How to determine if you’ve found a real blockchain use case
Blockchains are overhyped. There, I said it. From Sibos to Money20/20 to cover stories of The Economist and Euromoney, everyone seems to be climbing aboard the blockchain wagon. And no doubt like others in the space, we’re seeing a rapidly increasing number of companies building proofs of concept on our platform and/or asking for our help.
As a young startup, you’d think we’d be over the moon. Surely now is the time to raise a ton of money and build that high performance next generation blockchain platform we’ve already designed. What on earth are we waiting for?
I’ll tell you what. We’re waiting to gain a clearer understanding of where blockchains genuinely add value in enterprise IT. You see, a large proportion of these incoming projects have nothing to do with blockchains at all. Here’s how it plays out. Big company hears that blockchains are the next big thing. Big company finds some people internally who are interested in the subject. Big company gives them a budget and tells them to go do something blockchainy. Soon enough they come knocking on our door, waving dollar bills, asking us to help them think up a use case. Say what now?
As for those who do have a project in mind, what’s the problem? In many cases, the project can be implemented perfectly well using a regular relational database. You know, big iron behemoths like Oracle and SQL Server, or for the more open-minded, MySQL and Postgres. So let me start by setting things straight:
If your requirements are fulfilled by today’s relational databases, you’d be insane to use a blockchain.
Why? Because products like Oracle and MySQL have decades of development behind them. They’ve been deployed on millions of servers running trillions of queries. They contain some of the most thoroughly tested, debugged and optimized code on the planet, processing thousands of transactions per second without breaking a sweat.
And what about blockchains? Well, our product was one of the first to market, and has been available for exactly 5 months, with a few thousand downloads. Actually it’s extremely stable, because we built it off Bitcoin Core, the software which powers bitcoin. But even so, this entire product category is still in its diapers.
So am I saying that blockchains are useless? Absolutely not. But before you embark on that shiny blockchain project, you need to have a very clear idea of why you are using a blockchain. There are a bunch of conditions that need to be fulfilled. And if they’re not, you should go back to the drawing board. Maybe you can define the project better. Or maybe you can save everyone a load of time and money, because you don’t need a blockchain at all.
1. The database
Here’s the first rule. Blockchains are a technology for shared databases. So you need to start by knowing why you are using a database, by which I mean a structured repository of information. This can be a traditional relational database, which contains one or more spreadsheet-like tables. Or it can be the trendier NoSQL variety, which works more like a file system or dictionary. (On a theoretical level, NoSQL databases are just a subset of relational databases anyway.)
A ledger for financial assets can be naturally expressed as a database table in which each row represents one asset type owned by one particular entity. Each row has three columns containing: (a) the owner’s identifier such as an account number, (b) an identifier for the asset type such as “USD” or “AAPL”, and (c) the quantity of that asset held by that owner.
Databases are modified via “transactions” which represent a set of changes to the database which must be accepted or rejected as a whole. For example, in the case of an asset ledger, a payment from one user to another is represented by a transaction that deducts the appropriate quantity from one row, and adds it to another.
2. Multiple writers
This one’s easy. Blockchains are a technology for databases with multiple writers. In other words, there needs to be more than one entity which is generating the transactions that modify the database. Do you know who these writers are?
In most cases the writers will also run “nodes” which hold a copy of the database and relay transactions to other nodes in a peer-to-peer fashion. However transactions might also be created by users who are not running a node themselves. Consider for example a payments system which is collectively maintained by a small group of banks but has millions of end users on mobile devices, communicating only with their own bank’s systems.
3. Absence of trust
And now for the third rule. If multiple entities are writing to the database, there also needs to be some degree of mistrust between those entities. In other words, blockchains are a technology for databases with multiple non-trusting writers.
You might think that mistrust only arises between separate organizations, such as the banks trading in a marketplace or the companies involved in a supply chain. But it can also exist within a single large organization, for example between departments or the operations in different countries.
