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“Blockchains” is a word you’ve been ignoring, here’s what it’s all about

(FINANCE NEWS) You’re hearing more and more about banks and startups using “blockchain” technology. Confused? We got you.

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Mysterious origins

The first, original blockchain came from Bitcoin, an “electronic cash system” created by the mysterious Satoshi Nakamoto in 2008. Satoshi aside, there’s nothing secret about the Bitcoin software, as anyone can read the massively disruptive source code that Satoshi unleashed on the world in 2009.

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Bitcoin and the “blockchain” are more or less interchangeable words, as they both have the same origin. But over time, the original Bitcoin idea has inspired 100s of new “altcoins” such as Litecoin, Peercoin and Dash.

Altcoins have blockchains too

Just like Bitcoin, each altcoin has its own blockchain, which you can think of as a breadcrumb trail of confirmed transactions that floats around the world with trusted participants rubber-stamping new transactions as authentic along the way. These participants are called “nodes” and each one keeps a backup copy of the blockchain for reference. According to Bitnodes, there’s approximately 5,300 nodes in the world confirming new Bitcoin transactions.

If you combine the value of all the Bitcoins and altcoins, it’s about $12 billion dollars.

Altcoins comprise about 20% of that market cap. That sounds huge, until you realize Chipotle Mexican Grill is worth more than all the “crypto” coins combined.

What’s the point?

Right now, the Bitcoin blockchain is about 100 gigabytes in size and continues to grow. Hypothetically, an oppressive government could try to detect and block the blockchain, but thus far it’s not a problem for the Bitcoin network.

It seems Bitcoin was designed by Satoshi with resilience in mind, with new transactions (blocks) sized small enough to slip through the greedy fingers of Internet filters.

Early advocates of Bitcoin argued it would mostly appeal to the billions of unbanked people in the world that can’t easily buy and sell goods and services due to prohibitive paperwork, travel distance and other obstacles.

Beyond the coin: trust networks

Speaking of digital money, Bitcoins and altcoins seem to have cracked the code that E-gold trailblazed in the 90s. But beyond the “coin” aspect of blockchain technology, new applications are emerging.

Ethereum aims to use its secure network to create autonomous organizations and decentralized applications to form a “world computer.” And Austin-based Factom uses the blockchain to “safeguard the most critical government, commercial, and non-profit systems.” And Storj offers a blockchain-based encrypted storage service. Also IBM has invested billions in various blockchain technologies, from tracking identity through Bitcoin transactions to enhancing the privacy of cognitive computing for medical applications.

“Blockchain” sounds more credible

For a business, credibility is important and “blockchain” is maybe the safer word compared to “Bitcoin” because it emphasizes the computer science innovation rather than the disruptive economic innovation, which might still make some people nervous. Whatever your point of view, Bitcoin is still the most prominent blockchain by far, and its secure DNA has captured the imaginations of developers and businesses wanting to capitalize on the success of Bitcoin.

#Blockchains

PJ Brunet is a writer, full stack developer, and abstract artist. His first computer was a Texas Instruments TI-99. As a teen, he interned at IBM in Boca where the first PC was born. Graduating with a BFA, he gave California and New York a shot, but fell in love with Texas in 2004, the same year he started blogging about technology.

Business Finance

Blockchain has a competitor that could already obsolete the tech

(TECH NEWS) Just as people are learning what the word “blockchain” means, technology is already advancing beyond this groundbreaking innovation.

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hashgraph

Blockchain’s new competitor may one day render the popular database service obsolete. Hashgraph pitches itself as a “superior consensus mechanism/data structure alternative to blockchain,” featuring a decentralized platform for micropayments, live collaboration apps, distributed MMOs, auctions, and distributed capital markets.

The distributed ledger technology system notes it’s faster, fairer, and more secure than blockchain. However, Hashgraph has very diplomatically stated, “The pitching of Hashgraph against Blockchain is a sensationalist angle that we do not endorse.”

They go on to say, “We consider Blockchain to be like a capable older brother who graciously paved the way by bringing the power of Distributed Ledger Technology to the light of day, for which we are very grateful.”

Very Miss America of them. Unlike Bitcoin, Hashgraph doesn’t need massive amounts of computation or energy consumption. This is in part due to how the system handles transactions, particularly mining.

Bitcoin mining is the process of adding records of transactions to Bitcoin’s public ledger. These records are a blockchain, which serves as a confirmation of past transactions. With standard bitcoin mining, each transaction is put into a container, forming a long single chain.

If two miners happen to make two blocks at the same time, one will be discarded eventually, especially if one arrives too quickly. Instead, Hashgraph uses every container, and any member can create transactions at any point without threat of deletion.

Currently, Bitcoin uses proof-of-work (POW), requiring costly custom hardware. PoW artificially slows down the mining process, which is why miners need special hardware to gain anything close to efficiency. However, Hashgraph offers faster transactions, too.

Right now, Bitcoin on standard blockchain are limited to seven transactions per second, but Hashgraph could be up to 50,000 times faster with 250,000 transactions per second (pre-sharding). The transactions would only be limited by bandwidth availability.

Further, Hashgraph brings fairness into play with consensus time stamping, meaning no one can alter the order in which transactions are processed. Basically, there’s no line cutting or fast passes like in blockchain, where miners can choose what order transactions occur in a block, even delaying or stopping future blocks.

