in Hong Kong, up 1.3% from its Friday close, according to composite Bloomberg pricing. It slumped to as low as $5 780 on Sunday, breaching the previous 2018 nadir set in February, according to Bitstamp prices. Rival coins including ripple, ethereum and litecoin continue to trade lower, the data shows.

Bitcoin has tumbled more than 50% this year as regulators spanning the globe step up scrutiny of what some have criticised as a vehicle for fraud. A series of hacks, including a $500-million theft at a Japanese exchange in January and incidents in South Korea since then, have undermined confidence in the security of the digital currency.

In one of the latest flaps, private data including coin-wallet addresses and passwords for 19 clients were posted on a Kakao group chat on 22 June, Kim Moon-hyung, an official with South Korean exchange Bitkoex, said by phone. The official said there were no financial losses from the leak.

Sunday’s volatility came as the Bank of International Settlements, which serves as a clearing house and research and discussion forum for central banks, continued its critique of digital currencies. The BIS’s head of research said many cryptocurrencies should be regulated like stocks and bonds.

On Friday, Japan’s Financial Services Agency ordered six of the country’s biggest crypto trading venues to improve measures to prevent money laundering. The companies must submit their plans by 23 July. New pressure in Japan, one of the most crypto-friendly jurisdictions, demonstrated the market’s fragility to regulatory moves in the absence of much positive news.

The weekend slump took Bitcoin as low as $5 780 on Sunday, according to Bitstamp, one of the major price sources for cryptocurrencies, which have no unified quotation system. Bloomberg’s composite pricing system includes Bistamp and several other sources.  — Reported by Eric Lam, with assistance from Dave Liedtka and Todd White, (c) 2018 Bloomberg LP

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Bitcoin forfeits weekly gain as regulator orders changes

Bitcoin dropped the most in more than a week and led digital coins lower after Japanese regulators hit six of the country’s biggest cryptocurrency trading venues with business-improvement orders.

The crackdown surprised investors and ended what was about to be the first winning week since early June for the most-liquid digital coins. The MVIS CryptoCompare Digital Assets 10 Index tumbled as much as 7.1% on Friday. The index fell in five of the past six weeks.

Some of the targets were quick to react. Bitflyer said it would stop accepting new customers and also review identity verification for some existing users after it received an order from Japan’s Financial Services Agency. The FSA called for improved measures at all the exchanges against money laundering. The companies must submit their plans by 23 July.

Peer-to-peer money has come under fresh pressure in recent weeks after two South Korean exchanges said they were hacked. That raised fresh concerns about the security of investor holdings. New pressure in Japan, one of the most crypto-friendly jurisdictions, demonstrated the market’s fragility to regulatory moves in the absence of much positive news.

“The market is still trading on low volumes and has yet to break out of its current downtrend, leaving itself susceptible to sell-offs,” said Ryan Rabaglia, head trader with cryptocurrency dealing firm Octagon Strategy in Hong Kong, in an e-mail. “Although the market reacted negatively, I view this as a positive for the industry as a whole.”

Bitcoin, the largest cryptocurrency, sank as much as 6.3% and was trading at US$6 347 at 11.37am in London, according to consolidated Bloomberg pricing. It has lost about 56% this year. Ethereum and litecoin both retreated at least 7%.

Quoine, Bitbank, BTCBox, BITPoint Japan and Tech Bureau were the other exchanges penalized by the FSA. While Japan created a regulatory framework for exchanges last year that proved a lure for bourses, the $500-million heist in January at Coincheck prompted the country’s regulators to increase scrutiny of the industry.

‘We deeply apologise’

In April, bitFlyer tightened its anti-money laundering rules after the Nikkei newspaper reported that users could perform some limited functions without fully completing customer verification.

Yuzo Kano, bitFlyer’s CEO, apologised on Friday for the FSA sanctions. “We deeply apologise for causing concerns and inconvenience,” he said in a tweet. “We take this order seriously and will make all efforts to improve our operations.”

Transactions on bitFlyer averaged about $2-billion/day during late April and early May, thanks in large part to bitcoin margin contracts popular with Japanese day traders. The venue had two million users.  — Reported by Eric Lam and Todd White, with assistance from Yuki Hagiwara, (c) 2018 Bloomberg LP

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Cryptocurrencies fall after yet another heist

Cryptocurrencies dropped after the second South Korean exchange in as many weeks said it was the victim of a theft, renewing concerns about the safety of digital-asset trading venues.

Bithumb, ranked by Coinmarketcap.com as the world’s seventh largest crypto exchange by traded value, said on Wednesday that hackers stole about US$32-million and that ripple was among the coins taken. The exchange halted cryptocurrency deposits and withdrawals, said it will compensate victims and moved investor assets to a so-called cold wallet, which is disconnected from the Internet and less vulnerable to theft.

Bitcoin, the largest cryptocurrency, dropped as much as 2% and was trading at $6 588 as of 12.15pm in Hong Kong, bringing this year’s decline to 54%, according to Bloomberg composite pricing. Ripple, ethereum and litecoin also retreated, along with some Asia-listed stocks with exposure to digital currencies.

Enthusiasm for virtual currencies has waned this year partly due to a string of cyber heists, including the nearly $500-million theft from Japanese exchange Coincheck in late January. Last week, a South Korean venue called Coinrail said that some of the exchange’s digital coins appeared to have been stolen by hackers, though it didn’t disclose how much.

While the latest theft has weighed on sentiment, investor reactions have been relatively subdued, said Ryan Rabaglia, head trader at cryptocurrency dealing firm Octagon Strategy in Hong Kong. “The market has sort of become a bit more battle-hardened. It can weather the storm on these negative reports.”

The crypto mania that spread worldwide last year was particularly intense in South Korea, with bitcoin prices in the country at one point climbing to a 50% premium over those in America.

The speculative fervour has since cooled amid a government crackdown, but South Korean exchanges are still among the world’s most active. The country’s policy makers are debating comprehensive regulations for cryptocurrencies, with proposals ranging from shutting down local exchanges to allowing them to operate under increased supervision.

Bithumb said on Wednesday that it reported the theft to the Korea Internet & Security Agency and that officials there are investigating.

The hacks in South Korea show “how ill-prepared a lot of the exchanges still are across large markets”, said Vijay Ayyar, the Singapore-based head of business development at Luno, a cryptocurrency exchange. “The overall market is seeing a lot of regulatory action and incidents like these will only hasten the process.”  — Reported by Eric Lam, with assistance from Kyungji Cho and Andrea Tan, (c) 2018 Bloomberg LP

Original Link

Cryptocurrencies fall after yet another heist

Cryptocurrencies dropped after the second South Korean exchange in as many weeks said it was the victim of a theft, renewing concerns about the safety of digital-asset trading venues.

Bithumb, ranked by Coinmarketcap.com as the world’s seventh largest crypto exchange by traded value, said on Wednesday that hackers stole about US$32-million and that ripple was among the coins taken. The exchange halted cryptocurrency deposits and withdrawals, said it will compensate victims and moved investor assets to a so-called cold wallet, which is disconnected from the Internet and less vulnerable to theft.

Bitcoin, the largest cryptocurrency, dropped as much as 2% and was trading at $6 588 as of 12.15pm in Hong Kong, bringing this year’s decline to 54%, according to Bloomberg composite pricing. Ripple, ethereum and litecoin also retreated, along with some Asia-listed stocks with exposure to digital currencies.

Enthusiasm for virtual currencies has waned this year partly due to a string of cyber heists, including the nearly $500-million theft from Japanese exchange Coincheck in late January. Last week, a South Korean venue called Coinrail said that some of the exchange’s digital coins appeared to have been stolen by hackers, though it didn’t disclose how much.

While the latest theft has weighed on sentiment, investor reactions have been relatively subdued, said Ryan Rabaglia, head trader at cryptocurrency dealing firm Octagon Strategy in Hong Kong. “The market has sort of become a bit more battle-hardened. It can weather the storm on these negative reports.”

The crypto mania that spread worldwide last year was particularly intense in South Korea, with bitcoin prices in the country at one point climbing to a 50% premium over those in America.

The speculative fervour has since cooled amid a government crackdown, but South Korean exchanges are still among the world’s most active. The country’s policy makers are debating comprehensive regulations for cryptocurrencies, with proposals ranging from shutting down local exchanges to allowing them to operate under increased supervision.

Bithumb said on Wednesday that it reported the theft to the Korea Internet & Security Agency and that officials there are investigating.

The hacks in South Korea show “how ill-prepared a lot of the exchanges still are across large markets”, said Vijay Ayyar, the Singapore-based head of business development at Luno, a cryptocurrency exchange. “The overall market is seeing a lot of regulatory action and incidents like these will only hasten the process.”  — Reported by Eric Lam, with assistance from Kyungji Cho and Andrea Tan, (c) 2018 Bloomberg LP

Original Link

Cryptocurrencies fall after yet another heist

Cryptocurrencies dropped after the second South Korean exchange in as many weeks said it was the victim of a theft, renewing concerns about the safety of digital-asset trading venues.

Bithumb, ranked by Coinmarketcap.com as the world’s seventh largest crypto exchange by traded value, said on Wednesday that hackers stole about US$32-million and that ripple was among the coins taken. The exchange halted cryptocurrency deposits and withdrawals, said it will compensate victims and moved investor assets to a so-called cold wallet, which is disconnected from the Internet and less vulnerable to theft.

Bitcoin, the largest cryptocurrency, dropped as much as 2% and was trading at $6 588 as of 12.15pm in Hong Kong, bringing this year’s decline to 54%, according to Bloomberg composite pricing. Ripple, ethereum and litecoin also retreated, along with some Asia-listed stocks with exposure to digital currencies.

Enthusiasm for virtual currencies has waned this year partly due to a string of cyber heists, including the nearly $500-million theft from Japanese exchange Coincheck in late January. Last week, a South Korean venue called Coinrail said that some of the exchange’s digital coins appeared to have been stolen by hackers, though it didn’t disclose how much.

While the latest theft has weighed on sentiment, investor reactions have been relatively subdued, said Ryan Rabaglia, head trader at cryptocurrency dealing firm Octagon Strategy in Hong Kong. “The market has sort of become a bit more battle-hardened. It can weather the storm on these negative reports.”

The crypto mania that spread worldwide last year was particularly intense in South Korea, with bitcoin prices in the country at one point climbing to a 50% premium over those in America.

The speculative fervour has since cooled amid a government crackdown, but South Korean exchanges are still among the world’s most active. The country’s policy makers are debating comprehensive regulations for cryptocurrencies, with proposals ranging from shutting down local exchanges to allowing them to operate under increased supervision.

Bithumb said on Wednesday that it reported the theft to the Korea Internet & Security Agency and that officials there are investigating.

The hacks in South Korea show “how ill-prepared a lot of the exchanges still are across large markets”, said Vijay Ayyar, the Singapore-based head of business development at Luno, a cryptocurrency exchange. “The overall market is seeing a lot of regulatory action and incidents like these will only hasten the process.”  — Reported by Eric Lam, with assistance from Kyungji Cho and Andrea Tan, (c) 2018 Bloomberg LP

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SEC Director of Corporate Finance: Ether Is Not a Security

In an informal statement made at Yahoo Finance’s All Market Summit: Crypto, William Hinman, the United States Securities and Exchange Commission (SEC)’s director of corporate finance, indicated that the regulatory agency has no plans to deem ether a security.

“… based on my understanding of the present state of Ether, the Ethereum network and its decentralized structure, current offers and sales of Ether are not securities transactions,” Hinman said in a speech at the summit.

Along with ether, Hinman stated that the SEC would not classify bitcoin as a security, either. Rather, both cryptocurrencies function similar to commodities like gold, silver or oil, the agency believes.

But not all coins are created equal, Hinman expressed in his speech, and the SEC’s leniency on crypto’s top assets won’t relieve tokens from scrutiny. Tokens and Initial Coin Offerings, he continued, are most likely to be considered securities. The distinction lies in how the asset is offered or sold to the public.

“… strictly speaking, the token — or coin or whatever the digital information packet is called — all by itself is not a security … But the way it is sold — as part of an investment; to non-users; by promoters to develop the enterprise — can be, and, in that context, most often is, a security — because it evidences an investment contract,” Hinman stated.

This analysis seems to prioritize circumstance over semantics when deeming a token’s securities status. Projects will often dance around their token’s nomenclature to avoid self-branding as something that could be seen as a security, but Hinman conveyed that the SEC isn’t fooled by the verbal footwork. He made it clear in his speech that “simply labeling a digital asset a ‘utility token’ does not turn the asset into something that is not a security … the economic substance of the transaction always determines the legal analysis, not the labels.”

Hinman appeared to contradict himself when he dove into an analysis of token sales likely falling under the blanket of securities, only to dismiss ether from this classification. But this absolution comes from “putting aside the fundraising that accompanied the creation of Ether,” he said, as a token or coin can’t be deemed a security if no central organization or company is directing it after launch.

“Can a digital asset originally sold in a securities offering eventually be sold in something other than a security?” he posits, eventually concluding that it cannot. “But what about cases where there is no longer any central enterprise being invested in or where the digital asset is sold only to be used to purchase a good or service available through the network on which it was created? I believe in these cases the answer is a qualified ‘yes.’”

The speech shed substantial clarity on a question that has loomed over the industry for some time: namely, whether or not ether would be ruled as a security. And, while this speech is sure to quell the anxieties of enthusiasts and investors alike, it leaves a gray area open for the SEC to color in its treatment of each individual token and coin under Hinman’s interpretation.

Still, the developments are positive for an industry that, in the context of the United States, has made a slow crawl toward regulatory legitimacy.

“We are glad the SEC agrees with our long held analysis of how securities law applies to decentralized cryptocurrency networks like Bitcoin and Ethereum,” Coin Center Executive Director Jerry Brito said in a statement. “We are thrilled to see it take a strong pro-innovation approach to this nascent technology. With this guidance, the SEC is showing that taking a pro-innovation approach does not have to come at the expense of protecting investors.”