What do I specifically mean by mistrust? I mean that one user is not willing to let another modify database entries which it “owns”. Similarly, when it comes to reading the database’s contents, one user will not accept as gospel the “truth” as reported by another user, because each has different economic or political incentives.
So the problem, as defined so far, is enabling a database with multiple non-trusting writers. And there’s already a well-known solution to this problem: the trusted intermediary. That is, someone who all the writers trust, even if they don’t fully trust each other. Indeed, the world is filled with databases of this nature, such as the ledger of accounts in a bank. Your bank controls the database and ensures that every transaction is valid and authorized by the customer whose funds it moves. No matter how politely you ask, your bank will never let you modify their database directly.
Blockchains remove the need for trusted intermediaries by enabling databases with multiple non-trusting writers to be modified directly. No central gatekeeper is required to verify transactions and authenticate their source. Instead, the definition of a transaction is extended to include a proof of authorization and a proof of validity. Transactions can therefore be independently verified and processed by every node which maintains a copy of the database.
But the question you need to ask is: Do you want or need this disintermediation? Given your use case, is there anything wrong with having a central party who maintains an authoritative database and acts as the transaction gatekeeper? Good reasons to prefer a blockchain-based database over a trusted intermediary might include lower costs, faster transactions, automatic reconciliation, new regulation or a simple inability to find a suitable intermediary.
5. Transaction interaction
So blockchains make sense for databases that are shared by multiple writers who don’t entirely trust each other, and who modify that database directly. But that’s still not enough. Blockchains truly shine where there is some interaction between the transactions created by these writers.
What do I mean by interaction? In the fullest sense, this means that transactions created by different writers often depend on one other. For example, let’s say Alice sends some funds to Bob and then Bob sends some on to Charlie. In this case, Bob’s transaction is dependent on Alice’s one, and there’s no way to verify Bob’s transaction without checking Alice’s first. Because of this dependency, the transactions naturally belong together in a single shared database.
Taking this further, one nice feature of blockchains is that transactions can be created collaboratively by multiple writers, without either party exposing themselves to risk. This is what allows delivery versus payment settlement to be performed safely over a blockchain, without requiring a trusted intermediary.
A good case can also be made for situations where transactions from different writers are cross-correlated with each other, even if they remain independent. One example might be a shared identity database in which multiple entities validate different aspects of consumers’ identities. Although each such certification stands alone, the blockchain provides a useful way to bring everything together in a unified way.
6. Set the rules
This isn’t really a condition, but rather an inevitable consequence of the previous points. If we have a database modified directly by multiple writers, and those writers don’t fully trust each other, then the database must contain embedded rules restricting the transactions performed.
These rules are fundamentally different from the constraints that appear in traditional databases, because they relate to the legitimacy of transformations rather than the state of the database at a particular point in time. Every transaction is checked against these rules by every node in the network, and those that fail are rejected and not relayed on.
Asset ledgers contain a simple example of this type of rule, to prevent transactions creating assets out of thin air. The rule states that the total quantity of each asset in the ledger must be the same before and after every transaction.
7. Pick your validators
So far we’ve described a distributed database in which transactions can originate in many places, propagate between nodes in a peer-to-peer fashion, and are verified by every node independently. So where does a “blockchain” come in? Well, a blockchain’s job is to be the authoritative final transaction log, on whose contents all nodes provably agree.
Why do we need this log? First, it enables newly added nodes to calculate the database’s contents from scratch, without needing to trust another node. Second, it addresses the possibility that some nodes might miss some transactions, due to system downtime or a communications glitch. Without a transaction log, this would cause one node’s database to diverge from that of the others, undermining the goal of a shared database.
Third, it’s possible for two transactions to be in conflict, so that only one can be accepted. A classic example is a double spend in which the same asset is sent to two different recipients. In a peer-to-peer database with no central authority, nodes might have different opinions regarding which transaction to accept, because there is no objective right answer. By requiring transactions to be “confirmed” in a blockchain, we ensure that all nodes converge on the same decision.
