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Syscoin Platform’s Great Reddit Scaling Bake-off Proposal

Syscoin Platform’s Great Reddit Scaling Bake-off Proposal
We are excited to participate and present Syscoin Platform's ideal characteristics and capabilities towards a well-rounded Reddit Community Points solution!
Our scaling solution for Reddit Community Points involves 2-way peg interoperability with Ethereum. This will provide a scalable token layer built specifically for speed and high volumes of simple value transfers at a very low cost, while providing sovereign ownership and onchain finality.
Token transfers scale by taking advantage of a globally sorting mempool that provides for probabilistically secure assumptions of “as good as settled”. The opportunity here for token receivers is to have an app-layer interactivity on the speed/security tradeoff (99.9999% assurance within 10 seconds). We call this Z-DAG, and it achieves high-throughput across a mesh network topology presently composed of about 2,000 geographically dispersed full-nodes. Similar to Bitcoin, however, these nodes are incentivized to run full-nodes for the benefit of network security, through a bonded validator scheme. These nodes do not participate in the consensus of transactions or block validation any differently than other nodes and therefore do not degrade the security model of Bitcoin’s validate first then trust, across every node. Each token transfer settles on-chain. The protocol follows Bitcoin core policies so it has adequate code coverage and protocol hardening to be qualified as production quality software. It shares a significant portion of Bitcoin’s own hashpower through merged-mining.
This platform as a whole can serve token microtransactions, larger settlements, and store-of-value in an ideal fashion, providing probabilistic scalability whilst remaining decentralized according to Bitcoin design. It is accessible to ERC-20 via a permissionless and trust-minimized bridge that works in both directions. The bridge and token platform are currently available on the Syscoin mainnet. This has been gaining recent attention for use by loyalty point programs and stablecoins such as Binance USD.


Syscoin Foundation identified a few paths for Reddit to leverage this infrastructure, each with trade-offs. The first provides the most cost-savings and scaling benefits at some sacrifice of token autonomy. The second offers more preservation of autonomy with a more narrow scope of cost savings than the first option, but savings even so. The third introduces more complexity than the previous two yet provides the most overall benefits. We consider the third as most viable as it enables Reddit to benefit even while retaining existing smart contract functionality. We will focus on the third option, and include the first two for good measure.
  1. Distribution, burns and user-to-user transfers of Reddit Points are entirely carried out on the Syscoin network. This full-on approach to utilizing the Syscoin network provides the most scalability and transaction cost benefits of these scenarios. The tradeoff here is distribution and subscription handling likely migrating away from smart contracts into the application layer.
  2. The Reddit Community Points ecosystem can continue to use existing smart contracts as they are used today on the Ethereum mainchain. Users migrate a portion of their tokens to Syscoin, the scaling network, to gain much lower fees, scalability, and a proven base layer, without sacrificing sovereign ownership. They would use Syscoin for user-to-user transfers. Tips redeemable in ten seconds or less, a high-throughput relay network, and onchain settlement at a block target of 60 seconds.
  3. Integration between Matic Network and Syscoin Platform - similar to Syscoin’s current integration with Ethereum - will provide Reddit Community Points with EVM scalability (including the Memberships ERC777 operator) on the Matic side, and performant simple value transfers, robust decentralized security, and sovereign store-of-value on the Syscoin side. It’s “the best of both worlds”. The trade-off is more complex interoperability.

Syscoin + Matic Integration

Matic and Blockchain Foundry Inc, the public company formed by the founders of Syscoin, recently entered a partnership for joint research and business development initiatives. This is ideal for all parties as Matic Network and Syscoin Platform provide complementary utility. Syscoin offers characteristics for sovereign ownership and security based on Bitcoin’s time-tested model, and shares a significant portion of Bitcoin’s own hashpower. Syscoin’s focus is on secure and scalable simple value transfers, trust-minimized interoperability, and opt-in regulatory compliance for tokenized assets rather than scalability for smart contract execution. On the other hand, Matic Network can provide scalable EVM for smart contract execution. Reddit Community Points can benefit from both.
Syscoin + Matic integration is actively being explored by both teams, as it is helpful to Reddit, Ethereum, and the industry as a whole.

Proving Performance & Cost Savings

Our POC focuses on 100,000 on-chain settlements of token transfers on the Syscoin Core blockchain. Transfers and burns perform equally with Syscoin. For POCs related to smart contracts (subscriptions, etc), refer to the Matic Network proposal.
On-chain settlement of 100k transactions was accomplished within roughly twelve minutes, well-exceeding Reddit’s expectation of five days. This was performed using six full-nodes operating on compute-optimized AWS c4.2xlarge instances which were geographically distributed (Virginia, London, Sao Paulo Brazil, Oregon, Singapore, Germany). A higher quantity of settlements could be reached within the same time-frame with more broadcasting nodes involved, or using hosts with more resources for faster execution of the process.
Addresses used: 100,014
The demonstration was executed using this tool. The results can be seen in the following blocks:
It is important to note that this POC is not focused on Z-DAG. The performance of Z-DAG has been benchmarked within realistic network conditions: Whiteblock’s audit is publicly available. Network latency tests showed an average TPS around 15k with burst capacity up to 61k. Zero-latency control group exhibited ~150k TPS. Mainnet testing of the Z-DAG network is achievable and will require further coordination and additional resources.
Even further optimizations are expected in the upcoming Syscoin Core release which will implement a UTXO model for our token layer bringing further efficiency as well as open the door to additional scaling technology currently under research by our team and academic partners. At present our token layer is account-based, similar to Ethereum. Opt-in compliance structures will also be introduced soon which will offer some positive performance characteristics as well. It makes the most sense to implement these optimizations before performing another benchmark for Z-DAG, especially on the mainnet considering the resources required to stress-test this network.

Cost Savings

Total cost for these 100k transactions: $0.63 USD
See the live fee comparison for savings estimation between transactions on Ethereum and Syscoin. Below is a snapshot at time of writing:
ETH price: $318.55 ETH gas price: 55.00 Gwei ($0.37)
Syscoin price: $0.11
Snapshot of live fee comparison chart
Z-DAG provides a more efficient fee-market. A typical Z-DAG transaction costs 0.0000582 SYS. Tokens can be safely redeemed/re-spent within seconds or allowed to settle on-chain beforehand. The costs should remain about this low for microtransactions.
Syscoin will achieve further reduction of fees and even greater scalability with offchain payment channels for assets, with Z-DAG as a resilience fallback. New payment channel technology is one of the topics under research by the Syscoin development team with our academic partners at TU Delft. In line with the calculation in the Lightning Networks white paper, payment channels using assets with Syscoin Core will bring theoretical capacity for each person on Earth (7.8 billion) to have five on-chain transactions per year, per person, without requiring anyone to enter a fee market (aka “wait for a block”). This exceeds the minimum LN expectation of two transactions per person, per year; one to exist on-chain and one to settle aggregated value.

Tools, Infrastructure & Documentation

Syscoin Bridge

Mainnet Demonstration of Syscoin Bridge with the Basic Attention Token ERC-20
A two-way blockchain interoperability system that uses Simple Payment Verification to enable:
  • Any Standard ERC-20 token to be moved from Ethereum to the Syscoin blockchain as a Syscoin Platform Token (SPT), and back to Ethereum
  • Any SPT to be moved from Syscoin to the Ethereum blockchain as an ERC-20 token, and back to Syscoin


  • Permissionless
  • No counterparties involved
  • No trading mechanisms involved
  • No third-party liquidity providers required
  • Cross-chain Fractional Supply - 2-way peg - Token supply maintained globally
  • ERC-20s gain vastly improved transactionality with the Syscoin Token Platform, along with the security of bitcoin-core-compliant PoW.
  • SPTs gain access to all the tooling, applications and capabilities of Ethereum for ERC-20, including smart contracts.

Source code
Main Subprojects


Tools to simplify using Syscoin Bridge as a service with dapps and wallets will be released some time after implementation of Syscoin Core 4.2. These will be based upon the same processes which are automated in the current live Sysethereum Dapp that is functioning with the Syscoin mainnet.


Syscoin Bridge & How it Works (description and process flow)
Superblock Validation Battles
HOWTO: Provision the Bridge for your ERC-20
HOWTO: Setup an Agent
Developer & User Diligence


The Syscoin Ethereum Bridge is secured by Agent nodes participating in a decentralized and incentivized model that involves roles of Superblock challengers and submitters. This model is open to participation. The benefits here are trust-minimization, permissionless-ness, and potentially less legal/regulatory red-tape than interop mechanisms that involve liquidity providers and/or trading mechanisms.
The trade-off is that due to the decentralized nature there are cross-chain settlement times of one hour to cross from Ethereum to Syscoin, and three hours to cross from Syscoin to Ethereum. We are exploring ways to reduce this time while maintaining decentralization via zkp. Even so, an “instant bridge” experience could be provided by means of a third-party liquidity mechanism. That option exists but is not required for bridge functionality today. Typically bridges are used with batch value, not with high frequencies of smaller values, and generally it is advantageous to keep some value on both chains for maximum availability of utility. Even so, the cross-chain settlement time is good to mention here.


Ethereum -> Syscoin: Matic or Ethereum transaction fee for bridge contract interaction, negligible Syscoin transaction fee for minting tokens
Syscoin -> Ethereum: Negligible Syscoin transaction fee for burning tokens, 0.01% transaction fee paid to Bridge Agent in the form of the ERC-20, Matic or Ethereum transaction fee for contract interaction.


Zero-Confirmation Directed Acyclic Graph is an instant settlement protocol that is used as a complementary system to proof-of-work (PoW) in the confirmation of Syscoin service transactions. In essence, a Z-DAG is simply a directed acyclic graph (DAG) where validating nodes verify the sequential ordering of transactions that are received in their memory pools. Z-DAG is used by the validating nodes across the network to ensure that there is absolute consensus on the ordering of transactions and no balances are overflowed (no double-spends).


  • Unique fee-market that is more efficient for microtransaction redemption and settlement
  • Uses decentralized means to enable tokens with value transfer scalability that is comparable or exceeds that of credit card networks
  • Provides high throughput and secure fulfillment even if blocks are full
  • Probabilistic and interactive
  • 99.9999% security assurance within 10 seconds
  • Can serve payment channels as a resilience fallback that is faster and lower-cost than falling-back directly to a blockchain
  • Each Z-DAG transaction also settles onchain through Syscoin Core at 60-second block target using SHA-256 Proof of Work consensus

Source code


Syscoin-js provides tooling for all Syscoin Core RPCs including interactivity with Z-DAG.


Z-DAG White Paper
Useful read: An in-depth Z-DAG discussion between Syscoin Core developer Jag Sidhu and Brave Software Research Engineer Gonçalo Pestana


Z-DAG enables the ideal speed/security tradeoff to be determined per use-case in the application layer. It minimizes the sacrifice required to accept and redeem fast transfers/payments while providing more-than-ample security for microtransactions. This is supported on the premise that a Reddit user receiving points does need security yet generally doesn’t want nor need to wait for the same level of security as a nation-state settling an international trade debt. In any case, each Z-DAG transaction settles onchain at a block target of 60 seconds.

Syscoin Specs

Syscoin 3.0 White Paper
(4.0 white paper is pending. For improved scalability and less blockchain bloat, some features of v3 no longer exist in current v4: Specifically Marketplace Offers, Aliases, Escrow, Certificates, Pruning, Encrypted Messaging)
  • 16MB block bandwidth per minute assuming segwit witness carrying transactions, and transactions ~200 bytes on average
  • SHA256 merge mined with Bitcoin
  • UTXO asset layer, with base Syscoin layer sharing identical security policies as Bitcoin Core
  • Z-DAG on asset layer, bridge to Ethereum on asset layer
  • On-chain scaling with prospect of enabling enterprise grade reliable trustless payment processing with on/offchain hybrid solution
  • Focus only on Simple Value Transfers. MVP of blockchain consensus footprint is balances and ownership of them. Everything else can reduce data availability in exchange for scale (Ethereum 2.0 model). We leave that to other designs, we focus on transfers.
  • Future integrations of MAST/Taproot to get more complex value transfers without trading off trustlessness or decentralization.
  • Zero-knowledge Proofs are a cryptographic new frontier. We are dabbling here to generalize the concept of bridging and also verify the state of a chain efficiently. We also apply it in our Digital Identity projects at Blockchain Foundry (a publicly traded company which develops Syscoin softwares for clients). We are also looking to integrate privacy preserving payment channels for off-chain payments through zkSNARK hub & spoke design which does not suffer from the HTLC attack vectors evident on LN. Much of the issues plaguing Lightning Network can be resolved using a zkSNARK design whilst also providing the ability to do a multi-asset payment channel system. Currently we found a showstopper attack (American Call Option) on LN if we were to use multiple-assets. This would not exist in a system such as this.


Web3 and mobile wallets are under active development by Blockchain Foundry Inc as WebAssembly applications and expected for release not long after mainnet deployment of Syscoin Core 4.2. Both of these will be multi-coin wallets that support Syscoin, SPTs, Ethereum, and ERC-20 tokens. The Web3 wallet will provide functionality similar to Metamask.
Syscoin Platform and tokens are already integrated with Blockbook. Custom hardware wallet support currently exists via ElectrumSys. First-class HW wallet integration through apps such as Ledger Live will exist after 4.2.
Current supported wallets
Syscoin Spark Desktop


Mainnet: (Blockbook)

Thank you for close consideration of our proposal. We look forward to feedback, and to working with the Reddit community to implement an ideal solution using Syscoin Platform!

submitted by sidhujag to ethereum [link] [comments]

Your Guide to Monero, and Why It Has Great Potential

/////Your Guide to Monero, and Why It Has Great Potential/////

It's a dirty word for most members of the Monero community.
It is also one of the most divisive words in the Monero community. Yet, the lack of marketing is one of the most frustrating things for many newcomers.
This is what makes this an unusual post from a member of the Monero community.
This post is an unabashed and unsolicited analyzation of why I believe Monero to have great potential.
Below I have attempted to outline different reasons why Monero has great potential, beginning with upcoming developments and use cases, to broader economic motives, speculation, and key issues for it to overcome.
I encourage you to discuss and criticise my musings, commenting below if you feel necessary to do so.