While the words carry weight from one of the SEC’s highest officials, it’s worth noting that they were spoken somewhat informally and may not represent a cohesive message across the SEC’s regulatory staff.

This morning, Valerie Szczepanik, the SEC’s first crypto czar, issued what looks like a caveat on this front, stating in a panel at the summit that individual staffer comments may not be wholly in line with the SEC’s official stance.

Original Link

The passive investor’s guide to crypto investing

I am often asked what the best way for someone to invest passively in the cryptocurrency market might be. What coin should they buy or what options do they have if they don’t want to worry about everyday price fluctuations? If they have a day job and don’t have the time or inclination to understand the difference between the various consensus mechanisms, what Zk-SNARKs is or how software could fork.

The simple response is that these kinds of people probably shouldn’t invest in cryptocurrencies at all. Cryptocurrencies and the cryptocurrency market are highly volatile, speculative and experimental. Most of the projects will go to zero, the technology changes daily and you have to be comfortable with the idea of losing most, if not all, of your capital.

That being said, it is an exciting market that promises great potential in terms of what a decentralised internet, and trust-less economy and future could look like. It is a market with some of the brightest minds in the world working to build that future and has offered unprecedented returns to those willing to bare the risk and invest. So it isn’t a surprise to see more and more people looking to allocate a percentage of their funds to crypto investments.

What are the options available to a passive crypto investor?

There are various strategies that a passive investor could utilise when investing in this space. I’ve chosen to focus on the following five for the purpose of this article. Here they are below in no particular order:

  • Be a bitcoin maximalist and buy bitcoin to HODL (hold on for dear life);
  • Buy ethereum and HODL.
  • Buy the top five (10, 15 or 20) cryptocurrencies by market cap and HODL;
  • Invest in a passive index/rebalanced fund; and
  • Invest in an actively managed hedge fund.

I’ll explore each of the above strategies with the focus on the first four options. I will cover the actively managed hedge fund strategy in a separate article as they generally require much higher investment amounts and are primarily utilised by high net-worth individuals, family offices and institutions.

Bitcoin HODL strategy

Buying and holding bitcoin is the simplest strategy for the passive investor. Bitcoin has been the granddaddy of the cryptocurrency market since Satoshi Nakamoto released the bitcoin white paper and introduced the world to the bitcoin blockchain.

Bitcoin maximalists will say that this is the only strategy that one should consider and that bitcoin is the only cryptocurrency that will be around one, five, 10 or 50 years out due to its decentralised nature, proven security, digital scarcity and store of value attributes.

Bitcoin is also the easiest to buy. You can buy it from centralised exchanges (Coinbase, for example) and decentralised exchanges, on local bitcoin purchase sites and even at bitcoin ATMs.

There are also multiple storage options to keep your bitcoin safe and ensure that you’re the actual owner of the currency — from writing your private key down on a piece of paper, to various hardware and software wallets, or even keeping them on an exchange (not recommended).

But does HODLing bitcoin provide superior returns for the passive investor?

Had you invested US$1 000 in bitcoin on 3 January 2017 and held it until 3 June 2018, you would have $7 579 today (a 658% net return*).

Bitcoin price performance since January 2017

By anyone’s measure, that’s a massive return. If you had made the same $1 000 investment in the S&P 500, you would have walked away with $1 209 (a 20.9% return). The bitcoin HODL strategy would have outperformed the S&P 500 by over 637%, but how does this fare against an ethereum HODL strategy?

Ethereum HODL strategy

Ethereum maximalists will say that ethereum takes the potential of what bitcoin promised, makes it a reality and extends it even further with the ability to easily create smart contracts.

Indeed, the explosion of the ICO market wouldn’t have been possible without the ethereum network as the majority of tokens on the market today use the ethereum ERC20 standard to issue their tokens. Ethereum also boasts the largest development community and some of the highest transaction volumes per day (overtaking bitcoin).

For the passive investor, purchasing ethereum is as easy as purchasing bitcoin and gives the same options in terms of safely securing and ensuring ownership of the cryptocurrency.

Had you invested $1 000 in ethereum in January 2017, you would have made a return of $74 463 — a return of 7 346% and a 9.7x better return than the bitcoin HODL strategy over the same time period.

Ethereum price performance since January 2017

In fact, investing and HODLing ethereum would have outperformed the same strategy for bitcoin in every period measured except for one (12 months).

Ethereum vs bitcoin returns since January 2017

Previous performance is not an indicator of future performance, so your guess about what will happen to the ethereum price is as good as mine. But as a passive crypto investor, had you decided to just employ the bitcoin HODL strategy, you would have missed out on some significant returns.

How does this compare with the HODL top give by market cap strategy?

HODL top 5 by market cap strategy

The HODL top five by market cap strategy is to invest an equal amount in the five top cryptocurrencies ranked by market cap. This is a slightly more complex strategy than just buying bitcoin or ethereum as it first requires knowing what the market cap of each currency is and then purchasing the top five. Not all five currencies will be purchasable on the exchange that you have an account with, and you may need multiple wallets to store them.

Nonetheless, the strategy follows the same principle as the HODL bitcoin or ethereum strategies: find the top five, purchase them, safely secure them and then forget about them. There is also the option of rebalancing the top five every period (quarterly or semi-annually) but that hews into “non-passive” investor territory.

To find the top five cryptocurrencies by market cap, I used CoinMarketCap’s “historical snapshot” feature under “tools”. This is what the top five cryptocurrencies by market cap looked like for every period examined from January 2017 till today:

Historical ranking of the top five cryptocurrencies

As you can see, bitcoin (BTC) and ethereum (ETH) have held their dominance in the number one and two spots since January 2017. Ripple (XRP) only lost its number three position once to dash (DASH) while litecoin (LTC), bitcoin cash (BCH), ethereum classic (ETC), nem (XEM) and monero (XMR) have all vied for fourth and fifth position at various points.

As a passive investor, had you invested using this strategy, your returns would look as follows:

Performance returns by investing equally in the top five cryptocurrencies by market cap

When comparing these returns to that of Bitcoin and Ethereum you get the following:

Red cells = underperforming vs bitcoin; green cells = outperforming vs bitcoin.
Comparison of top five performance vs bitcoin and ethereum

You can see that the top five outperformed bitcoin for three out of the six periods and underperformed against bitcoin for the same number of periods. What is notable, though, is that the outperformance generally exceeded the underperformance by a significant factor.

To illustrate this, had you invested $1 000 in the top five 17 months ago, you would have generated a return of $45 682 vs bitcoin’s return of $7 579 (a ~$37 000 or 6x premium) whereas 12 months ago the top five would have only returned $2 026 vs bitcoin’s $3 093 (a ~$1 000 difference).

What was the major component driving this difference in return between the top five and bitcoin?

Had you gone with the bitcoin HODL strategy, you would have missed out on the incredible run that both ethereum (+7 346%) and Ripple (+10 750%) had.

This doesn’t mean that the trend will continue this way but it does cast doubt on whether the bitcoin HODL strategy is really the best strategy for a passive investor. We have seen in both examples above that only HODLing bitcoin would have resulted in missing large potential gains while suffering smaller potential losses.

Side note: You may be asking at this point why I’m only looking at data that goes back 17 months? Bitcoin has been available since 2009 so isn’t it unfair to only be looking from the beginning of 2017. I chose this period as it’s the only period that I can compare data on our next strategy, index fund performance. The oldest crypto index fund that I could find accurate data on was only launched in January 2017. So in order to compare apples with apples, I decided to only look at these periods.

Investing in an index fund

Investing in an index is a popular traditional investment strategy for a passive investor. They don’t require any active management so they charge lower fees than actively managed funds and historical data has shown that index funds generally outperform the majority of actively managed funds.

Until recently, there weren’t many index options available in crypto but today many are starting to pop up.

The most notable of these are:

  • BitWise Hold 10: Holds the top 10 cryptocurrencies weighted by 5-year diluted market cap and rebalanced monthly;
  • Coinbase Index Fund: Tracks the overall performance of the digital assets listed on Coinbase’s exchange, GDAX;
  • Bit20: It is difficult to understand the inclusion criteria for the Bit20. (Their website doesn’t make this clear.);
  • ICONOMI: Not an index but rather a simple to use digital asset management platform to be able to invest in a range of different actively and passively managed index funds with over 26 funds to choose from.

Both BitWise Hold10 and the Coinbase Index Fund are only available to accredited US investors and have a $25 000 and $250 000 minimum respectively. Neither Bit20 or ICONOMI seem to have any minimum restrictions and are open to investors from across the globe.

A note on ICONOMI: I decided to give it a try in November 2017. I have really enjoyed the experience and have been impressed with the progress being made on the platform. I found the entire sign-up experience to be simple and I enjoy having the ability to easily identify the holdings of each fund and track their performance.

In addition, ICONOMI has a transparent blog where it posts about the performance of the company, share full financials and growth plans. I appreciate that level of transparency in a company that I am trusting with my funds and sacrificing the security of having access to my private keys. I also met with the ICONOMI team while at Consensus in New York and was impressed with their future road map and plans. For the passive investor, the ICONOMI platform is definitely worth exploring.

The ICONOMI platform has 26 funds that you can select from. For the purpose of this analysis I decided to consider only funds that had over $1-million in assets under management and a trading history of at least eight months. This left me with five funds to compare (Blockchain Index, Crush Crypto Core, Future Chain Index, Solidim Prime and Pinta). I was unable to get accurate performance information on the Coinbase Index Fund so they, too, were excluded from my analysis.

How do these funds stack up against each other and bitcoin? (For a detailed breakdown with potential returns of each fund’s individual performance, view the calculations spreadsheet.)

Comparative performance of index funds vs bitcoin vs HODL top five

What we can see is that during a bull run, like we saw throughout 2017, HODLing beyond bitcoin would have provided superior returns across all the indexes analysed. However, simply HODLing the top five would have drastically outperformed (by 2x to 4.5x) all the indexes tracked. Only one fund (Future Chain Index — FCI) was able to outperform the top five HODL strategy consistently, barring the last month.

Comparison of index fund performance vs HODLing top five

What is surprising is the performance of the BTWTY and Hold 10 funds. Both hold a greater spread of tokens (10 or more), yet we can see that in a bull market, their weight-adjusted and broader inclusion strategies tend to underperform against a simpler HODL top five strategy without the benefit of significant improvement in performance in a bear market either. This raises the question whether a greater spread of tokens actually improves performance or adds any kind of diversification.

What can we learn from this analysis?

There are a few key insights.

Bitcoin maximilasts would appear to be wrong in their mantra of bitcoin being the only crypto asset worth HODLing. Only investing in bitcoin would have produced significantly lower returns for any period six months or longer. Investors would have missed out on the massive performance gains of both ethereum and ripple had they embarked on this strategy.

HODLing an equal portion of the top five by market cap appears to be an effective strategy outperforming the performance of bitcoin in four out of the six periods measured as well as most of the index fund strategies.
Investing in a greater spread of tokens (10+) doesn’t necessarily equate to greater performance in a bull market and greater protection in a bear market. In fact, the opposite trend (a greater concentration of fewer tokens) appears to be true.

Most index funds have yet to consistently prove themselves as being able to outperform HODLing bitcoin or a simple HODL 5 strategy. This appears counter-intuitive.

Time will tell whether these insights remain true.

A caveat on the above analysis is that the time period measured is extremely short. Drawing any conclusions and predictions based on an eight- to 17-month historical analysis is in and of itself a flawed investment strategy. Previous performance is not an indicator of future of performance and this is not intended as investment advice. As always, please do your own research.

Click here to access the Google Sheet providing the raw data and performance calculations used to perform the above analysis.

  • * Bitcoin returns don’t include any potential returns from receiving an AirDrop or additional tokens in any of the bitcoin forks over the period
  • Yossi Hasson is MD at Techstars, an entrepreneur turned investor, co-founder of Synaq, WeThinkCode_ and Onchain Capital
  • This article was originally published on CoinInsider.com and is used here with kind permission

Original Link

Scaling Ethereum with Raul Jordan and Preston Van Loon

Cryptocurrency infrastructure is a new form of software. Thousands of developers are submitting transactions to Bitcoin and Ethereum, and this transaction volume tests the scalability of current blockchain implementations. The bottlenecks in scalability lead to slow transaction times and high fees.

Over the last twenty years, engineers have learned how to scale databases. We’ve learned how to scale Internet applications like e-commerce stores and online games. It’s easy to forget, but there was a time when those systems didn’t perform well either.

Scaling a blockchain is different than scaling a relational database or a microservices infrastructure. Blockchains are peer-to-peer databases with an append only ledger shared by thousands of nodes. With different scalability solutions, there are tradeoffs between decentralization, scalability, and security. As an example, in Bitcoin, the core developers are working towards deployment and adoption of lightning network. Some would argue that this approach favors scalability over decentralization.

Today’s show is about scaling Ethereum. Raul Jordan and Preston Van Loon are developers who are part of Prysmatic Labs, a team building a sharding implementation for the Go Ethereum client. In this episode, we discuss Ethereum’s approaches to scaling, including sharding and Plasma.

Transcript

Transcript provided by We Edit Podcasts. Software Engineering Daily listeners can go to weeditpodcasts.com/sed to get 20% off the first two months of audio editing and transcription services. Thanks to We Edit Podcasts for partnering with SE Daily. Please click here to view this show’s transcript.

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GoCD is a continuous delivery tool created by ThoughtWorks. It’s great to see the continued progress on GoCD with the new Kubernetes integrations–and you can check it out for yourself at gocd.org/sedaily.

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Cryptos are tokens, not currency: SA Reserve Bank

South Africa’s central bank chooses to call digital currencies such as bitcoin “cyber-tokens” because they don’t meet the requirements to be classified as money.

“We don’t use the term ‘cryptocurrency’ because it doesn’t meet the requirements of money in the economic sense of the stable means of exchange, a unit of measure and a stable unit of value,” Reserve Bank deputy governor Francois Groepe told reporters in Pretoria on Thursday. “We prefer to use the word ‘cyber-token’.”

