Bite Your Coins Don’t Eat Them!

ALL THESE WORLDS
ARE YOURS EXCEPT
EUROPA
ATTEMPT NO
LANDING THERE
USE THEM TOGETHER
USE THEM IN PEACE

War on planet earth Russia versus the USA, as National Security Council ordered HAL to conceal from the Discovery‘s crew the fact that the mission was about the Monolith a machine built by an unseen extraterrestrial species, and this conflicted with HAL’s basic programming of open, accurate processing of information, causing him to suffer the computer equivalent of a paranoid mental breakdown.

Paranoia, there’s nothing like a pandemic scare to reveal a person’s true self. So, it’s been fascinating to see how the fear of infection is affecting friends in different ways. Of course, one man’s paranoia is another’s prudent preparation.

Let’s begin by examining what happened and where we are likely going as the technological age captures our better senses. Traditionally to create one US dollar the US government needed to have a certain amount of gold in the reserves. Overtime those rules were eroded into the system we have today, governments can print money as much as they like and whenever they need, just as we see they’re doing right now. If a government is trusted to set up money supply chains they must be trusted to manage it right? But our youth together with the likes of cryptocurrency will become the first generation to successfully decentralize and move away from a single point of control to a multi-point of control – the reality of the techy-world we now face.

I started to examine Bitcoin and the dark web after I watched Silk Road and I was fascinated by how there exists an underworld right under our feet, and so was I naive? I guess so, but what I thought was incredible was how electronic coins were being used, and these coins were being mined. Essentially this meant you or anyone else could earn for participating in mining and I couldn’t believe it, so I started to research it more finding muself in a world I had never heard of:

https://en.wikipedia.org/wiki/Ross_Ulbricht
https://en.wikipedia.org/wiki/Silk_Road_(marketplace)
https://www.youtube.com/watch?v=BvC9oDlT8mM

I am not the type who believes in supporting in any way illegal or illicit activities, but I accept they are and have always been a part of our everyday society. The main problem is where do we draw the line between the protection of our rights, and the lawfulness of governments to stop criminals and especially pedophiles. This is something Apple was caught in the middle of and now cooperates with the US government on tracking down data and sharing it to prevent criminals from prospering. I believe Ross Ulbricht was framed as the founder of Silk Road, imprisoned for life, a political statement, a sad commentary on how governments use their ultimate powers to throw away the key. The idea of governments spying on us and the importance of whistleblowers who take the ultimate risk in ruining their own lives to make us aware of how governments spy: https://en.wikipedia.org/wiki/Edward_Snowden and the likes of Julian Assange who was involved in numerous events in exposing goverments covert messages.

Today we see how the dark web celebrates its 20 years and how it changed our lives: https://www.businessinsider.com/dark-web-changed-the-world-black-markets-arab-spring-2020-3

I’ve watched it go up and go down in value from a very insignificant small double-digit traded blockchain into 5 digit value. Yesterday it was trading down almost 15%, and for any investor that adds more worry. So, why are investors selling their Bitcoins? As institutions (large holders of Bitcoins called Whales) unload bitcoin along with stocks as part of the coronavirus-driven global sell-off, cryptocurrency’s traditional base retail investors are doing most of the buying. Today it recovered and is flat, slightly negative.

Research shows that 80% of becoming mining was conducted by six groups of miners. And so the risk would be if mining pools would game over 51% of the big coin network hash power it could theoretically start double-spending. The focus is always on cryptocurrency theft and the idea of that cryptocurrency is mostly for the purposes of illicit business activities, which it is not.

Founded in 2009 by an anonymous Japanese what is important about its creation is the fact that it is peer-to-peer with a reliable blockchain preventing double-spending. So in effect, it is comparable to a traditional currency where you have accountability but it is decentralized.

But since the cryptocurrency was instituted some major issues caused a great degree of uncertainty, including Mount Gox and a number of other global exchanges shut down due to theft. And as I understand, theft occurs when hot wallets those connected to the Internet can be hacked. But let’s step back for a minute and try to put some perspective on cryptocurrency.

