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You have probably read dozens of articles dedicated to this subject before, and likely skipped even more. So why write another one, let alone read it? The short answer is times have changed. Well, times always change. Still, the point is that we may be amidst a paradigm shift in the cryptocurrency space right now even if we don’t feel it yet. by stealthEX Such a fundamental change is possible due to a confluence of several factors. Some of these factors are external and therefore not related to crypto. Others are internal and represent the value-oriented nature of cryptocurrencies. It just happened that all of them got activated under specific conditions at a certain point in time, which is today, give or take.
Economic woes in a post-Covid-19 World
You wouldn’t be far from the truth if you claimed that we haven’t yet pulled through the pandemic, to begin with. Unfortunately, it only makes matters worse unless you are a cryptocurrency investor and don’t care for the rest of humanity. Anyway, the damage has been done, and nothing can change that. We are now entering the phase that is technically called “competitive devaluations” and colloquially known as currency wars. You could also argue that if it didn’t happen at the peak of the coronavirus pandemic, it is not going to happen now. The sad truth is that we are only starting to feel the real pain. Even the deadly coronavirus doesn’t take over the body instantly, while it takes some time on the scale of a few months up to a couple years for the economic disease to spread through the fabric of society, evolve, and then erupt with inflation rates shooting through the roof, among many other nasty things. Please take your seat. The world reserve fiat, the American dollar, is sinking like Titanic, slowly but surely. We can’t say the same about less lucky currencies, though. We won’t dwell on the Venezuelan bolivar and Zimbabwean dollar as they are altogether beyond redemption, but fiats like the Brazilian real and Russian ruble are also balancing on the brink of another landslide devaluation, which they have seen many in the past. Sharp minds in the cryptocurrency space have been telling us about this development for ages. It all looked like a remote possibility in some distant future that as we felt deep down wouldn’t have a chance to come up in our lifetime. As it stands, we were wrong, and the events described are now starting to unfold right before our own eyes. In a strange twist of fate, large-scale cryptocurrency adoption is about to occur along with them, but not through some technical breakthroughs and innovation, or even the much-hyped DeFi, but primarily through the failure of conventional financial systems based on fiat currencies. Rest assured, the top dogs in the cryptocurrency pit are well aware of this dynamic, and they are not going to wait any longer. Grayscale Investments, a multi-billion dollar company behind a host of cryptocurrency trust funds, started to frenziedly buy up bitcoins a couple weeks ago. All in all, it acquired over 17,000 BTC adding to its already quite impressive stash of Bitcoin, now totalling almost 450,000 coins under its management. Love it or leave it, but it amounts to 2.4% of all bitcoins mined to date, including lost, burned, or left for dead as dust in Bitcoin wallets. In essence, it means that their effective share is way higher. But while Grayscale definitely sits at the top of the cryptocurrency investment chain, it is not the only company that went on a buying spree lately. MicroStrategy, a company largely unknown to the wider public, suddenly got religion and swapped over $400 million of its capital into 38,250 BTC. Even Barry Silbert, CEO of Grayscale, commented on this feat in his tweet. Twitter, by StealthEX So whenever there is a hint at price correction, someone comes out of the shadows and picks up a handful of bitcoins from the market propping up the price. Why are they doing this? You already know the answer.
In different words, all that cryptocurrencies had to do was to last long enough until fiat started to fall apart. It does now, and paradoxically such times are also times of great opportunity, Baron Rothschild’s way. The world’s largest cryptocurrency exchange, Binance, has been pushing its cryptocurrency payment card since April when it acquired Swipe, a firm focused on crypto-to-fiat payment cards. At the time of the acquisition Swipe already supported 20 cryptocurrencies and fiat transactions in major currencies. Binance.com, by StaelthEX For European users the Binance card was officially made available in August, and the exchange plans to enter the US market soon. Given its dominance in the crypto arena, it wouldn’t be unreasonable to expect the surge in the cryptocurrency use as a means of payment thanks to this. It is unlikely that people would spend their precious bitcoins, but the packmaster is not the only member of the pack that Binance handles. Cryptos like Litecoin or Bitcoin Cash can easily become currencies of choice to use with Binance debit cards. But what truly makes it a game-changer is the current turmoil in the global economic affairs which may turn out to be a once-in-a-lifetime chance for crypto to pick up where fiat currencies leave, or fail, to be exact. On the other hand, it may be a natural development after all, set in stone by the very first Bitcoin transaction and cemented for good when it got confirmed. Now things start to arrange themselves to fit their preordained layout. We have taken our time. As cryptocurrencies are not internally linked to, or tied by, the lunatic policies of monetary authorities, that is to say, no central bank can ask or force miners to mine more bitcoins, we have the first element in place in the layout for the cryptocurrency mass adoption to occur at the most basic level. In fact, it has always been there, so we just had to wait until the two other elements arrived, even though it took longer than most of us were ready to wait. The second required element in the grand picture of cryptocurrency adoption is the change in attitude toward wealth evaluation. So far the vast majority of people involved in crypto, including its most die-hard supporters, valued their cryptocurrency holdings in fiat terms. Without doubt, it was the US dollar, regardless of your home currency. But when fiat collapses or enters a long period of runaway inflation, people will be ready for a dramatic change in their approaches toward capital assessment as well as spending habits. And here comes the most important part where Binance hits the nail on the head. If you are unable to effortlessly spend crypto in your everyday life, the first two components cannot trigger this change in attitude on their own. We need this third element to make use of what has existed and take advantage of what has come around. In a way, what Binance did, and what its competitors are no doubt going to do as well if they don’t want to miss out on the opportunity, appears to be the part that snugly snaps into place when we finally get there. With Binance payment card, you can “buy the things you love with crypto”. So now the ball is in your court to support the full-scale cryptocurrency adoption coming up. Kidding aside, with fiat turning into trash by leaps and bounds all over the globe, this looks like a very enticing payment option for both the crypto purists and the unbanked. We have seen quite a few such cards in the past, but Binance seems to be adamant on making its variety really popular and actually usable. And then you can ride volatility waves to your financial benefit. If Binance succeeds, that may herald a new era of cryptocurrency adoption, a breakthrough of sorts after so many years of stagnation in this department.