Digital currencies such as bitcoin and ethereum are becoming increasingly popular, with regulators in some countries struggling to move fast enough to manage them. The Reserve Bank has established a fintech unit to review its position on private cryptocurrencies and to help draw up an appropriate policy framework and regulatory regime.

“We want to ensure or establish whether there is still compliance with the relevant financial surveillance or exchange control regulations,” Groepe said.

South Africa’s Reserve Bank isn’t the first to voice reservations about digital currencies. In January, Nigerian governor Godwin Emefiele said investing in bitcoin is a “ gamble”. Bank for International Settlements GM Agustin Carstens said in an interview with the German newspaper Boersen-Zeitung this week he prefers to call these currencies “crypto assets”.  — Reported by Amogelang Mbatha, Ntando Thukwana and Odwa Mjo, with assistance from Ana Monteiro and Robert Brand, (c) 2018 Bloomberg LP

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Bitcoin slumps to below $7 500: this is why

Bitcoin fell to a six-week low, as selloff that began in early May dropped the cryptocurrency’s price below US$7 500 for the first time since mid-April.

Bitcoin slumped 7.3% to $7 495 as of 1.57pm in New York, according to Bloomberg composite pricing. It’s now down more than 20% since a 4 May peak.

Wednesday’s decline came after OKEx, the most active fee-charging exchange over the past day, suspended withdrawals and fiat trading to fix an error that was leading to inaccurate account balances, according to a statement on its website.

The latest hiccup comes as the world’s most valuable digital coin is mired in a slump amid growing regulatory scrutiny even after last week’s Consensus confab put the community’s optimism and excess in full display.

The declines on Wednesday also coincided with a selloff in financial markets, with stocks and commodities falling on fading optimism over the US’s talks with North Korea and China. Ethereum was also down 5% on Wednesday, while bitcoin cash fell 9%.  — Reported by Justina Lee, (c) 2018 Bloomberg LP

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ImpactPPA Partners with Indian Government to Power 50 Million Rural Jobs

Decentralized energy platform ImpactPPA announced at Consensus 2018 in New York City that it has partnered with the Indian government to re-energize India’s cottage industry.

Under the auspice of the Honorable Minister Shri Giriraj Singh, ImpactPPA will be working with India’s Ministry of Micro, Small and Medium Enterprises to carry out the government’s Bhartiya Harit Khadi Gramodaya Sansthan (BHKGS) initiative. Translated roughly as “Indian Green Cotton Textile Village Development Organization,” the initiative will push to introduce some 50 million jobs for female workers in India’s more rural states.

Starting in Khanwan village in Bihar, the program plans to install textile looms in the homes of women workers. Per the partnership, ImpactPPA is charged with delivering renewable energy to power these looms, using the Ethereum blockchain to manage supply-chain logistics for the initiative.

“It’s an honor to work with the government of India to deploy out technology solutions,” Dan Bates, CEO of ImpactPPA, said in a statement. “A project of this scope clearly demonstrates that the use of renewable energy and blockchain technology has reached the mainstream. This partnership perfectly aligns with our fundamental mission to help improve quality of life with energy as the engine for social good and greater economic justice.”

The project estimates that its female workers could generate 8,000–10,000 rupees (~$115–145 USD) a month right out of their homes. This would mean that some families could experience a 60 percent increase to their monthly incomes, as the joint monthly income for families in some of India’s poorest villages just barely clears 7,000 rupees ($~100 USD).

Come June, the program expects to unveil the first iteration of its project, ushering in the milestone with a ribbon-cutting ceremony by Indian Prime Minister Narendra Modi. The inaugural facility in Khanawa will consume 100 KW of energy provided by ImpactPPA, as well as 2 KW systems to deploy the facility’s solar-powered looms.

“Having worked with the government of India on various solutions and projects for social impact, this alliance is a game-changer,” remarked Aradhana Singh, CEO and managing director of Sarang Services Pvt. Ltd., a company serving as India’s domestic partner for the project. “We are thrilled that ImpactPPA will be the provider of energy and blockchain technology and services for the project, bringing tangible economic growth opportunities while advocating women’s empowerment.”

ImpactPPA’s Mission and Story

With a history of providing renewable energy to underdeveloped areas for over 10 years, ImpactPPA wants to cut through the bureaucratic processes that it claims keeps clean, reliable energy from circulating in areas that need it most.

ImpactPPA plans to cut through the red tape of centralized NGOs and governments with its distributed platform and token (MPAQ). Through a combination of blockchain technology, smart contracts and its SmartPPA energy protocol, the project will streamline energy financing by allowing anyone to submit a project proposal to the network for consideration. Community members can then vote on which projects should see funding with the MPAQ token. If approved, ImpactPPA can then easily deploy energy to electricity anchors, called smart meters, whose data is connected to the blockchain.

ImpactPPA believes that its tokenized model can free energy innovations and electrical infrastructure projects from outdated financing processes. Most of all, it seeks to serve the underprivileged and destitute, as it envisions a future in which energy projects can easily enter into poorer areas thanks to a decentralized, global approach to funding and approval.

Original Link

The Evolving Debate Over EIP-999: Can (or Should) Trapped Ether Be Freed?

In November 2017, a pseudonymous actor exploited a vulnerability in Parity’s multi-signature Ethereum wallet library that rendered half a million ether inaccessible to their owners.

Ironically, the culprit, Devops199, was trying to patch another vulnerability that allowed hackers to steal $32 million from Parity’s multi-signature wallet accounts back in July of 2017. While tinkering with the popular service’s smart contracts, Devops199 blundered his way into complete ownership of the library that houses the entirety of Parity’s multi-signature wallet accounts. Alerted to this mistake, he made another by killing the code he deployed.

The fallout of this decision resulted in the library locking up roughly $150 million worth of ether, leaving the funds completely untouchable. Fast forward five months: The 514,000 inaccessible coins are worth over $320 million, and the community now has a few feasible options at its disposal to restore them to their rightful owners.

The problem is that not everyone agrees on how the contract should be restored, nor does everyone agree that any action should be taken at all.

Stick a Fork in It — Or Don’t

On April 4, 2018, Afri Schoedon gave owners of the 587 affected wallets a potential solution to their problem. The Parity developer published the EIP-999 commit to Github, a proposal to resurrect the funds from the pit of multi-signature purgatory by restoring the code-dead library.

“This proposal suggests restoring the WalletLibrary by a patched version to allow the owners of the dependent multi-signature wallets regain access to their assets,” Schoedon wrote in the commit’s abstract. In the Rationale section of the commit, Schoedon continues to defend the patch as a low-consequence, satisfactory solution for all involved:

“The total supply of Ether is neither changed nor does this proposal require the transfer of any tokens or assets including Ether. It is assumed that this change is aligned with the interests both of (A) Parity Technologies that intended to provide a smart-contracts library for multi-signature wallets to last forever for its users and (B) the users of the multi-signature wallets that meant to safely store their assets in a contract accessible any time they desire. Lastly, the client-side implementation cost of this proposal is estimated to be low.”

Not everyone is on board with this proposal, though, even those affected by the vulnerability. At least, an informal coin vote on etherchain.org, wherein the affected users signed votes with the keys to their now defunct wallets, indicates as much. Out of the 639 votes recorded, 330 voted against the EIP-999 proposal, 300 voted for it, and 9 didn’t care either way. The vote, however, is in no way conclusive, and some community members are even calling it “fraud” outright, arguing that it doesn’t accurately reflect the community’s sentiment.

There’s concern within the developer community that, if implemented, EIP-999 will fragment the community and code to the point of a hard fork. “The change that is proposed by EIP-999 would be incompatible with the current version because it would introduce a single transaction to restore the deleted multi-sig library contract,” Dan Phifer, CTO of Musiconomi, a project that lost funds to the vulnerability, told Bitcoin Magazine.

“That transaction would not exist for any client that is running the upgrade, so the old and new software wouldn’t agree about the state of the chain,” he continued. “If it’s widely believed that the large majority of users will run the code containing the fix, then only that version of the chain will retain its value.”

Although one of its own developers suggested EIP-999, Parity announced in a recent blog post that it is against forking Ethereum to recover user funds. “Let us make [it] clear: we have no intention to split the Ethereum chain,” the post reads (emphasis theirs). “We plan to continue to work with the community to find a path forward. We have all dedicated a great deal of time and effort to developing the Ethereum ecosystem, and have no intention of harming what we have helped build.”

Two prominent Ethereum developers, Alex Van de Sande and Péter Szilágyi, have expressed a similar concern over this outcome. They’ve both voiced the opinion that the already contentious EIP-999 could evolve into a turf war over Ethereum’s code that would devolve into a chain split. Van de Sande has written about the topic extensively on his Medium blog and Szilágyi, in unpublished interview questions that he posted to Twitter, espouses the idea that “[the community] is trying to reach consensus here, not destroy [its] work.

“It’s not possible to unlock the coins without a hard fork,” Alex Van de Sande told Bitcoin Magazine in an interview. “If they moved with EIP-999 (which they now have publicly vowed not to do) then it would inevitably lead to a fork as we know there would be enough users on both sides to maintain both coins.”

Indeed, the conflict represents crossroads that could fracture the community, even if it isn’t as dire as some outlets may present it. Van de Sande believes that Parity’s official announcement shows that “they saw the concern the community had and have stepped back” from the proposal.

Still, Van de Sande has explored alternative solutions to the Parity dilemma in the event that the community can’t reach a consensus on a way forward. The two solutions, both of which he posits in a post on his Medium blog, could be accomplished without a code change. The first involves creating a “recovery token” whose supply would reflect a 1:1 ratio of the frozen funds. “The idea,” he expounds in our interview, “is that the tokens would have multiple sources of revenue, donation being one of them,” and users can redeem these recovery tokens for real ether by burning them through the token’s smart contract.

In the same vein, the second solution involves a decentralized insurance fund. Basically, the community could create smart contract insurance policies to refund those who lost ether to Parity and to cover future losses, as well. Featuring its own insurance tokens, this system would pay out 90 percent of losses and would rely on community members to act as issuers/insurance brokers for others.

While novel in design, neither of these solutions is without its faults, and Van de Sande admitted in our interview that “[it] would require a lot of work to build such [systems].” The first bets that the community will display a degree of extreme altruism, as $320 million is no small loss to cover via donations. Without proper funding, the recovery tokens would have nothing to buttress their value, as they function solely as a voucher for lost funds. The second proposal also raises questions as to the incentives insurance issuers will have to front funds and how these policies would properly manage risks and liabilities.

Phifer told us that, while he appreciates “Alex’s continued effort to find another solution to the stuck funds that would not require a hard fork,” he does not see these solutions (in their current form) as “viable,” an opinion he has stated publicly elsewhere. He suggests that alternative solutions like those Van de Sande proposes are creative and well-intended, but in trying to make everyone happy, they’re likely to fail some while appeasing others. Someone — or some people — will inevitably have needs ignored.

In their separate interviews, however, both developers agreed on one key point: splitting Ethereum’s chain would come at a cost, and hard-forking is more complicated than a yes-or-no question.

“It’s true that there is a cost to a split chain if both versions continue to exist for an extended period of time,” Phifer said. “However, I don’t think recognizing those costs helps to decide which solution is ‘right.’”

Van de Sande suggested, “We need to differentiate between hard forks and contentious hard forks. Many of the EIPs in the eips.ethereum.org repository require a hard fork, but most of them are non-controversial improvements that can be bundled together in a planned hard fork that is likely going to get 100 percent support from the community. But [EIP-999 has] already generated enough controversy and infighting that we know [it] will not have 100 percent support.”

Clearly, the debate has revisited concerns over code immutability and what role, if any, rescue forks should play to restore lost funds. Lurking in the background of the discussion, the in-fighting has reopened old wounds from Ethereum’s hard fork after the DAO hack. To this precedent, EIP-999 proponents see a parallel scenario where opponents see a dissimilar occurence entirely.

Given that there was a strong consensus behind the DAO fork, the current debate has Van de Sande believing “that the DAO fork was the last of its kind.” Even so, Phifer insists that decentralized systems need a certain degree of flexibility to respond to events like the Parity multi-sig library fiasco. If a decentralized network’s selling point is individual asset ownership, to him, the question should not be if a hard fork acts like a bailout that conflicts with that blockchain’s decentralized vision; rather, he asks how “should a decentralized system behave when users are prevented from controlling the assets they own?”

Following up on this argument, Phifer stated, “I would instead encourage people to consider what the primary value of blockchain technology is and if the rejection of EIP-999 and other such recovery efforts is consistent with those values.”

Problems of Perspective

One Medium post by “pimpindots” challenges us to examine the problem from their perspective. The author reframes the debate, asking not “should we change the code” but “[should] people and projects be allowed to access their funds?” After all, the post points out, this isn’t a bailout as Parity itself wasn’t responsible for the losses; those affected had no control over one coder breaking the multi-sig library, and, in the aftermath, they’re left holding the pieces while everyone else around them argues whether or not they should be pieced back together.

As always, the debate is more complicated than pimpindots’ portrayal or those previously examined. Even some of those individuals who lost funds to the bug, as the poll indicates, don’t want to change the code to retrieve them.

Whatever action the community decides to take, the debate exposes a catch-22 for both decentralized community consensus and open source governance: In a realm where open source access to vulnerable systems can cause major problems, that same open source access can provide solutions to these problems, even if the community doesn’t agree with these solutions.

Going forward, if open-source technologies give any users uninhibited access to its code, then the community needs to adopt policies for managing the hazards this presents. Without such contingency plans in place, we convey that we’re okay with code meddling until something goes horribly wrong; after that, it’s every man for himself and trying to rectify these changes runs contrary to the mantra “code is law.”

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Saudi Telecom and ConsenSys Boost Blockchain Infrastructure in Middle East

Saudi Arabia is rebuilding its country’s industry and government infrastructure in line with its Vision 2030 commitment to become a world leader in the adoption of blockchain infrastructure technology.

ConsenSys, the world’s largest Ethereum blockchain design studio, is partnering with the Saudi Telecom Company (STC), to help make this happen.

In a Memorandum of Understanding (MOU) signed recently, the two companies agreed to work together to design and build out blockchain technology in a range of government and private sectors including real estate, banking and healthcare.

