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What is Blockchain? | The Ultimate Beginner’s Guide

What is Blockchain?

On January 9, 2009, Satoshi Nakamoto shared with us the inventions of both Bitcoin and its underlying technology, the blockchain. Now this revolutionary tech, which acts as the foundation for most cryptocurrencies, is being tested in nearly every industry. Companies ranging from real estate and public records, to forecasting and cloud storage are jumping into…

The post What is Blockchain? | The Ultimate Beginner’s Guide appeared first on UNHASHED.

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On January 9, 2009, Satoshi Nakamoto shared with us the inventions of both Bitcoin and its underlying technology, the blockchain. Now this revolutionary tech, which acts as the foundation for most cryptocurrencies, is being tested in nearly every industry. Companies ranging from real estate and public records, to forecasting and cloud storage are jumping into blockchains. Still, many people don’t have a good understanding of what a blockchain is.

In this article I’ll help you understand blockchains by exploring:

Blockchains excel at a very specific function: securing a distributed, trustless, immutable ledger for data. Before the invention of blockchains, there was no way to share a database with the entire internet and still trust that its data was reliable and tamper-resistant. Thanks to blockchains, we can not only rely on this data, but in the case of Bitcoin, we can use it to secure a network currently valued at $146 billion.

Blockchains were first thought of in 1991 by a group of cryptographers as a theoretical type of data structure. It would be another 18 years before a person or group named Satoshi Nakamoto actually put a blockchain into use as the ledger for the cryptocurrency Bitcoin.

Previous attempts had been made at creating digital currencies; some of them are even referenced in the Bitcoin white paper. All of these predecessors to Bitcoin, however, had a few things in common: their databases were centralized, their creators were public and consequently, they were all shut down for various legal reasons.

Satoshi, having learned from the mistakes of these past attempts, knew two things for sure. First, they knew that their identity should remain hidden, which was accomplished by using the pseudonym Satoshi Nakamoto. Secondly, they knew that there could be no one in control of the ledger or that entity would risk legal trouble. The blockchain was the breakthrough concept that solved the second issue.

A blockchain is a type of database where the data is organized into groups, called blocks. Each new block uses a cryptographic method, called hashing, to include a reference to the data in the previous block. This creates a chain in the sense that to change any data in a block would in turn change the next block, and so on down the line.

Depending on the difficulty required to add new blocks to the chain, the fact that there is a reference to the previous block makes the chain resistant to modification. The longer the chain becomes the more resistant it becomes to change. This makes the data on the blockchain extremely secure and reliable.

The first use of a blockchain was as a ledger of ownership for the digital currency Bitcoin. In the 9 years since then there have been several attempts to use blockchains in other industries. It is yet to be determined which of these will improve efficiency in their field, or make some process more egalitarian. Nevertheless here are some of the projects that seem particularly noteworthy.

Paving the way for a future where we no longer have to scan identification documents, Microsoft is using blockchains in an attempt to make online verification easier. Storj is using blockchains to decentralize data storage, and Augur is providing a predictions market that promises to offer accurate forecasting. While operations like La`Zooz and Arcade City are using blockchains for distributing rideshares, Follow My Vote and Democracy Earth want to use blockchains to decentralize and secure voting.

In other cases, blockchains are being used as more than just a ledger. There are a handful of teams using blockchains as platforms for smart contracts. These used to be referred to as “blockchain 2.0” projects because they take the blueprint that Satoshi gave us and they take it to the next level. These blockchains are intended to function like a global computer rather than a database. Some of those using blockchains as platforms for code execution are Aeternity, Ethereum, EOS, golem, IOTA, and NEO.

To say that a blockchain is secure, is to say that the information stored on the blockchain cannot be altered. So how can a database completely built and maintained by strangers, some of them known bad actors, be so reliable? It comes down to two main things: smart planning of reward vs. penalty and decentralization.

One of the properties that secures a blockchain is the balance between the difficulty in adding new blocks and the reward received for doing so. If the blocks are too difficult to create or there isn’t sufficient reward, no transactions will ever get confirmed. If the blocks are too easy to create, however, a malicious actor might roll back the chain, give themselves more funds, and then build the blocks back up — obviously a disaster.