Ask yourself is do you believe that government spending on the government’s printing of money is sustainable, and are they responsible and accountable when it comes to balance sheet currency management? I think one of the main reasons we trust government is because they have the ability to print money, regulate laws as we standby and watch.

Clearly our children will not be accustomed to the same values we’ve experienced growing up and think that with the digitalization of currencies what will happen. As we enter a more technological era we all watch it happening right in front of our eyes, a digital revolution includes a new generation of wealth called digerati: https://en.wikipedia.org/wiki/Digerati and they are super-wealthy.

Blockchain could be adopted and used to document financial transactions in the movement of goods and services and the exchange of information, especially money and finance, as we become more and more digital. What’s important is the importance of security and decentralization, the opposite to what happens with search engines and companies like Facebook twitter collecting your data storing it may be sharing it. And then I won’t get into a detail explanation about Prism but it should be noted: https://en.wikipedia.org/wiki/PRISM_(surveillance_program)

The biggest challenge for databases is storing billions of bits of information that are susceptible to being hacked. I am over simplifying it, but building centralized systems is always more expensive and the data that’s collected doesn’t belong to you anymore. Sadly you really never have a clear understanding of how the data is being used. I laugh about owning a new iPhone and using face recognition and Siri just another means of eventual exploitation.

Cryptocurrency is considered by so many seeking peer-to-peer, avoiding any interference by governments. And the true key is preventing people from using the same assets twice on two different things, just the same way your bank solves that problem by checking with a centralized database to see if the asset has been used, or is available. So the blockchain that we know of today provides us with peer-to-peer communication and shopping with a more reliable payment system. Additionally, it all makes good sense to eliminate the middleman, so you can imagine one day if credit card companies like American Express or Visa will not be able to overcharge us anymore – watch out Mr. Buffet. But more importantly, Blockchain is always public, and it is not a private transaction so with a decentralized system it means that no one person can control the system, and essentially things only change via consensus – the perfect world at last.

Ultimately blockchain will be used for supply chains and data platforms to exchange information anonymously which could be an important part of the way we live. I am sure many of you feel as if the Government doesn’t give enough respect to individual privacy. And by that, I am not speaking about limiting privacy to the extent where criminals can take control and disadvantage the protocols. So consider the speed and efficiency improvements and the likes of digital and Cryptocurrency are important for the development of the computer age we live in. The scary thought of Moore’s Law a computing term that originated in 1970, the simplified version of this law states that processor speeds or overall processing power for computers will double every two years.

So the structure of our basic economy has moved from analog to digital, and our economies have experienced dramatic change over time as it all happens right under our nose. Consider Gresham’s law is a monetary principle stating that “bad money drives out good” we went from silver and gold coins being replaced by other cheaper metals and eventually paper is replaced by plastic and in the end.

Certainly, a certain compromise in cryptocurrency is in the interference by the government. For those of you for not familiar with Alexander Vinnik, he was detained for 30 months (in Greece) charged with money-laundering and extortion conspiracy. He narrowly escaped being extradited to the United States after being accused of the Mount Gox hacking which traced 300,000 Bitcoins in his personal account. After news of his extradition reached the U.S. Bloomberg reported that based on evidence collected by the United States Federal Bureau of Investigation, Vinnik could have a connection to the Russian hackers being investigated by U.S. Special Counsel Robert Mueller, who investigated the influence of Russian hackers on the 2016 U.S. elections.

Though Vinnik himself is not suspected of directly influencing the elections, he may have helped Fancy Bear: https://en.wikipedia.org/wiki/Fancy_Bear a Russian hacking unit linked to the attacks, and the laundering of money using bitcoin. In doing so, there is something becoming more popular, a zero-knowledge proof method can now be used in cryptography to prove that something is known without revealing the known information directly.

In cryptography, a zero-knowledge proof or zero-knowledge protocol is a method by which one party (the prover) can prove to another party (the verifier) that they know a value x , without conveying any information apart from the fact that they know the value x.