///Upcoming Developments///

Bulletproofs - A Reduction in Transaction Sizes and Fees
Since the introduction of Ring Confidential Transactions (Ring CT), transaction amounts have been hidden in Monero, albeit at the cost of increased transaction fees and sizes. In order to mitigate this issue, Bulletproofs will soon be added to reduce both fees and transaction size by 80% to 90%. This is great news for those transacting smaller USD amounts as people commonly complained Monero's fees were too high! Not any longer though! More information can be found here. Bulletproofs are already working on the Monero testnet, and developers were aiming to introduce them in March 2018, however it could be delayed in order to ensure everything is tried and tested.
Multisig has recently been merged! Mulitsig, also called multisignature, is the requirement for a transaction to have two or more signatures before it can be executed. Multisig transactions and addresses are indistinguishable from normal transactions and addresses in Monero, and provide more security than single-signature transactions. It is believed this will lead to additional marketplaces and exchanges to supporting Monero.
Kovri is an implementation of the Invisible Internet Project (I2P) network. Kovri uses both garlic encryption and garlic routing to create a private, protected overlay-network across the internet. This overlay-network provides users with the ability to effectively hide their geographical location and internet IP address. The good news is Kovri is under heavy development and will be available soon. Unlike other coins' false privacy claims, Kovri is a game changer as it will further elevate Monero as the king of privacy.
Mobile Wallets
There is already a working Android Wallet called Monerujo available in the Google Play Store. X Wallet is an IOS mobile wallet. One of the X Wallet developers recently announced they are very, very close to being listed in the Apple App Store, however are having some issues with getting it approved. The official Monero IOS and Android wallets, along with the MyMonero IOS and Android wallets, are also almost ready to be released, and can be expected very soon.
Hardware Wallets
Hardware wallets are currently being developed and nearing completion. Because Monero is based on the CryptoNote protocol, it means it requires unique development in order to allow hardware wallet integration. The Ledger Nano S will be adding Monero support by the end of Q1 2018. There is a recent update here too. Even better, for the first time ever in cryptocurrency history, the Monero community banded together to fund the development of an exclusive Monero Hardware Wallet, and will be available in Q2 2018, costing only about $20! In addition, the CEO of Trezor has offered a 10BTC bounty to whoever can provide the software to allow Monero integration. Someone can be seen to already be working on that here.
TAILS Operating System Integration
Monero is in the progress of being packaged in order for it to be integrated into TAILS and ready to use upon install. TAILS is the operating system popularised by Edward Snowden and is commonly used by those requiring privacy such as journalists wanting to protect themselves and sources, human-right defenders organizing in repressive contexts, citizens facing national emergencies, domestic violence survivors escaping from their abusers, and consequently, darknet market users.
In the meantime, for those users who wish to use TAILS with Monero, u/Electric_sheep01 has provided Sheep's Noob guide to Monero GUI in Tails 3.2, which is a step-by-step guide with screenshots explaining how to setup Monero in TAILS, and is very easy to follow.
Mandatory Hardforks
Unlike other coins, Monero receives a protocol upgrade every 6 months in March and September. Think of it as a Consensus Protocol Update. Monero's hard forks ensure quality development takes place, while preventing political or ideological issues from hindering progress. When a hardfork occurs, you simply download and use the new daemon version, and your existing wallet files and copy of the blockchain remain compatible. This reddit post provides more information.
Dynamic fees
Many cryptocurrencies have an arbitrary block size limit. Although Monero has a limit, it is adaptive based on the past 100 blocks. Similarly, fees change based on transaction volume. As more transactions are processed on the Monero network, the block size limit slowly increases and the fees slowly decrease. The opposite effect also holds true. This means that the more transactions that take place, the cheaper the fees!
Tail Emission and Inflation
There will be around 18.4 million Monero mined at the end of May 2022. However, tail emission will kick in after that which is 0.6 XMR, so it has no fixed limit. Gundamlancer explains that Monero's "main emission curve will issue about 18.4 million coins to be mined in approximately 8 years. (more precisely 18.132 Million coins by ca. end of May 2022) After that, a constant "tail emission" of 0.6 XMR per 2-minutes block (modified from initially equivalent 0.3 XMR per 1-minute block) will create a sub-1% perpetual inflatio starting with 0.87% yearly inflation around May 2022) to prevent the lack of incentives for miners once a currency is not mineable anymore.
Monero Research Lab
Monero has a group of anonymous/pseudo-anonymous university academics actively researching, developing, and publishing academic papers in order to improve Monero. See here and here. The Monero Research Lab are acquainted with other members of cryptocurrency academic community to ensure when new research or technology is uncovered, it can be reviewed and decided upon whether it would be beneficial to Monero. This ensures Monero will always remain a leading cryptocurrency. A recent end of 2017 update from a MRL researcher can be found here.

///Monero's Technology - Rising Above The Rest///

Monero Has Already Proven Itself To Be Private, Secure, Untraceable, and Trustless
Monero is the only private, untraceable, trustless, secure and fungible cryptocurrency. Bitcoin and other cryptocurrencies are TRACEABLE through the use of blockchain analytics, and has lead to the prosecution of numerous individuals, such as the alleged Alphabay administrator Alexandre Cazes. In the Forfeiture Complaint which detailed the asset seizure of Alexandre Cazes, the anonymity capabilities of Monero were self-demonstrated by the following statement of the officials after the AlphaBay shutdown: "In total, from CAZES' wallets and computer agents took control of approximately $8,800,000 in Bitcoin, Ethereum, Monero and Zcash, broken down as follows: 1,605.0503851 Bitcoin, 8,309.271639 Ethereum, 3,691.98 Zcash, and an unknown amount of Monero".
Privacy CANNOT BE OPTIONAL and must be at a PROTOCOL LEVEL. With Monero, privacy is mandatory, so that everyone gets the benefits of privacy without any transactions standing out as suspicious. This is the reason Darknet Market places are moving to Monero, and will never use Verge, Zcash, Dash, Pivx, Sumo, Spectre, Hush or any other coins that lack good privacy. Peter Todd (who was involved in the Zcash trusted setup ceremony) recently reiterated his concerns of optional privacy after Jeffrey Quesnelle published his recent paper stating 31.5% of Zcash transactions may be traceable, and that only ~1% of the transactions are pure privacy transactions (i.e., z -> z transactions). When the attempted private transactions stand out like a sore thumb there is no privacy, hence why privacy cannot be optional. In addition, in order for a cryptocurrency to truly be private, it must not be controlled by a centralised body, such as a company or organisation, because it opens it up to government control and restrictions. This is no joke, but Zcash is supported by DARPA and the Israeli government!.
Monero provides a stark contrast compared to other supposed privacy coins, in that Monero does not have a rich list! With all other coins, you can view wallet balances on the blockexplorers. You can view Monero's non-existent rich list here to see for yourself.
I will reiterate here that Monero is TRUSTLESS. You don't need to rely on anyone else to protect your privacy, or worry about others colluding to learn more about you. No one can censor your transaction or decide to intervene. Monero is immutable, unlike Zcash, in which the lead developer Zooko publicly tweeted the possibility of providing a backdoor for authorities to trace transactions. To Zcash's demise, Zooko famously tweeted:
" And by the way, I think we can successfully make Zcash too traceable for criminals like WannaCry, but still completely private & fungible. …"
Ethereum's track record of immutability is also poor. Ethereum was supposed to be an immutable blockchain ledger, however after the DAO hack this proved to not be the case. A 2016 article on Saintly Law summarised the problematic nature of Ethereum's leadership and blockchain intervention:
" Many ethereum and blockchain advocates believe that the intervention was the wrong move to make in this situation. Smart contracts are meant to be self-executing, immutable and free from disturbance by organisations and intermediaries. Yet the building block of all smart contracts, the code, is inherently imperfect. This means that the technology is vulnerable to the same malicious hackers that are targeting businesses and governments. It is also clear that the large scale intervention after the DAO hack could not and would not likely be taken in smaller transactions, as they greatly undermine the viability of the cryptocurrency and the technology."
Monero provides Fungibility and Privacy in a Cashless World
As outlined on, fungibility is the property of a currency whereby two units can be substituted in place of one another. Fungibility means that two units of a currency can be mutually substituted and the substituted currency is equal to another unit of the same size. For example, two $10 bills can be exchanged and they are functionally identical to any other $10 bill in circulation (although $10 bills have unique ID numbers and are therefore not completely fungible). Gold is probably a closer example of true fungibility, where any 1 oz. of gold of the same grade is worth the same as another 1 oz. of gold. Monero is fungible due to the nature of the currency which provides no way to link transactions together nor trace the history of any particular XMR. 1 XMR is functionally identical to any other 1 XMR. Fungibility is an advantage Monero has over Bitcoin and almost every other cryptocurrency, due to the privacy inherent in the Monero blockchain and the permanently traceable nature of the Bitcoin blockchain. With Bitcoin, any BTC can be tracked by anyone back to its creation coinbase transaction. Therefore, if a coin has been used for an illegal purpose in the past, this history will be contained in the blockchain in perpetuity.
A great example of Bitcoin's lack of fungibility was reposted by u/ViolentlyPeaceful:
"Imagine you sell cupcakes and receive Bitcoin as payment. It turns out that someone who owned that Bitcoin before you was involved in criminal activity. Now you are worried that you have become a suspect in a criminal case, because the movement of funds to you is a matter of public record. You are also worried that certain Bitcoins that you thought you owned will be considered ‘tainted’ and that others will refuse to accept them as payment."
This lack of fungibility means that certain businesses will be obligated to avoid accepting BTC that have been previously used for purposes which are illegal, or simply run afoul of their Terms of Service. Currently some large Bitcoin companies are blocking, suspending, or closing accounts that have received Bitcoin used in online gambling or other purposes deemed unsavory by said companies. Monero has been built specifically to address the problem of traceability and non-fungibility inherent in other cryptocurrencies. By having completely private transactions Monero is truly fungible and there can be no blacklisting of certain XMR, while at the same time providing all the benefits of a secure, decentralized, permanent blockchain.
The world is moving cashless. Fact. The ramifications of this are enormous as we move into a cashless world in which transactions will be tracked and there is a potential for data to be used by third parties for adverse purposes. While most new cryptocurrency investors speculate upon vaporware ICO tokens in the hope of generating wealth, Monero provides salvation for those in which financial privacy is paramount. Too often people equate Monero's features with criminal endeavors. Privacy is not a crime, and is necessary for good money. Transparency in Monero is possible OFF-CHAIN, which offers greater transparency and flexibility. For example, a Monero user may share their Private View Key with their accountant for tax purposes.
Monero aims to be adopted by more than just those with nefarious use cases. For example, if you lived in an oppressive religious regime and wanted to buy a certain item, using Monero would allow you to exchange value privately and across borders if needed. Another example is that if everybody can see how much cryptocurrency you have in your wallet, then a certain service might decide to charge you more, and bad actors could even use knowledge of your wallet balance to target you for extortion purposes. For example, a Russian cryptocurrency blogger was recently beaten and robbed of $425k. This is why FUNGIBILITY IS ESSENTIAL. To summarise this in a nutshell:
"A lack of fungibility means that when sending or receiving funds, if the other person personally knows you during a transaction, or can get any sort of information on you, or if you provide a residential address for shipping etc. – you could quite potentially have them use this against you for personal gain"
For those that wish to seek more information about why Monero is a superior form of money, read The Merits of Monero: Why Monero Vs Bitcoin over on the website.
Monero's Humble Origins
Something that still rings true today despite the great influx of money into cryptocurrencies was outlined in Nick Tomaino's early 2016 opinion piece. The author claimed that "one of the most interesting aspects of Monero is that the project has gained traction without a crowd sale pre-launch, without VC funding and any company or well-known investors and without a pre-mine. Like Bitcoin in the early days, Monero has been a purely grassroots movement that was bootstrapped by the creator and adopted organically without any institutional buy-in. The creator and most of the core developers serve the community pseudonymously and the project was launched on a message board (similar to the way Bitcoin was launched on an email newsletter)."
The Organic Growth of the Monero Community
The Monero community over at monero is exponentially growing. You can view the Monero reddit metrics here and see that the Monero subreddit currently gains more than 10,000 (yes, ten thousand!) new subscribers every 10 days! Compare this to most of the other coins out there, and it proves to be one of the only projects with real organic growth. In addition to this, the community subreddits are specifically divided to ensure the main subreddit remains unbiased, tech focused, with no shilling or hype. All trading talk is designated to xmrtrader, and all memes at moonero.
Forum Funding System
While most contributors have gratefully volunteered their time to the project, Monero also has a Forum Funding System in which money is donated by community members to ensure it attracts and retains the brightest minds and most skilled developers. Unlike ICOs and other cryptocurrencies, Monero never had a premine, and does not have a developer tax. If ANYONE requires funding for a Monero related project, then they can simply request funding from the community, and if the community sees it as beneficial, they will donate. Types of projects range from Monero funding for local meet ups, to paying developers for their work.
Monero For Goods, Services, and Market Places
There is a growing number of online goods and services that you can now pay for with Monero. Globee is a service that allows online merchants to accept payments through credit cards and a host of cryptocurrencies, while being settled in Bitcoin, Monero or fiat currency. Merchants can reach a wider variety of customers, while not needing to invest in additional hardware to run cryptocurrency wallets or accept the current instability of the cryptocurrency market. Globee uses all of the open source API's that BitPay does making integrations much easier!
Project Coral Reef is a service which allows you to shop and pay for popular music band products and services using Monero.
Linux, Veracrypt, and a whole array of VPNs now accept Monero.
There is a new Monero only marketplace called Annularis currently being developed which has been created for those who value financial privacy and economic freedom, and there are rumours Open Bazaar is likely to support Monero once Multisig is implemented.
In addition, Monero is also supported by The Living Room of Satoshi so you can pay bills or credit cards directly using Monero.
Monero can be found on a growing number of cryptocurrency exchange services such as Bittrex, Poloniex, Cryptopia, Shapeshift, Changelly, Bitfinex, Kraken, Bisq, Tux, and many others.
For those wishing to purchase Monero anonymously, there are services such as and
With XMR.TO you can pay Bitcoin addresses directly with Monero. There are no other fees than the miner ones. All user records are purged after 48 hours. XMR.TO has also been added as an embedded feature into the Monerujo android wallet.
Coinhive Browser-Based Mining
Unlike Bitcoin, Monero can be mined using CPUs and GPUs. Not only does this encourage decentralisation, it also opens the door to browser based mining. Enter side of stage, Coinhive browser-based mining. As described by Hon Lau on the Symnatec Blog Browser-based mining, as its name suggests, is a method of cryptocurrency mining that happens inside a browser and is implemented using Javascript. Coinhive is marketed as an alternative to browser ad revenue. The motivation behind this is simple: users pay for the content indirectly by coin mining when they visit the site and website owners don't have to bother users with sites laden with ads, trackers, and all the associated paraphern. This is great, provided that the websites are transparent with site visitors and notify users of the mining that will be taking place, or better still, offer users a way to opt in, although this hasn't always been the case thus far.
Skepticism Sunday
The main Monero subreddit has weekly Skepticism Sundays which was created with the purpose of installing "a culture of being scientific, skeptical, and rational". This is used to have open, critical discussions about monero as a technology, it's economics, and so on.