Repercussions and ramifications
It is not like only we, traders and investors alike, see these trends. Governments are also taking notice and paying close attention. They can’t remove cryptocurrencies and they can’t help inflating their national currencies. However, they can still crack down massively on this and similar endeavors, trying to nip them in the bud. We don’t know yet what Uncle Sam is going to say but some muslim countries have been quite vocal in this regard. For example, Egypt has issued a fetva which prohibits bitcoin transactions as being against Sharia, an Islamic religious law. Another mostly Islamic country, Indonesia, has banned the use of cryptocurrencies as a means of payment. Russia, although not Islamic yet, is hellbent on effectively outlawing most cryptocurrency operations despite passing earlier a law on digital assets which is essentially neutral to crypto. To conclude, we must be aware that once things get serious and governments see that their monetary supremacy is being threatened, that they can no longer play their favorite game of inflation tax, they will leave no stone unturned to prevent mass use of crypto as an alternative means of payment. And cryptocurrency payment cards are hands down one of the best tools available for this use on a down-to-earth level, groceries and whatnot. Now you know what their target will be. And don’t forget if you need to exchange your coins StealthEX is here for you. We provide a selection of more than 300 coins and constantly updating the cryptocurrency list so that our customers will find a suitable option. Our service does not require registration and allows you to remain anonymous. Why don’t you check it out? Just go to StealthEX and follow these easy steps: ✔ Choose the pair and the amount for your exchange. For example BTC to ETH. ✔ Press the “Start exchange” button. ✔ Provide the recipient address to which the coins will be transferred. ✔ Move your cryptocurrency for the exchange. ✔ Receive your coins. Follow us on Medium, Twitter, Facebook, and Reddit to get StealthEX.io updates and the latest news about the crypto world. For all requests message us via [email protected]. The views and opinions expressed here are solely those of the author. Every investment and trading move involves risk. You should conduct your own research when making a decision. Original article was posted onhttps://stealthex.io/blog/2020/10/06/cryptocurrency-adoption-a-breakthrough/
Why Ethereum Problems Make UMI the Flagship Among the New Generation Cryptocurrencies
https://preview.redd.it/8skuypxp9lj51.jpg?width=1023&format=pjpg&auto=webp&s=ba5a38ba592428f92dc7c1943a780ff127132875 Ethereum cryptocurrency that comes second in terms of capitalization on the crypto market is traditionally seen as fast and profitable. However, over the last few weeks it's had a rough patch. Since early August, the network has had huge queues of transactions pending processing while fees have skyrocketed and surpassed the historical high. The main issue though is that even fees of a few dollars per transfer don't help get rid of the“traffic jams”. The cause of this is numerous DeFi projects and a huge number of financial pyramids based on the Ethereum platform. Both generate excessive load on the network. The situation is downright unpleasant, and our users might question whether the UMI network could face a similar challenge? We'd like to assure you it could not. The UMI network is by default protected against these problems — it cannot have “traffic jams”, fees or financial pyramids. But first things first. How has the Ethereum network ground to a halt? In its report dated August 4, Arcane Research that provides analysis within the field of cryptocurrency stated that over the previous week the daily size of transaction fees in the Ethereum network has surged up to a record high for over two and a half years. On August 3, the median value #%D0%9F%D1%80%D0%B8%D0%BC%D0%B5%D1%80_%D0%B8%D1%81%D0%BF%D0%BE%D0%BB%D1%8C%D0%B7%D0%BE%D0%B2%D0%B0%D0%BD%D0%B8%D1%8F)of the fee amounted to $0.82, with the overall amount of transaction fees totaling $2 mln. However, it only signaled the start of real problems. Over the next week, fees continued to grow and by August 11 the median fee value almost doubled equaling $1.57. Larry Cermak, an expert at a big analytical and news-making crypto portal The Block, wrote in his August 15 tweet that over a week the total amount of transaction fees in the Ethereum network totaled $34.5 mln, having surpassed its historical high. Meanwhile, in the Bitcoin network that is seen as too expensive the fees were almost four times lower at $9 mln. The total fee amount paid by cryptocurrency users over a week:
Ethereum — $34.5 mln;
Bitcoin — $9 mln;
Monero — $2,240;
Tezos — $1,876;
Cardano — $1,615;
XRP — $1,138;
BSV — $1,102;
Stellar — $1,059;
Bitcoin Cash — $1,027;
UMI — $0. Let's talk about it a little later.