The analysis of how participants in a competitive system will act in response to reward and punishment is referred to as game theory. Some people will say that the great invention of blockchain had little to do with cryptography or economics, but was instead a brilliant leap forward for global game theory in this interconnected world. What Satoshi did was use the inherent cost in creating electricity as the penalty and newly-minted Bitcoin as the reward. This helped in two ways: it created an incentive to remain honest and a method by which new coins could be generated.

When transactions are made on any cryptocurrency network, they are first sent to other nodes in the network and stored in a group waiting to be included in the next block. This group of unconfirmed transactions is referred to as the “mempool.” In order for these transactions to be included in a block, a certain amount of computational “work” must be done first. The specialized hardware that does this work are referred to as a miners, and they require a massive amount of electricity to mine a new block. Miners that successfully add a new block are given a reward of 12.5 Bitcoin.

This system of using energy to add new blocks to the chain is known as “Proof of Work” (PoW).

Another interesting method that is being used is called “Proof of Stake” (PoS). In a PoS system the odds of finding a block are not determined by physical machines burning electricity, but instead by the amount or age of cryptocurrency a miner has staked. As of yet PoS has not been truly tested at global scale, but that will change when Ethereum begins transitioning to Casper.

The PoS method is interesting because it addresses two issues. The first is obvious, a reduction in energy use from PoW. The second is more philosophical; in a PoW system a miner does not have to own any of the coin they’re mining. They could sell all their rewards immediately, and in reality most miners do to pay for the costs involved with running their operation. There’s a theory that this lack of interest in the coin from the miners could have negative effects on the blockchain in the future. On the other hand, in PoS a miner has to hold some of the asset to keep mining. Therefore, the theory is that the miners will have a vested interest in the future of the coin.

Regardless of the proof algorithm, as long as the reward and difficulty remain in balance, it will always be in a miner’s best interest to confirm transactions according to the rules. By trying to break the rules, or rewriting part of the blockchain, the miners are penalized. Even with an extreme amount of money available to anyone that does, no one has come up with an attack that is more profitable than simply following the rules.

Another important feature of a healthy blockchain is to remain decentralized, which means that there is diversification in the operation of nodes. Also, it’s important that there are a sufficient number of nodes storing the full historical record of every transaction, called “full nodes.” This diversification serves a few purposes, the first of which is to keep everyone else honest. If the only holders of the historical record are the ones that collude to change it, then doing so is trivial.

Another logical reason to have the blockchain distributed widely is to make it difficult to censor. You would have to get almost 100% of nodes to agree on any censorship being imposed. Without near majority you end up with two different versions of reality, with some nodes having the censored data and some having the uncensored data. These two subsets of nodes will stop communicating with each other, creating what is called a “hard fork,” possibly with catastrophic effects for both sides.

This type of fork actually happened with Ethereum (ETH) when the devs decided to roll back the blockchain to fix a coding error and a portion of nodes refused to follow. The nodes that refused to follow now have their own coin: Ethereum Classic (ETC).

The final reason to keep the network decentralized is not about security, but for the overall health of the system. When new nodes come online, whether they are attempting to acquire the entire blockchain or just check the balance of a single address, they need to request this data from other nodes. If there is not a decent number of nodes out there to serve the data, then the ones that exist can become overloaded easily. This could slow down or even completely stop the entire network.

For decades, our digital information has resided in databases which require minimal effort to maintain and are often the responsibility of just a single person. If you think about it, a blockchain is one of the least efficient ways possible to store data. So, why use all of the resources required to build and maintain a blockchain? Because so far, no one has come up with another way to achieve trustless consensus.

In a traditional data storage system there is a lot of trust involved, even if you don’t realize it. Think about your bank account for instance. When you spend or deposit money, that action is entered into the bank’s database. Your account balance is the sum of all the information in this database relating to your account. Unless an employee of the bank makes a mistake, this information tends to be accurate because the bank has a reputation to uphold and often a legal responsibility.

In order to safeguard these centralized databases, huge amounts of time and money are expended on security, both technological and physical. A blockchain, on the other hand, allows us to open this database for everyone to use and still remain secure. Participants are able to agree on a public ledger of data without needing to trust or impose legal responsibility on any of the parties involved.