Major Investors And Crypto Figureheads Are Interested
Ari Paul is the co-founder and CIO of BlockTower Capital. He was previously a portfolio manager for the University of Chicago's $8 billion endowment, and a derivatives market maker and proprietary trader for Susquehanna International Group. Paul was interviewed on CNBC on the 26th of December and when asked what was his favourite coin was, he stated "One that has real fundamental value besides from Bitcoin is Monero" and said it has "very strong engineering". In addition, when he was asked if that was the one used by criminals, he replied "Everything is used by criminals including the US dollar and the Euro". Paul later supported these claims on Twitter, recommending only Bitcoin and Monero as long-term investments.
There are reports that "Roger Ver, earlier known as 'Bitcoin Jesus' for his evangelical support of the Bitcoin during its early years, said his investment in Monero is 'substantial' and his biggest in any virtual currency since Bitcoin.
Charlie Lee, the creator of Litecoin, has publicly stated his appreciation of Monero. In a September 2017 tweet directed to Edward Snowden explaining why Monero is superior to Zcash, Charlie Lee tweeted:
All private transactions, More tested privacy tech, No tax on miners to pay investors, No high inflation... better investment.
John McAfee, arguably cryptocurrency's most controversial character at the moment, has publicly supported Monero numerous times over the last twelve months(before he started shilling ICOs), and has even claimed it will overtake Bitcoin.
Playboy instagram celebrity Dan Bilzerian is a Monero investor, with 15% of his portfolio made up of Monero.
Finally, while he may not be considered a major investor or figurehead, Erik Finman, a young early Bitcoin investor and multimillionaire, recently appeared in a CNBC Crypto video interview, explaining why he isn't entirely sold on Bitcoin anymore, and expresses his interest in Monero, stating:
"Monero is a really good one. Monero is an incredible currency, it's completely private."
There is a common belief that most of the money in cryptocurrency is still chasing the quick pump and dumps, however as the market matures, more money will flow into legitimate projects such as Monero. Monero's organic growth in price is evidence smart money is aware of Monero and gradually filtering in.
The Bitcoin Flaw
A relatively unknown blogger named CryptoIzzy posted three poignant pieces regarding Monero and its place in the world. The Bitcoin Flaw: Monero Rising provides an intellectual comparison of Monero to other cryptocurrencies, and Valuing Cryptocurrencies: An Approach outlines methods of valuing different coins.
CryptoIzzy's most recent blog published only yesterday titled Monero Valuation - Update and Refocus is a highly recommended read. It touches on why Monero is much more than just a coin for the Darknet Markets, and provides a calculated future price of Monero.
CryptoIzzy also published The Power of Money: A Case for Bitcoin, which is an exploration of our monetary system, and the impact decentralised cryptocurrencies such as Bitcoin and Monero will have on the world. In the epilogue the author also provides a positive and detailed future valuation based on empirical evidence. CryptoIzzy predicts Monero to easily progress well into the four figure range.
Monero Has a Relatively Small Marketcap
Recently we have witnessed many newcomers to cryptocurrency neglecting to take into account coins' marketcap and circulating supply, blindly throwing money at coins under $5 with inflated marketcaps and large circulating supplies, and then believing it's possible for them to reach $100 because someone posted about it on Facebook or Reddit.
Compared to other cryptocurrencies, Monero still has a low marketcap, which means there is great potential for the price to multiply. At the time of writing, according to CoinMarketCap, Monero's marketcap is only a little over $5 billion, with a circulating supply of 15.6 million Monero, at a price of $322 per coin.
For this reason, I would argue that this is evidence Monero is grossly undervalued. Just a few billion dollars of new money invested in Monero can cause significant price increases. Monero's marketcap only needs to increase to ~$16 billion and the price will triple to over $1000. If Monero's marketcap simply reached ~$35 billion (just over half of Ripple's $55 billion marketcap), Monero's price will increase 600% to over $2000 per coin.
Another way of looking at this is Monero's marketcap only requires ~$30 billion of new investor money to see the price per Monero reach $2000, while for Ethereum to reach $2000, Ethereum's marketcap requires a whopping ~$100 billion of new investor money.
Technical Analysis
There are numerous Monero technical analysts, however none more eerily on point than the crowd-pleasing Ero23. Ero23's charts and analysis can be found on Trading View. Ero23 gained notoriety for his long-term Bitcoin bull chart published in February, which is still in play today. Head over to his Trading View page to see his chart: Monero's dwindling supply. $10k in 2019 scenario, in which Ero23 predicts Monero to reach $10,000 in 2019. There is also this chart which appears to be freakishly accurate and is tracking along perfectly today.
Coinbase Rumours
Over the past 12 months there have been ongoing rumours that Monero will be one of the next cryptocurrencies to be added to Coinbase. In January 2017, Monero Core team member Riccardo 'Fluffypony' Spagni presented a talk at Coinbase HQ. In addition, in November 2017 GDAX announced the GDAX Digit Asset Framework outlining specific parameters cryptocurrencies must meet in order to be added to the exchange. There is speculation that when Monero has numerous mobile and hardware wallets available, and multisig is working, then it will be added. This would enable public accessibility to Monero to increase dramatically as Coinbase had in excess of 13 million users as of December, and is only going to grow as demand for cryptocurrencies increases. Many users argue that due to KYC/AML regulations, Coinbase will never be able to add Monero, however the Kraken exchange already operates in the US and has XMfiat pairs, so this is unlikely to be the reason Coinbase is yet to implement XMfiat trading.
Monero Is Not an ICO Scam
It is likely most of the ICOs which newcomers invest in, hoping to get rich quick, won't even be in the Top 100 cryptocurrencies next year. A large portion are most likely to be pumps and dumps, and we have already seen numerous instances of ICO exit scams. Once an ICO raises millions of dollars, the developers or CEO of the company have little incentive to bother rolling out their product or service when they can just cash out and leave. The majority of people who create a company to provide a service or product, do so in order to generate wealth. Unless these developers and CEOs are committed and believed in their product or service, it's likely that the funds raised during the ICO will far exceed any revenue generated from real world use cases.
Monero is a Working Currency, Today
Monero is a working currency, here today.
The majority of so called cryptocurrencies that exist today are not true currencies, and do not aim to be. They are a token of exchange. They are like a share in a start-up company hoping to use blockchain technology to succeed in business. A crypto-assest is a more accurate name for coins such as Ethereum, Neo, Cardano, Vechain, etc.
Monero isn't just a vaporware ICO token that promises to provide a blockchain service in the future. It is not a platform for apps. It is not a pump and dump coin.
Monero is the only coin with all the necessary properties to be called true money.
Monero is private internet money.
Some even describe Monero as an online Swiss Bank Account or Bitcoin 2.0, and it is here to continue on from Bitcoin's legacy.
Monero is alleviating the public from the grips of banks, and protests the monetary system forced upon us.
Monero only achieved this because it is the heart and soul, and blood, sweat, and tears of the contributors to this project. Monero supporters are passionate, and Monero has gotten to where it is today thanks to its contributors and users.

///Key Issues for Monero to Overcome///

While Bulletproofs are soon to be implemented in order to improve Monero's transaction sizes and fees, scalability is an issue for Monero that is continuously being assessed by Monero's researchers and developers to find the most appropriate solution. Ricardo 'Fluffypony' Spagni recently appeared on CNBC's Crypto Trader, and when asked whether Monero is scalable as it stands today, Spagni stated that presently, Monero's on-chain scaling is horrible and transactions are larger than Bitcoin's (because of Monero's privacy features), so side-chain scaling may be more efficient. Spagni elaborated that the Monero team is, and will always be, looking for solutions to an array of different on-chain and off-chain scaling options, such as developing a Mimblewimble side-chain, exploring the possibility of Lightning Network so atomic swaps can be performed, and Tumblebit.
In a post on the Monero subreddit from roughly a month ago, monero moderator u/dEBRUYNE_1 supports Spagni's statements. dEBRUYNE_1 clarifies the issue of scalability:
"In Bitcoin, the main chain is constrained and fees are ludicrous. This results in users being pushed to second layer stuff (e.g. sidechains, lightning network). Users do not have optionality in Bitcoin. In Monero, the goal is to make the main-chain accessible to everyone by keeping fees reasonable. We want users to have optionality, i.e., let them choose whether they'd like to use the main chain or second layer stuff. We don't want to take that optionality away from them."
When the Spagni CNBC video was recently linked to the Monero subreddit, it was met with lengthy debate and discussion from both users and developers. u/ferretinjapan summarised the issue explaining:
"Monero has all the mechanisms it needs to find the balance between transaction load, and offsetting the costs of miner infrastructure/profits, while making sure the network is useful for users. But like the interviewer said, the question is directed at "right now", and Fluffys right to a certain extent, Monero's transactions are huge, and compromises in blockchain security will help facilitate less burdensome transactional activity in the future. But to compare Monero to Bitcoin's transaction sizes is somewhat silly as Bitcoin is nowhere near as useful as monero, and utility will facilitate infrastructure building that may eventually utterly dwarf Bitcoin. And to equate scaling based on a node being run on a desktop being the only option for what classifies as "scalable" is also an incredibly narrow interpretation of the network being able to scale, or not. Given the extremely narrow definition of scaling people love to (incorrectly) use, I consider that a pretty crap question to put to Fluffy in the first place, but... ¯_(ツ)_/¯"
u/xmrusher also contributed to the discussion, comparing Bitcoin to Monero using this analogous description:
"While John is much heavier than Henry, he's still able to run faster, because, unlike Henry, he didn't chop off his own legs just so the local wheelchair manufacturer can make money. While Morono has much larger transactions then Bitcoin, it still scales better, because, unlike Bitcoin, it hasn't limited itself to a cripplingly tiny blocksize just to allow Blockstream to make money."
Setting up a wallet can still be time consuming
It's time consuming and can be somewhat difficult for new cryptocurrency users to set up their own wallet using the GUI wallet or the Command Line Wallet. In order to strengthen and further decentralize the Monero network, users are encouraged to run a full node for their wallet, however this can be an issue because it can take up to 24-48 hours for some users depending on their hard-drive and internet speeds. To mitigate this issue, users can run a remote node, meaning they can remotely connect their wallet to another node in order to perform transactions, and in the meantime continue to sync the daemon so in the future they can then use their own node.
For users that do run into wallet setup issues, or any other problems for that matter, there is an extremely helpful troubleshooting thread on the Monero subreddit which can be found here. And not only that, unlike some other cryptocurrency subreddits, if you ask a question, there is always a friendly community member who will happily assist you. is a fantastic resource too!
Despite still being difficult to use, the user-base and price may increase dramatically once it is easier to use. In addition, others believe that when hardware wallets are available more users will shift to Monero.


I actually still feel a little shameful for promoting Monero here, but feel a sense of duty to do so.
Monero is transitioning into an unstoppable altruistic beast. This year offers the implementation of many great developments, accompanied by the likelihood of a dramatic increase in price.
I request you discuss this post, point out any errors I have made, or any information I may have neglected to include. Also, if you believe in the Monero project, I encourage you to join your local Facebook or Reddit cryptocurrency group and spread the word of Monero. You could even link this post there to bring awareness to new cryptocurrency users and investors.
I will leave you with an old on-going joke within the Monero community - Don't buy Monero - unless you have a use case for it of course :-) Just think to yourself though - Do I have a use case for Monero in our unpredictable Huxleyan society? Hint: The answer is ?
Edit: Added in the Tail Emission section, and noted Dan Bilzerian as a Monero investor. Also added information regarding the XMR.TO payment service. Added info about hardfork
submitted by johnfoss69 to CryptoCurrency [link] [comments]

AES Crypt security audit (1 serious issue found)

I just learned about this afternoon and started poking around at some of the software I hadn't heard of before. One in particular caught my eye: AES Crypt. It's listed as "Worth Mentioning" under "File Encryption". I found some minor issues and one major issue.
I only looked at the Linux version, written in C. However, most of the issues I highlight are relevant to all versions since it's part of the file format.
Update: So apparently the major issue has been known since 2012, but they've decided not to address it. Therefore Privacy Tools should not be recommending this software.
Update 2: AES Crypt was removed

The Bad News

Let's start with the most serious issue. An unauthenticated field in encrypted files is trusted, and this allows a man-in-the-middle to manipulate the plaintext without being detected. I wrote up a little example scenario in my bug report, along with proof of concept you can try for yourself:
GitHub issue #23: Unauthenticated header data is trusted, making the plaintext malleable
Instead of using a proper padding scheme, the size of the final block is stored in a last_block_size field in the file. Despite being placed between the encrypted message and the authentication tag, it's not authenticated. This is a huge no-no and must be fixed before it would be reasonable to recommend this tool to anyone for any use.
It's not a problem with the code, but the file format itself. Therefore all versions are affected, and the fix will require a new file format (version 3?).
It could be fixed by including the last_block_size field when authenticating, but it would be much better to drop this field and use a standard padding scheme like PKCS#5. As a really minor bonus, this would also hide the exact file length from snoops.