https://preview.redd.it/z9azd9v6alj51.png?width=1600&format=png&auto=webp&s=25c365d6e14665ecda4a2b8d19b2fc57dd5cde1e Historical Growth Chart for Ethereum Fees.Source The existing situation shows that Ethereum is actually not as fast and profitable as commonly cited. Additionally, this could happen to almost any cryptocurrency except UMI that charges no fees whatsoever. We will tell you why. Why have these problems emerged? There is nothing unoriginal: the Ethereum network simply can't handle an increased load. Arcane Research analysts consider that a principal cause of this situation is the constantly increasing number of the DeFi ecosystem projects built on the Ethereum blockchain. Their number is growing all the time which causes the overload of the network. As of August 12, the total amount of funds in DeFi applications reached $4.3 billion which is 19.5% higher than that in the past week. At the time of writing this article, the amount surged to $6.21 billion. You can see the current data here. What is the most unpleasant about DeFi protocols is that a lot of them are scam projects. Which is not the worst part though. There is also another factor that significantly slows down the Ethereum network. There are a lot of pyramid-like projects that are built on the EOS platform and use smart contracts. One of them is SmartWay Forsage, which regularly overloads the network with a large number of transactions, causes traffic jams, and, consequently, leads to increased fees (keep in mind that Ethereum miners choose transactions with a higher commission). Vitalik Buterin, the co-founder of Ethereum, revealed his disapproval of the SmartWay Forsage methodology and asked them to "leave and not pollute Ethereum ecology in the future". However, the project is slow to do this — it continues to deceive users. This is only the tip of the iceberg of scam projects which abounds on the EOS network –– they continually emerge, work for a while, then go down as scams and are replaced with new ones. This never-ending stream of "investment projects" based on the Ponzi scheme overloads the system. This is the reason why Adam Back, a pioneer of the crypto industry and founder of the technology company Blockstream, equated Ethereum with such infamous projects as Onecoin and Bitconnect. Adam Back's solid dig at Ethereum became the subject of much debate among crypto enthusiasts. Of course, it all doesn't mean that Ethereum is a bad cryptocurrency. On the contrary, it has a lot of advantages over other coins. But all that has happened exposes Ethereum's faults which must be eliminated. The problem is that they may not be fixable. It is far from certain that the developers will be able to get rid of all the defects as the system has huge scalability problems. The crypto community has to admit that Ethereum, like other first-generation cryptocurrencies, has issues with capacity, fees, and scalability and is gradually becoming obsolete. 2020 is the time for young innovative cryptocurrencies such as UMI. UMI is the flagship of new-generation cryptocurrencies. In real fact, any cryptocurrency could face it. Each cryptocurrency charges fees which typically surge when the network is overloaded or the price is going up. Everyone will remember 2017 when in line with price growth and the network's overload Bitcoin transaction fee reached a high of around $40. But when it comes to UMI, it works the other way round. The UMI network's advantages are high capacity, no fees, and scaling possibilities. It uses the best and fastest crypto industry solutions and excludes all inefficient methods by default. Smart optimization in combination with the Proof-of-Authority technology operating on the master node basis enables almost instant payments. At the stage of network testing, an incredibly high capacity was achieved:
up to 4,369 transactions per second;
up to 262,140 transactions per minute;
up to 15,728,400 transactions per hour;
up to 377,481,600 transactions per day.
Ethereum processes about 20 transactions per second. It means that the UMI network can process transactions that Ethereum processes over a year in 1 to 5 days — and with no fees. https://preview.redd.it/rwohnov3alj51.png?width=1125&format=png&auto=webp&s=4329b75c0bd8b7a22276b529f5ca433d17a0874f The UMI network can process transactions that Ethereum processes over a year in a few days and with no fees.More details What is more important is that less than 0.001% of the network's overall potential is used now. The UMI network has a lot of reserve capacity and can handle hundreds of thousands of times heavier load. Moreover, with scaling possibilities, UMI can keep up with the times. The UMI code ensures the safe introduction of any upgrades — the network can be easily modified and scaled with cutting edge technology solutions. In other words, traffic jams will never pose a problem for us. UMI will instantly process all transactions, with no fees. Always. https://preview.redd.it/t0068th0alj51.png?width=544&format=png&auto=webp&s=019f46ec8c093480c4638cf098312a5a146134a8 A real-time speedometer displays the number of transactions processed by the UMI network per second.Link Additionally, unlike Ethereum and other cryptocurrencies, the UMI's staking smart contract prevents possibilities of any pyramid schemes, meaning eliminates their negative influence. Our staking is completely safe and secured against scammers. Read more about this in our article. Any UMI staking structure could work forever. In other words, you can multiply your coins at a rate of up to 40% per month for an indefinitely long period of time. UMI doesn't inherit the disadvantages of the first-generation cryptocurrencies. This is an innovative, carefully designed network based on state-of-the-art technologies. UMI is an ambitious step toward the future. And we're making it together right now! Sincerely yours, UMI team