The reason that you don’t need to trust anyone on a proper blockchain is because you can trust the laws of thermodynamics. The fact that there is a cost to convert energy into electricity is the reason that it will always be ultimately unsuccessful to cheat.

There is no doubt that the concept of using a blockchain for Bitcoin was profound; without it, no cryptocurrency could exist as we know them today. Blockchains actually did even more than this though, they solved a crucial trust issue for the internet era in an elegant and secure way.

We now have the ability to share information with more security and dependability than we ever have. The full implications of this creation are still yet to be realized. I’m sure in the future, people will look back at the invention of the blockchain and compare it with the invention of the internet itself.

That said, it’s still very early in the life of blockchains, and outside of cryptocurrencies, it’s not clear where they will be effective. Nevertheless, they’re being tested in other areas and it is only a matter of time before some other industry is disrupted by them. Over the next few years it will be exciting to find out where else blockchains can thrive and how much more efficient they can become.

Source: https://unhashed.com/cryptocurrency-coin-guides/what-is-blockchain/

Blockchain

Crypto Exchange Binance Under Investigation by Department of Justice and IRS

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Crypto exchange giant Binance is allegedly under investigation by the U.S. Internal Revenue Service (IRS), as well as the Department of Justice (DOJ) for money laundering and tax evasion.

According to Bloomberg, the federal probe is confidential, with both the DOJ and IRS having “sought information from individuals with insight into Binance’s business.” The report accused Binance of succeeding without strong government oversight, with its lack of corporate headquarters and incorporation in the Cayman Islands — which levies no taxes and offers more lenient business practices. 

“We take our legal obligations very seriously and engage with regulators and law enforcement in a collaborative fashion. We have worked hard to build a robust compliance program that incorporates anti-money laundering principles and tools used by financial institutions to detect and address suspicious activity,” said a Binance spokesperson in response to the recent probe. 

Binance and Crypto Markets Continue to Face Regulatory Scrutiny

One of the biggest criticisms of Bitcoin and the crypto space at large has been their use for criminal activity. Back in January, Treasury Secretary Janet Yellen raised concerns over cryptocurrencies being used in terrorist and illegal financing, with other major financial figures like Charlie Munger associating the industry with “kidnappers” and “extortionists.” 

Chainalysis, a blockchain-based data analytics firm used by U.S. federal agencies, reported in 2019 that Binance saw more funds tied to criminal activity than any other exchanges based on the transactions that it had analyzed.

Binance and Huobi, which are two of the largest cryptocurrency exchanges in the world by volume, saw over 51% of total illicit transactions in the space. Source: Chainalysis Blog

“Binance and Huobi lead all exchanges in illicit Bitcoin received by a significant margin. That may come as a surprise given that Binance and Huobi are two of the largest exchanges operating, and are subject to KYC regulations. How can they be receiving so much Bitcoin from criminal sources? Let’s start by looking at the specific accounts receiving illicit funds at both exchanges.”

This is certainly not the first time Binance has been embroiled in legal troubles. Recently, the exchange’s venture into tradable stock tokens landed the company under the scrutiny of European regulators, including the U.K’s Financial Conduct Authority (FCA) and Germany’s BaFin. In March, Binance hired former U.S. senator Max Baucus as a regulatory advisor. 

Binance Coin (BNB) on Tradingview.com
Featured image from UnSplash 

Coinsmart. Beste Bitcoin-Börse in Europa
Source: https://bitcoinist.com/crypto-exchange-binance-under-investigation-by-irs-and-doj/?utm_source=rss&utm_medium=rss&utm_campaign=crypto-exchange-binance-under-investigation-by-irs-and-doj

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Blockchain

Kraken Daily Market Report for May 14 2021

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Overview


  • Total spot trading volume at $3.17 billion, 5.3% higher than the 30-day average of $3.01 billion.
  • Total futures notional at $638.8 million.
  • The top five traded coins were, respectively, Ethereum (+2.3%), Bitcoin (-1.4%), Tether (0%), Dogecoin (12%), and Polkadot (-0.6%).
  • Strong returns from Dogecoin (+12%) and Synthetix (8.5%).