Weak key derivation

The encryption key is derived from the user-entered password by iterating SHA-256 8,192 times. It's not a showstopper, but this is very weak, and puts a lot more stress on choosing good passphrases. It is salted with the IV, which helps protect against some kinds of attacks.
This is part of the file format since the passphrase is usable between implementations, so all versions are affected.
Recommendation: Switch to a memory-hard KDF like Argon2 or scrypt. Less good option: allow the number of iterations to be configured, or just use more iterations. It's very easy to parallelize SHA-256, especially thanks to all those hardware implementations designed for mining Bitcoin.

More complicated than necessary

The passphrase is used to encrypt yet another key, which is used to encrypt the message. This offers no additional protection, and it's not used for anything. The only reason you might want something like this is so that you can encrypt the file with more than one passphrase, allowing it to be decrypted with any individual passphrase. But that's not a feature of AES Crypt.
Worse, it actually weakens the format since it makes brute force attacks on the passphrase faster. No need to check guesses against the entire ciphertext, just the fixed-length key!
This is part of the file format so all versions are affected.
Recommendation: Get rid of this. It's not a big deal, it's just pointless.

Some cargo culting

Entropy read from the operating system (/dev/urandom, etc.) isn't entirely trusted for some reason, so it's hashed along with the current time and PID. That's not sufficient to accomplish anything useful. It doesn't hurt, but it's a strange thing to do.
This isn't part of the file format, so it's just a quirk of the Linux and Windows implementations.

Ambiguous licensing

I am unable to find any license governing the C Linux and Windows versions of the software. There's no LICENSE file, and the individual sources are not consistently marked. The AES implementation is embedded and marked as GPL, which suggests the entire source is GPL.
So at the moment a conservative take would be that AES Crypt is source available but not necessarily Open Source.

Perhaps some code quality issues?

There were a couple cases of undefined behavior. I submitted a patch to fix these. (Update: This patch was never accepted, and so AES Crypt still invokes undefined behavior each time it's used to encrypt data, making all its output suspect.)
The very second time I ran the aescrypt command after compiling it, I got a segmentation fault, which was pretty alarming. I submitted a patch to fix this, too (Update: also never accepted), but considering how quickly I found this, I wonder how many more issues are lingering. File name handling is a mess. Though, as a command line program, it's probably reasonable to consider the command line arguments trusted inputs.
I looked mostly at the code that does encryption and decryption, and that part is pretty solid. It does thorough error checking and is even careful to clean up before bailing out.

Variable-time comparison

The memcmp() function is used to verify the authentication tag, which takes a variable amount of time to complete. It's not significant for a command line application like this since it's never going to behave as an oracle for an attacker, but something to notice, especially if the code is reused in, say, a server implementation of AES Crypt.

The Good News

It's not well documented, but the encryption scheme is AES-256 in CBC mode, authenticated with encrypt-then-authenticate HMAC-SHA256. Except for the lack of padding, it's all solid stuff. The IV is generated and used properly, and the (pointless) intermediate key is also generated properly (C version, Linux and Windows).
The program makes consistent and reasonable attempts to sanitize memory holding sensitive information. Well done!
As I noted, the actual file parsing and crypto routines are, for the most part, robust with error checking and input validation. (Though, I did notice the upper four bits of last_block_size is allowed to hold any value with no impact on the result.)
If the padding issue is fixed with a new file format, then it's reasonable to recommend this tool with the caveat that the KDF is weak and so your passphrases must be especially strong.
Disclaimer: I wrote and maintain a similar open source tool called Enchive which is perhaps a "competitor" in this area.
submitted by skeeto to privacytoolsIO [link] [comments]

The core concepts of DTube's new blockchain

Dear Reddit community,
Following our announcement for DTube v0.9, I have received countless questions about the new blockchain part, avalon. First I want to make it clear, that it would have been utterly impossible to build this on STEEM, even with the centralized SCOT/Tribes that weren't available when I started working on this. This will become much clearer as you read through the whole wall of text and understand the novelties.
SteemPeak says this is a 25 minutes read, but if you are truly interested in the concept of a social blockchain, and you believe in its power, I think it will be worth the time!


I'm a long time member of STEEM, with tens of thousands of staked STEEM for 2 years+. I understand the instinctive fear from the other members of the community when they see a new crypto project coming out. We've had two recent examples recently with the VOICE and LIBRA annoucements, being either hated or ignored. When you are invested morally, and financially, when you see competitors popping up, it's normal to be afraid.
But we should remember competition is healthy, and learn from what these projects are doing and how it will influence us. Instead, by reacting the way STEEM reacts, we are putting our heads in the sand and failing to adapt. I currently see STEEM like the "North Korea of blockchains", trying to do everything better than other blockchains, while being #80 on coinmarketcap and slowly but surely losing positions over the months.
When DLive left and revealed their own blockchain, it really got me thinking about why they did it. The way they did it was really scummy and flawed, but I concluded that in the end it was a good choice for them to try to develop their activity, while others waited for SMTs. Sadly, when I tried their new product, I was disappointed, they had botched it. It's purely a donation system, no proof of brain... And the ultra-majority of the existing supply is controlled by them, alongside many other 'anti-decentralization' features. It's like they had learnt nothing from their STEEM experience at all...
STEEM was still the only blockchain able to distribute crypto-currency via social interactions (and no, 'donations' are not social interactions, they are monetary transfers; bitcoin can do it too). It is the killer feature we need. Years of negligence or greed from the witnesses/developers about the economic balance of STEEM is what broke this killer feature. Even when proposing economical changes (which are actually getting through finally in HF21), the discussions have always been centered around modifying the existing model (changing the curve, changing the split, etc), instead of developing a new one.
You never change things by fighting the existing reality.
To change something, build a new model that makes the existing model obsolete.
What if I built a new model for proof of brain distribution from the ground up? I first tried playing with STEEM clones, I played with EOS contracts too. Both systems couldn't do the concepts I wanted to integrate for DTube, unless I did a major refactor of tens of thousands of lines of code I had never worked with before. Making a new blockchain felt like a lighter task, and more fun too.
Before even starting, I had a good idea of the concepts I'd love to implement. Most of these bullet points stemmed from observations of what happened here on STEEM in the past, and what I considered weaknesses for's growth.


The first concept I wanted to implement deep down the core of how a DPOS chain works, is that I didn't want the token to be staked, at all (i.e. no 'powering up'). The cons of staking for a decentralized social platform are obvious: * complexity for the users with the double token system. * difficulty to onboard people as they need to freeze their money, akin to a pyramid scheme.
The only good thing about staking is how it can fill your bandwidth and your voting power when you power-up, so you don't need to wait for it to grow to start transacting. In a fully-liquid system, your account ressources start at 0% and new users will need to wait for it to grow before they can start transacting. I don't think that's a big issue.
That meant that witness elections had to be run out of the liquid stake. Could it be done? Was it safe for the network? Can we update the cumulative votes for witnesses without rounding issues? Even when the money flows between accounts freely?
Well I now believe it is entirely possible and safe, under certain conditions. The incentive for top witnesses to keep on running the chain is still present even if the stake is liquid. With a bit of discrete mathematics, it's easy to have a perfectly deterministic algorithm to run a decentralized election based off liquid stake, it's just going to be more dynamic as the funds and the witness votes can move around much faster.


STEEM has had multiple events that influenced the distribution in a bad way. The most obvious one is the inflation settings. One day it was hella-inflationary, then suddently hard fork 16 it wasn't anymore. Another major one, is the non-linear rewards that ran for a long time, which created a huge early-user advantage that we can still feel today.
I liked linear rewards, it's what gives minnows their best chance while staying sybil-resistant. I just needed Avalon's inflation to be smart. Not hyper-inflationary like The key metric to consider for this issue, is the number of tokens distributed per user per day. If this metric goes down, then the incentive for staying on the network and playing the game, goes down everyday. You feel like you're making less and less from your efforts. If this metric goes up, the number of printed tokens goes up and the token is hyper-inflationary and holding it feels really bad if you aren't actively earning from the inflation by playing the game.
Avalon ensures that the number of printed tokens is proportional to the number of users with active stake. If more users come in, avalon prints more tokens, if users cash-out and stop transacting, the inflation goes down. This ensures that earning 1 DTC will be about as hard today, tomorrow, next month or next year, no matter how many people have registered or left, and no matter what happens on the markets.


Another big issue that most steemians don't really know about, but that is really detrimental to STEEM, is how the voting power mana bar works. I guess having to manage a 2M SP delegation for @dtube really convinced me of this one.
When your mana bar is full at 100%, you lose out the potential power generation, and rewards coming from it. And it only takes 5 days to go from 0% to 100%. A lot of people have very valid reasons to be offline for 5 days+, they shouldn't be punished so hard. This is why all most big stake holders make sure to always spend some of their voting power on a daily basis. And this is why minnows or smaller holders miss out on tons of curation rewards, unless they delegate to a bidbot or join some curation guild... meh. I guess a lot of people would rather just cash-out and don't mind the trouble of having to optimize their stake.
So why is it even a mana bar? Why can't it grow forever? Well, everything in a computer has to have a limit, but why is this limit proportional to my stake? While I totally understand the purpose of making the bandwidth limited and forcing big stake holders to waste it, I think it's totally unneeded and inadapted for the voting power. As long as the growth of the VP is proportional to the stake, the system stays sybil-resistant, and there could technically be no limit at all if it wasn't for the fact that this is ran in a computer where numbers have a limited number of bits.
On Avalon, I made it so that your voting power grows virtually indefinitely, or at least I don't think anyone will ever reach the current limit of Number.MAX_SAFE_INTEGER: 9007199254740991 or about 9 Peta VP. If you go inactive for 6 months on an account with some DTCs, when you come back you will have 6 months worth of power generation to spend, turning you into a whale, at least for a few votes.
Another awkward limit on STEEM is how a 100% vote spends only 2% of your power. Not only STEEM forces you to be active on a daily basis, you also need to do a minimum of 10 votes / day to optimize your earnings. On Avalon, you can use 100% of your stored voting power in a single mega-vote if you wish, it's up to you.


No Author rewards

People should vote with the intent of getting a reward from it. If 75% of the value forcibly goes to the author, it's hard to expect a good return from curation. Steem is currently basically a complex donation platform. No one wants to donate when they vote, no matter what they will say, and no matter how much vote-trading, self-voting or bid-botting happens.
So in order to keep a system where money is printed when votes happen, if we cannot use the username of the author to distribute rewards, the only possibility left is to use the list of previous voters aka "Curation rewards". The 25% interesting part of STEEM, that has totally be shadowed by the author rewards for too long.

Downvote rewards

STEEM has always suffered from the issue that the downvote button is unused, or when it's used, it's mostly for evil. This comes from the fact that in STEEM's model, downvotes are not eligible for any rewards. Even if they were, your downvote would be lowering the final payout of the content, and your own curation rewards...
I wanted Avalon's downvotes to be completely symmetric to the upvotes. That means if we revert all the votes (upvotes become downvotes and vice versa), the content should still distribute the same amount of tokens to the same people, at the same time.

No payment windows

Steem has a system of payments windows. When you publish a content, it opens a payment window where people can freely upvote or downvote to influence the payout happening 7 days later. This is convenient when you want a system where downvotes lower rewards. Waiting 7 days to collect rewards is also another friction point for new users, some of them might never come back 7 days later to convince themselves that 'it works'. On avalon, when you are part of the winners of curation after a vote, you earn it instantly in your account, 100% liquid and transferable.

Unlimited monetization in time

Indeed, the 7 days monetization limit has been our biggest issue for our video platform since day 8. This incentivized our users to create more frequent, but lesser quality content, as they know that they aren't going to earn anything from the 'long-haul'. Monetization had to be unlimited on DTube, so that even a 2 years old video could be dug up and generate rewards in the far future.
Infinite monetization is possible, but as removing tokens from a balance is impossible, the downvotes cannot remove money from the payout like they do on STEEM. Instead, downvotes print money in the same way upvotes do, downvotes still lower the popularity in the hot and trending and should only rewards other people who downvoted the same content earlier.

New curation rewards algorithm

STEEM's curation algorithm isn't stupid, but I believe it lacks some elegance. The 15 minutes 'band-aid' necessary to prevent curation bots (bots who auto vote as fast as possible on contents of popular authors) that they added proves it. The way is distributes the reward also feels very flat and boring. The rewards for my votes are very predictable, especially if I'm the biggest voter / stake holder for the content. My own vote is paying for my own curation rewards, how stupid is that? If no one elses votes after my big vote despite a popularity boost, it probably means I deserve 0 rewards, no?
I had to try different attempts to find an algorithm yielding interesting results, with infinite monetization, and without obvious ways to exploit it. The final distribution algorithm is more complex than STEEM's curation but it's still pretty simple. When a vote is cast, we calculate the 'popularity' at the time of the vote. The first vote is given a popularity of 0, the next votes are defined by (total_vp_upvotes - total_vp_downvotes) / time_since_1st_vote. Then we look into the list of previous votes, and we remove all votes in the opposite direction (up/down). The we remove all the votes with a higher popularity if its an upvote, or the ones with a lower popularity if its a downvote. The remaining votes in the list are the 'winners'. Finally, akin to STEEM, the amount of tokens generated by the vote will be split between winners proportionally to the voting power spent by each (linear rewards - no advantages for whales) and distributed instantly. Instead of purely using the order of the votes, Avalon distribution is based on when the votes are cast, and each second that passes reduces the popularity of a content, potentially increasing the long-term ROI of the next vote cast on it.
Graph It's possible to chart the popularity that influences the DTC monetary distribution directly in the UI
This algorithm ensures there are always losers. The last upvoter never earns anything, also the person who upvoted at the highest popularity, and the one who downvoted at the lowest popularity would never receive any rewards for their vote. Just like the last upvoter and last downvoter wouldn't either. All the other ones in the middle may or may not receive anything, depending on how the voting and popularity evolved in time. The one with an obvious advantage, is the first voter who is always counted as 0 popularity. As long as the content stays at a positive popularity, every upvote will earn him rewards. Similarly, being the first downvoter on an overly-popular content could easily earn you 100% rewards on the next downvote that could be from a whale, earning you a fat bonus.
While Avalon doesn't technically have author rewards, the first-voter advantage is strong, and the author has the advantage of always being the first voter, so the author can still earn from his potentially original creations, he just needs to commit some voting power on his own contents to be able to publish.