Finally, in Ethereum-style blockchains, the precise ordering of transactions plays a crucial role, because every transaction can affect what happens in every subsequent one. In this case the blockchain acts to define the authoritative chronology, without which transactions cannot be processed at all.
A blockchain is literally a chain of blocks, in which each block contains a set of transactions that are confirmed as a group. But who is responsible for choosing the transactions that go into each block? In the kind of “private blockchain” which is suitable for enterprise applications, the answer is a closed group of validators (“miners”) who digitally sign the blocks they create. This whitelisting is combined with some form of distributed consensus scheme to prevent a minority of validators from seizing control of the chain. For example, MultiChain uses a scheme called mining diversity, in which the permitted miners work in a round-robin fashion, with some degree of leniency to allow for non-functioning nodes.
No matter which consensus scheme is used, the validating nodes have far less power than the owner of a traditional centralized database. Validators cannot fake transactions or modify the database in violation of its rules. In an asset ledger, that means they cannot spend other people’s money, nor change the total quantity of assets represented. Nonetheless there are still two ways in which validators can unduly influence a database’s contents:
- Transaction censorship. If enough of the validators collude maliciously, they can prevent a particular transaction from being confirmed in the blockchain, leaving it permanently in limbo.
- Biased conflict resolution. If two transactions conflict, the validator who creates the next block decides which transaction is confirmed on the blockchain, causing the other to be rejected. The fair choice would be the transaction that was seen first, but validators can choose based on other factors without revealing this.
Because of these problems, when deploying a blockchain-based database, you need to have a clear idea of who your validators are and why you trust them, collectively if not alone. Depending on the use case, the validators might be chosen as: (a) one or more nodes controlled by a single organization, (b) a core group of organizations that maintain the chain, or (c) every node on the network.
8. Back your assets
If you’ve got this far, you may have noticed that I tend to refer to blockchains as shared databases, rather than the more common “shared ledgers”. Why? Because as a technology, blockchains can be applied to problems far beyond the tracking of asset ownership. Any database which has multiple non-trusting writers can be implemented over a blockchain, without requiring a central intermediary. Examples include shared calendars, wiki-style collaboration and discussion forums.
Having said that, for now it seems that blockchains are mainly of interest to those who track the movement and exchange of financial assets. I can think of two reasons for this: (a) the finance sector is responding to the (in retrospect, minuscule) threat of cryptocurrencies like bitcoin, and (b) an asset ledger is the most simple and natural example of a shared database with interdependent transactions created by multiple non-trusting entities.
If you do want to use a blockchain as an asset ledger, you need to answer one additional crucial question: What is the nature of the assets being moved around? By this I don’t just mean cash or bonds or bills of lading, though of course that’s important as well. The question is rather: Who stands behind the assets represented on the blockchain? If the database says that I own 10 units of something, who will allow me to claim those 10 units in the real world? Who do I sue if I can’t convert what’s written in the blockchain into traditional physical assets? (See this asset agreement for an example.)
The answer, of course, will vary by the use case. For monetary assets, one can imagine custodial banks accepting cash in traditional form, and then crediting the accounts of depositors in a blockchain-powered distributed ledger. In trade finance, letters of credit and bills of lading would be backed by the importer’s bank and the shipping company respectively. And further in the future, we can imagine a time when the primary issuance of corporate bonds takes place directly on a blockchain by the company seeking to raise funds.
As I mentioned in the introduction, if your project does not fulfill every single one of these conditions, you should not be using a blockchain. In the absence of any of the first five, you should consider one of: (a) regular file storage, (b) a centralized database, (c) master–slave database replication, or (d) multiple databases to which users can subscribe.
And if you do fulfill the first five, there’s still work to do. You need to be able to express the rules of your application in terms of the transactions which a database allows. You need to be confident about who you can trust as validators and how you’ll define distributed consensus. And finally, if you’re looking at creating a shared ledger, you need to know who will be backing the assets which that ledger represents.