You made it! :) First up, SORRY! This has been a late post, I have my reasons don't question them (if you must know I'll be posting in the discord - one time only haha). Secondly, I am sure you can agree with me when I say "Wow!" What an incredible week it has been. Last week I thought it was going to take a couple more weeks for more moving price action when it had only taken a few days which has seen Bitcoin reach and pass the $10,000 region. We have also seen the total Market cap for cryptocurrencies increase from about 280B to over 300B (308B at time of writing) within just a few days. A huge injection of liquidity, about 40B, into the market and just to name a few of the best rises in the top 20 (on Coinmarketcap.com), the price of ETH BTC ADA have given good performances/positive responses (With this I will start adding screenshots at the end of each week for timestamp purposes). This may be a combination from Binance, Mastercard, Paypal, Grayscale investments, VISA AND the DEFI sector. Let me explain... Last week we read about Binance integrating with the company Swipe (SXP) to issue there own debit card expanding the use and reach of cryptocurrency to 31 countries within Europe. Binance's Q2 scheduled token burn of $60.5 Million, this figure correlates with its exchange, margin and futures trading platforms where approximately 20% of profits get burned to increase the price of BNB token (careful as the price has been steady after the burn). This week we find out Mastercard's expansion into the Cryptosphere as they expand and integrate with the Wirex team to issue a Mastercard-backed Bitcoin debit card, thus further extending the reach of cryptocurrency availability internationally. "The cryptocurrency market continues to mature and Mastercard is driving it forward, creating safe and secure experiences for consumers and businesses in today’s digital economy " "...Our work with Wirex and the wider crypto ecosystem is accelerating innovation and empowering consumers with more choice in the way they pay" Mastercard is also reaching out to other emerging cryptocurrency firms to apply to become principal members [Partners] with Mastercard as they have relaxed their digital assets program and look to expand into the Digital Assets and Blockchain environment. Paypals expression of interest in cryptocurrency facilitiation may bear fruits as it is said Paypal has partnered up with stablecoin operator Paxos (who is already in partnership with Revolut in the US) to facilitate trading through a cryptocurrency brokerage which will enable other firms to integrate cryptocurrency trading functionalities with them. In my opinion this looks much more promising than the Libra association they pulled out from last October as regulations. Grayscale Investments clears regulatory hurdle as they have been given the green light for its Bitcoin Cash Trust (BCHG) and Litecoin Trust (LTCN) to be quoted in over-the-counter (OTC) markets by US Financial Industry Regulatory Authority (FINRA). “The Trusts are open-ended trusts sponsored by Grayscale and are intended to enable exposure to the price movement of the Trusts’ underlying assets through a traditional investment vehicle, avoiding the challenges of buying, storing, and safekeeping digital Bitcoin Cash or Litecoin directly.” More green lights for Cryptocurrency in the US as regulators allow banks to provide cryptocurrency custody services (which may go further than just custody services). A little bit strange as it seems unnecessary and undermines one of the key factors and uses of cryptocurrency which is to be in complete control of your own finances... On another outlook this may be bullish as it allows US banks to provide banking services directly to lawful cryptocurrency businesses and show support for Bitcoin. Visa shows support stating they have a roadmap for their further expansion into the Crypto sphere. Already working with Crypto platform Coinbase and Fold they have stated they recognise the role of digital assets in the future of money. To be frank, it appears to be focused on stable coins, cost effectiveness and transaction speeds. However they are expanding their support for crypto assets. AND MOST IMPORTANTLY, DeFI! Our very own growing section in crypto. Just like the 2017 ICO boom we are seeing exorbitant growth and FOMO into the Decentralised Finance sector (WBTC, Stablecoins, Yield farming, DEXs etc). The amount of active addresses on Ethereum has doubled but with the FOMO on their network have sky rocketed their fees! Large use-cases of stable coins such as USDT ($6B in circulation using ERC-20 standard), DAI, TUSD, and PAX. $114M Wrapped Bitcoin (WBTC) on their network acts as a fluid side chain for Bitcoin and DEX trade volume has touched $1.6B this month. With all this action happening on Ethereum I saw the 24HR volume surpass BTC briefly on Worldcoinindex.com In other news, Bitcoin has been set as a new precedent in a US federal court in a case against Larry Dean Harmon, the operator of an underground trading platform Helix. Bitcoin has now legally been ruled as a form of money. “After examination of the relevant statutes, case law, and other sources, the Court concludes that bitcoin is money under the MTA and that Helix, as described in the indictment, was an `unlicensed money transmitting business´ under applicable federal law.” Quick news in China/Asia as floods threaten miners and the most dominant ASIC Bitcoin mining rig manufacturer Bitmain loses 10,000 Antminers worth millions alledgedly goes missing or "illegally transfered" with ongoing leadership dispute between cofounders. Last but not least, Cardano (ADA) upgrade Shelley is ready to launch! Hardfork is initiated as final countdown clock is switched on. At time of writing the point of no return has been reached, stress tests done and confirmation Hardfork is coming 29/07 The Shelley Mainnet upgrade is a step toward fast, capable and decentralised crypto that can serve billions of people. With the Shelley Mainnet is ADA staking rewards and pools! Here is a chance for us Gravychainers to set up a small pool of our own. Small percentage of profits going into the development of the community, and you keep the rest! If you read all of my ramblings thanks heaps! I appreciate it! I have added an extra piece of reading called speculation. Most you can speculate on by just reading the headline some others have more depth to them. Another post next week for a weekly round up! Where do you think the market is going? What is in your portfolio? Let us know in the Gravychain Discord Channel See you soon!
🍕 Bring some virtual pizza to share 🍕 Come have a chat, stimulate a discussion, ask a question or share some knowledge. We are all friendly crypto enthusiasts up for a chat, supportive and want to help each other with knowledge and investments! Big thanks to our Telegram and My Crypto HQ for the constant news updates!