More scalable than shared blockchains

Another issue with generalistic blockchains like ETH/STEEM/EOS/TRX, which are currently hosting dozens of semi-popular web/mobile apps, is the reduced scalability of such shared models. Again, everything in a computer has a limit. For DPOS blockchains, 99%+ of the CPU load of a producing node will be to verify the signatures of the many transactions coming in every 3 seconds. And sadly this fact will not change with time. Even if we had a huge breakthrough on CPU speeds today, we would need to update the cryptographic standards for blockchains to keep them secure. This means it would NOT become easier to scale up the number of verifiable transactions per seconds.
Oh, but we are not there yet you're thinking? Or maybe you think that we'll all be rich if we reach the scalability limits so it doesn't really matter? WRONG
The limit is the number of signature verifications the most expensive CPU on the planet can do. Most blockchains use the secp256k1 curve, including Bitcoin, Ethereum, Steem and now Avalon. It was originally chosen for Bitcoin by Satoshi Nakamoto probably because it's decently quick at verifying signatures, and seems to be backdoor-proof (or else someone is playing a very patient game). Maybe some other curves exist with faster signature verification speed, but it won't be improved many-fold, and will likely require much research, auditing, and time to get adopted considering the security implications.
In 2015 Graphene was created, and Bitshares was completely rewritten. This was able to achieve 100,000 transaction per second on a single machine, and decentralized global stress testing achieved 18,000 transactions per second on a distributed network.
So BitShares/STEEM and other DPOS graphene chains in production can validate at most 18000 txs/sec, so about 1.5 billion transactions per day. EOS, Tendermint, Avalon, LIBRA or any other DPOS blockchain can achieve similar speeds, because there's no planet-killing proof-of-works, and thanks to the leader-based/democratic system that reduces the number of nodes taking part in the consensus.
As a comparison, there are about 4 billion likes per day on instagram, so you can probably double that with the actual uploads, stories and comments, password changes, etc. The load is also likely unstable through the day, probably some hours will go twice as fast as the average. You wouldn't be able to fit Instagram in a blockchain, ever, even with the most scalable blockchain tech on the world's best hardware. You'd need like a dozen of those chains. And instagram is still a growing platform, not as big as Facebook, or YouTube.
So, splitting this limit between many popular apps? Madness! Maybe it's still working right now, but when many different apps reach millions of daily active users plus bots, it won't fit anymore.
Serious projects with a big user base will need to rethink the shared blockchain models like Ethereum, EOS, TRX, etc because the fees in gas or necessary stake required to transact will skyrocket, and the victims will be the hordes of minnows at the bottom of the distribution spectrum.
If we can't run a full instagram on a DPOS blockchain, there is absolutely no point trying to run medium+reddit+insta+fb+yt+wechat+vk+tinder on one. Being able to run half an instagram is already pretty good and probably enough to actually onboard a fair share of the planet. But if we multiply the load by the number of different app concepts available, then it's never gonna scale.
DTube chain is meant for the DTube UI only. Please do not build something unrelated to video connecting to our chain, we would actively do what we can to prevent you from growing. We want this chain to be for video contents only, and the JSON format of the contents should always follow the one used by
If you are interested in avalon tech for your project isn't about video, it's strongly suggested to fork the blockchain code and run your own avalon chain with a different origin id, instead of trying to connect your project to dtube's mainnet. If you still want to do it, chain leaders would be forced to actively combat your project as we would consider it as useless noise inside our dedicated blockchain.

Focused governance

Another issue of sharing a blockchain, is the issues coming up with the governance of it. Tons of features enabled by avalon would be controversial to develop on STEEM, because they'd only benefit DTube, and maybe even hurt/break some other projects. At best they'd be put at the bottom of a todo list somewhere. Having a blockchain dedicated to a single project enables it to quickly push updates that are focused on a single product, not dozens of totally different projects.
Many blockchain projects are trying to make decentralized governance true, but this is absolutely not what I am interested in for DTube. Instead, in avalon the 'init' account, or 'master' account, has very strong permissions. In the DTC case, @dtube: * will earn 10% fees from all the inflation * will not have to burn DTCs to create accounts * will be able to do certain types of transactions when others can't * * account creation (during steem exclusivity period) * * transfers (during IEO period) * * transfering voting power and bandwidth ressources (used for easier onboarding)
For example, for our IEO we will setup a mainnet where only @dtube is allowed to transfer funds or vote until the IEO completes and the airdrop happens. This is also what enabled us to create a 'steem-only' registration period on the public testnet for the first month. Only @dtube can create accounts, this way we can enforce a 1 month period where users can port their username for free, without imposters having a chance to steal usernames. Through the hard-forking mechanism, we can enable/disable these limitations and easily evolve the rules and permissions of the blockchain, for example opening monetary transfers at the end of our IEO, or opening account creation once the steem exclusivity ends.
Luckily, avalon is decentralized, and all these parameters (like the @dtube fees, and @dtube permissions) are easily hardforkable by the leaders. @dtube will however be a very strong leader in the chain, as we plan to use our vote to at least keep the #1 producing node for as long as we can.
We reserve the right to 'not follow' an hardfork. For example, it's obvious we wouldn't follow something like reducing our fees to 0% as it would financially endanger the project, and we would rather just continue our official fork on our own and plug domain and mobile app to it.
On the other end of the spectrum, if other leaders think @dtube is being tyranical one way or another, leaders will always have the option of declining the new hardforks and putting the system on hold, then @dtube will have an issue and will need to compromise or betray the trust of 1/3 of the stake holders, which could reveal costly.
The goal is to have a harmounious, enterprise-level decision making within the top leaders. We expect these leaders to be financially and emotionally connected with the project and act for good. @dtube is to be expected to be the main good actor for the chain, and any permission given to it should be granted with the goal of increasing the DTC marketcap, and nothing else. Leaders and @dtube should be able to keep cooperation high enough to keep the hard-forks focused on the actual issues, and flowing faster than other blockchain projects striving for a totally decentralized governance, a goal they are unlikely to ever achieve.


A lot of hard-forking

Avalon is easily hard-forkable, and will get hard-forked often, on purpose. No replays will be needed for leaders/exchanges during these hard-forks, just pull the new hardfork code, and restart the node before the hard-fork planned time to stay on the main fork. Why is this so crucial? It's something about game theory.
I have no former proof for this, but I assume a social and financial game akin to the one played on steem since 2016 to be impossible to perfectly balance, even with a thourough dichotomical process. It's probably because of some psychological reason, or maybe just the fact that humans are naturally greedy. Or maybe it's just because of the sheer number of players. They can gang up together, try to counter each others, and find all sorts of creative ideas to earn more and exploit each other. In the end, the slightest change in the rules, can cause drastic gameplay changes. It's a real problem, luckily it's been faced by other people in the past.
Similarly to what popular and succesful massively multiplayer games have achieved, I plan to patch or suggest hard-forks for avalon's mainnet on a bi-monthly basis. The goal of this perfect imbalance concept, is to force players to re-discover their best strategy often. By introducing regular, small, and semi-controlled changes into this chaos, we can fake balance. This will require players to be more adaptative and aware of the changes. This prevents the game from becoming stale and boring for players, while staying fair.

Death to bots

Automators on the other side, will need to re-think their bots, go through the developement and testing phase again, on every new hard-fork. It will be an unfair cat-and-mouse game. Doing small and semi-random changes in frequent hard-forks will be a easy task for the dtube leaders, compared to the work load generated to maintain the bots. In the end, I hope their return on investment to be much lower compared to the bid-bots, up to a point where there will be no automation.
Imagine how different things would have been if SteemIt Inc acted strongly against bid-bots or other forms of automation when they started appearing? Imagine if hard-forks were frequent and they promised to fight bid-bots and their ilk? Who would be crazy enough to make a bid-bot apart from @berniesanders then?
I don't want you to earn DTCs unless you are human. The way you are going to prove you are human, is not by sending a selfie of you with your passport to a 3rd party private company located on the other side of the world. You will just need to adapt to the new rules published every two weeks, and your human brain will do it subconsciously by just playing the voting game and seeing the rewards coming.
All these concepts are aimed at directly improving, making it more resilient, and scale both technologically and economically. Having control over the full tech stack required to power our dapp will prevent issues like the one we had with the search engine, where we relied too heavily on a 3rd party tool, and that created a 6-months long bug that basically broke 1/3 of the UI.
While's UI can now totally run independently from any other entity, we kept everything we could working with STEEM, and the user is now able to transparently publish/vote/comment videos on 2 different chains with one click. This way we can keep on leveraging the generalistic good features of STEEM that our new chain doesn't focuses on doing, such as the dollar-pegged token, the author rewards/donation mechanism, the tribes/communities tokens, and simply the extra exposure users can get from other website (,, partiko, steempeak, etc), which is larger than the number of people using directly.
The public testnet has been running pretty well for 3 weeks now, with 6000+ accounts registered, and already a dozen of independant nodes popping up and running for leaders. The majority of the videos are cross-posted on both chains and the daily video volume has slightly increased since the update, despite the added friction of the new 'double login' system and several UI bugs.
If you've read this article, I'm hoping to get some reactions from you in the comments section!
Some even more focused articles about avalon are going to pop on my blog in the following weeks, such as how to get a node running and running for leadewitness, so feel free to follow me to get more news and help me reach 10K followers ;)
submitted by nannal to dtube [link] [comments]