Got all the answers? Congratulations, you have a real blockchain use case. And we’d love to hear from you.
SingularityNET Partners With Ocean Protocol Prior to the AI-Based DeFi Fund Launch
[Press Release – Amsterdam, Netherlands, 18th May 2021]
The collaboration will see the OCEAN token’s inclusion in SingularityDAO’s index fund/investment portfolio. Moreover, SingularityDAO is designed to leverage AI at multiple levels: AI manages dynamic token-sets, executes predictive market-making strategies to provide liquidity for these token-sets on DEXs, and predictively models hedging strategies.
All this AI requires a lot of data to learn and improve, which is why SingularityDAO is a natural user of Ocean data sets – data sets published via Ocean Market (and other Ocean-based markets) into the Ocean ecosystem. The Ocean ecosystem is host to many diverse and varied trading and DeFi data sets. These make excellent candidates for consumption by SingularityDAO’s AI agents to enhance its financial modeling.
I’m really excited by the opportunity to work together with Ocean Protocol, one of the most respectable projects in crypto that has been constantly delivering community-driven, decentralized data solutions. SingularityDAO will constantly make use of data to train our ML and I can’t think of a better partner than Ocean Protocol. – Marcello Mari, CEO at SingularityDAO
The news follows the successful completion of a total of $5.2 million raised in three different rounds for the highly anticipated Governance Generation Event on MANTRADAO, which reached its hard cap within less than 2½ hours.
The protocol, described as ‘DeFi meets decentralized AI,’ held the event exclusively for SingularityNET $AGI holders and attracted 5,800 registrations in one week. The token sale raised $1.6 million (8,000,000 SDAO).
The successful Governance Generation Event follows a recent private sale wherein SingularityDAO raised $2.7 million of funding from a number of top-tier investors such as AlphaBit, Marshland Capita, GBV, and SMO Capital. SingulariyDAO’s governance token has been generated on May 13th and distributed on the same day. It is currently trading on Uniswap.
SingularityDAO is a decentralized platform, governed by the SDAO token, tasked with governing DynaSets. DynaSets are diversified baskets of cryptocurrency assets dynamically managed by AI and curated by the protocol. SingularityDAO brings the financial sophistication of AI-managed funds to DeFi, deploying SingularityNET’s AI technology to navigate complex markets.
About Ocean Protocol
Ocean Protocol’s mission is to kickstart a Web3 Data Economy that reaches the world, giving power back to data owners and enabling people to capture value from data to better our world.
Data is a new asset class; Ocean Protocol unlocks its value. Data owners and consumers use the Ocean Market app to publish, discover, and consume data assets in a secure, privacy-preserving fashion.
Bought the Dip? MicroStrategy Purchased $10M in Bitcoin at $43.6K
Michael Saylor’s NASDAQ-listed company continues with its initiative to purchase sizeable amounts of bitcoins at frequent intervals. The firm said earlier today it had allocated another $10 million in cash in BTC, and its total stash is over 92,000 coins.
- The founder and CEO of the business intelligence giant announced the latest purchase on Twitter earlier on May 12th.
- It reads that the firm has bought 229 bitcoins for $10 million in cash at an average price of $43,663 per coin.
MicroStrategy has purchased an additional 229 bitcoins for $10.0 million in cash at an average price of ~$43,663 per #bitcoin. As of 5/18/2021, we #hodl ~92,079 bitcoins acquired for ~$2.251 billion at an average price of ~24,450 per bitcoin. $MSTRhttps://t.co/fU6LN4WbKI
— Michael Saylor (@michael_saylor) May 18, 2021
- Keeping in mind the multiple purchases made since August 2020, the firm holds 92,079 bitcoins. MicroStrategy has paid $2.251 billion for its stash, with an average price of $24,450 per token.
- Although this is far from being the largest single acquisition, as the company once bought more than $1 billion worth of BTC, this one actually comes in a compelling moment.