Unlike blockchain, Hashgraph uses asynchronous Byzantine fault tolerance to achieve consensus within the community using virtual voting. Members cannot change the consensus once reached, nor can they prevent any community from reaching a consensus.

Plus, Hashgraph uses bank-grade consensus algorithms for added security, and is resilient to DDoS, Sybil, firewall, and virus attacks, as well as network partitions.

The amount of storage is reduced as well by only keeping the effects of the transaction, shrinking the amount of storage from its current 60GB for bitcoin to 1GB. So what does that mean? Your smartphone could act as a node.

Yes, you can start geeking out now.

At this time, Hashgraph isn’t available on public networks or ledgers, so no associated cryptocurrency is currently available. However, you can apply for an an enterprise or commercial license use on a private network by contacting Swirlds, the company that handles Hashgraphs licensing.

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Business Finance

Like it or not, Millennials prefer Bitcoin over Stocks

(FINANCE NEWS) A new survey shows that the investment pendulum has swung to favor blockchain backed cryptocurrency over stocks when it comes to millennials.

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Informed or not, Millennials prefer bitcoin over stocks. Could it be because “bitcoin” sounds cool and futuristic while “stock” sounds super boring? Studies haven’t officially evaluated my hypothesis, but let’s go with a maybe for now.

Venture capital firm Blockchain Capital’s survey of 2,000 people found that around 30 percent of the participants in the 18-34 age range would rather own $1000 of Bitcoin than $1000 of government stocks or bonds.

Additionally, of those surveyed, 42 percent of millennials were at least marginally familiar with bitcoin, while only 15 percent over age 65 knew of the concept.

On Wednesday bitcoin rose more than six percent to as high as $7,545, pushing the value of the cryptocurrency market over $200 billion for the first time ever. This time last year, bitcoin was worth around $700.

In the past year, cyrptocurrency has risen 600 percent. This is compared to measly gains of 15 percent for the S&P 500 Index. Despite the rise in value, only 2 percent of Americans currently own or have ever owned bitcoin according to Blockchain Capital’s survey.

However, as millennials become more involved in the investment force, this number is sure to increase. If U.S. regulators allow bitcoin ETFs, it may be even easier for new bitcoin buyers to enter the market.

According to Google Trends, more people are searching online for how to buy bitcoin that gold. Can you dive Scrooge McDuck style into a ludicrous pile of bitcoins? Well, no. But you also can’t have the Dothraki give you a melted bitcoin crown, so there’s that safety factor working in bitcoin’s favor.

What else is so appealing about bitcoin? Unlike traditional banks, the bitcoin network isn’t run by a centralized agency and has no physical backing. Instead, it’s run by a network of computers worldwide digitally keeping track of all transactions by storing records in a blockchain.

Since anyone can make an anonymous account, bitcoin gained notoriety a preferred method for drug dealers and ransom payment aficionados. However, the cryptocurrency is also accepted by many major businesses, including Overstock.com and eBay, for legal transactions.

Since there are no transaction or currency conversion fees, people in countries with high inflation can use bitcoin to avoid losing money. Plus, bitcoin makes international money transfers significantly faster than traditional methods.

While bitcoin certainly has proven fruitful for shady transactions, the rising popularity of cryptocurrency for legitimate uses indicates a market shift.

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Business Finance

Venezuela cash crunch means workers won’t see money for months

(FINANCE NEWS) Venezuela is currently in a cash crunch due to a weakening oil market which means that Venezuelans won’t see pay for at least 5 months.

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If you ever ran out of money as a broke 20-something, you know how nervewracking it can be to go without cash. Now, imagine you ran a country and ran out of money. Sweating yet?

Be glad you’re not Venezuela, who is extremely cash poor at the moment. According to coverage from Bloomberg, “more than $1.2 billion of the company’s debt is coming due in the next few days, and investors are showing less confidence that funds will be transferred.”

The country is already two weeks late to pay off several other bonds. Additionally, cargo ships full of crude oil have idled for months because Venezuela can’t pay for their supply of oil.

The biggest culprit for the cash shortage is the shrinking market for crude oil. PDVSA controls one of the large crude supplies in the world, and it’s been a lucrative export for the country. However, in three years, the price of oil has dropped by 50 percent.

The biggest demand for crude used to come from America, who would pay cash for the barrels; however, shipments are down 35 percent since August.

Part of that demand shortage is due to political sanctions, imposed on the country by the United States. In response to Maduro’s aggressive political maneuvering, which sought to arrest opposition leaders, “rewrite the constitution and strip power from Congress,” President Trump punished this behavior through sanctions on imports from Venezuela.

Because oil was such a lucrative export, PDVSA was targeted heavily by the sanctions. Oil importers don’t want to run afoul of these sanctions by buying crude from the country. That problem will get even worse if the sanctions increase, which Bloomberg predicts is likely to happen within the year.

There is a risk that PDVSA could default on its debt, which could have a huge impact on the oil economy. According to Bloomberg, if oil could be seized as an asset to cover for debts, oil traders will expect a significant discount to cover for that risk. That discount will sink overall oil revenue. This same problem came up when Ecuador, another large exporter of oil, defaulted on its debt in 2008.

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