Trading Cryptocurrency Markets

Hello! My name is Slava Mikhalkin, I am a Project Owner of Crowdsale platform at Platinum, the company that knows how to start any ICO or STO in 2019.
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I am also happy to be a part of the UBAI, the first educational institution providing the most effective online education on blockchain! We can teach you how to do ICO/STO in 2019. Today I want to tell you how to sell and transfer cryptocurrencies.
Major Exchanges
In finance, an exchange is a forum or platform for trading commodities, derivatives, securities or other financial instruments. The principle concern of an exchange is to allow trading between parties to take place in a fair and legally compliant manner, as well as to ensure that pricing information for any instrument traded on the exchange is reliable and coherently delivered to exchange participants. In the cryptocurrency space exchanges are online platforms that allow users to trade cryptocurrencies or digital currencies for fiat money or other cryptocurrencies. They can be centralized exchanges such a Binance, or decentralized exchanges such as IDEX. Most cryptocurrency exchanges allow users to trade different crypto assets with BTC or ETH after having already exchanged fiat currency for one of those cryptocurrencies. Coinbase and Kraken are the main avenue for fiat money to enter into the cryptocurrency ecosystem.
Function and History
Crypto exchanges can be market-makers that take bid/ask spreads as a commission on the transaction for facilitating the trade, or more often charge a small percentage fee for operating the forum in which the trade was made. Most crypto exchanges operate outside of Western countries, enabling them to avoid stringent financial regulations and the potential for costly and lengthy legal proceedings. These entities will often maintain bank accounts in multiple jurisdictions, allowing the exchange to accept fiat currency and process transactions from customers all over the globe.
The concept of a digital asset exchange has been around since the late 2000s and the following initial attempts at running digital asset exchanges foreshadows the trouble involved in attempting to disrupt the operation of the fiat currency baking system. The trading of digital or electronic assets predate Bitcoin’s creation by several years, with the first electronic trading entities running afoul of the Australian Securities and Investments Commission (ASIC) in late 2004. Companies such as Goldex, SydneyGoldSales, and Ozzigold, shut down voluntarily after ASIC found that they were operating without an Australian Financial Services License. E-Gold, which exchanged fiat USD for grams of precious metals in digital form, was possibly the first digital currency exchange as we know it, allowing users to make instant transfers to the accounts of other E-Gold members. At its peak in 2006 E-Gold processed $2 billion worth of transactions and boasted a user base of over 5 million people.
Popular Exchanges
Here we will give a brief overview of the features and operational history of the more popular and higher volume exchanges because these are the platforms to which newer traders will be exposed. These exchanges are recommended to use because they are the industry standard and they inspire the most confidence.
Owned and operated by iFinex Inc, the cryptocurrency trading platform Bitfinex was the largest Bitcoin exchange on the planet until late 2017. Headquartered in Hong Kong and based in the US Virgin Island, Bitfinex was one of the first exchanges to offer leveraged trading (“Margin trading allows a trader to open a position with leverage. For example — we opened a margin position with 2X leverage. Our base assets had increased by 10%. Our position yielded 20% because of the 2X leverage. Standard trades are traded with leverage of 1:1”) and also pioneered the use of the somewhat controversial, so-called “stable coin” Tether (USDT).
Binance is an international multi-language cryptocurrency exchange that rose from the mid-rank of cryptocurrency exchanges to become the market dominating behemoth we see today. At the height of the late 2017/early 2018 bull run, Binance was adding around 2 million new users per week! The exchange had to temporarily disallow new registrations because its servers simply could not keep up with that volume of business. After the temporary ban on new users was lifted the exchange added 240,000 new accounts within two hours.
Have you ever thought whats the role of the cypto exchanges? The answer is simple! There are several different types of exchanges that cater to different needs within the ecosystem, but their functions can be described by one or more of the following: To allow users to convert fiat currency into cryptocurrency. To trade BTC or ETH for alt coins. To facilitate the setting of prices for all crypto assets through an auction market mechanism. Simply put, you can either mine cryptocurrencies or purchase them, and seeing as the mining process requires the purchase of expensive mining equipment, Cryptocurrency exchanges can be loosely grouped into one of the 3 following exchange types, each with a slightly different role or combination of roles.
Have you ever thought about what are the types of Crypto exchanges?
  1. Traditional Cryptocurrency Exchange: These are the type that most closely mimic traditional stock exchanges where buyers and sellers trade at the current market price of whichever asset they want, with the exchange acting as the intermediary and charging a small fee for facilitating the trade. Kraken and GDAX are examples of this kind of cryptocurrency exchange. Fully peer-to-peer exchanges that operate without a middleman include EtherDelta, and IDEX, which are also examples of decentralized exchanges.
  2. Cryptocurrency Brokers: These are website or app based exchanges that act like a Travelex or other bureau-de-change. They allow customers to buy or sell crypto assets at a price set by the broker (usually market price plus a small premium). Coinbase is an example of this kind of exchange.
  3. Direct Trading Platform: These platforms offer direct peer-to-peer trading between buyers and sellers, but don’t use an exchange platform in doing so. These types of exchanges do not use a set market rate; rather, sellers set their own rates. This is a highly risky form of trading, from which new users should shy away.
To understand how an exchange functions we need only look as far as a traditional stock exchange. Most all the features of a cryptocurrency exchange are analogous to features of trading on a traditional stock exchange. In the simplest terms, the exchanges fulfil their role as the main marketplace for crypto assets of all kinds by catering to buyers or sellers. These are some definitions for the basic functions and features to know: Market Orders: Orders that are executed instantly at the current market price. Limit Order: This is an order that will only be executed if and when the price has risen to or dropped to that price specified by the trader and is also within the specified period of time. Transaction fees: Exchanges will charge transactions fees, usually levied on both the buyer and the seller, but sometimes only the seller is charged a fee. Fees vary on different exchanges though the norm is usually below 0.75%. Transfer charges: The exchange is in effect acting as a sort of escrow agent, to ensure there is no foul play, so it might also charge a small fee when you want to withdraw cryptocurrency to your own wallet.
Regulatory Environment and Evolution
Cryptocurrency has come a long way since the closing down of the Silk Road darknet market. The idea of crypto currency being primarily for criminals, has largely been seen as totally inaccurate and outdated. In this section we focus on the developing regulations surrounding the cryptocurrency asset class by region, and we also look at what the future may hold.
The United States of America
A coherent uniform approach at Federal or State level has yet to be implemented in the United States. The Financial Crimes Enforcement Network published guidelines as early as 2013 suggesting that BTC and other cryptos may fall under the label of “money transmitters” and thus would be required to take part in the same Anti-money Laundering (AML) and Know your Client (KYC) procedures as other money service businesses. At the state level, Texas applies its existing finance laws. And New York has instituted an entirely new licensing system.
The European Union
The EU’s approach to cryptocurrency has generally been far more accommodating overall than the United States, partly due to the adaptable nature of pre-existing laws governing electronic money that predated the creation of Bitcoin. As with the USA, the EU’s main fear is money laundering and criminality. The European Central Bank (ECB) categorized BTC as a “convertible decentralized currency” and advised all central banks in the EU to refrain from trading any cryptocurrencies until the proper regulatory framework was put in place. A task force was then set up by the European Parliament in order to prevent and investigate any potential money laundering that was making use of the new technology.
Likely future regulations for cryptocurrency traders within the European Union and North America will probably consist of the following proposals: The initiation of full KYC procedures so that users cannot remain fully anonymous, in order to prevent tax evasion and curtail money laundering. Caps on payments that can be made in cryptocurrency, similar to caps on traditional cash transactions. A set of rules governing tax obligations regarding cryptocurrencies Regulation by the ECB of any companies that offer exchanges between cryptocurrencies and fiat currencies It is less likely for other countries to follow the Chinese approach and completely ban certain aspects of cryptocurrency trading. It is widely considered more progressive and wiser to allow the technology to grow within a balanced accommodative regulatory framework that takes all interests and factors into consideration. It is probable that the most severe form of regulation will be the formation of new governmental bodies specifically to form laws and exercise regulatory control over the cryptocurrency space. But perhaps that is easier said than done. It may, in certain cases, be incredibly difficult to implement particular regulations due to the anonymous and decentralized nature of crypto.
Behavior of Cryptocurrency Investors by Demographic
Due to the fact that cryptocurrency has its roots firmly planted in the cryptography community, the vast majority of early adopters are representative of that group. In this section we cover the basic structure of the cryptocurrency market cycle and the makeup of the community at large, as well as the reasons behind different trading decisions.
The Cryptocurrency Market Cycle
Bitcoin leads the bull rally. FOMO (Fear of missing out) occurs, the price surge is a constant topic of mainstream news, business programs cover the story, and social media is abuzz with cryptocurrency chatter. Bitcoin reaches new All Timehigh (ATH) Market euphoria is fueled with even more hype and the cycle is in full force. There is a constant stream of news articles and commentary on the meteoric, seemingly unstoppable rise of Bitcoin. Bitcoin’s price “stabilizes”, In the 2017 bull run this was at or around $14,000. A number of solid, large market cap altcoins rise along with Bitcoin; ETH & LTC leading the altcoins at this time. FOMO comes into play, as the new ATH in market cap is reached by pumping of a huge number of alt coins.
Top altcoins “somewhat” stabilize, after reaching new all-time highs. The frenzy continues with crypto success stories, notable figures and famous people in the news. A majority of lesser known cryptocurrencies follow along on the upward momentum. Newcomers are drawn deeper into crypto and sign up for exchanges other than the main entry points like Coinbase and Kraken. In 2017 this saw Binance inundated with new registrations. Some of the cheapest coins are subject to massive pumping, such as Tron TRX which saw a rise in market cap from $150 million at the start of December 2017 to a peak of $16 billion! At this stage, even dead coins or known scams will get pumped. The price of the majority of cryptocurrencies stabilize, and some begin to retract. When the hype is subsiding after a huge crypto bull run, it is a massive sell signal. Traditional investors will begin to give interviews about how people need to be careful putting money into such a highly volatile asset class. Massive violent correction begins and the market starts to collapse. BTC begins to fall consistently on a daily basis, wiping out the insane gains of many medium to small cap cryptos with it. Panic selling sweeps through the market. Depression sets in, both in the markets, and in the minds of individual investors who failed to take profits, or heed the signs of imminent collapse. The price stagnation can last for months, or even years.
The Influence of Age upon Trading
Did you know? Cryptocurrencies have been called “stocks for millennials” According to a survey conducted by the Global Blockchain Business Council, only 5% of the American public own any bitcoin, but of those that do, an overwhelming majority of 71% are men, 58% of them are between the ages of 18 and 35, and over half of them are minorities. The same survey gauged public attitude toward the high risk/high return nature of cryptocurrency, in comparison to more secure guaranteed small percentage gains offered by government bonds or stocks, and found that 30% would rather invest $1,000 in crypto. Over 42% of millennials were aware of cryptocurrencies as opposed to only 15% of those ages 65 and over. In George M. Korniotis and Alok Kumar’s study into the effects of aging on portfolio management and the quality of decisions made by older investors, they found “that older and experienced investors are more likely to follow “rules of thumb” that reflect greater investment knowledge. However, older investors are less effective in applying their investment knowledge and exhibit worse investment skill, especially if they are less educated and earn lower income.”
Geographic Influence upon Trading
One of the main drivers of the apparent seasonal ebb and flow of cryptocurrency prices is the tax situation in the various territories that have the highest concentrations of cryptocurrency holders. Every year we see an overall market pull back beginning in mid to late January, with a recovery beginning usually after April. This is because “Tax Season” is roughly the same across Europe and the United States, with the deadline for Income tax returns being April 15th in the United States, and the tax year officially ending the UK on the 6th of April. All capital gains must be declared before the window closes or an American trader will face the powerful and long arm of the IRS with the consequent legal proceedings and possible jail time. Capital gains taxes around the world vary from jurisdiction to jurisdiction but there are often incentives for cryptocurrency holders to refrain from trading for over a year to qualify their profits as long term gain when they finally sell. In the US and Australia, for example, capital gains are reduced if you bought cryptocurrency for investment purposes and held it for over a year. In Germany if crypto assets are held for over a year then the gains derived from their sale are not taxed. Advantages like this apply to individual tax returns, on a case by case basis, and it is up to the investor to keep up to date with the tax codes of the territory in which they reside.
2013 Bull run vs 2017 Bull run price Analysis
In late 2016 cryptocurrency traders were faced with the task of distinguishing between the beginnings of a genuine bull run and what might colorfully be called a “dead cat bounce” (in traditional market terminology). Stagnation had gripped the market since the pull-back of early 2014. The meteoric rise of Bitcoin’s price in 2013 peaked with a price of $1,100 in November 2013, after a year of fantastic news on the adoption front with both Microsoft and PayPal offering BTC payment options. It is easy to look at a line going up on a chart and speak after the fact, but at the time, it is exceeding difficult to say whether the cat is actually climbing up the wall, or just bouncing off the ground. Here, we will discuss the factors that gave savvy investors clues as to why the 2017 bull run was going to outstrip the 2013 rally. Hopefully this will help give insight into how to differentiate between the signs of a small price increase and the start of a full scale bull run. Most importantly, Volume was far higher in 2017. As we can see in the graphic below, the 2017 volume far exceeds the volume of BTC trading during the 2013 price increase. The stranglehold MtGox held on trading made a huge bull run very difficult and unlikely.
Fraud & Immoral Activity in the Private Market
Ponzi Schemes Cryptocurrency Ponzi schemes will be covered in greater detail in Lesson 7, but we need to get a quick overview of the main features of Ponzi schemes and how to spot them at this point in our discussion. Here are some key indicators of a Ponzi scheme, both in cryptocurrencies and traditional investments: A guaranteed promise of high returns with little risk. Consistentflow of returns regardless of market conditions. Investments that have not been registered with the Securities and Exchange Commission (SEC). Investment strategies that are a secret, or described as too complex. Clients not allowed to view official paperwork for their investment. Clients have difficulties trying to get their money back. The initial members of the scheme, most likely unbeknownst to the later investors, are paid their “dividends” or “profits” with new investor cash. The most famous modern-day example of a Ponzi scheme in the traditional world, is Bernie Madoff’s $100 billion fraudulent enterprise, officially titled Bernard L. Madoff Investment Securities LLC. And in the crypto world, BitConnect is the most infamous case of an entirely fraudulent project which boasted a market cap of $2 billion at its peak.
What are the Exchange Hacks?
The history of cryptocurrency is littered with examples of hacked exchanges, some of them so severe that the operation had to be wound up forever. As we have already discussed, incredibly tech savvy and intelligent computer hackers led by Alexander Vinnik stole 850000 BTC from the MtGox exchange over a period from 2012–2014 resulting in the collapse of the exchange and a near-crippling hammer blow to the emerging asset class that is still being felt to this day. The BitGrail exchange suffered a similar style of attack in late 2017 and early 2018, in which Nano (XRB) was stolen that was at one point was worth almost $195 million. Even Bitfinex, one of the most famous and prestigious exchanges, has suffered a hack in 2016 where $72 million worth of BTC was stolen directly from customer accounts.
Hardware Wallet Scam Case Study
In late 2017, an unfortunate character on Reddit, going by the name of “moody rocket” relayed his story of an intricate scam in which his newly acquired hardware wallet was compromised, and his $34,000 life savings were stolen. He bought a second hand Nano ledger into which the scammers own recover seed had already been inserted. He began using the ledger without knowing that the default seed being used was not a randomly assigned seed. After a few weeks the scammer struck, and withdrew all the poor HODLer’s XRP, Dash and Litecoin into their own wallet (likely through a few intermediary wallets to lessen the very slim chances of being identified).
Hardware Wallet Scam Case Study Social Media Fraud
Many gullible and hapless twitter users have fallen victim to the recent phenomenon of scammers using a combination of convincing fake celebrity twitter profiles and numerous amounts of bots to swindle them of ETH or BTC. The scammers would set up a profile with a near identical handle to a famous figure in the tech sphere, such as Vitalik Buterin or Elon Musk. And then in the tweet, immediately following a genuine message, follow up with a variation of “Bonus give away for the next 100 lucky people, send me 0.1 ETH and I will send you 1 ETH back”, followed by the scammers ether wallet address. The next 20 or so responses will be so-called sockpuppet bots, thanking the fake account for their generosity. Thus, the pot is baited and the scammers can expect to receive potentially hundreds of donations of 0.1 Ether into their wallet. Many twitter users with a large follower base such as Vitalik Buterin have taken to adding “Not giving away ETH” to their username to save careless users from being scammed.
Market Manipulation
It also must be recognized that market manipulation is taking place in cryptocurrency. For those with the financial means i.e. whales, there are many ways in which to control the market in a totally immoral and underhanded way for your own profit. It is especially easy to manipulate cryptos that have a very low trading volume. The manipulator places large buy orders or sell walls to discourage price action in one way or the other. Insider trading is also a significant problem in cryptocurrency, as we saw with the example of blatant insider trading when Bitcoin Cash was listed on Coinbase.
Examples of ICO Fraudulent Company Behavior
In the past 2 years an astronomical amount of money has been lost in fraudulent Initial Coin Offerings. The utmost care and attention must be employed before you invest. We will cover this area in greater detail with a whole lesson devoted to the topic. However, at this point, it is useful to look at the main instances of ICO fraud. Among recent instances of fraudulent ICOs resulting in exit scams, 2 of the most infamous are the Benebit and PlexCoin ICOs which raised $4 million for the former and $15 million for the latter. Perhaps the most brazen and damaging ICO scam of all time was the Vietnamese Pincoin ICO operation, where $660million was raised from 32,000 investors before the scammer disappeared with the funds. In case of smaller ICO “exit scamming” there is usually zero chance of the scammers being found. Investors must just take the hit. We will cover these as well as others in Lesson 7 “Scam Projects”.
Signposts of Fraudulent Actors
The following factors are considered red flags when investigating a certain project or ICO, and all of them should be considered when deciding whether or not you want to invest. Whitepaper is a buzzword Salad: If the whitepaper is nothing more than a collection of buzzwords with little clarity of purpose and not much discussion of the tech involved, it is overwhelmingly likely you are reading a scam whitepaper.
Signposts of Fraudulent Actors §2
No Code Repository: With the vast majority of cryptocurrency projects employing open source code, your due diligence investigation should start at GitHub or Sourceforge. If the project has no entries, or nothing but cloned code, you should avoid it at all costs. Anonymous Team: If the team members are hard to find, or if you see they are exaggerating or lying about their experience, you should steer clear. And do not forget, in addition to taking proper precautions when investing in ICOs, you must always make sure that you are visiting authentic web pages, especially for web wallets. If, for example, you are on a spoof MyEtherWallet web page you could divulge your private key without realizing it and have your entire portfolio of Ether and ERC-20 tokens cleaned out.
Methods to Avoid falling Victim
Avoiding scammers and the traps they set for you is all about asking yourself the right questions, starting with: Is there a need for a Blockchain solution for the particular problem that a particular ICO is attempting to solve? The existing solution may be less costly, less time consuming, and more effective than the proposals of a team attempting to fill up their soft cap in an ICO. The following quote from Mihai Ivascu, the CEO of Modex, should be kept in mind every time you are grading an ICO’s chances of success: “I’m pretty sure that 95% of ICOswill not last, and many will go bankrupt. ….. not everything needs to be decentralized and put on an open source ledger.”
Methods to Avoid falling Victim §2 Do I Trust These People with My Money, or Not?
If you continue to feel uneasy about investing in the project, more due diligence is needed. The developers must be qualified and competent enough to complete the objectives that they have set out in the whitepaper.
Is this too good to be true?
All victims of the well-known social media scams using fake profiles of Vitalik Buterin, or Bitconnect investors for that matter, should have asked themselves this simple question, and their investment would have been saved. In the case of Bitconnect, huge guaranteed gains proportional to the amount of people you can get to sign up was a blatant pyramid scheme, obviously too good to be true. The same goes for Fake Vitalik’s offer of 1 ether in exchange for 0.1 ETH.
Selling Cryptocurrencies, Several reasons for selling with the appropriate actions to take:
If you are selling to buy into an ICO, or maybe believe Ether is a safer currency to hold for a certain period of time, it is likely you will want to make use of the Ether pair and receive Ether in return. Obviously if the ICO is on the NEO or WANchain blockchain for example, you will use the appropriate pair. -Trading to buy into another promising project that is listing on the exchange on which you are selling (or you think the exchange will experience a large amount of volume and become a larger exchange), you may want to trade your cryptocurrency for that exchange token. -If you believe that BTC stands a good chance of experiencing a bull run then using the BTC trading pair is the suitable choice. -If you believe that the market is about to experience a correction but you do not want to take your gains out of the market yet, selling for Tether or “tethering up” is the best play. This allows you to keep your locked-in profits on the exchange, unaffected by the price movements in the cryptocurrency markets,so that you can buy back in at the most profitable moment. -If you wish to “cash out” i.e. sell your cryptocurrency for fiat currency and have those funds in your bank account, the best pair to use is ETH or BTC because you will likely have to transfer to an exchange like Kraken or Coinbase to convert them into fiat. If the exchange offers Litecoin or Bitcoin Cash pairs it could be a good idea to use these for their fast transaction time and low fees.
Selling Cryptocurrencies
Knowing when and how to sell, as well as strategies to inflate the value of your trade before sale, are important skills as a trader of any product or financial instrument. If you are satisfied that the sale itself of the particular amount of a token or coin you are trading away is the right one, then you must decide at what price you are going to sell. Exchanges exercise their own discretion as to which trading “pairs” they will offer, but the most common ones are BTC, ETH, BNB for Binance, BIX for Bibox etc., and sometimes Tether (USDT) or NEO. As a trader, you decide which particular cryptocurrency to exchange depending on your reason for making that specific trade at that time.
Methods of Sale
Market sell/Limit sell on exchange: A limit sell is an order placed on an exchange to sell as soon as (also specifically only if and when) the price you specified has been hit within the time limit you select. A market order executes the sale immediately at the best possible price offered by the market at that exact time. OTC (or Over the Counter) selling refers to sale of securities or cryptocurrencies in any method without using an exchange to intermediate the trade and set the price. The most common way of conducting sales in this manner is through This method of cryptocurrency selling is far riskier than using an exchange, for obvious reasons.
The influence and value of your Trade
There are a number of strategies you can use to appreciate the value of your trade and thus increase the Bitcoin or Ether value of your portfolio. It is important to disassociate yourself from the dollar value of your portfolio early on in your cryptocurrency trading career simply because the crypto market is so volatile you will end up pulling your hair out in frustration following the real dollar money value of your holdings. Once your funds have been converted into BTC and ETH they are completely in the crypto sphere. (Some crypto investors find it more appropriate to monitor the value of their portfolio in satoshi or gwei.) Certainly not limited to, but especially good for beginners, the most reliable way to increase your trading profits, and thus the overall value and health of your portfolio, is to buy into promising projects, hold them for 6 months to a year, and then reevaluate. This is called Long term holding and is the tactic that served Bitcoin HODLers quite well, from 2013 to the present day. Obviously, if something comes to light about the project that indicates a lengthy set back is likely, it is often better to cut your losses and sell. You are better off starting over and researching other projects. Also, you should set initial Price Points at which you first take out your original investment, and then later, at which you take out all your profits and exit the project. That should be after you believe the potential for growth has been exhausted for that particular project.
Another method of increasing the value of your trades is ICO flipping. This is the exact opposite of long term holding. This is a technique in which you aim for fast profits taking advantage of initial enthusiasm in the market that may double or triple the value of ICO projects when they first come to market. This method requires some experience using smaller exchanges like IDEX, on which project tokens can be bought and sold before listing on mainstream exchanges. “Tethering up” means to exchange tokens or coins for the USDT stable coin, the value of which is tethered to the US Dollar. If you learn, or know how to use, technical analysis, it is possible to predict when a market retreatment is likely by looking at the price movements of BTC. If you decide a market pull back is likely, you can tether up and maintain the dollar value of your portfolio in tether while other tokens and coins decrease in value. The you wait for an opportune moment to reenter the market.
Market Behavior in Different Time Periods
The main descriptors used for overall market sentiment are “Bull Market” and “Bear Market”. The former describes a market where people are buying on optimism. The latter describes a market where people are selling on pessimism. Fun (or maybe not) fact: The California grizzly bear was brought to extinction by the love of bear baiting as a sport in the mid 1800s. Bears were highly sought after for their intrinsic fighting qualities, and were forced into fighting bulls as Sunday morning entertainment for Californians. What has this got to do with trading and financial markets? The downward swipe of the bear’s paws gives a “Bear market” its name and the upward thrust of a Bull’s horns give the “Bull Market” its name. Most unfortunately for traders, the bear won over 80% of the bouts. During a Bull market, optimism can sometimes grow to be seemingly boundless, volume is rising, and prices are ascending. It can be a good idea to sell or rebalance your portfolio at such a time, especially if you have a particularly large position in one holding or another. This is especially applicable if you need to sell a large amount of a relatively low-volume holding, because you can then do so without dragging the price down by the large size of your own sell order.
Learn more on common behavioral patterns observed so far in the cryptocurrency space for different coins and ICO tokens.
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submitted by UBAI_UNIVERSITY to u/UBAI_UNIVERSITY [link] [comments]