- In fact, buying 10 million coins at an average price of $43,663 means that MicroStrategy has taken advantage of a popular narrative in the crypto community – buy the dip.
- The price of the primary cryptocurrency has suffered severely in the past week or so after Elon Musk announced that Tesla has stopped receiving BTC payments for its electric vehicles.
- In a matter of days, bitcoin fell from over $58,000 to a three-month low of $42,000.
- Although losing $16,000 of value in less than a week could be considered a major blow, and some investors disposed of their coins even at a loss, MicroStrategy has reaffirmed its promise to continue buying bitcoin as part of its reserve treasury strategy.
Capixal Review 2021: Make Your Trading Special
Successful traders have always focused on two things that led them there. The first is a good trading strategy, and the second is a good broker. There is a difference between a forex broker and a stockbroker. The top forex brokers in the world are not the best forex brokers, while many online brokers are considered good brokerage firms. In this article, we will talk about Capixal forex broker, a brokerage company that novice traders can use to make money.
Many traders want to make very quick money, and many different brokers are aware of this fact. The traders, due to this trait of wanting to earn quickly, are always at a risk of losing money. The risk of losing money rapidly increases when the lost capital is the money when trading CFDs.
Capixal broker is one the best online brokers out there and offers three main trading accounts. Platinum account, Gold account, and Silver account. The gold and platinum accounts are subject to similar leverage, with the professional accounts also being the same at it. The broker also offers the retail investor accounts, and it has to be kept in mind that the holders of the retail investor accounts lose money because of the improper use of leverage and CFD.
The account opening process with the broker is not that hard and can be easily done over the internet. The Silver account users, Platinum account users, and Gold account users are all subject to equal leverage with the broker Capixal. Each account can be considered a professional account because the broker certainly treats the users like they had their holdings in retail accounts. The broker provides the best services in terms of the trading account that a user can have.
Although it has to be kept in mind that quick money can never be made in the market no matter how good the broker is. Sometimes traders say that CFD trading is easy and can help them make money, but that is not right. It is a complex trading instrument and can wreak havoc on the trader. The trading market has never entertained non-experienced traders.
Financial trading has always been reliant on trading signals and trading platforms. The broker Capixal offers the best out of both. In fact, a lot of traders call forex trading bliss with this broker.
What is Capixal?
Capixal is an online broker that saw the face of the market in 2021.
The parent company of the firm is IFC investments, and it is a regulated and licensed company. The broker provides its users with the best experiences in online trading. Suited best for newbie traders, Capixal also provides them with customized investment news under its education area.
The broker happens to be regulated by the CySEC and provides negative account balances with segregated balance and p[protection for the traders.
This is an important step in novice traders because they make mistakes most of the time. None of the experienced traders would do and hence, are always in need of constant supervision of the broker.
The traders are open to trade more than 300 tradable instruments that cover cryptocurrencies, indices, forex, and many more. The broker is happy to serve the traders as they need its services to survive in the market.
What account types are offered by Capixal?
One of the best online brokers, Capixal offers three different trading accounts. The silver account, the platinum account, and the gold account. The Platinum and Gold accounts holders are subject to similar leverage, while the Silver account also bears the same leverage with itself. The broker also offers retail investor accounts. Although it has to be kept in mind that the holders of the retail investor accounts are more susceptible to losing their money because of lack of information and the wrong use of trading CFDs.
The process to open an account with the broker. The Platinum account users, the Silver account users, and the Gold account users are all subject to equal leverage for the broker Capixal. Each account can be treated as a professional account because the broker certainly provides services like the users are making their transactions under a professional account.
Which assets can I trade with Capixal?
As stated above, the broker provides more than 300 tradable assets to the traders, out of which they can trade on almost anything they want. The traders are open to using these assets as their will and can also go short on the market if they desire.
This is pointed out because a lot of brokers do not provide going shot on the market due to capitalistic reasons but not Capixal. This broker trusts its traders and makes them. It should be kept in mind that although the broker offers CFD trading, the traders should not trade on CFDs. We have said this enough and will say that again that CFDs are complex trading instruments and should be used carefully.