P.S. Dr Seuss collectables on the blockchain HECK YEAH! and Bitcoin enters NASCAR, remember when Doge did this? it was like when Doge was trending on TikTok. ... Oh yeah did I also mention Steve Wozniak is suing Youtube, Google over rampant Bitcoin scams. Wait, what? Sydney based law firm JPB Liberty is suing Google, Facebook and Twitter for up to $300B. Just another day in the Cryptosphere.
Is bitcoin really viable as a peer-to-peer electronic cash? Due to high transaction costs and slow transaction speeds, how can we ever use bitcoin to purchase, for example, a Sprite and a bag of potato chips at a gas station? If I want to send a micropayment, for example, of 1000 sats on-chain I can pretty much forget about it because no miner will for and the ftransaction hangs out in the memepool indefinitely. I had a lot of hope for lightning network, but I am now starting to have doubts about its long-term success. What happens when someone using lightning wants to settling a microtransaction on the bitcoin blockchain? How secure is bitcoin really? Remember when cz binance wanted to people to thank him for not ordering a re-org to recover lost funds? Isn't bitcoin mining dangerously centralized? What if in the future there is a terrorist attack by government or other criminal orgs that involve bombing or burning large bitcoin mining facilities. Satoshi writes in the white paper that we propose a solution to the double spending problem, but has this really been achieved? Double spends are still possible with a 51% attack, so what solution to double spending has been achieved. Can't large mining pools conspire to attack bitcoin. These are concerns I have for the long-term viability and intrinsic value of bitcoin.
AMA Recap of CEO and Co-founder of Chromia, Henrik Hjelte in the @binancenigeria Telegram group on 03/05/2020.
1)It is possible to change the code through a miner vote or a fork and change the total supply or anything. DASH did it : they reduced the total supply from 84M to 18.9M a few years ago. They could also increase it to 999 Trillions if they wanted to so that millions of DASH are mined every week. 2)You can also fork bitcoin anytime , start over from 0 and claim it's the real bitcoin. (BCH , BSV , BTG , LTC , BCD etc) 3)Why would you pay $10,000 for a digital collectible unit called BTC when you can use BCH or TRX or LTC .. you name it. They work just as fine and cost less. There is no rarity like in gold. 4)Think of any amount you hold in ethereum as a gift card to use smart contracts on the ETH blockchain. Ridiculous. You’d rather hold a wal mart gift card or even simply cash. 5)Private keys may be bruteforced as we speak. Quintillions entries a second. When they’ll have enough bitcoins under control , they could move them all at once instantly.(At least 45,000 ETH have been stolen this way for now through ethereum bandit)SHA 256 is too old , bitcoin is 10 years old , it is not secure enough , quantum computing could potentially break it. 6)And that’s if people don’t find a way to create an infinite amount of coins to sell on exchanges.. it happened with monero , stellar , bitcoin , zcash , zcoin , eos , etc.. proofs : “Bitcoin , Coindesk : “The Latest Bitcoin Bug Was So Bad, Developers Kept Its Full Details a Secret”an attacker could have actually used it to create new Bitcoin — above the 21 million hard-cap of coin creation — thereby inflating the supply and devaluing current bitcoins.” Stellar : “Stellar Inflation: Glitch Leads to 2.25 Billion Extra XLM Printed” Monero : “A bug in the Monero (XMR) wallet software that could enable fake deposits to exchanges has been recently brought to public attention through a Medium post” Zcoin : Forged coins were created, but not exceeding 1% of the circulating supply. We will release further details on exact numbers when Sigma is released. EOS : “Hackers Forge Billion EOS Coins to Steal Real Crypto From DEX “ Zcash : “Zcash Team Reveals It Fixed a Catastrophic Coin Counterfeiting Bug” etc.. 7)Segwit , and especially Lightning network is a very complex technology and it will inevitably have flaws , bugs , it will be exploited and people will lose money. That alone can cause bitcoin to drop very low levels. 8)Then miners may be losing millions so they will stop mining , blocks may be so slow , almost no transaction will come though , and bitcoin may not have enough time to reach the next difficulty adjustement. This is reffered to as a death spiral. Then every crypto even those with no mining involved may crash hard. 9)Many crypto wallets are unsafe and have already caused people to lose all their investment , including the infamous “parity wallet”. 10)It is NOT trustless. you have to trust the wallet you’re using is not just generating an address controlled by the developper , you have to trust the node the wallet connects to is an honest node , you have to trust a Rogue state or organization with enough computing power will not 51% attack the network. etc.. 11)Bitcoin is NOT deflationary. Bitcoins are created every blocks (roughly every 10 minutes) and you wil be dead by the time we reach the 21 million current hard cap. 12)Bitcoin price may artificially be inflated by Tether. 13)It’s an energy waste , an environmental catastrophy. 14)The only usecases are money laundering , tax evasion , gambling , buying on the dark net , evading sanctions and speculation. 15)Governments will ban it if it gets too big , and they have a big incentive to do so , not only for the obscure usecases but also because it threatens the stability of sovereign currencies. Trump could kill bitcoin with one tweet , force fiat exchanges to cease activity. 16)Most cryptos are scams , the rest are just crazy speculative casino investments. 17)It is pyramidal : early adopters intend to profit massively while last comers get crushed. That's not how money works. The overwhelming majority of crypto holders are buying it because they think they will be able to sell it to a higher price later. Money is supposed to be rather stable. That's why the best cryptocurrencies are USDT USDC etc.. 18)The very few stores accepting bitcoin always have the real price in the local currency , not in bitcoin. And prices like 0.00456329 BTC are ridiculous ! 