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What Actually is Programmable Money?

Everyone seems to be interested in programmable money (and assets), but what exactly does this mean? This post explores the concept of programmable money – what is possible today, and what is possible with the help of smart contracts on blockchains. Is it automated payments? If I click on “make a payment” in my bank’s … Continue reading What Actually is Programmable Money?

The post What Actually is Programmable Money? appeared first on Bits on Blocks.

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Everyone seems to be interested in programmable money (and assets), but what exactly does this mean? This post explores the concept of programmable money – what is possible today, and what is possible with the help of smart contracts on blockchains.

Is it automated payments?

  • If I click on “make a payment” in my bank’s online banking website, and the bank’s computers move the money, is this programmable money?
  • If I run an app on my computer which does some stuff then logs in to my bank’s online banking website and clicks on “make a payment”, is this programmable money?
  • What if my program does the same thing using the bank’s API?

It feels like simply instructing a bank to make a payment doesn’t count as programmable money, whether that instruction comes from a human or a computer program. Here’s a primer on how payments are made today.

This means that programmable money can’t just be the ability to write arbitrary code that can move money. Even if it includes complex business logic and external data as part of the decision making. Because businesses already do this today: payment instructions sent to banks typically come from computer programs running on corporate servers.

So is it more to do with automation of payments at the bank’s side (as opposed to on the customer’s side)?

  • If I instruct my bank to make an automated monthly payment of $4,000 to my landlord, is that programmable money?
  • If I authorise a utilities provider (eg electricity, gas, phone etc) to take different amounts of money from my bank account every month, is that programmable money?
  • What about if I upload a file to my bank to pay 350 staff their monthly salary, is that programmability? (This is how payroll works; you don’t usually have someone manually typing in each and every payment)

Well, we have all of this already. Banks already perform client-instructed automated tasks, with rudimentary if/then logic:

IF it's the first day of the month THEN pay rent UNLESS I don't have enough money THEN don't make the payment AND send a notification AND charge a fee.

If banks saw demand, I suppose they could let you upload code, and they would run the code, and they would treat the result of the code as a payment instruction from you. But the result is no different to if you ran your own code then instructed the bank, as discussed earlier. And this would create liability headaches for the banks if and when the code goes wrong…

If not automated payments then what?

Well, in each of the above cases, of course the bank could actually hold back the payment, even after they have received the payment instruction. (And in many cases they are required by regulators to not tell customers why they have withheld the payment!)

So you are not guaranteed that the payment will work end to end.

Does programmable money mean that no matter what, the code’s instructions will be carried out, and no bank or intermediary can stop it?

If that’s the aim, then this can only happen if customers can hold and control money (or something representing money) outside of the banking system.

Stablecoins, on a public or permissioned ledger, get us closer. You can upload programs called smart contracts that are guaranteed to run. But even these smart contracts result in an instruction to the smart contract that defines the money. And the smart contract that defines the money can decide not to make the payment, for example if the payment instruction is to a blacklisted account.

It’s designer money

I think then the answer is designer money. Money that is created by someone – an issuer – that behaves a certain way, and has certain constraints no matter who “owns” it at any point in time.

Banks can’t do this, because money in banks is all different. My USD at Citibank is different to your USD at JP Morgan. It’s different in two ways:

  1. My Citibank-dollars are controlled by Citibank, and your JP Morgan-dollars are controlled by JP Morgan. This means if the money should behave a certain way, both banks have to implement exactly the same logic and constraints.
  2. My Citibank-dollars are legally, and practically, a different instrument to your JP Morgan-dollars. My Citibank-dollars are a legal agreement that Citibank owes me dollars; your JP Morgan-dollars are a legal agreement that JP Morgan owes you dollars.

The result is that money, controlled by all of these different entities, is all different and behaves in different ways. Think how hard it is to implement anti-money-laundering rules across the board. Every participant has to attempt to apply the same logic. Every. Single. Participant. No wonder it’s ridiculously expensive, and has many gaps.

Why is this the case? It’s because there is no ledger for money that can be referenced to while transactions are made.