May 14, 2021 
 $3.17B traded across all markets today
 Crypto, EUR, USD, JPY, CAD, GBP, CHF, AUD 
ETH 
$3796.7 
↑2.3% 
$825.8M
XBT 
$48974. 
↓1.4% 
$779.3M
USDT 
$1.0009 
↑0.08% 
$508.9M
XDG 
$0.5503 
↑12% 
$407.6M
DOT 
$39.663 
↓0.6% 
$165.0M
ADA 
$1.8208 
↓6.1% 
$154.1M
USDC 
$1.0 
↑0.01% 
$95.7M
XRP 
$1.3287 
↓2.5% 
$79.3M
LTC 
$312.26 
↓1.4% 
$52.4M
ETC 
$88.401 
↓0.4% 
$51.6M
EOS 
$10.559 
↓0.07% 
$34.0M
BCH 
$1232.1 
↓1.5% 
$34.0M
LINK 
$43.633 
↑1.2% 
$33.6M
XLM 
$0.6651 
↑1.4% 
$30.2M
NANO 
$10.933 
↓5.4% 
$28.7M
AAVE 
$532.69 
↑4.9% 
$23.0M
KSM 
$510.58 
↓3.3% 
$19.2M
FIL 
$116.34 
↓0.9% 
$14.4M
SC 
$0.0307 
↑0.7% 
$13.3M
YFI 
$67698. 
↑2.6% 
$10.4M
TRX 
$0.1212 
↓0.19% 
$9.58M
ATOM 
$23.629 
↑0.7% 
$8.93M
SNX 
$19.964 
↑8.5% 
$8.79M
ALGO 
$1.3422 
↓0.6% 
$8.75M
XMR 
$398.66 
↓0.9% 
$8.7M
XTZ 
$6.0497 
↓0.9% 
$8.06M
ZEC 
$288.35 
↓2.5% 
$7.03M
UNI 
$37.991 
↑1.8% 
$6.93M
FLOW 
$24.679 
↑2.2% 
$6.27M
DASH 
$357.46 
↑0.18% 
$5.15M
DAI 
$1.0002 
↓0.01% 
$5.09M
OMG 
$9.7649 
↑1.4% 
$4.35M
OCEAN 
$1.1936 
↓0.3% 
$4.12M
KAVA 
$5.3777 
↑0.5% 
$3.99M
EWT 
$15.814 
↓4.4% 
$3.78M
QTUM 
$20.106 
↓3.0% 
$3.46M
CRV 
$3.3409 
↓0.4% 
$3.04M
WAVES 
$30.683 
↓3.4% 
$2.88M
MANA 
$1.2435 
↓0.5% 
$2.75M
GRT 
$1.2896 
↓1.7% 
$2.63M
ICX 
$2.0734 
↓0.8% 
$2.48M
PAXG 
$1852.2 
↓0.12% 
$2.45M
COMP 
$774.63 
↑1.1% 
$2.31M
BAT 
$1.1887 
↓0.12% 
$2.23M
KEEP 
$0.5042 
↑0.5% 
$2.19M
REPV2 
$36.097 
↓0.4% 
$2.06M
LSK 
$6.7568 
↓5.2% 
$1.98M
STORJ 
$1.6898 
↓0.4% 
$1.89M
KNC 
$2.9788 
↓0.21% 
$1.26M
OXT 
$0.5575 
↑1.7% 
$1.05M
BAL 
$60.560 
↑1.2% 
$979K
GNO 
$250.55 
↑3.0% 
$883K
ANT 
$8.0996 
↓0.8% 
$867K
MLN 
$105.13 
↑1.2% 
$864K
REP 
$39.528 
↑1.6% 
$423K
TBTC 
$50620. 
↓1.8% 
$95.5K



#####################. Trading Volume by Asset. ##########################################

Trading Volume by Asset


The figures below break down the trading volume of the largest, mid-size, and smallest assets. Cryptos are in purple, fiats are in blue. For each asset, the chart contains the daily trading volume in USD, and the percentage of the total trading volume. The percentages for fiats and cryptos are treated separately, so that they both add up to 100%.

Figure 1: Largest trading assets: trading volume (measured in USD) and its percentage of the total trading volume (May 14 2021)



Figure 2: Mid-size trading assets: (measured in USD) (May 14 2021)



Figure 3: Smallest trading assets: (measured in USD) (May 14 2021)



#####################. Spread %. ##########################################

Spread %


Spread percentage is the width of the bid/ask spread divided by the bid/ask midpoint. The values are generated by taking the median spread percentage over each minute, then the average of the medians over the day.