New people please read this. [upvote for visibility please]

I am seeing too many new people come and and getting confused. Litecoin wiki isn't the greatest when it comes to summing up things so I will try to do things as best as I can. I will attempt to explain from what I have learned and answer some questions. Hopefully people smarter than me will also chime in. I will keep this post updated as much as I can.
Litecoin is a type to electronic currency. It is just like Bitcoin but it there are differences. Difference explained here.
If you are starting to mine now chances are that you have missed the Bitcoin mining train. If you really want your time and processing power to not go to waste you should mine LTC because the access to BTC from there is much easier.
Mining. What is it?
Let's get this straight. When making any financial commitment to this be prepared to do it with "throw away" money. Mining is all about the hashrate and is measured in KH/s (KiloHash/sec). Unlike the powerful ASICs (Application Specific Integrated Circuit) that are used to mine bitcoins using hashrates in the GH/s and even TH/s, litecoin mining has only been able to achieve at the very best MH/s. I think the highest I've seen is 130 MH/s so far. Which leads us to our next section.
Mining Hardware
While CPU mining is still a thing it is not as powerful as GPU mining. Your laptop might be able to get 1 a month. However, I encourage you to consult this list first. List of hardware comparison You will find the highest of processors can maybe pull 100 KH/s and if we put this into a litecoin mining calculator it doesn't give us much.
Another reason why you don't want to mine with your CPU is pretty simple. You are going to destroy it.
So this leaves us with GPUs. Over the past few months (and years) the HD 7950 has been the favourite because it drains less power and has a pretty good hashrate. But recently the introduction of the R9 290 (not the x) has changed the game a bit. People are getting 850 KH/s - 900 KH/s with that card. It's crazy.
Should I mine?
Honestly given the current difficulty you can make a solid rig for about $1100 with a hashrate of 1700 KH/s which would give you your investment back in about a month and a half. I am sure people out there can create something for much cheaper. Here is a good example of a setup as suggested by dystopiats
PCPartPicker part list / Price breakdown by merchant / Benchmarks
Type Item Price
CPU AMD Sempron 145 2.8GHz Single-Core Processor $36.01 @ Amazon
Motherboard ASRock 970 EXTREME4 ATX AM3+ Motherboard $99.48 @ OutletPC
Memory Crucial Ballistix Tactical Tracer 4GB (1 x 4GB) DDR3-1866 Memory $59.99 @ Newegg
Video Card Sapphire Radeon HD 7950 3GB Video Card (3-Way CrossFire) $245.38 @ Newegg
Video Card Sapphire Radeon HD 7950 3GB Video Card (3-Way CrossFire) $245.38 @ Newegg
Video Card Sapphire Radeon HD 7950 3GB Video Card (3-Way CrossFire) $245.38 @ Newegg
Power Supply SeaSonic Platinum 860W 80+ Platinum Certified Fully-Modular ATX Power Supply $146.98 @ SuperBiiz
Prices include shipping, taxes, and discounts when available. $1078.60
Generated by PCPartPicker 2013-11-29 00:52 EST-0500
Estimated Hashrate (with GPU overclocking) : 1900 KH/s
Hardware Fundamentals
CPU - Do you need a powerful CPU? No but make sure it is a decent one. AMD CPUs are cheap to buy right now with tons of power. Feel free to use a Sempron or Celeron depending on what Motherboard you go with.
RAM - Try to get at least 4 GB so as to not run into any trouble. Memory is cheap these days. I am saying 4 GB only because of Windoze. If you are plan to run this on Linux you can even get away with less memory.
HDD Any good ol 7200 RPM hard drive will do. Make sure it is appropriate. No point in buying a 1TB hard drive. Since, this is a newbie's guide I assumed most won't know how to run linux, but incase you do you can get a USB flash drive and run linux from it thus removing the need for hard drive all toghether. (thanks dystopiats)
GPU - Consult the list of hardware of hardware I posted above. Make sure you consider the KH/s/W ratio. To me the 290 is the best option but you can skimp down to 7950 if you like.
PSU - THIS IS BLOODY IMPORTANT. Most modern GPUs are power hungry so please make sure you are well within the limits of your power consumption.
MOTHERBOARD - Ok, so a pretty popular board right now is Gigabyte GA-990FXA-UD3 and the ASRock 970 Extreme4. Some people are even going for Gigabyte GA-990FXA-UD5 and even the mighty Gigabyte GA-990FXA-UD7 because it has more PCI-E slots. 6 to be exact. However you may not need that much. With risers you can get more shoved into less.
PCI-E RISERS - These are called risers. They come in x16 to x16 and x1 to x16 connections. Here is the general rule of thumb. This is very important. Always get a POWERED riser otherwise you will burn a hole in your MoBo. A powered rise as a molex connector so that additional power from PSU can be supplied.
When it comes to hardware I've provided the most basic knowledge you need. Also, take a look at cryptobader's website. This is very helpful. Please visit the mining section of Litecoin Forums and the litecoinmining subreddit for more indepth info.
Mining Software
Now that you have assembled your hardware now you need to get into a pool. But before you do that you need a mining software. There are many different ones but the one that is most popular is cgminer. Download it and make sure you read the README. It is a very robust piece of software. Please read this if you want to know more. (thanks BalzOnYer4Head)
Mining Pools
Now that your hardware and software is ready. I know nothing about solo mining other than the fact that you have to be very lucky and respectable amount of hashing power to decrypt a block. So it is better to join pools. I have been pool hopping for a bit and really liked give-me-coin previously known to the community as give-me-ltc. They have a nice mobile app and 0% pool fees. This is really a personal preference. Take a look at this list and try some yourself.
How do I connect to a pool?
Most pools will give you a tutorial on how to but the basics are as follows:
  • Signup for a pool
  • Create a worker for your account. Usually one worker per rig (Yes people have multiple rigs) is generally a good idea.
  • Create a .run file. Open up notepad and type cgminer.exe -o (address_to_the_miningpool:port_number) -u (yourusername.workername) -p (your_worker_password_if_you_made_one). Then File>Save As> (Make sure the drop down is set to "All Files" and .txt document.) and save in the same folder as cgminer. That's it.
  • Double click on (or whatever you named it) and have fun mining.
Mining Profitability
This game is not easy. If it was, practically everyone would be doing it. This is strictly a numbers game and there are calculations available that can help you determine your risk on your investments. 4 variables you need to consider when you are starting to mine:
Hardware cost: The cost of your physical hardware to run this whole operation.
Power: Measured in $/KwH is also known as the operating cost.
Difficulty rate: To put it in layman's terms the increase in difficulty is inversely proportional to amount of coin you can mine. The harder the difficulty the harder it is to mine coin. Right now difficulty is rising at about 18% per 3 days. This can and will change since all you miners are soon going to jump on the band wagon.
Your sanity: I am not going to tell you to keep calm and chive on because quiet frankly that is stupid. What I will tell you not to get too carried away. You will pull you hair out. Seriously.
Next thing you will need is a simple tool. A mining profitability calculator. I have two favourite ones.
I like this one cause it is simple. The fields are self explanatory. Try it.
I like this one because it is a more real life scenario calculator and more complicated one (not really). It also takes increasing difficulty into account.
Please note: This is the absolute basic info you need. If you have more questions feel free to ask and or google it!
More Below.
submitted by craeyon to litecoin [link] [comments]