19)About famous brokers listing bitcoin : they have to meet the demand in order to make money , it doesn't mean they approve it , some even short it (see interactive broker's CEO opinion on bitcoin) 20)People say cash is backed by nothing and losing value slowly , and yes it is very flawed , but there is a whole nation behind it , it's accepted everywhere , you can buy more things with it. 21)Everybody in crypto thinks that there will be a new bullrun and that then , they will sell. But because everybody thinks it will happen , it might not happen. The truth is past performance doesn’t indicate future performance and it is absolutely not guaranteed that there will ever be another bullrun. The markets are unpredictable. 22)Also BTC went from about $0.003 to the price it is today , so don’t think it’s cheap now. 23)There is no recourse if you’re scammed/hacked/made a mistake in the address etc. No chargebacks. But it might be possible to do a rollback (blockchain reorganization) to reverse some transactions. BSV did it. 24)In case of a financial crisis , the speculative assets would crash the most and bitcoin is far from being a non speculative safe heaven ; and governments might ban it to prevent fiat inflation to worsen. 25) Having to write down the private key somewhere or memorize it is a security flaw ! It’s insane to think a system like this will gain mass adoption. 26) The argument saying governments can not ban it because it is decentralized (like they banned drugs) doesn’t work for cryptos. First , drugs are much harder to find and much more expensive and unsafe because of the ban , and people are willing to take the risk because they like it. But if crypto is banned , value will drop too much , and if you can’t sell it for fiat without risking jail , goodluck to find a buyer. Fiat exchanges could close. Banks could terminate every crypto related bank account. And maybe then the mining death spiral would happen and kill all cryptos. 27) Crypto doesn’t exist. It’s like buying air. It’s just virtual collectibles generated by a code. Faguzzi, fugazzi, it’s a whazzie, it’s a whoozie.. it’s a.. fairy dust. It doesn’t exist. It’s never landed. It’s no matter, it’s not on the elemental chart. It… it’s not fucking real! 28) Most brilliant guys have come out and said Bitcoin was a scam or worthless. Including Bill Gates , Warren Buffet , The Wolf Of Wall Street… 29) Inflation is necessary for POW , BTC code will have to be changed to bypass the 21M cap or mining will die ! If BTC code is not changed to allow for miners to be paid reasonably , they will cease mining when the bitcoin block reward gets too low.Even monero understood it ,the code will have to be changed to allow for an infinite bitcoin supply (devaluating all current bitcoins) or the hash will decrease and the security of bitcoin will decrease dramatically and be 51% attacked 30) Don’t mix up blockchain and cryptos. Even blockchain is overrated. But when you hear this or that company is going blockchain , it doesn’t mean they support cryptocurrencies. 31) Craig Wright had a bitcoin mining company with Dave Kleinman (he died) and on january 1 2020 he claims he will be able to access the 1.1M BTC/BCH/BTG from the mining trust. He may or may not dump them on the market , he also said BTC had a fatal flaw and that by 2019 there will be no more BTC. 32) Hacks in cryptos are very common and usually massive. Billions of dollars in crypto have been stolen in the last 6 years. In may 2019 Binance was hacked and lost 7,000 BTC (and it’s far from being the biggest crypto hack). 33) Bitcoin was first. It's an ancient technology. Newer blockchains have privacy, smart contracts, distributed apps and more.Bitcoin is our future? Was the Model T the future of the automobile? (John Mc Afee) 34) IOTA investiguating stolen funds on mainnet. IOTA shuts down the whole network to deal with trinity wallet attack. 35) Compared to bitcoin other cryptos work just as fine and don't waste so much energy. 36 ) Everytime miners disagree on the updates it will create another version of bitcoin : problem of governance and legitimacy. 37) Cryptos are only legitimate if they act as a credit for a redeemable asset like USDT or gold backed coins. While the native language of the writter is not english , I think you get the point and it doesn't make it any less relevant.
A double-spend occurs when the same funds are spent more than once. The term is used almost exclusively in the context of digital money — after all, you’d have a hard time spending the same physical cash twice. When you pay for a coffee today, you hand cash over to a cashier who probably locks it in a register. You can’t go to the coffee shop across the road and pay for another coffee with the same bill. In digital cash schemes, there’s the possibility that you could. You’ve surely duplicated a computer file before — you just copy and paste it. You can email the same file to ten, twenty, fifty people. Since digital money is just data, you need to prevent people from copying and spending the same units in different places. Otherwise, your currency will collapse in no time. For a more in-depth look at double-spending, check out Double Spending Explained.
Why is Proof of Work necessary?
If you’ve read our guide to blockchain technology, you’ll know that users broadcast transactions to the network. Those transactions aren’t immediately considered valid, though. That only happens when they get added to the blockchain. The blockchain is a big database that every user can see, so they can check if funds have been spent before. Picture it like this: you and three friends have a notepad. Anytime one of you wants to make a transfer of whatever units you’re using, you write it down — Alice pays Bob five units, Bob pays Carol two units, etc. There’s another intricacy here — each time you make a transaction, you refer to the transaction where the funds came from. So, if Bob was paying Carol with two units, the entry would actually look like the following: Bob pays Carol two units from this earlier transaction with Alice. Now, we have a way to track the units. If Bob tries to make another transaction using the same units he just sent to Carol, everyone will know immediately. The group won’t allow the transaction to be added to the notepad. Now, this might work well in a small group. Everyone knows each other, so they’ll probably agree on which of the friends should add transactions to the notepad. What if we want a group of 10,000 participants? The notepad idea doesn’t scale well, because nobody wants to trust a stranger to manage it. This is where Proof of Work comes in. It ensures that users aren’t spending money that they don’t have the right to spend. By using a combination of game theory and cryptography, a PoW algorithm enables anyone to update the blockchain according to the rules of the system.