STC, a telecommunications company offering cell phone, internet and computer services, based in Riyadh, was defined in the MOU as the lead agency for the ongoing digital transformation of the country, and ConsenSys is identified as an enabler of this transformation.

ConsenSys Sets Up Shop in Dubai

ConsenSys, currently headquartered in New York City, is establishing a significant presence in the Middle East, setting up its second largest office in the Dubai Design District in the United Arab Emirates. The ConsenSys Dubai office expects to have 50 employees by the end of 2018.

Lina Hediah, executive director, ConsenSys MENA region, said that blockchain technology is “vital for the future growth (of Saudi Arabia) as it enables efficient, secure and cost-effective ecosystems and facilitates the automation of business systems creating added value.”

Commenting on their new partner, Hediah said STC is “the largest telecom operator in the region, with a large and significant geographic footprint,” so it is well placed to lead the blockchain makeover.

ConsenSys is also the Dubai City Blockchain Advisor, providing design and technical advice as well as regular blockchain training, events and education and engaging the Dubai Design District community through regular meetups.

In an earlier announcement, ConsenSys founder and Ethereum co-founder Joseph Lubin laid out his company’s commitment to growing the Ethereum ecosystem in the Middle East:

“Using blockchain technologies to build next-generation nations has always been high on our agenda, and there is no better place to witness this strategic transformation than Dubai, which is forging ahead with its aim to be the world’s first blockchain-powered city.”

Saudi Telecom Company

STC told Bitcoin Magazine in an interview that the company’s goal is to be a leader in establishing blockchain ecosystems based on “open standards.” Riyadh S. Muawad, vice president of Key Accounts, said:

“STC is always looking to bring in the best-of-breed technology to leverage the global alliances and experiences to enrich innovation. Blockchain platforms are in a rapid evolution phase, whereas Ethereum blockchain technology is based on open standards and has an industry wide adoption.”

Muawad added that STC aims to tailor the blockchain business applications it builds for various industry verticals, helping them to accelerate adoption in a seamless manner. “Presently our focus is on use cases which are more relevant for blockchain applications, employing the core principle of a ‘trusted distributed ledger.’”

ConsenSys Wants to Build More Than Just Blockchain Technology

“This partnership not only marks Consensys’ official entry into the Kingdom but is evidence of our commitment to helping build next-generation nations using blockchain technologies,” said Hediah.

“Our experience in building bespoke applications showcases qualitative capabilities, and by leveraging STC’s reach we are looking to really immerse ourselves in the Kingdom’s transformation agenda making a significant impact on both the economic and social infrastructure.”

As outlined here, the ConsenSys Social Impact team is “spearheading research on blockchain solutions for sustainable development in emerging economies.”

In addition to building social infrastructure in emerging economies, ConsenSys is working with developing nations on energy sustainability projects like Grid+1, creating a distributed electricity provider with registration and payments built on the Ethereum blockchain.

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What Is Ether?

Ether is the underlying token powering the Ethereum blockchain, but it serves a slightly different purpose than bitcoin does to the Bitcoin blockchain. Although ether is traded on public markets and has displayed price appreciation similar to bitcoin, they are quite different by design. Ether is not intended to be a unit of currency on a peer-to-peer payment network; rather, it acts as the “fuel” or “gas” that powers the Ethereum network.

At the highest level, Ethereum is an open-source platform that runs smart contracts. When smart contracts are run on a blockchain, they become self-executing when certain conditions are met. The execution of smart contracts requires computational resources that must be paid for in some way: this is where ether comes in.  

Ether is the crypto-fuel allowing smart contracts to run. It provides the incentive for nodes to validate blocks on the Ethereum blockchain, which contains the smart contract code. Every time a block is validated, 5 ethers are created and awarded to the successful node. A new block is propagated roughly every 15–17 seconds. Some nodes may find the correct solution to a block without having it included in the network. The Ethereum network rewards these nodes with 2–3 ethers.

Individuals interacting with decentralized applications on the Ethereum platform will have to pay the network in ether for the use. Developers are incentivized to create these decentralized applications because they will be paid in ether for their work. Developers are also incentivized to write quality applications because wasteful applications will be more expensive and likely will not be used as frequently as better alternatives.

Using this information, the narrative around ether becomes more clear. Its final use will most likely be abstracted by basic button clicking, but assuming Ethereum becomes widely used, ether will be rapidly moving between users and miners. Its value is directly tied to the use of the Ethereum blockchain.

Is Ether Inflationary?

The total supply of ether is not capped like the total supply of bitcoin. 60 million ether were created during the initial crowdsale, 12 million of which went to early backers and the Ethereum Foundation. Most of the money raised will be used to fund future development initiatives.

Ether’s issuance model is unique in that it does not emphasize deflation like most other popular cryptographic assets. Initially, issuance of ether was capped at 18 million per year, which is 25 percent of the initial supply raised in the crowdsale. But more recently, Vitalik Buterin said that issuance levels will be contingent on security rather than a predetermined schedule. Although this rate is fixed each year, the monetary inflation rate actually decreases every year, making ether a disinflationary currency. Disinflation occurs when the rate of inflation shrinks over time.

Ether is expected to be lost each year because some users may forget their private keys, some may pass away without transmitting their private keys, and some may send ether to an address without a corresponding private key. As the network grows, it is expected that the annual rate of ether lost will equal the annual issuance rate. The hope is that ether will be deflationary in 2140, around the same time that Bitcoin ceases issuing new coins. For an in-depth analysis of Ethereum’s issuance model, read Joseph Lubin’s piece.

These calculations are not set in stone. Ethereum is expected to switch its consensus algorithm from proof of work to proof of stake, which in theory is supposed to be more efficient and require a smaller mining reward. This change has produced some uncertainty within the ecosystem. The Ethereum Foundation is currently researching potential monetary effects and claims that all changes to the network will be handled by smart contracts, as opposed to individuals who may have ulterior motives.

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Taking Ether Public: An Interview with Ether Capital CEO Michael Conn

Taking Ether Public: An Interview with Ether Capital CEO Michael Conn

Ether Capital is positioning itself to be the first Ethereum-focused publicly traded company. Having already raised $45 million through a private placement, the Toronto-based firm is now close to finalizing the reverse takeover (RTO) of a Vancouver shell company by mid-April.

“Ether Capital is a technology company focused on building the central business and investment hub for the Ethereum ecosystem,” explained Ether Capital CEO Michael Conn in an interview with Bitcoin Magazine.

“We feel that being publicly traded, and therefore transparent, gives us a significant competitive advantage in the marketplace and helps protect us against the regulatory headwinds that ICOs [initial coin offerings] have been recently facing.”

Ether Capital aims to bring some clarity to an industry that has been largely opaque. The lack of transparency and the concerns around ICO-related fraud have recently led to a clampdown of sorts on ICOs and exchanges by the U.S. Securities and Exchange Commission (SEC) and other global financial regulators.

“Approximately 90 percent of ICOs fail,” noted Conn. “It’s unclear if some ICOs which have raised millions of dollars will even come to market.”

Ether Capital’s plan is to set the proceeds from its private placement aside for working capital and to acquire ether, the native currency of the blockchain-based platform Ethereum, once they complete their RTO in mid-April.

“We believe ether is a strategic asset in and of itself and are bullish that it will appreciate in its own right,” said Conn, in spite of recent price corrections that have seen ether decline to the $300 handle, though it has recovered to above $400 at the time of writing.

Ether Capital then plans to use that ether first to acquire a core Ethereum-based blockchain business and then to buy or build businesses around it, in order to create an interoperable technology company.

“We want to create accretive value by building a true business, rather than acting as a venture capital firm that makes 10–15 investments and is pleased if two or three appreciate in value,” the serial entrepreneur explained. “We are really looking to be a meaningful alternative to both ICOs and venture capital. We are not precluding ourselves from collaborating with VCs or private investors in any of our investments, but ultimately [we] need to see how a business fits in to our broader vision of interoperability.”

He views Ether Capital’s model as similar to Google’s, where Alphabet is the holding company, and other companies like Search, Gmail and Google Plus, etc., feature some level of interoperability with each other, while contributing to the growth of the greater whole.

“As the ICO marketplace comes under greater scrutiny from the SEC, the fact that we are a regulated and publicly traded company should shield our companies,” said Conn. “They will likely not be subject to the same constraints from the SEC as companies that choose to go the ICO route.

“While a lot of capital has been raised to date through ICOs, the SEC is now calling some of them securities and subjecting them to the Howey Test,” Conn observed. “These regulatory hurdles are making ICOs a much more difficult path for raising capital.”

The Venture Capital Role

There are venture capitalists in and around the space, but they want a piece of the business and they want to see liquidity.

“Very few businesses in the blockchain space are seeing tremendous revenue right now, which makes it dilutive and somewhat difficult to operate under the umbrella of a VC fund, though not impossible,” said Conn.

“We are effectively creating a pool of publicly traded permanent capital. The level of regulatory scrutiny we will be subject to such as quarterly investment calls, quarterly financials, etc., will provide cover to those businesses underneath us. They won’t need to face regulations head on, as they would have if they had raised capital via an ICO.”

Ether Capital has conferred with financial regulators and exchanges in Canada in the lead-up to its reverse takeover and the private placement.

“They have been supportive and we feel that through our funding mechanism we are effectively de-risking the buildout for whatever businesses we end up taking on,” said Conn. “We believe that this creates a unique space where our businesses can operate and focus on growing and creating shareholder value.

“It’s really a regulatory clampdown that’s happening in the ICO market and that is where Ether Capital fits in as a solid alternative.”

Ether Capital is backed by OMERS, one of the largest pension plans in Canada, as well as Purpose Investments, a relatively large Toronto-based asset management business.

The Ether Capital board consists of well-known individuals such as Joey Krug, founder of Augur and co-CIO of Pantera Capital; John Ruffolo, CEO of OMERS Ventures; and Som Seif, CEO of Purpose Investments. Conn himself comes from a strong asset management background, having held key executive roles at firms such as AllianceBernstein, TCW and Quail Creek Partners. The team is already evaluating deal flow from early-stage incubations to more established businesses.

“We are fortunate to have a deep and diverse network across the Ethereum community which provides us with well-curated deal flow,” says Conn. “We are looking to be a meaningful actor in the space, but will not do any transaction unless we feel that the potential for shareholder value creation is greater than the value of ether. Our goal is to ensure our shareholders and the Ethereum community both benefit through the value we are creating.”

This article originally appeared on Bitcoin Magazine.

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How Sars plans to tax your bitcoin

The South African Revenue Service (Sars) will continue to apply “normal income tax rules” to cryptocurrencies such as bitcoin and has urged taxpayers to declare cryptocurrency gains or losses as part of their taxable income.

The growing popularity of cryptocurrencies such as bitcoin and ethereum and the rollercoaster ride some of these have experienced over the past year, have increasingly resulted in questions about their tax treatment in the local context.

Sars previously indicated that it was in discussions with some of the top technology companies in the world to enable it to track cryptocurrency trades more efficiently.

“Increased attentiveness and speculation regarding the future of cryptocurrencies has prompted calls … to provide direction as to how cryptocurrencies should be treated for tax purposes,” Sars said in a statement on Friday.

It noted that the existing tax framework could be used to guide taxpayers on the tax implications of cryptocurrencies and that it was unnecessary to issue a separate “interpretation note” at this point.

“Taxpayers who are uncertain about specific transactions involving cryptocurrencies may seek guidance from Sars through channels such as binding private rulings (depending on the nature of the transaction).”

Sars said cryptocurrencies like bitcoin are Internet-based digital currencies that existed in the virtual realm. A growing number of proponents supported its use as an alternative currency that could pay for goods and services much like conventional currencies.

However, the Income Tax Act did not define the word “currency” and cryptocurrencies were neither official South African tender nor widely used and accepted as a medium of payment or exchange in the local market.

“As such, cryptocurrencies are not regarded by Sars as a currency for income tax purposes or capital gains tax (CGT). Instead, cryptocurrencies are regarded by Sars as assets of an intangible nature.”

Normal tax rules

“While not constituting cash, cryptocurrencies can be valued to ascertain an amount received or accrued as envisaged in the definition of ‘gross income’ in the Income Tax Act.

“Following normal income tax rules, income received or accrued from cryptocurrency transactions can be taxed on revenue account under ‘gross income’. Alternatively, such gains may be regarded as capital in nature, as spelt out in the Eighth Schedule to the Act for taxation under the CGT paradigm,” it added.

Sars said whether accruals or receipts were revenue or capital in nature would be tested under existing jurisprudence (of which there was no shortage) and added that taxpayers were entitled to claim expenses associated with cryptocurrency accruals or receipts, provided it was incurred in the production of income and for purposes of trade.

The revenue authority said base cost adjustments could be made if it fell within the CGT paradigm.

“Gains or losses in relation to cryptocurrencies can broadly be categorised with reference to three types of scenarios, each of which potentially gives rise to distinct tax consequences:

  • A cryptocurrency can be acquired through “mining”. Mining is conducted by the verification of transactions in a computer-generated public ledger, achieved through the solving of complex computer algorithms. By verifying these transactions the miner is rewarded with ownership of new coins which become part of the networked ledger.

“This gives rise to an immediate accrual or receipt on successful mining of the cryptocurrency. This means that until the newly acquired cryptocurrency is sold or exchanged for cash, it is held as trading stock which can subsequently be realised through either a normal cash transaction as described in (i) or a barter transaction as described in (iii) below.

  • (ii) Investors can exchange local currency for a cryptocurrency (or vice versa) by using cryptocurrency exchanges, which are essentially markets for cryptocurrencies, or through private transactions.
  • (ii) Goods or services can be exchanged for cryptocurrencies. This transaction is regarded as a barter transaction. Therefore, the normal barter transaction rules apply.

According to the 2018 budget review, the VAT treatment of cryptocurrencies would be reviewed.

“Pending policy clarity in this regard, Sars will not require VAT registration as a vendor for purposes of the supply of cryptocurrencies,” it said.

Sars said the onus was on taxpayers to declare all cryptocurrency-related taxable income in the tax year in which it was received or accrued.