Figure 4: Average spread % by pair (May 14 2021)



.


#########. Returns and Volume ############################################

Returns and Volume


Figure 5: Returns of the four highest volume pairs (May 14 2021)


Figure 6: Volume of the major currencies and an average line that fits the data to a sinusoidal curve to show the daily volume highs and lows (May 14 2021)



###########. Daily Returns. #################################################

Daily Returns %


Figure 7: Returns over USD and XBT. Relative volume and return size is indicated by the size of the font. (May 14 2021)



###########. Disclaimer #################################################

The values generated in this report are from public market data distributed from Kraken WebSockets api. The total volumes and returns are calculated over the reporting day using UTC time.

Coinsmart. Beste Bitcoin-Börse in Europa
Source: https://blog.kraken.com/post/9130/kraken-daily-market-report-for-may-14-2021/

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Ternoa Blockchain’s NFT-based data transmission project gets LVT Capital as a partner

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Ternoa Blockchain has found a new partner as it introduces its NFT-based data transmission service to the market.

The company received an investment from Australia-based private equity firm LVT Capital to form a strategic partnership aimed at enhancing the sustainability, innovation, competitiveness, and dependability of Ternoa’s services that allow users to build time capsules for safely transmitting their memories and important data to their descendants even after death.

Building on LVT’s Expertise

With its focus on blockchain, crypto, and tech projects, LVT Capital has already proven its expertise in these areas with its numerous collaborations and investments. The company has already made investments in more than 40 top-caliber crypto, real estate, finance, education, and cybersecurity firms with 200 more under evaluation for potential collaborations.

LVT Capital has the market and technology expertise as well as the resources to enhance Ternoa’s unique service and promote it to boost the company’s competitiveness. For instance, LVT Capital has its own media & marketing services and an online publishing arm focused on blockchain, technology, and business, which makes the firm a perfect fit for Ternoa.

Ternoa Blockchain Offers Customizable Time Capsules

Ternoa Blockchain found a new way to use NFT and blockchain technologies to help people handle their data storage and transmission needs, which is one of the reasons for LVT Capital’s decision to invest in its business. With its Polkadot-powered, NFT-based customizable time capsules, people can securely transmit their memories such as photos, videos, and other important data to future generations or simply use the platform as a secure storage solution.

Ternoa’s platform is flexible enough and gives users several options on how they wish their data to be retrieved by their intended recipients. The available transmission protocols are Safe Protocol, Consent Protocol, Death Protocol, D-day Protocol, and Countdown Protocol.

  • Safe Protocol – Data owners can retrieve data at any time, which makes use of Ternoa as a secure and portable storage solution.
  • Consent Protocol – Recipients can access the time capsule as long as the original owner does not use his veto option.
  • Death Protocol – The time capsule will be delivered to the beneficiaries upon the death of the creator based on local death registries APIs.
  • Countdown Protocol – Introduces a countdown feature which can be set to1 month, 1 year, or 10 years. The time capsule will be delivered to the recipient if the countdown reaches the limit. The creator can reset the countdown at any time.
  • D-day Protocol – Time capsule can only be accessed on a specific date, which is set by the creator.

While the loss of data is always an issue for other data storage solutions, Ternoa eliminated this risk by making copies of the files inside the time capsule, which are stored in other dex storage blockchains. At the moment, Ternoa sends these copies to Aerweave, Sia, and Storj while keeping the original version in its network. To learn more about the project, click here.

IMPORTANT NOTE: This is a paid press release, which BitcoinerX has posted as part of a commercial agreement. BitcoinerX is not responsible for producing this content and does not endorse the products or services mentioned. It is the responsibility of the company posting the press release to ensure the material is credible and accurate. BitcoinerX is not responsible for any damage or loss caused to anyone who chooses to use the company, product or services mentioned in the press release. BitcoinerX does not recommend using the information in the press release to form the sole basis of investment decisions.

Coinsmart. Beste Bitcoin-Börse in Europa
Source: https://bitcoinerx.com/blockchain/ternoa-blockchains-nft-based-data-transmission-project-gets-lvt-capital-as-a-partner/

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