How does PoW work?
Our notepad above is the blockchain. But we don’t add transactions one by one — instead, we lump them into blocks. We announce the transactions to the network, then users creating a block will include them in a candidate block. The transactions will only be considered valid once their candidate block becomes a confirmed block, meaning that it has been added to the blockchain. Appending a block isn’t cheap, however. Proof of Work requires that a miner (the user creating the block) uses up some of their own resources for the privilege. That resource is computing power, which is used to hash the block’s data until a solution to a puzzle is found. Hashing the block’s data means that you pass it through a hashing function to generate a block hash. The block hash works like a “fingerprint” — it’s an identity for your input data and is unique to each block. It’s virtually impossible to reverse a block hash to get the input data. Knowing an input, however, it’s trivial for you to confirm that the hash is correct. You just have to submit the input through the function and check if the output is the same. In Proof of Work, you must provide data whose hash matches certain conditions. But you don’t know how to get there. Your only option is to pass your data through a hash function and to check if it matches the conditions. If it doesn’t, you’ll have to change your data slightly to get a different hash. Changing even one character in your data will result in a totally different result, so there’s no way of predicting what an output might be. As a result, if you want to create a block, you’re playing a guessing game. You typically take information on all of the transactions that you want to add and some other important data, then hash it all together. But since your dataset won’t change, you need to add a piece of information that is variable. Otherwise, you would always get the same hash as output. This variable data is what we call a nonce. It’s a number that you’ll change with every attempt, so you’re getting a different hash every time. And this is what we call mining. Summing up, mining is the process of gathering blockchain data and hashing it along with a nonce until you find a particular hash. If you find a hash that satisfies the conditions set out by the protocol, you get the right to broadcast the new block to the network. At this point, the other participants of the network update their blockchains to include the new block. For major cryptocurrencies today, the conditions are incredibly challenging to satisfy. The higher the hash rate on the network, the more difficult it is to find a valid hash. This is done to ensure that blocks aren’t found too quickly. As you can imagine, trying to guess massive amounts of hashes can be costly on your computer. You’re wasting computational cycles and electricity. But the protocol will reward you with cryptocurrency if you find a valid hash. Let’s recap what we know so far:
It’s expensive for you to mine.
You’re rewarded if you produce a valid block.
Knowing an input, a user can easily check its hash — non-mining users can verify that a block is valid without expending much computational power.
So far, so good. But what if you try to cheat? What’s to stop you from putting a bunch of fraudulent transactions into the block and producing a valid hash? That’s where public-key cryptography comes in. We won’t go into depth in this article, but check out What is Public-Key Cryptography? for a comprehensive look at it. In short, we use some neat cryptographic tricks that allow any user to verify whether someone has a right to move the funds they’re attempting to spend. When you create a transaction, you sign it. Anyone on the network can compare your signature with your public key, and check whether they match. They’ll also check if you can actually spend your funds and that the sum of your inputs is higher than the sum of your outputs (i.e., that you’re not spending more than you have). Any block that includes an invalid transaction will be automatically rejected by the network. It’s expensive for you to even attempt to cheat. You’ll waste your own resources without any reward. Therein lies the beauty of Proof of Work: it makes it expensive to cheat, but profitable to act honestly. Any rational miner will be seeking ROI, so they can be expected to behave in a way that guarantees revenue.
Proof of Work vs. Proof of Stake
There are many consensus algorithms, but one of the most highly-anticipated ones is Proof of Stake (PoS). The concept dates back to 2011, and has been implemented in some smaller protocols. But it has yet to see adoption in any of the big blockchains. In Proof of Stake systems, miners are replaced with validators. There’s no mining involved and no race to guess hashes. Instead, users are randomly selected — if they’re picked, they must propose (or “forge”) a block. If the block is valid, they’ll receive a reward made up of the fees from the block’s transactions. Not just any user can be selected, though — the protocol chooses them based on a number of factors. To be eligible, participants must lock up a stake, which is a predetermined amount of the blockchain’s native currency. The stake works like bail: just as defendants put up a large sum of money to disincentivize them from skipping trial, validators lock up a stake to disincentivize cheating. If they act dishonestly, their stake (or a portion of it) will be taken. Proof of Stake does have some benefits over Proof of Work. The most notable one is the smaller carbon footprint — since there’s no need for high-powered mining farms in PoS, the electricity consumed is only a fraction of that consumed in PoW. That said, it has nowhere near the track record of PoW. Although it could be perceived as wasteful, mining is the only consensus algorithm that’s proven itself at scale. In just over a decade, it has secured trillions of dollars worth of transactions. To say with certainty whether PoS can rival its security, staking needs to be properly tested in the wild.