“Failure to do so could result in interest and penalties.”

  • This article was originally published on Moneyweb and is used here with permission

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Gitcoin: Open Source Bounties with Kevin Owocki

Most technology companies rely on open source software projects. But open source software projects are often maintained by a group of people that is not affiliated with any particular company. When an open source project develops too much technical debt, it can become a tragedy of the commons. Who is responsible for maintaining these open source projects?

This is the motivation for open source bounties. Companies and individuals who rely on open source create bounties, which are financial incentives for developers to solve problems within the open source project.

Kevin Owocki is the creator of Gitcoin, a platform for open source bounties that is mediated by an Ethereum smart contract. Kevin joins the show to discuss his experience building Gitcoin–as well as some of the problems with the blockchain space, such as rampant ICOs. Gitcoin is NOT a cryptocurrency or token itself–it is a platform for open source software to be built more efficiently. Kevin was an awesome guest and you will enjoy the conversation.

Gitcoin is a nice example of a real-world Ethereum use case–it uses Ethereum for escrow: if I post a $25 bounty for someone to fix a bug in my open source project, I will lock up ether in a smart contract. When the bug is fixed, the programmer who fixed it will submit a pull request on Github, and I will release the ether from the smart contract to pay them.

We would love for you to fill out our listener survey at softwareengineeringdaily.com/survey. This will help us decide what other content to focus on.

Of course–you can also send me an email at any time, jeff@softwaredaily.com. And in the meantime, if you are completely sick of cryptocurrencies, check out our back catalog of episodes at softwaredaily.com, or by downloading our Software Engineering Daily apps, which have all of our episodes including our Greatest Hits, which is a curated set of the most popular shows. The apps will soon have offline downloads and bookmarking.

Transcript

Transcript provided by We Edit Podcasts. Software Engineering Daily listeners can go to weeditpodcasts.com/sed to get 20% off the first two months of audio editing and transcription services. Thanks to We Edit Podcasts for partnering with SE Daily. Please click here to view this show’s transcript.

Sponsors

Triplebyte is a company that connects engineers with top tech companies. We’re running an experiment and our hypothesis is that Software Engineering Daily listeners will do well above average on the quiz. Go to triplebyte.com/sedaily and take the multiple-choice quiz, and in a few episodes we’ll share some stats about how you all did. Try it yourself at triplebyte.com/sedaily.

There’s no need to reinvent the wheel when it comes to making your app “realtime.” PubNub makes it simple, enabling you to build immersive and interactive experiences on the web, on mobile phones, embedded into hardware, and any other device connected to the Internet. With powerful APIs, and a robust global infrastructure, you can stream geolocation data, send chat messages, turn on your sprinklers, or rock your baby’s crib when they start crying (PubNub literally powers IoT cribs). 70 SDKs for web, mobile, IoT, and more means you can start streaming data in realtime without a ton of compatibility headaches, and no need to build your own SDKs from scratch. Go to PubNub.com/sedaily to get started. They offer a generous sandbox tier that’s free forever (until your app takes off).

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The TEALs program is looking for engineers from across the country to volunteer to teach computer science in high schools. Work with a computer science teacher in the classroom to bring development concepts to life through teamwork and determination. If you’d like to learn more about the Microsoft’s TEALs program or submit your volunteer application, go to tealsk12.org/sedaily.

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Enterprise Smart Contracts with Marley Gray

We sign many different types of contracts throughout our lives. We sign a mortgage to get a loan for a house. When we go to the hospital, we sign a piece of paper that defines how our medical data can be shared between organizations. These pieces of paper represent our opting into an agreement that will be mediated and enforced by computer interactions. We can’t see the code behind those computer interactions, and we can’t verify that it is abiding by the contract we agreed to.

Smart contracts allow for programmatic execution of contractual agreements. Code is law, and there is less ambiguity. The most widely used smart contract platform is the Ethereum blockchain–but several large enterprises are creating their own smart contracts. Should all smart contracts be decentralized, or do enterprise consortium blockchains make sense?

In this episode, Marley Gray from Microsoft joins the show to discuss enterprise smart contracts–why you would want to use them and how they can be architected. Marley has worked on banking and financial technology for over a decade, and makes some strong arguments for why banks will adopt smart contracts, and the timeline for how that might take place.

We would love for you to fill out our listener survey at softwareengineeringdaily.com/survey. This will help us decide what other content to focus on.

Of course–you can also send me an email at any time, jeff@softwaredaily.com. And in the meantime, if you are completely sick of cryptocurrencies, check out our back catalog of episodes at softwaredaily.com, or by downloading our apps, which have all of our episodes including our Greatest Hits, which is a curated set of the most popular shows. The apps will soon have offline downloads and bookmarking.

Transcript

Transcript provided by We Edit Podcasts. Software Engineering Daily listeners can go to weeditpodcasts.com/sed to get 20% off the first two months of audio editing and transcription services. Thanks to We Edit Podcasts for partnering with SE Daily. Please click here to view this show’s transcript.

Sponsors

Today’s sponsor is Datadog, a cloud-scale monitoring and analytics platform. Datadog integrates with more than 200 technologies so you can gain deep visibility into every layer of your stack – and any other data you’re interested in tracking. For example, you can use Datadog’s RESTful API to collect custom metrics from your favorite crypto data sources, and analyze trends in Ethereum prices over time. Start a 14-day free trial and as a bonus, Datadog will send you a free T-shirt! softwareengineeringdaily.com/datadog

Triplebyte is a company that connects engineers with top tech companies. We’re running an experiment and our hypothesis is that Software Engineering Daily listeners will do well above average on the quiz. Go to triplebyte.com/sedaily and take the multiple-choice quiz, and in a few episodes we’ll share some stats about how you all did. Try it yourself at triplebyte.com/sedaily.

ConsenSys has hundreds of web3 developers that are building decentralized applications, focusing on world-changing ideas like creating a system for self-sovereign identity, managing supply chains, developing a more efficient electricity provider and much more. ConsenSys is actively hiring talented software developers to help build the decentralized web. Learn more about Consensys projects and open source jobs at consensys.net/sedaily.

GoCD is a continuous delivery tool created by ThoughtWorks. GoCD agents use Kubernetes to scale as needed. Check out gocd.org/sedaily and learn about how you can get started. GoCD was built with the learnings of the ThoughtWorks engineering team, who have talked about building the product in previous episodes of Software Engineering Daily. It’s great to see the continued progress on GoCD with the new Kubernetes integrations–and you can check it out for yourself at gocd.org/sedaily.

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Plasma: Smart Contract Scalability with Christian Reitwiessner

Ethereum is a system for running decentralized smart contracts. In the current implementation of Ethereum, every smart contract gets deployed to every full node. Whenever a user wants to call a smart contract, that smart contract gets executed on each full node–across the entire network.

The current model for smart contract execution needs to be made more scalable. In today’s episode, Christian Reitwiessner joins the show to describe Plasma–a system for scaling smart contracts. Christian is a developer who has worked extensively on Solidity, the most popular smart contract programming language in Ethereum.

For the last month, we have focused on blockchain related topics, and we will soon be shifting to other subjects. Some of the listeners have not enjoyed the blockchain focus, other people have loved it–for everyone listening, we would love for you to fill out our listener survey at softwareengineeringdaily.com/survey. This will help us decide what other content to focus on.

Of course–you can also send me an email at any time, jeff@softwaredaily.com. And join our Slack at softwareengineeringdaily.com/slack. And if you are completely sick of cryptocurrencies, check out our back catalog of episodes at softwaredaily.com, or by downloading our apps, which have all of our episodes including our Greatest Hits, which is a curated set of the most popular shows. The apps will soon have offline downloads and bookmarking.

Transcript

Transcript provided by We Edit Podcasts. Software Engineering Daily listeners can go to weeditpodcasts.com/sed to get 20% off the first two months of audio editing and transcription services. Thanks to We Edit Podcasts for partnering with SE Daily. Please click here to view this show’s transcript.

Sponsors


ConsenSys has hundreds of web3 developers that are building decentralized applications, focusing on world-changing ideas like creating a system for self-sovereign identity, managing supply chains, developing a more efficient electricity provider and much more. ConsenSys is actively hiring talented software developers to help build the decentralized web. Learn more about Consensys projects and open source jobs at consensys.net/sedaily.

GoCD is a continuous delivery tool created by ThoughtWorks. GoCD agents use Kubernetes to scale as needed. Check out gocd.org/sedaily and learn about how you can get started. GoCD was built with the learnings of the ThoughtWorks engineering team, who have talked about building the product in previous episodes of Software Engineering Daily. It’s great to see the continued progress on GoCD with the new Kubernetes integrations–and you can check it out for yourself at gocd.org/sedaily.

LiveRamp is one of the fastest growing companies in data connectivity in the Bay Area, and they are looking for senior level talent to join their team. LiveRamp helps the world’s largest brands activate their data to improve customer interactions on any channel or device. The infrastructure is at a tremendous scale: a 500-billion node identity graph generated from over a thousand data sources, running an 85PB hadoop cluster; and application servers that process over 20 billion HTTP requests per day. The LiveRamp team thrives on mind-bending technical challenges. LiveRamp members value entrepreneurship, humility, and constant personal growth. If this sounds like a fit for you, check out softwareengineeringdaily.com/liveramp.

There’s no need to reinvent the wheel when it comes to making your app “realtime.” PubNub makes it simple, enabling you to build immersive and interactive experiences on the web, on mobile phones, embedded into hardware, and any other device connected to the Internet. With powerful APIs, and a robust global infrastructure, you can stream geolocation data, send chat messages, turn on your sprinklers, or rock your baby’s crib when they start crying (PubNub literally powers IoT cribs). 70 SDKs for web, mobile, IoT, and more means you can start streaming data in realtime without a ton of compatibility headaches, and no need to build your own SDKs from scratch. Go to PubNub.com/sedaily to get started. They offer a generous sandbox tier that’s free forever (until your app takes off).

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DAO Reflections and Slock.it with Christoph Jentzsch

The DAO was a system of smart contracts on the Ethereum blockchain that investors put millions of dollars into. Back in May 2016, it was the largest crowdfunding event in history, and we discussed it in detail in a previous episode with Matt Leising. The DAO was hacked due to a security vulnerability, and this event led to a hard fork of Ethereum.

The DAO was organized by a company called Slock.it. Slock.it’s original goal was to allow people to connect devices to the Ethereum blockchain. If you could connect smart locks, cars, and electricity systems to the blockchain, it could create decentralized systems for sharing these devices. To raise money, Slock.it created the DAO. Although the initial scope of the DAO was to raise money for Slock.it, over time it expanded in scope to become a decentralized system for venture capital.

When the DAO was hacked, the events that followed shook the Ethereum community. The hard fork lowered the financial damage inflicted on the investors–but there was still outrage within the community. How was it possible for an open source crowdfunding project to launch with a security vulnerability? As the Ethereum world looked for someone to blame, they turned to Slock.it.

Thus began a very difficult period in the life of Christoph Jentzsch. Christoph is the CEO of Slock.it, and he has been involved in the Ethereum community since the early days. When people think of Slock.it, they might imagine a group of people that move fast and break things. But in fact, Christoph’s early work on Ethereum was around rigorous unit testing of different Ethereum clients. He was obsessed with testing, and consistency between the different Ethereum interfaces.

In today’s episode, Christoph and I talk about his early experiences with Ethereum, his reflections on the events of the DAO, and the direction that Slock.it is going today. Since the events of the DAO, the company has refocused its efforts on the original mission–to connect devices to the Ethereum blockchain.

Meetups for Software Engineering Daily are being planned! Go to softwareengineeringdaily.com/meetup if you want to register for an upcoming Meetup. In March, I’ll be visiting Datadog in New York and Hubspot in Boston, and in April I’ll be at Telesign in LA.

If you are looking for all 700 episodes of Software Engineering Daily, check out our apps on the iOS or Android app store. We’ve got tons of episodes on blockchains, business, distributed systems, and tons of other topics. If you want to become a paid subscriber to Software Engineering Daily, you can hear all of our episodes without ads–you can subscribe at softwaredaily.com. And all of the code for our apps is open source. If you are looking for an open source community to be a part of, come check out github.com/softwareengineeringdaily.

Transcript

Transcript provided by We Edit Podcasts. Software Engineering Daily listeners can go to weeditpodcasts.com/sed to get 20% off the first two months of audio editing and transcription services. Thanks to We Edit Podcasts for partnering with SE Daily. Please click here to view this show’s transcript.

Sponsors

Datadog was built to bring clarity to complex, dynamic applications—in the cloud, on-premises, in containers, or wherever they run. With beautiful dashboards, seamless integrations with more than 200 technologies, and distributed request tracing, Datadog provides deep, end-to-end visibility into the health and performance of modern applications. Visualize key metrics, set alerts to identify anomalies, and collaborate with your team to troubleshoot and fix issues fast. Try it yourself by starting a free, 14-day trial today. Listeners of this podcast will also receive a free Datadog T-shirt! softwareengineeringdaily.com/datadog

ConsenSys has hundreds of web3 developers that are building decentralized applications, focusing on world-changing ideas like creating a system for self-sovereign identity, managing supply chains, developing a more efficient electricity provider and much more. ConsenSys is actively hiring talented software developers to help build the decentralized web. Learn more about Consensys projects and open source jobs at consensys.net/sedaily.

If you love Software Engineering Daily, I think you’ll also love The Google Google Cloud Platform Podcast. It’s a podcast about Google Cloud Products, how they are built, and and how you can use them. But, really, it’s about all the changes that are going on in software engineering–as told from the point of view of Google engineers. You can find the Google Cloud Platform podcast at gcppodcast.com.

Triplebyte is a company that connects engineers with top tech companies. We’re running an experiment and our hypothesis is that Software Engineering Daily listeners will do well above average on the quiz. Go to triplebyte.com/sedaily and take the multiple-choice quiz, and in a few episodes we’ll share some stats about how you all did. Try it yourself at triplebyte.com/sedaily.