The idea of more than $600 million worth of bitcoin being funneled into the dark web in 2018 and notably the lastest victim of darknet business to fall: https://en.wikipedia.org/wiki/AlphaBay Aand the well known story about a an English drug dealer who took his wallet codes and hid them at his house: https://www.independent.co.uk/life-style/gadgets-and-tech/news/bitcoin-wallet-lost-cryptocurrency-crime-ireland-a9355691.html

But everyone fears hackers prowling the networks searching for loopholes, and it gets worse when companies are hacked for hundreds of millions worth of digital currency. In South Korea, Youbit shut down after hacking theft and went bankrupt – so scary but it doesn’t stop investors. Despite the theft, the notion of blockchain that runs cryptocurrencies is being adopted by governments often wary of the pitfalls: https://consensys.net/blog/enterprise-blockchain/which-governments-are-using-blockchain-right-now/

It doesn’t scare away the next global race, electronic currencies, the ultimate independence away from our analog currency. I am still dreaming (Zukerberg too) for Facebook’s plan to launch its own Libra coins as cross-border transactions grow in popularity – but not too soon as it has many obstavlces, mostly goverments afraid of the shear power it wold poseses – three trillion.

So the popularity of cryptocurrencies roars and new coins keep emerging as a result of hard forks because currencies like Bitcoin are open source, anyone can take the code, make some changes, and produce a new version. Bitcoin Cash was a hard fork of Bitcoin, the split took place in 2017 and since then, Bitcoin Cash has become one of the largest cryptocurrencies to emerge from Bitcoin. It has made a number of subtle but significant changes to distinguish itself from Bitcoin, namely larger block size and faster transaction times.

The emergence of other currencies will challenge Ethereum and the change Bitcoin mining which is happening now as it halves, which essentially means you get fewer coins than you did before, half the amount for participating in mining. Called proof of work an algorithm essential to Blockchain. But the main problem is the extraordinary level of electricity used and the number of machines required to compute all transactions on the network to verify and add them to the ledger.

Think of it as a single Node, and each computer shares information each transaction on the network, so when someone makes a transaction it sends it to all others so that every node is on the same page. These node transactions are grouped together to form blocks that make up the blockchain. The complicated part is the hash function and this is a specific algorithm that transforms all the transactions in a block into one single number. The miners are trying to combine all the transactions in the existing block testing the hash function trying to create a number that’s in a certain range in order to be right and get rewarded. If they get it right the network confirms the number is accurate in the software closes the block and rewards the minor was some currency and it continues on and on. But the most important aspect is proof of work which is really designed to ensure that people aren’t changing, altering transactions or any details already in the block, a critical tool to protect the ledger from being hacked but the proof of work is very costly.

However, as Blockchain evolves there is a new approach to verification and mining and is considered to be an evolution of both Bitcoin and Ethereum. There is something called Internet-of-things IOT and it is not new. It identifies the basic problem of more devices that become smart, the more information generated. So what we will have is an Internet-of-things application, this is a new type of blockchain system given we can only process so many transactions.

So the idea is to have a network ledger Tangle to verify his transactions. And where differs from Bitcoin is you do not have minors and instead it verifies and approves two transactions while becoming faster more efficient. And more importantly, there’re no transaction fees so essentially allowing machines to work tirelessly and autonomously on the network.

https://www.zdnet.com/article/the-tangle-or-blockchain-for-the-internet-of-things/

And the increasing interest in decentralized finance called DeFi running on Blockchain and providing financial services globally. Decentralized Finance DeFi is the movement that leverages decentralized networks to transform old financial products into trustless and transparent protocols that run without intermediaries.

https://blog.coinbase.com/a-beginners-guide-to-decentralized-finance-defi-574c68ff43c4

There’s also the idea of staking as a service which means locking up points so you can participate in the network and earn rewards. The distributed ledger technology is the online recording of data and transactions and how GIT is managed: https://en.wikipedia.org/wiki/Git and distributed leisure technologies are creating versions that are both decentralized and distributed. All this means greater accessibility transparency and lots of other rewards and new possibilities. We all know that open-source code is adopted very quickly and our lives are changing at the speed of light.

Never underestimate the powers of the vary things changing our everyday lives otherwise, you will be left behind.

Categories: Curious About it?