What are trading applications provided by the broker Capixal for trading?
The broker offers the most advanced trading platform, the MetaTrader4. The platform can be used in multiple trading platforms like WebTrader, mobile applications, and many more. The Capixal trading platforms are one of the best, and the traders can trust them to put their bets on.
The market analysis and educational resources that come along with these platforms are the best. They can be used so that the market can be understood in a better way. Traders can start trading and use the forex leverage to elevate their trading experience and account balances.
The platform that the broker provides can be used over the desktop as well as mobile. The different analytical tools act as a garnish on the serving. The platforms also come with an economic calendar that the traders can use as they need. The trading assets are all at par with the trading platform and are one step away, with the instant access that is provided by the MetaTrader trading software.
Is the broker Capixal Regulated?
The broker offers to trade in currency pairs, so it is regulated. Capixal is the trade name of the reputed and famous investment firm IFC investments Cyprus LTD.
The broker is regulated and authorized by the top financial institution Cyprus Securities and Commission Exchange (CySec), under license no 327/16. Moreover, the broker follows all the rules issued by financial bodies like EU, MFiD, and Investors Compensation Funds (ICF).
As stated above, the broker is the best choice of the retail traders who specialize in trading forex and professional traders who are the movers of the financial market, the broker has to be regulated with such an extravagant population that it has. Stock trading is also done from the broker, making it a necessity for the broker to be regulated.
The trading history of the broker is awe-inspiring under a volatile market. The financial markets have always been volatile, and to support the traders, the broker has a dedicated customer support team.
How can I open an account with Capixal?
It is easy to open an account with the broker Capixal. The traders can choose from three different account types, Silver, Platinum, and Gold. All. These accounts are commission-free and subject to variable spreads that the broker needs to make its bread. Variable spreads are generally floating, and they begin from as low as 0.7.
The broker’s leverage is kept the same for all the accounts and can be used by traders to make the correct trades.
To open an account with the broker, readers need to go to the broker’s website and then follow the web page’s steps. After most of it is done, the traders are asked to submit different identity and address proofs because the broker is subject to the standard AML and KYC regulations.
The minimum balance with the broker is $20, and trading can be done up to the fifth decimal point. The broker offers swap discounts and also offers spread betting.
The broker is regulated and offers training on more than three hundred trading instruments. This is more than effective for a novice trader. The novice also has to be sure that he or she is using CFDs and futures properly.
Trading is a risky business and should never be done as a side business. It needs to focus more than anything in the world and a mind made out of sheer Ice. Remember, no matter how good the broker is, if you are not good enough, none of it can help. Trade wisely and never trade on emotion.
US Investment Bank Cowen to Offer Crypto Custody Services
Coinbase revenue tripled in Q1, plans to add bank-like services and to list DOGE
YooShi Launches MEME DeFi Token
MicroStrategy Buys Another $15M Worth of Bitcoin at $55K
Diem Relocates From Switzerland to the US to Launch an USD-Backed Stablecoin
Central Bank of Bahrain and JPMorgan to work on digital currency settlement pilot
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AppSwarm’s DOGE division calls for a global dev teams to build off Dogecoin
Cardano DeFi Project deFIRE Secures $5M in Funding Round
Sportsbet.io and Arsenal FC Launch Augmented Reality Matchday Programme
Coinbase Nets $771 Million Profit in Q1 2021
Increasing Popularity of Crypto Pressures Samsung to Add Hardware Wallet Support to Its Galaxy Smartphones
Elon Musk loses $20B since SNL, as Michael Saylor comes out firing
Binance Faces Investigation from IRS and DoJ
deFIRE Raises $5 Million in Pre-IDO Funding Round to Enable Defi on Cardano
Polkadot-centric derivatives exchange raises $6.4M in seed funding
Digitex Announces Launch of Blockfarm Yield Farming: First Program Offers $50K ETH
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