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Streamr: Data Streaming Marketplace with Henri Pihkala

Data streams about the weather can be used to predict how soybean futures are going to change in price. Satellite data streams can take pictures of the number of cars on the road, and judge how traffic patterns are changing. Search engines can aggregate data from different queries and determine what people are most interested in.

Data streams define how the world is changing over time. Technology companies process these data streams and make decisions based on that stream. The most direct example of this might be financial trading companies, which use all kinds of data streams to predict economic price changes.

When Henri Pihkala worked on algorithmic trading systems, he saw how useful these data streams are, and decided to build products around data streaming. Eventually, Henri started working on Streamr, a platform for data streams to be bought and sold on top of the Ethereum network.

Streamr is an adaptation of technology that Henri worked on before he started working on the decentralized version. The original technology is a user interface for connecting data streams and building applications on top of them, and he acquired several customers for that platform. Today, the Streamr platform is still mostly centralized, but Henri and his team are working on building out the decentralized infrastructure.

Streamr raised an ICO worth ~25 million Euros. Most startups would not raise this amount of money before series B, much less before they have a product with a large user base. In this episode, Henri discusses why they raised so much money, and explains why ICOs are different than equity raises. The investors who participated in the Streamr ICO received the DATAcoin token. Henri also explained why it makes sense for this ecosystem to have its own token.

Transcript

Transcript provided by We Edit Podcasts. Software Engineering Daily listeners can go to weeditpodcasts.com/sed to get 20% off the first two months of audio editing and transcription services. Thanks to We Edit Podcasts for partnering with SE Daily. Please click here to view this show’s transcript.

Sponsors

Triplebyte is a company that connects engineers with top tech companies. We’re running an experiment and our hypothesis is that Software Engineering Daily listeners will do well above average on the quiz. Go to triplebyte.com/sedaily and take the multiple-choice quiz, and in a few episodes we’ll share some stats about how you all did. Try it yourself at triplebyte.com/sedaily.

If you love Software Engineering Daily, I think you’ll also love The Google Google Cloud Platform Podcast. It’s a podcast about Google Cloud Products, how they are built, and and how you can use them. But, really, it’s about all the changes that are going on in software engineering–as told from the point of view of Google engineers. You can find the Google Cloud Platform podcast at gcppodcast.com.

ConsenSys has hundreds of web3 developers that are building decentralized applications, focusing on world-changing ideas like creating a system for self-sovereign identity, managing supply chains, developing a more efficient electricity provider and much more. ConsenSys is actively hiring talented software developers to help build the decentralized web. Learn more about Consensys projects and open source jobs at consensys.net/sedaily.

Sumo Logic is a cloud-native, machine data analytics service that helps you Run and Secure your Modern Application. If you are feeling the pain of managing your own log, event, and performance metrics data, check out sumologic.com/sedaily. Check out sumologic.com/sedaily for a free 30-day Trial of Sumo Logic, to find out how Sumo Logic can improve your productivity and your application observability–wherever you run your applications. That’s sumologic.com/sedaily.

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The Business of Decentralization with Anthony Diiorio

Anthony Diiorio was involved with Ethereum since the earliest days. He was one of the first people to see the Ethereum ideas presented by Vitalik Buterin, and he invested deeply in Ethereum–both financially and by helping to establish the early Ethereum community. Anthony started Decentral in 2014, which is a hub for his projects in the cryptocurrency space, the most impactful project being Jaxx.

Jaxx is a blockchain wallet that can hold multiple different cryptocurrencies. It works by connecting a small client-side application to remote full nodes. The user interface is simple, and Jaxx maintains the full node instances that the small client-side application connects to. We discuss the architecture of Jaxx in more detail during this episode.

We also talk about Anthony’s background–which includes a wide range of businesses: marketing, patio door manufacturing, real estate, and eventually blockchains. Anthony had a wealth of information to provide around entrepreneurship–both inside and outside of the blockchain space.

If you are looking for all 700 episodes of Software Engineering Daily, check out our apps on the iOS or Android app store. We’ve got tons of episodes on blockchains, business, distributed systems, and tons of other topics. If you want to become a paid subscriber to Software Engineering Daily, you can hear all of our episodes without ads–you can subscribe at softwaredaily.com. And all of the code for our apps is open source. If you are looking for an open source community to be a part of, come check out github.com/softwareengineeringdaily.

Transcript

Transcript provided by We Edit Podcasts. Software Engineering Daily listeners can go to weeditpodcasts.com/sed to get 20% off the first two months of audio editing and transcription services. Thanks to We Edit Podcasts for partnering with SE Daily. Please click here to view this show’s transcript.

Sponsors

We’re running an experiment and our hypothesis is that Software Engineering Daily listeners will do well above average on the quiz. Go to triplebyte.com/sedaily and take the multiple-choice quiz, and in a few episodes we’ll share some stats about how you all did.” — and then a few episodes in, after getting some data, we could switch it to something like: “We ran an experiment and found that Software Engineering Daily listeners are 2.5 times more likely to pass the Triplebyte quiz compared to everyone else. Try it yourself at triplebyte.com/sedaily.

Do you think blockchain technology is only used for cryptocurrency? Think again. ConsenSys develops tools and infrastructure to enable a decentralized future built on Ethereum, the most advanced blockchain development platform. ConsenSys has hundreds of web3 developers that are building decentralized applications, focusing on world-changing ideas like creating a system for self-sovereign identity, managing supply chains, developing a more efficient electricity provider and much more. Listeners, why continue to build the internet of today when you can build the internet of the future on the blockchain? ConsenSys is actively hiring talented software developers to help build the decentralized web. Learn more about Consensys projects and open source jobs at consensys.net/sedaily.

QCon.ai is a software conference for full-stack developers looking to uncover the real-world patterns, practices, and use cases for applying artificial intelligence/machine learning in engineering. Come to QCon.ai in San Francisco, from April 9th – 11th 2018–and see talks from companies like Instacart, Uber, Coinbase, and Stripe. These companies have built and deployed state of the art machine learning models–and they come to QCon to share their developments. The keynote of QCon.ai is Matt Ranney, a Sr. Staff Engineer at UberATG (the autonomous driving unit at Uber)–and he’s an amazing speaker–he was on SE Daily in the past, if you want a preview for what he is like. I have been to QCon three times and it is a fantastic conference. What I love about QCon is the high bar for quality–quality in terms of speakers, content, peer sharing as well as the food and general atmosphere. QCon is one of my favorite conferences, and if you haven’t been to a QCon before, make QCon.ai your first. Register for QCon.ai and use promo code SEDAILY for $100 off your ticket. 

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Shapeshift Operations with Jon Shapeshift

A financial exchange is an operationally intensive business. You have customers making a high volume of transactions, your service has to be low latency and highly available, and you are dealing with a lot of money. A cryptocurrency exchange has all of the complexity of a typical financial exchange–and then some additional complexity.

Shapeshift is a cryptocurrency exchange that allows users to buy and sell digital assets–Bitcoin, Ethereum, Litecoin, and lots of other currencies. Shapeshift also has a set of tools and APIs that allow developers to build higher level applications that transact in cryptocurrencies. Shapeshift’s CEO is an early cryptocurrency entrepreneur named Erik Voorhees, who will appear on the show in the near future.

Today’s guest Jon is the COO of Shapeshift–he handles the operations of the company. He prefers not to use his last name, because Shapeshift is particularly sensitive to social engineering attacks. We’ll get into why that is in the episode–and explore lots of other topics too. How to scale a cryptocurrency exchange, the products Shapeshift offers, and some of the near-death experiences that Shapeshift has had. After all–it is a startup, and every startup has moments where it seems like the company will die.

Meetups for Software Engineering Daily are being planned! Go to softwareengineeringdaily.com/meetup if you want to register for an upcoming Meetup. In March, I’ll be visiting Datadog in New York and Hubspot in Boston, and in April I’ll be at Telesign in LA.

If you are looking for all 700 episodes of Software Engineering Daily, check out our apps on the iOS or Android app store. We’ve got tons of episodes on blockchains, business, distributed systems, and tons of other topics. If you want to become a paid subscriber to Software Engineering Daily, you can hear all of our episodes without ads–you can subscribe at softwaredaily.com. And all of the code for our apps is open source. If you are looking for an open source community to be a part of, come check out github.com/softwareengineeringdaily.

Transcript

Transcript provided by We Edit Podcasts. Software Engineering Daily listeners can go to weeditpodcasts.com/sed to get 20% off the first two months of audio editing and transcription services. Thanks to We Edit Podcasts for partnering with SE Daily. Please click here to view this show’s transcript.

Sponsors

Users have come to expect realtime. They crave alerts that their payment is received. They crave little cars zooming around on the map. They crave locking their doors at home when they’re not at home. There’s no need to reinvent the wheel when it comes to making your app “realtime.” PubNub makes it simple, enabling you to build immersive and interactive experiences on the web, on mobile phones, embedded into hardware, and any other device connected to the Internet. With powerful APIs, and a robust global infrastructure, you can stream geolocation data, send chat messages, turn on your sprinklers, or rock your baby’s crib when they start crying (PubNub literally powers IoT cribs). 70 SDKs for web, mobile, IoT, and more means you can start streaming data in realtime without a ton of compatibility headaches, and no need to build your own SDKs from scratch. And lastly, PubNub includes a ton of other realtime features beyond realtime messaging, like presence for online/offline detection, and access manager to thwart trolls and hackers. Go to PubNub.com/sedaily to get started. They offer a generous sandbox tier that’s free forever (until your app takes off).

Sumo Logic is a cloud-native, machine data analytics service that helps you Run and Secure your Modern Application. If you are feeling the pain of managing your own log, event, and performance metrics data, check out sumologic.com/sedaily. Even if you have tools already, it’s worth checking out Sumo Logic and seeing if you can leverage your data even more effectively, with real-time dashboards and monitoring, and improved observability – to improve the uptime of your application and keep your day-to-day runtime more secure. Check out sumologic.com/sedaily for a free 30-day Trial of Sumo Logic, to find out how Sumo Logic can improve your productivity and your application observability–wherever you run your applications. That’s sumologic.com/sedaily.

Do you think blockchain technology is only used for cryptocurrency? Think again. ConsenSys develops tools and infrastructure to enable a decentralized future built on Ethereum, the most advanced blockchain development platform. ConsenSys has hundreds of web3 developers that are building decentralized applications, focusing on world-changing ideas like creating a system for self-sovereign identity, managing supply chains, developing a more efficient electricity provider and much more. Listeners, why continue to build the internet of today when you can build the internet of the future on the blockchain? ConsenSys is actively hiring talented software developers to help build the decentralized web. Learn more about Consensys projects and open source jobs at consensys.net/sedaily.

The octopus: a sea creature known for its intelligence and flexibility. Octopus Deploy: a friendly deployment automation tool for deploying applications like .NET apps, Java apps and more. Ask any developer and they’ll tell you it’s never fun pushing code at 5pm on a Friday then crossing your fingers hoping for the best. That’s where Octopus Deploy comes into the picture. Octopus Deploy is a friendly deployment automation tool, taking over where your build/CI server ends. Use Octopus to promote releases on-prem or to the cloud. Octopus integrates with your existing build pipeline–TFS and VSTS, Bamboo, TeamCity, and Jenkins. It integrates with AWS, Azure, and on-prem environments. Reliably and repeatedly deploy your .NET and Java apps and more. If you can package it, Octopus can deploy it! It’s quick and easy to install. Go to Octopus.com to trial Octopus free for 45 days. That’s Octopus.com

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Web3 with Fabian Vogelsteller

Most applications today run on a cloud provider like AWS. They are built with a framework like Ruby on Rails. They use a set of APIs like Stripe and Twilio for middleware services. This is the era of “web 2.0.”

With decentralized systems, we are starting to get a feel for what “web 3.0” might feel like. The futuristic idea of “web 3.0” works off of the following idea: instead of using a centralized service owned by a single company, you might purchase your computation and storage from a network of nodes. The nodes will be running peer-to-peer software that competes on price.

Fabian Vogelsteller works on Web3.js, a JavaScript library for interfacing with the Ethereum blockchain. He also works on Mist, a browser for Ethereum. Fabian joins the show to discuss the difference between decentralized apps and centralized apps—and to explain why we need to build a bridge between those two worlds.

Transcript

Transcript provided by We Edit Podcasts. Software Engineering Daily listeners can go to weeditpodcasts.com/sed to get 20% off the first two months of audio editing and transcription services. Thanks to We Edit Podcasts for partnering with SE Daily. Please click here to view this show’s transcript.

Sponsors


Do you think blockchain technology is only used for cryptocurrency? Think again. ConsenSys develops tools and infrastructure to enable a decentralized future built on Ethereum, the most advanced blockchain development platform. ConsenSys has hundreds of web3 developers that are building decentralized applications, focusing on world-changing ideas like creating a system for self-sovereign identity, managing supply chains, developing a more efficient electricity provider and much more. Listeners, why continue to build the internet of today when you can build the internet of the future on the blockchain? ConsenSys is actively hiring talented software developers to help build the decentralized web. Learn more about Consensys projects and open source jobs at consensys.net/sedaily.

Today’s sponsor is Datadog, a cloud-scale monitoring and analytics platform. Datadog integrates with more than 200 technologies so you can gain deep visibility into every layer of your stack – and any other data you’re interested in tracking. For example, you can use Datadog’s RESTful API to collect custom metrics from your favorite crypto data sources, and analyze trends in Ethereum prices over time. Start a 14-day free trial and as a bonus, Datadog will send you a free T-shirt! softwareengineeringdaily.com/datadog

Sumo Logic is a cloud-native, machine data analytics service that helps you Run and Secure your Modern Application. If you are feeling the pain of managing your own log, event, and performance metrics data, check out sumologic.com/sedaily. Even if you have tools already, it’s worth checking out Sumo Logic and seeing if you can leverage your data even more effectively, with real-time dashboards and monitoring, and improved observability – to improve the uptime of your application and keep your day-to-day runtime more secure. Check out sumologic.com/sedaily for a free 30-day Trial of Sumo Logic, to find out how Sumo Logic can improve your productivity and your application observability–wherever you run your applications. That’s sumologic.com/sedaily.