Problems today

  • Money that was intended for some specific thing ends up somewhere else (corruption).
  • Loans can be spent on items other than what the borrower told their lender they would use it for (fraud).
  • Grants can be used to pay for things the grant was not intended for (misuse, corruption, or fraud).

Benefits of designer money

Now you can create money where the money itself has control logic built into it. This is done at the smart contract level. A smart contract is typically a bunch of code that is run by all participants in a blockchain network. It that defines:

  1. The characteristics of the money (how many units there are, who initially owns it, etc)
  2. How users can interact with the money (ask for a balance, make a payment, etc).

The constraints are coded into the second part of the smart contract, so that all payment requests are subject to those constraints – no matter who is in control of the money at the time.

In this way, money can only go to intended destinations. Once this special purpose money has arrived at the destination, it can be “redeemed” for general purpose money, if needed. (As analogy, think about how food stamps work)

You can create certain types of money that can’t be sent without additional data, eg proof that the payment is to support an export or import.

You can even put constraints on wallet balances or money flows. For example a recipient’s balance can’t exceed $2,500, or any payment can only be made up to $50, or any account can only send or receive a total of $1,500 per day, or whatever.

With designer money, the possibilities are practically endless. Yes, special purpose money reduces the ‘fungability’ of money, but that’s the point. There are so many cases today where money has special uses and should not be fungible with general purpose money, but the current system messes this up.

During Covid-19, governments are experimenting with grants that should only be spent in certain ways. Blockchains provide a platform for building designer money in a repeatable and scalable way.

What do you think? What’s your definition of programmable money?

Note: Special thanks to Henning Diedrich, author of “Ethereum: Blockchains, Digital Assets, Smart Contracts, Decentralized Autonomous Organizations” for feedback and inputs on this piece.

Source: https://bitsonblocks.net/2020/04/26/what-actually-is-programmable-money/

Blockchain

Tether Gets 500 BTC Ransom: Sender Threats to Leak Harmful Documents

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Tether, the company issuing the most widely-used stablecoin, USDT, has revealed that it got a ransom demand for 500 BTC. The sender has threatened the company to leak documents to the public that would “harm the bitcoin ecosystem.”

Tether Gets a 500 BTC Ransom Demand

Tether, the issuer of the popular USDT stablecoin, took it to Twitter to reveal that someone had threatened to leak documents to the public in an attempt to “harm the bitcoin ecosystem.”

The company explained that “forged documents are circulating online purporting to be between Tether personnel and reps of Deltec Bank & Trust and others. The documents are bogus.”

Furthermore, Tether explained that they’ve also received a ransom demanding 500 BTC, which is currently worth around $23.6 million. They also revealed that unless the ransom is paid, the sender would “leak documents to the public in an effort to harm the bitcoin ecosystem.” Also, Tether has no intention of paying the money.

What Now?

At the time of this writing, there’s no further information on what’s going to happen next.

It is unclear whether this is a basic extortion scheme like those directed at other crypto companies or people looking to undermine Tether and the crypto community as a whole. Either way, those seeking to harm Tether are getting increasingly desperate.

The company also said that the “forged communications and the associated ransom demand” were reported to law enforcement.

Interestingly enough, all of this comes about a week after Tether and Bitfinex reached a settlement with the office of the New York Attorney General, putting an end to a year-long lawsuit that many thought could really harm the ecosystem. Nevertheless, the company admitted to no wrongdoings and agreed to pay an $18.5 million fine.

However, as part of the settlement deal, the company has also agreed to no longer be able to deal with customers from New York.

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Source: https://cryptopotato.com/tether-gets-500-btc-ransom-sender-threats-to-leak-harmful-documents/

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Blockchain

Litecoin Price Analysis: 01 March

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The cryptocurrency market has been moving in a wave-like fashion with continuous crests and troughs. The market has been seeing spurts of growth in the price, but it did not trigger a price swing. Litecoin [LTC], also witnessed such a push in its price recently, but at the time of writing, the coin continued to move within a tight range.

The digital asset has a market capitalization of $10.99 billion and was being traded at $163.94.

Litecoin 1-hour chart

Source: LTCUSD on TradingView

The above chart of Litecoin has been noting the price consolidation between $155 and $181. Before the drop to this level, LTC was trading between $169 and $181 for a while. However, sudden selling pressure pushed it to this new price level.