Block Collider: Fusing existing chains into a Multi-Chain, a dramatic evolution in Blockchain Interoperability

A New Approach to Blockchain Interoperability (True Decentralisation)
Recommended Reading to assist in better informing this post:
A close look at the Blockchain space reveals a series of blockchain projects that operate largely in distinct silos. The reality is that blockchain technology is yet to realise widespread real-world adoption, however as we accelerate towards maturity a key infrastructure level requirement will be the ability for information to be transmitted in real time from blockchain to blockchain and even off-blockchain to old world systems. Anecdotally we need to look only as far as the internet to conceive the value that interconnectivity can generate.
“Bridging chains with a multichain is like building roads between buildings. Hypothetically, one could build a building that has everything, but in practice some buildings are built to work in, some are built to live in — as long as citizens want to be in multiple buildings at different points in time, roads are valuable. The crypto community as it exists demonstrates a wide variety of features across blockchains — some chains have quick block times, some chains have expressive smart contracts, some are purely deflationary and an excellent store of value. As long as users need features from more than one blockchain, bridging those chains with a multichain is needed.” – Block Collider Whitepaper (Source)
There are some well known projects that are trying to tackle interconnectivity between disparate chains. Of those known projects, only a few are focused on Interoperability as their core focus – some examples are Polkadot, Cosmos and Ark. A new project which as yet has remained under the radar (by design) has come out with a radically different solution to the issue of interconnectivity between chains: Block Collider.
“A mineable multi-chain protocol for stable coins, decentralized exchanges, and meta contracts.” – Block Collider
Let’s take a quick look at a few of the key interoperability projects within the space:
Comparison Table
For more detailed Table of comparison click here
The Multi-Chain: The Advent of Multi-chain Distributed Applications and Meta Contracts
Block Collider is the first true “multi-chain”, which at genesis will connect 6 chains – Bitcoin, Ethereum, Neo, Waves, Lisk and another chain that is yet to be named. Block Collider’s core ledger is the aggregate of all blocks on all member chains, giving rise to the term “multi-chain”. Block Collider’s blockchain is built by “weaving” together disparate chains using PoD* (Proof of Distance – a modified version of Nakamoto consensus), consuming blocks from each chain into a Block Collider block, recording in effect the state of each member chain.
The multi-chain not only facilitates value transfer between chains but more importantly allows these previously “siloed” projects to know the “state” of each other’s chains. Why is knowing the state of other chains so important? True interoperability is much more than just value transfer, it is the ability for different blockchains to work in parallel. This innovation opens the gates to something truly remarkable – multi-chain distributed applications and meta contracts (multi-chain smart contracts).
Example Diagram
The above diagram illustrates a simple example of a distributed multi-chain DAPP handling trust funds. This kind of application only scratches the surface of the true potential Block Collider brings to the blockchain ecosystem. The multi-chain functionality is not merely transferring data but proving data relative to another chain.
“…distributed application developers can modularly combine exotic features from blockchains across the ecosystem …. distributed application developers can build in the capability to load-balance work between chains” – Block Collider Whitepaper (Source)
As an aside there is an additional security benefit that results from Block Collider being a multi-chain, an aggregate of member chains. A miner attempting to use bad blocks would not only have to reverse the entire chain on Block Collider but also break the hash power of difficulty of the member chain.
*PoD – Proof Of Distance consensus mechanism is beyond the scope of this article. Please refer to Block Collider Whitepaper – Section 3.2 The Edit Distance Computational Challenge (pp 13) or Building a Blockchain Singularity with Proof of Distance by Patrick McConlogue (Co-founder of Block Collider).
True Decentralisation
“The Block Collider multichain is collaboratively created exclusively by decentralized peer-to-peer miners — with no centralized points of failure, oracles, or validators.” – Block Collider Whitepaper (Source)
One of the core tenets of Block Collider is to provide a platform that is very much in line with Blockchain’s vision of true decentralisation. Block Collider prides itself on the absence of validators in its consensus mechanism and its resistance to centralising elements.
Validators vs no validators
What is a validator? A validator in a blockchain is a “human element” or third party to whom the network cedes some degree of trust. A validator is incentivised by a network to confirm that an event/transaction has occurred on the network. This approach has been/will be adopted by many chains including interoperability chains like Cosmos, Polkadot and Ark who utilise Delegated-Proof-of-Stake (DPoS) or similar consensus models, where there are a set number of validators.
Block Collider does not require validators, it builds it’s blockchain with a mining algorithm (PoD), requiring proof of work to validate events on the blockchain. It in effect removes the requirement to place trust in a fallible party.
Centralisation of Power
A concern in any decentralised network is that power may accrue to a few. We see some commentators point to this occurrence in the Bitcoin network, where there is a centralisation of power around a few mining pools. Power in this context is the governance of the chain and the rewards for block validation. In this situation existing economic power is entrenched and can conceivably lead to the ongoing centralisation of consensus, governance and wealth. However, it is also worth noting one of the advantages that the Bitcoin platform has in comparison to its counterparts who have pursued PoS or DPoS is that it does not require the network to cede any additional trust to validators.
PoS or DPoS and their varying iterations aim to solve for some of the bottlenecks in current blockchain technology, however, these consensus mechanisms still contain elements that can give rise to centralisation. PoS requires that a node stake a sufficiently high bond in order to achieve the status of “validator” and thus PoS is still heavily weighted to those with economic power. DPoS has the added functionality of “democracy” by allowing delegates to vote for a trusted “validator”. Ideally the scenario is one of a democratic approach, however such a system may still lend itself towards centralisation as voting is typically weighted by share of network. Without going into an exhaustive discussion about various consensus methodologies, their strengths and shortcomings, we can nevertheless see that the use of validators presents some departure from trustless consensus without necessarily resolving the centralising effects of economic power.
Block Collider is a mineable chain like bitcoin and faces the same issue of centralisation of power from mining pools but has implemented certain conditions to alleviate the pressure towards centralisation. These include:
1) Splitting the mining of blocks and transactions (Refer Whitepaper Section 3 – Mining on the collider for technical details)
“… by allowing for competition in two spaces, there is reduced risk of centralization, since an actor would have to win the centralization game at both levels.” – Block Collider Whitepaper – Section 3.4
Transaction mining is open to anyone and does not require ASIC hardware to mine. This allows anyone on the network to have an economic incentive to participate in the network whilst achieving greater throughput and greater load distribution, reducing the strain on the network.
2) Emblems – Block Size Bonus (Refer Whitepaper Section 3 – Mining on the collider for technical details)
BC has a unique proposition to implement dynamic block sizes through the use of Emblems. In effect miners can “stake” Emblems which will allow them to expand the size of the block, thereby fitting more transactions into a single block for greater rewards. How does this alleviate pressure towards centralisation? We look to the Co-Founder Patrick McConlogue for answers:
“Block Collider implements game theory to the benefits of mining incentives beyond block/fee rewards. The Emblem bonuses for mining is sublinear (that is, there are diminishing returns for emblem ownership) which balances the economic incentive against centralisation (as the marginal utility of Emblems will be highest for those with fewer emblems).” – Patrick McConlogue
As an example, noting that all metrics are hypothetical, Sue has 10 Emblems and Mike has 100 Emblems. If the optimal number of Emblems required to achieve a desired block size was around 20 Emblems, staking beyond the 20 emblems does not significantly increase the block size. In effect, any additionally staked emblems has a diminishing value in comparison to the optimally staked 20 Emblems. So, in this example Sue’s block size could be “Standard block size + 5” and the optimal block size is “Standard block size + 7”. As staking has a diminishing bonus, Mike staking 100 Emblems would result in “Standard block size + 8”. This is to say those without large economic power can still compete on a near equal footing. In this way Block Collider aims to mitigate the pull of economic power towards centralisation.
What if Mike splits his 100 Emblems to utilise the optimal number of emblems to stake, to run multiple mining rigs concurrently? In this case 20 Emblems to 5 mining operations.
“A miner could absolutely split the Emblem rewards among mining rigs but in order to maximize the rewards from this he/she would have to be connected to the least number of identical peers that the original rig is connected to. In this way they must expand to other regions. This leads to less centralization regionally and increases the overall efficiency + speed of the network.” – Patrick McConlogue
In addition, Mike replicating 4 more instances of the original mining operation would require significant resources.
Interoperability Technology
Member Chain Conditions
One of the greatest breakthroughs that Block Collider has achieved is that it has a very low threshold to incorporate foreign blockchains into its multi-chain. In laymans terms there is no need for modification of member chains to participate in the network.
This is a significant development in the blockchain ecosystem as current and planned future interoperability solutions require some form of compatibility or change to the participating chains. To achieve compatibility Cosmos and Polkadot primarily require chains to be built on top of their infrastructure. Ark on the other hand requires direct changes to existing chains in the form of embedded code.
However, it should be noted though that Cosmos Polkadot, and Ark have alternate solutions to compatibility for existing chains who choose not to be modified. This can be achieved through intermediate zones, peg-zones, bridgechains, smart bridges and encoded listeners. If we are to borrow from the Polkadot whitepaper certain chains (Ethereum) are clearly easier to adapt into intermediate zones but others not so much (Bitcoin):
1) Ethereum – “Due to Ethereum’s Turing completeness, we expect there is ample opportunity for Polkadot and Ethereum to be interoperable with each other, at least within some easily deducible security bounds.” – (Polkadot Whitepaper – Source)
2) Bitcoin –* “…. As such we believe it not unrealistic to place a reasonably secure Bitcoin interoperability “virtual parachain” between the two networks, though nonetheless a substantial effort with an uncertain timeline and quite possibly requiring the cooperation of the stakeholders within that network.”* – (Polkadot Whitepaper – Source)
The breakthrough by Block Collider should not be understated, the multi-chain by providing a low threshold for member chains to interoperate without the need for validators provides crucial infrastructure for a trustless internet of blockchains.
Scalability and Shared Security for Member Chains
Through comparison of Cosmos and Polkadot, the question may arise does Block Collider provide scalability and shared security for member chains? The simple answer is no.
Block Collider does not provide scalability and shared security primarily because of its conditionless participation for member chains. Block Collider follows the philosophy of Doug McIlroy, the inventor of Unix pipes, “Write programs that do one thing and do it well. Write programs to work together.” In this sense scaling solutions are the responsibility of protocol level chains, interoperability is the responsibility of Block Collider.
Cosmos and Polkadot provide these solutions for member chains that “join” their networks and is a unique and commendable value proposition provided by their platforms. Although it should be noted that for existing chains, using the intermediate zones referenced earlier, does not provide the same scalability and shared security benefits as those built natively on the platforms. This is because the existing chain does not function atop the platform, rather they are bridged to the platform with links (bridgechains or pegzones) built by Polkadot or Cosmos.
Scalability – Size and Transaction Speed
Block Collider as a multi-chain is the aggregate of blocks from its member chains. What does this mean for scalability in terms of size & transaction speed?
Size of the Chain
A valid concern would be that Block Collider which is an aggregate of all blocks on all member chains can be quite space consuming. To combat this Block Collider’s PoD consensus mechanism primarily uses header states and Merkle proofs of other chains to store the chain on the Block Collider network. The headers are less than 1% of the size of the original chains’ block. So, one could imagine without any modifications, Block Collider could merge 100 chains and still only be the size of one Ethereum sized chain.
As Block Collider evolves, we can envision a day when 1000 plus chains are interoperable with Block Collider. So, what then? Block Collider is designed to tackle this growth in two ways, compression as far as possible and then through reverse chain pruning.
“To handle the first part [compression], we start with header states. After which we switch to a signature only model like that proposed in Mimblewimble (once the Block Collider hash rate is strong enough). Finally the pruning which will be the process of creating a second blockchain which mines backwards. In the second blockchain, “the work” is transactions that should be trimmed from the block. In this way it works like defragmenting your hard drive.”* – Patrick McConlogue
*Mimblewimble – an experimental blockchain network
Transaction Speed
Block Collider as the aggregate of blocks from member chains will always be slightly faster than the fastest member chain. This is due to Block Collider having a high block issuance rate that is based on blocks issued on member chains.
Image Example of Block Issuance
In the above example from the whitepaper we see that Bitcoin issues 2 blocks in a set time frame “x”, Ethereum issues 6 blocks and Waves issues 3 Blocks. The first Block Collider block is formed when the 3 chains issue their first block. It should be noted that block times vary across chains and as such member chains will issue blocks at different intervals. At each issuance from a member chain Block Collider will issue its own block containing the new set of blocks from the member chains. In this example 9 Block Collider blocks are issued in the time frame “x”. So the block issuance rate (block velocity) will always be higher than the fastest member chain.
Higher block velocity of course brings up the issue of throughput – the number of transactions per second. Mining has been designed with throughput being the primary mandate. The satisfaction of this mandate was one of the primary motivations for Block Collider splitting block mining and transaction mining into separate processes.
“Unlike other cryptocurrencies, the transactions and the blocks of the Collider blockchain can be mined separately. Transactions being pre-mined makes it easier for a miner to add a transaction to a block it has discovered, which balances the power that miners have in current systems.” – Block Collider
TECH COMPARISON // Multi-chain Protocols (The Internet of Blockchains)
Block Collider has come to the space with a radical solution to the “Internet of Blockchains”, connecting disparate chains whilst maintaining blockchain technology’s vision of being truly decentralised. The mainnet launch will include interoperability between 6 chains, BTC, ETH, NEO, Waves, Lisk and a yet to be named chain.
submitted by Lifeandthecosmos to CryptoCurrency [link] [comments]

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