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Monopolies and Proof of Stake with Karl Floersh

Decentralized applications might someday offer alternatives to modern monopolies. Uber, Airbnb, Facebook, Amazon—all of these services could be recreated on a decentralized stack of technologies like Ethereum, IPFS, and Golem. Fully decentralized services could be more transparent, cheaper, and more efficient.

But let’s be realistic. Today, even the simplest applications of fully decentralized blockchains don’t work as well as we need them to. Cryptokitties offered a glimpse into how a simple viral application can limit the throughput of Ethereum. And don’t forget that these technologies are in some ways still subject to centralization in their current form. Miners form the decentralized consensus layer—and that mining activity is physically centralized in large server farms.

The decentralized future is possible. In order to get there, we need to make progress on the low-level tools that such a world will be built upon. This is the realization that today’s guest Karl Floersh had. Karl is a researcher for the Ethereum Foundation. He was initially excited about the prospect of decentralized apps—such as a decentralized Uber. But as he looked more closely at the space, he realized how early we are, and how much work there is to be done on foundational technologies.

Proof of Stake is the central topic of discussion in today’s conversation with Karl. Proof of Stake is a consensus mechanism that is an alternative to Proof of Work. In Proof of Work, miners race to validate blocks of transactions. This results in duplicated effort and perhaps wasted energy. In Proof of Stake, validators are chosen to approve transactions. These validators lock up an amount of currency that they are willing to “stake.” If a validator acts badly, the validator will lose their entire stake.

This mechanism could be more efficient—and we will explain why that is in this episode. If Proof of Stake works, it could lead to a faster, truly decentralized Ethereum blockchain. That’s a remarkable potential outcome.

Transcript

Transcript provided by We Edit Podcasts. Software Engineering Daily listeners can go to weeditpodcasts.com/sed to get 20% off the first two months of audio editing and transcription services. Thanks to We Edit Podcasts for partnering with SE Daily. Please click here to view this show’s transcript.

Sponsors

Today’s sponsor is Datadog, a cloud-scale monitoring and analytics platform. Datadog integrates with more than 200 technologies so you can gain deep visibility into every layer of your stack – and any other data you’re interested in tracking. For example, you can use Datadog’s RESTful API to collect custom metrics from your favorite crypto data sources, and analyze trends in Ethereum prices over time. Start a 14-day free trial and as a bonus, Datadog will send you a free T-shirt! softwareengineeringdaily.com/datadog

Do you think blockchain technology is only used for cryptocurrency? Think again. ConsenSys develops tools and infrastructure to enable a decentralized future built on Ethereum, the most advanced blockchain development platform. ConsenSys has hundreds of web3 developers that are building decentralized applications, focusing on world-changing ideas like creating a system for self-sovereign identity, managing supply chains, developing a more efficient electricity provider and much more. Listeners, why continue to build the internet of today when you can build the internet of the future on the blockchain? ConsenSys is actively hiring talented software developers to help build the decentralized web. Learn more about Consensys projects and open source jobs at consensys.net/sedaily.

Users have come to expect realtime. They crave alerts that their payment is received. They crave little cars zooming around on the map. They crave locking their doors at home when they’re not at home. There’s no need to reinvent the wheel when it comes to making your app “realtime.” PubNub makes it simple, enabling you to build immersive and interactive experiences on the web, on mobile phones, embedded into hardware, and any other device connected to the Internet. With powerful APIs, and a robust global infrastructure, you can stream geolocation data, send chat messages, turn on your sprinklers, or rock your baby’s crib when they start crying (PubNub literally powers IoT cribs). 70 SDKs for web, mobile, IoT, and more means you can start streaming data in realtime without a ton of compatibility headaches, and no need to build your own SDKs from scratch. And lastly, PubNub includes a ton of other realtime features beyond realtime messaging, like presence for online/offline detection, and access manager to thwart trolls and hackers. Go to PubNub.com/sedaily to get started. They offer a generous sandbox tier that’s free forever (until your app takes off).

Your enterprise produces lots of data, but you aren’t capturing as much as you would like. You aren’t storing it in the right place, and you don’t have the proper tools to run complex queries against your data. MapR is a converged data platform that runs across any cloud. MapR provides storage, analytics, and machine learning engines. Use the MapR operational database and event streams to capture your data. Use the MapR analytics and machine learning engines to analyze your data, in batch or interactively–across any cloud, on premise, or at the edge. MapR’s technology is trusted by major industries like Audi, which uses MapR for its connected vehicles. MapR also powers Aadhar, the world’s largest biometric system. To learn more about how MapR can solve problems for your enterprise, go to softwareengineeringdaily.com/mapr to find whitepapers, videos, and ebooks. Whether you are an oil company like Anadarko, a major FinTech provider like Kabbage, or a business in any other vertical, MapR can leverage the high volumes of data produced within your company. Go to softwareengineeringdaily.com/mapr and find out how MapR can help your business take full advantage of its data. 

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Proof of Stake with Subhan Nadeem

For a decade, Bitcoin’s proof-of-work system has run without disruption. In a proof-of-work scheme, Bitcoin miners compete to solve a cryptographic puzzle associated with a block of transactions.

Every ten minutes, all the Bitcoin miner nodes race to be the first to solve a block of transactions. Only one miner wins each block, meaning the other nodes’ time was ultimately wasted. There is also a massive expense of electricity.

Bitcoin is a system with low transaction throughput—about 7 transactions per second. Computer scientists have wondered—is there an alternative way of doing consensus? What if we took all the wasted compute power from proof of work, and allocated it in a way that makes transactions get processed faster?

But Bitcoin’s governance tends to be extremely conservative. A change to the consensus mechanism probably won’t happen any time soon in Bitcoin.

Ethereum’s consensus mechanism is modeled after that of Bitcoin—proof-of-work mining. But Ethereum’s governance ethos is quite different. Ethereum is in the process of planning and implementing proof of stake, an alternative consensus mechanism in which trusted validators are chosen to validate blocks of transactions.

Subhan Nadeem is a student at the University of Waterloo where he studies computer science and business. He is the author of several popular articles on Medium that explain blockchain concepts. He joins the show to talk about crypto from the point of a student—and gives us a great walk through of different consensus mechanisms.

To find all of our old episodes about cryptocurrencies, check out our apps in the  iOS or Android app store. They have all 700 of our episodes, with recommendations, related links, discussions and more. And it’s all open source–if you are looking for an open source project to contribute to, come check us out at github.com/softwareengineeringdaily. We welcome all kinds of contributors–new developers and experts. Engineers and non-technical people.

Transcript

Transcript provided by We Edit Podcasts. Software Engineering Daily listeners can go to weeditpodcasts.com/sed to get 20% off the first two months of audio editing and transcription services. Thanks to We Edit Podcasts for partnering with SE Daily. Please click here to view this show’s transcript.

Sponsors

Users have come to expect realtime. They crave alerts that their payment is received. They crave little cars zooming around on the map. They crave locking their doors at home when they’re not at home. There’s no need to reinvent the wheel when it comes to making your app “realtime.” PubNub makes it simple, enabling you to build immersive and interactive experiences on the web, on mobile phones, embedded into hardware, and any other device connected to the Internet. With powerful APIs, and a robust global infrastructure, you can stream geolocation data, send chat messages, turn on your sprinklers, or rock your baby’s crib when they start crying (PubNub literally powers IoT cribs). 70 SDKs for web, mobile, IoT, and more means you can start streaming data in realtime without a ton of compatibility headaches, and no need to build your own SDKs from scratch. And lastly, PubNub includes a ton of other realtime features beyond realtime messaging, like presence for online/offline detection, and access manager to thwart trolls and hackers. Go to PubNub.com/sedaily to get started. They offer a generous sandbox tier that’s free forever (until your app takes off).

QCon.ai is a software conference for full-stack developers looking to uncover the real-world patterns, practices, and use cases for applying artificial intelligence/machine learning in engineering. Come to QCon.ai in San Francisco, from April 9th – 11th 2018–and see talks from companies like Instacart, Uber, Coinbase, and Stripe. These companies have built and deployed state of the art machine learning models–and they come to QCon to share their developments. The keynote of QCon.ai is Matt Ranney, a Sr. Staff Engineer at UberATG (the autonomous driving unit at Uber)–and he’s an amazing speaker–he was on SE Daily in the past, if you want a preview for what he is like. I have been to QCon three times and it is a fantastic conference. What I love about QCon is the high bar for quality–quality in terms of speakers, content, peer sharing as well as the food and general atmosphere. QCon is one of my favorite conferences, and if you haven’t been to a QCon before, make QCon.ai your first. Register for QCon.ai and use promo code SEDAILY for $100 off your ticket. 

Do you think blockchain technology is only used for cryptocurrency? Think again. ConsenSys develops tools and infrastructure to enable a decentralized future built on Ethereum, the most advanced blockchain development platform. ConsenSys has hundreds of web3 developers that are building decentralized applications, focusing on world-changing ideas like creating a system for self-sovereign identity, managing supply chains, developing a more efficient electricity provider and much more. Listeners, why continue to build the internet of today when you can build the internet of the future on the blockchain? ConsenSys is actively hiring talented software developers to help build the decentralized web. Learn more about Consensys projects and open source jobs at consensys.net/sedaily.

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Bitcoin’s Future with Joseph Bonneau

Joseph Bonneau is co-author of Bitcoin and Cryptocurrency Technologies, a popular textbook. At NYU, he works as an assistant professor exploring cryptography and security. His YouTube lessons teaching Bitcoin have hundreds of thousands of views. His material offers clear explanations of how Bitcoin works.

Since Joseph has a clear understanding of the objective facts around Bitcoin, he is the perfect person to ask about the more subjective topics: the common misunderstandings of Bitcoin; the governance tradeoffs between Ethereum and Bitcoin; proof of work vs. proof of stake.

Joseph believes that the early mainstream cryptocurrency solutions will be largely centralized—and that we are likely to move beyond Bitcoin to more efficient currencies. I enjoyed hearing his reasons behind this perspective.

Meetups for Software Engineering Daily are being planned! Go to softwareengineeringdaily.com/meetup if you want to register for an upcoming Meetup. In March, I’ll be visiting Datadog in New York and Hubspot in Boston, and in April I’ll be at Telesign in LA.

Transcript

Transcript provided by We Edit Podcasts. Software Engineering Daily listeners can go to weeditpodcasts.com/sed to get 20% off the first two months of audio editing and transcription services. Thanks to We Edit Podcasts for partnering with SE Daily. Please click here to view this show’s transcript.

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Users have come to expect realtime. They crave alerts that their payment is received. They crave little cars zooming around on the map. They crave locking their doors at home when they’re not at home. There’s no need to reinvent the wheel when it comes to making your app “realtime.” PubNub makes it simple, enabling you to build immersive and interactive experiences on the web, on mobile phones, embedded into hardware, and any other device connected to the Internet. With powerful APIs, and a robust global infrastructure, you can stream geolocation data, send chat messages, turn on your sprinklers, or rock your baby’s crib when they start crying (PubNub literally powers IoT cribs). 70 SDKs for web, mobile, IoT, and more means you can start streaming data in realtime without a ton of compatibility headaches, and no need to build your own SDKs from scratch. And lastly, PubNub includes a ton of other realtime features beyond realtime messaging, like presence for online/offline detection, and access manager to thwart trolls and hackers. Go to PubNub.com/sedaily to get started. They offer a generous sandbox tier that’s free forever (until your app takes off).

There’s a new open source project called Dremio that is designed to simplify analytics. It’s also designed to handle some of the hard work, like scaling performance of analytical jobs. Dremio is the team behind Apache Arrow, a new standard for in-memory columnar data analytics. Arrow has been adopted across dozens of projects – like Pandas – to improve the performance of analytical workloads on CPUs and GPUs. It’s free and open source, designed for everyone, from your laptop, to clusters of over 1,000 nodes. At dremio.com/sedaily you can find all the necessary resources to get started with Dremio for free. If you like it, be sure to tweet @dremiohq and let them know you heard about it from Software Engineering Daily. Thanks again to Dremio, and check out dremio.com/sedaily to learn more.

Do you think blockchain technology is only used for cryptocurrency? Think again. ConsenSys develops tools and infrastructure to enable a decentralized future built on Ethereum, the most advanced blockchain development platform. ConsenSys has hundreds of web3 developers that are building decentralized applications, focusing on world-changing ideas like creating a system for self-sovereign identity, managing supply chains, developing a more efficient electricity provider and much more. Listeners, why continue to build the internet of today when you can build the internet of the future on the blockchain? ConsenSys is actively hiring talented software developers to help build the decentralized web. Learn more about Consensys projects and open source jobs at consensys.net/sedaily.

Your enterprise produces lots of data, but you aren’t capturing as much as you would like. You aren’t storing it in the right place, and you don’t have the proper tools to run complex queries against your data. MapR is a converged data platform that runs across any cloud. MapR provides storage, analytics, and machine learning engines. Use the MapR operational database and event streams to capture your data. Use the MapR analytics and machine learning engines to analyze your data, in batch or interactively–across any cloud, on premise, or at the edge. MapR’s technology is trusted by major industries like Audi, which uses MapR for its connected vehicles. MapR also powers Aadhar, the world’s largest biometric system. To learn more about how MapR can solve problems for your enterprise, go to softwareengineeringdaily.com/mapr to find whitepapers, videos, and ebooks. Whether you are an oil company like Anadarko, a major FinTech provider like Kabbage, or a business in any other vertical, MapR can leverage the high volumes of data produced within your company. Go to softwareengineeringdaily.com/mapr and find out how MapR can help your business take full advantage of its data. 

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Reserve Bank to conduct review into cryptocurrencies

The South African Reserve Bank said on Tuesday that it will complete a review into cryptocurrencies, including bitcoin, before the end of 2018.

The objective is to “inform an appropriate policy framework and regulatory regime”, the Bank said in a statement.

The review will address regulatory issues such as clearing and settlement risks, exchange control, monetary policy and financial stability, and cybersecurity, it said.