This could mean that the LTC market may further this phase of consolidation as momentum in the Bitcoin market also noted a similar trend.

Reasoning

The Bitcoin market has been pushing the price of most altcoins in the market. Now that, the digital asset moves sideways after a little pump, the alts are also showing signs of consolidation.

Litecoin has shown that the volatility in its market has comparatively decreased as the Bollinger Bands converged. Meanwhile, the 50 moving average and signal line were beginning to witness a bearish crossover, which could be just a sign for the price to retrace within the above-mentioned range.

The Relative Strength Index has climbed to equilibrium due to the boost in price. This meant that the buyers and sellers were equal in the market, and hinted towards yet another spell of sideways movement for LTC. Meanwhile, the awesome oscillator noted the lack of momentum in the market.

Conclusion

The current trend prominent in the LTC market was of consolidation between $155 and $169. There has been bearishness evolving in the market, but the price swing may not be visible in the short-term.


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Source: https://ambcrypto.com/litecoin-price-analysis-01-march

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Blockchain

LetsExchange Launches Crypto Trading Service With Smart Exchange Rates

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LetsExchange Launches Crypto Trading Service With Smart Exchange Rates

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For each trade, LetsExchange instantly selects the best rate across the world’s leading crypto exchanges and lets the trader secure this rate at the beginning of the transaction. 

Cryptocurrency trading can be a very lucrative activity. Because of the price volatility of many coins, the possibilities to make gains through short-term trading are big. Two factors influence the outcome of a trade. First, the trader must buy crypto at the best possible rate. And second, the trader must be able to buy or sell the crypto assets without delays.

The LetsExchange platform has been designed to maximize traders’ gains by facilitating the two factors mentioned above. With the use of this service, traders can get the most profitable exchange rate available on the market at a given moment. What’s more, the platform ensures that the said rate remains unchanged until the trade is completed.

This newly launched service also eliminates delays in the processing of transactions by waiving registration, KYC screening, and other authentication and authorization procedures. The platform’s founders elaborate on these features that allow traders to maximize their gains:

  • The registration process and KYC authentication are time-consuming. Traders usually cannot afford to waste much time in such procedures as the cryptocurrency market is volatile, and exchange rates may change significantly within a few minutes. With LetsExchange, traders can benefit from these fluctuations by buying and selling cryptocurrencies as soon as they decide, without hassle and delays.
  • LetsExchange works with the world’s top crypto exchanges including Binance, Okex, KuCoin, Gate, Huobi, and more. By using its SmartRate technology, the platform always offers the most profitable rate across all the exchanges. In this way, traders won’t waste time in comparing rates and researching the market status at a given moment.
  • This platform offers the possibility to secure the most profitable exchange rate by selecting the Fixed Rates option. This feature will maintain the said rate unchanged until the completion of the trade. But if a trader prefers to forecast the rate fluctuations in a bid to maximize their gain, the floating rates option allows doing it. Each trader has the freedom to choose the most convenient strategy.
  • Thanks to the use of fully automated exchange algorithms, the only delay in the processing time of a transaction depends on the network speed of the selected cryptocurrency. During Beta testing of the platform, the average transaction time was 25 seconds.

The LetsExhange platform at https://letsexchange.io is now ready to help traders maximize their gains by guaranteeing the best rates and eliminating unnecessary delays.

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About LetsExchange

LetsExchange is a one-stop multicurrency exchange service free of registration, limits, and complications. It supports 210+ coins, about 45,000 currency pairs and automatically selects the best rate across all major crypto exchanges for each trade. Built by a team of crypto visionaries with 10+ years of experience in the blockchain space and fintech, LetsExchange saves your time at each step of a crypto swap and amplifies your trading revenue.


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DISCLAIMER Read More

The views expressed in the article are wholly those of the author and do not represent those of, nor should they be attributed to, ZyCrypto. This article is not meant to give financial advice. Please carry out your own research before investing in any of the various cryptocurrencies available.

Source: https://zycrypto.com/letsexchange-launches-crypto-trading-service-with-smart-exchange-rates/

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