“Through collaboration with other regulatory bodies, matters such as tax implications, consumer and investor protection, and money laundering activities will also be addressed.”

The review will be carried out by the Bank’s recently established financial technology (fintech) unit. The review of cryptocurrencies will a big focus area for the unit, it said.

The unit will then investigate and decide on the “applicability of innovation facilitators” for the Bank. “‘Innovation facilitators’ is a collective term for innovation hubs, regulatory sandboxes and accelerators. The Bank hopes to have concluded its assessment of the appropriateness of innovation facilitators by the third quarter of 2018. Clear and transparent eligibility and participation criteria will be developed to assist in the consideration of applicants into a regulatory sandbox.”

A third objective is to launch Project Khokha, which will experiment with distributed ledger technologies (DLTs). “The aim of this project is to gain a practical understanding of DLTs through the development of a proof of concept in collaboration with the banking industry,” it said.

Proof of concept

“The objective of the proof of concept is to replicate inter-bank clearing and settlement on a DLT, which will allow the Bank and industry to jointly assess the potential benefits and risks of DLTs. The proof of concept involves the processing of wholesale payments using Quorum, an ethereum enterprise DLT. The Bank is aware of multiple DLTs being experimented with globally.”

ConsenSys, a global expert on Quorum, has been selected as the technology partner to assist the Bank in the design, setup of infrastructure and running of the proof of concept.

“This does not imply a radical move to DLT for the country’s national payments infrastructure, but rather a structured approach to understand the implication of using a tokenised asset on DLT technology to transfer value,” it emphasised. “A public report will be released to explain all the findings, risks and benefits of the associated project during the second quarter of 2018.”

All three initiatives will help the Bank in the formulation of policy frameworks for the possible regulation of fintech, it said. — © 2018 NewsCentral Media

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Cryptocurrency markets: a history of heists

The US$500m heist of digital tokens from Japanese exchange Coincheck on Friday is remarkable for its sheer size, but thefts in the lightly regulated world of cryptocurrencies are woefully frequent.

In less than a decade, hackers have stolen $1.2bn worth of bitcoin and ether, two of the most popular digital currencies, according to Lex Sokolin, global director of fintech strategy at Autonomous Research. If measured at today’s elevated prices, the figure would be much higher.

Here’s a look at some of the biggest thefts since 2012.

December 2017

NiceHash, a crypto-mining marketplace based in Slovenia, said on its Facebook page that its payment system was compromised and as much as $63m worth of bitcoin was stolen. The firm added extra security measures and sought the community’s help to analyse the breach. Youbit said it would file for bankruptcy hours after losing 17% of its assets in a cyberattack. The South Korean exchange had suffered what it called an “accident” in April and its owner encouraged clients to keep their tokens in a safer form. South Korean investigators are looking into North Korea’s possible involvement in the hack.

November 2017

A security hole in the Parity Wallet resulted in losses of about $155m, including in ether and other tokens. The company behind tether said a “malicious” attacker stole $31m worth of the cryptocurrency and sent them to an unauthorised bitcoin address.

July 2017

A group calling itself the White Hat Group exploited a bug in the Parity Wallet software and attempted to launder stolen ether, valued at about $30m according to Security Week, through exchanges. Just minutes after CoinDash’s launch of an initial coin offering, hackers made off with as much as $6.6m worth of ether. The Israel-based firm terminated its token sale.

April 2017

A Bithumb contract worker’s personal computer that stored customers’ data files was hacked, resulting in the leak of personal and trading information of more than 30 000 users. The South Korean crypto-exchange was fined 58.5m won ($55 000) by the local regulator for the breach.

August 2016

Bitfinex said hackers took 119 756 Bitcoin, valued at about $65m. In April 2017, the exchange said it had repaid all customers.

June 2016

Decentralised Autonomous Organisation, a leaderless venture-capital fund and what was then the highest-profile project using ethereum, was hacked. About $50m of members’ contributions to the fund were siphoned off.

May 2016

Hong Kong-based Gatecoin had about $2m in bitcoin and ether stolen following a cyberattack.

March 2015

Two former US federal agents who helped probe the illegal Silk Road Internet drug emporium were charged with wrongfully pocketing hundreds of thousands of dollars in bitcoin.

January 2015

Bitstamp’s CEO reassured customers that the bulk of their bitcoins were safe after $5m of the coins were stolen, according to a Fortune report.

February 2014

Mt Gox, once the world’s biggest bitcoin exchange, reported that tokens valued at about $480m had gone missing. The firm filed for bankruptcy in Japan and the US, and said the disappearance was probably the result of a “massive theft”.

September 2012

BitFloor, based in New York, lost about $250 000 in Bitcoin after it was hacked. Months later in April 2013, the exchange announced it would shut and refund customer deposits, Bitcoin Magazine reported.  — Reported by Andrea Tan and Yuji Nakamura, with assistance from Benjamin Robertson, (c) 2018 Bloomberg LP

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Cryptocurrency markets aren’t all the same

There’s a compelling reason to consider what’s going on with cryptocurrencies a purely speculative boom-and-bust roller-coaster: over a three-month period, the prices of all the top coins and tokens are rather strongly correlated, going up and down in unison. What does that make them if not the 21st-century incarnation of tulip bulbs?

It’s not so simple, though. In the last 30 days, which include a spectacular decline in the dollar price of bitcoin, the correlations haven’t been so reliable. In some cases, they appear to have broken down. That’s not an accident. Apart from relatively ignorant speculators, the cryptocurrency-trading community includes people who are genuinely interested in various applications of the blockchain technology and who are making informed bets on its particular flavours.

I calculated the correlations of the price of bitcoin with the prices of the next 10 cryptocurrencies by market capitalisation. They turned out to be the strongest, both over three months and over 30 days, in the case of three “altcoins” — Iota, litecoin and bitcoin cash.

The latter two are bitcoin “forks” — offshoots of the original currency meant roughly for the same purposes: payments and storing value. Both were meant to reduce bitcoin’s considerable friction (long processing times and high processing fees) and enable smaller, everyday transactions more efficiently.

Iota is something of a different beast: its developers bill it as intended specifically for the Internet of things, a medium for fee-free machine-to-machine payments. It’s a kind of bitcoin for robots, so essentially still a variation of the original idea.

There are two other broad categories of cryptocurrency among the biggest “altcoins”: those launched by platforms designed for “smart contracts” and initial coin offerings (ethereum, NEO, NEM, EOS), and those “minted” by projects working on blockchain-based transaction processing for the finance industry (ripple, cardano). Stellar, the nonprofit project whose cryptocurrency is called the lumen, falls into both these categories.

Over the last 30 days, the currencies launched by ethereum competitors have showed the strongest price correlations with ether, ethereum’s currency. And they haven’t been moving in unison with bitcoin.

The cryptocurrency market is younger than the rapidly evolving technology itself, and the high volatility has lured a lot of oblivious gamblers. They have whipped up clouds of froth. It makes sense, however, to look beyond that.

Future of money?

One can be sceptical that crypto — decentralised or harnessed by central banks — is the future of money. In that case, it makes sense to stay away from bitcoin, litecoin and bitcoin cash. But that doesn’t rule out believing in other applications of the technology. For example, if one holds that initial coin offerings are a sound way to attract investment and that the blockchain is good for registering property rights and storing contracts, then ethereum and its competitors are worth watching and perhaps backing. Deciding which ones depends on whose technology or market one likes best: there are different arguments, for example, in favour of Chinese-based NEO and for EOS, with its focus on fast processing.

For a believer in the blockchain as the ultimate replacement for the current money transfer infrastructure such as the Swift system, ripple’s and cardano’s digital currencies make sense. But these investments may be particularly risky, since it’s not quite clear whether the currencies will ever gain broad acceptance as part of their creators’ increasingly popular money-moving solutions.

After a while, any market craze gets boring and discerning investors replace speculators. It happened to dot-coms in the early 2000s, and it’s starting to happen to cryptocurrencies in 2018. Eventually, some blockchain applications will turn out to be hot, others not — and some investors who buy and hold, as opposed to speculators, will make money as a satisfying result of smart bets.  — (c) 2018 Bloomberg LP

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CryptoKitties will come to Hong Kong and Taiwan in time for Chinese New Year



CryptoKitties will come to Hong Kong and Taiwan in time for Chinese New Year · TechNode


























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Cryptocurrencies tank amid clampdown fears

Bitcoin slumped as South Korea’s justice ministry reiterated a proposed ban on cryptocurrency venues, fuelling concern that a government crackdown will erode one of the world’s biggest sources of demand for digital currencies.

The ministry is preparing a bill that would outlaw cryptocurrency trading via exchanges, justice minister Park Sang-ki told reporters today. The government disclosed a similar plan on 28 December. Separately, one of Korea’s biggest cryptocurrency exchanges, Bithumb, said it met briefly with tax officials on Wednesday. The exchange denied a Reuters report that its offices had been raided.

Bitcoin dropped 10% to US$12 986.41 at 12.36pm Hong Kong time, extending its decline from last month’s high to more than 30%. Ripple fell 21% and ethereum slumped 8.7%.

“For the last few months, the Korean government has been making it very clear they want to bring this speculative activity under control and this isn’t really too much of a surprise,” said Thomas Glucksmann, Hong Kong-based head of APAC business development with cryptocurrency exchange Gatecoin. “This short dip in price is really an immediate reaction to this news.”

Some investors may also be reacting to China’s crackdown on bitcoin mining operations, he said.

Governments around the world are increasing scrutiny of cryptocurrencies as surging prices attract everyone from individual investors to Wall Street banks. Korea has emerged as something of a ground zero for the speculative frenzy, with the nation’s prime minister warning recently that the boom might corrupt the nation’s youth.

The US senate will hold a hearing with the country’s top markets regulators to discuss risks posed by cryptocurrencies such as bitcoin, Reuters reported, citing an unidentified person with direct knowledge of matter.  — Reported by Eric Lam and Shinhye Kang, with assistance from Kyungji Cho, (c) 2018 Bloomberg LP

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Kenyan Man Transitions from Farmer to Cryptocurrency Miner

The word cryptocurrency has been thrown around left and right for the past couple of months. You see it on your social media timelines, in the news, and pretty much anywhere else your eyeballs glance in the digital space, but where are these cryptocurrencies coming from?

Well, there are people who work behind the scenes of all of the coins that enthusiasts are investing in and they’re called miners. Eugene Mutai, who is based in his native Kenya, set up his own mining rig and is cashing in on the creation of this digital currency.

According to CNN, Mutai previous worked as a farmer and decided to change all of that. After doing some research, Mutai quickly switched his labor-intensive job to the virtual world. “I was curious about what was making these alternative coins drive. Bitcoin was hard to mine by that point in time,” Mutai tells CNN. “There were already many Bitcoin miners. Instead, Mutai started mining Ethereum, a similar but less well-known cryptocurrency.”

Mutai, like many others, had never seen anything like this before and quickly became engulfed. It opened up his world to a brand-new opportunity to make money.

“The way I understand what mining cryptocurrencies is, is that it’s basically supporting the network and helping the verification and adding of transactions to the whole blockchain database,” Mutai told CNN. In the simplest form, miners confirm transactions instead of big banks and credit card companies.

By definition, cryptocurrency is limited entries in a database no one can change without fulfilling specific conditions. Essentially, once a transaction takes place the network is notified immediately. Once the transaction is confirmed it cannot be reversed. Its records are then added to the blockchain. A miner’s job is to confirm the transaction.

How is Mutai making money? Every time he confirms a transaction and it is added to the blockchain, he gets paid. “There’s something known as a Hashrate, which is basically how fast can you verify transactions, and eventually help the transactions to be added to the block. The more powerful your computer, the more transactions you can verify, the more money you can make. Then for every transaction verification, you get something called a share, which is translated into the cryptocurrency that you’re mining,” Mutai continued. He brings in approximately $800 each month.

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Bitcoin nears $10 000 as crypto mania intensifies

Bitcoin is showing no signs of slowing down, blowing past US$9 000 less than a week after topping $8 000 and now quickly closing in on five big figures.

The price of the largest cryptocurrency by market value is soaring as it gains greater mainstream attention despite warnings of a bubble in what not everyone agrees is an asset. From Wall Street executives to venture capitalists, observers have been weighing in, with some more sceptical than others. Bitcoin has climbed more than 40% over the past two weeks.

“Bitcoin has seen another frenzy of buying as the fear of missing out trade bites even harder,” analysts at IG Group, a trading-platform operator, wrote in a note on Monday. “There are others who see downside risks from the introduction of bitcoin futures,” they wrote.

The surge has swept along individual investors. The number of accounts at Coinbase, one of the largest platforms for trading bitcoin and rival ethereum, has almost tripled to 13m in the past year, according to Bespoke Investment Group.

Bitcoin climbed as high as a record $9 720.95 on Monday, and was recently up about 16% compared to trading late on Friday.

The rapid appreciation has made it difficult for bullish analysts and investors to keep their predictions up to date. Hedge fund manager Mike Novogratz, who is starting a $500m fund to invest in cryptocurrencies, said last week that bitcoin would end the year at $10 000. A day later, Fundstrat head of research Thomas Lee doubled his price target to $11 500 by the middle of 2018.

In a move toward mainstream investing, CME Group has said it plans to start offering futures contracts for bitcoin, which could begin trading in December. JPMorgan Chase & Co, the largest US bank, was weighing last week whether to help clients bet on bitcoin via the proposed futures contracts, according to a person with knowledge of the situation.

Scepticism

Bitcoin’s surge in value is forcing Wall Street banks to balance clients’ interest in speculating on the cryptocurrency with executives’ scepticism about its future. JPMorgan Chase CEO Jamie Dimon has been one of bitcoin’s most prominent detractors, calling it a fraud and deriding buyers as “stupid”, while his finance chief, Marianne Lake, has struck a more measured tone. The firm is “open minded” to the potential uses for digital currencies so long as they are properly regulated, she said last month.

The total market cap of digital currencies now sits north of $300bn, according to Coinmarketcap.com’s website.  — Reported by Julie Verhage and Eric Lam, (c) 2017 Bloomberg LP

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