Proof of Work was the original solution to the double-spend problem and has proven to be reliable and secure. Bitcoin proved that we don’t need centralized entities to prevent the same funds from being spent twice. With clever use of cryptography, hash functions, and game theory, participants in a decentralized environment can agree on the state of a financial database.
https://preview.redd.it/6w93e0afttx41.png?width=1400&format=png&auto=webp&s=c00989612ec2d52eb522405e6b6a98bf875e08bb Version 1.3.0 is a powerful update to TkeySpace that our team has been carefully preparing. since version 1.2.0, we have been laying the foundation for implementing new features that are already available in the current version. Who cares about the security and privacy of their assets is an update for you. TkeySpace — was designed to give You full control over your digital assets while maintaining an exceptional level of security, which is why there is no personal data in the wallet: phone number, the email address that could be compromised by hackers — no identity checks and other hassles, just securely save the backup phrase consisting of 12 words.
Briefly about the TkeySpace 1.3.0 update :
Code optimization and switching to AndroidX;
Selecting the privacy mode;
Selecting the recovery method for each currency;
Choosing the address format for Litecoin;
Enhanced validation of transactions and blocks in the network;
Starting with the current update, the TkeySpace wallet can communicate via the TOR network, includes new privacy algorithms, and supports 59 different currencies. https://i.redd.it/kn5waeskttx41.gif Tor is a powerful privacy feature for those who own large assets or live in places where the Internet is heavily censored.
Tor technology provides protection against traffic analysis mechanisms that compromise not only Internet privacy, but also the confidentiality of trade secrets, business contacts, and communications in General.
When you enable TOR settings, all outgoing traffic from the wallet will be encrypted and routed through an anonymous network of servers, periodically forming a chain through the Tor network, which uses multi-level encryption, effectively hiding any information about the sender: location, IP address, and other data. This means that if your provider blocks the connection, you can rest easy — after all, by running this function, you will get an encrypted connection to the network without restrictions. https://preview.redd.it/w9y3ax4mttx41.png?width=960&format=png&auto=webp&s=972e375fc26d479e8b8d2999f7659ec332e2af55 In TOR mode, the wallet may work noticeably slower and in some cases, there may be problems with the network, due to encryption, some blockchain browsers may temporarily not work. However, TOR encryption is very important when Internet providers completely block traffic and switching to this mode, you get complete freedom and no blocks for transactions.
Confidentiality of transactions (the Blockchain transaction)
The wallet can change the model of a standard transaction, mixing inputs and outputs, making it difficult to identify certain cryptocurrencies. In the current update, you can select one of several modes for the transaction privacy level: deterministic lexicographic sorting or shuffle mode.
Mode: Lexicographic indexing
Implemented deterministic lexicographic sorting using hashes of previous transactions and output indexes for sorting transaction input data, as well as values and scriptPubKeys for sorting transaction output data; We understand that information must remain confidential not only in the interests of consumers but also in higher orders, financial systems must be kept secret to prevent fraud. One way to address these privacy shortcomings is to randomize the order of inputs and outputs.
Lexicographic orderingis a comparison algorithm used to sort two sets based on their Cartesian order within their common superset. Lexicographic order is also often referred to as alphabetical order or dictionary order. The hashes of previous transactions (in reverse byte order) are sorted in ascending order, lexicographically.
In the case of two matching transaction hashes, the corresponding previous output indexes will be compared by their integer value in ascending order. If the previous output indexes match, the input data is considered equal.
Shuffle Mode: mixing (random indexing)
To learn more about how “shuffle mode” works, we will first analyze the mechanisms using the example of a classic transaction. Current balance Of your wallet: 100 TKEY, coins are stored at different addresses: x1. Address-contains 10 TKEY. x2. Address-contains 20 TKEY. x3. Address-contains 30 TKEY. x4. Address-contains 15 TKEY. x5. Address-contains 25 TKEY.
Addresses in the blockchain are identifiers that you use to send cryptocurrency to another person or to receive digital currency.
Let’s look at a similar example: you have 100 TKEY on your balance, and you need to send 19 TKEY. x1. Address-contains 10 TKEY. x2. Address-contains 20 TKEY. x3. Address-contains 30 TKEY. x4. Address-contains 15 TKEY. x5. Address-contains 25 TKEY. You send 19 TKEY, the system analyzes all your addresses and balances on them and selects the most suitable ones for the transaction. To send 19 TKEY, the miners will be given coins with x2. Addresses, for a total of 20 TKEY. Of these, 19 TKEY will be sent to the recipient, and 0.99999679 TKEY will be returned to Your new address as change minus the transaction fee. https://preview.redd.it/doxmqffqttx41.png?width=1400&format=png&auto=webp&s=5c99ec41363fe50cd651dc0acab05e175416006a In the blockchain explorer, you will see the transaction amount in the amount of 20 TKEY, where 0.99999679 TKEY is Your change, 19 TKEY is the amount you sent and 0.00000321 is the transaction fee. The shuffle mode has a cumulative effect. with each new transaction, delivery Addresses will be created and the selection of debit addresses/s that are most suitable for the transaction will change. Thus, if you store 1,000,000 TKEY in your wallet and want to send 1 TKEY to the recipient, the transaction amount will not display most of your balance but will select 1 or more addresses for the transaction.
Selecting the recovery method for each digital currency (Blockchain restore)
Now you can choose the recovery method for each currency: API + Blockchain or blockchain.
Note: This is not a syncing process, but rather the choice of a recovery method for your wallet. Syncing takes place with the blockchain — regardless of the method you choose.
What are the differences between recovery methods?
API + Blockchain
In order not to load the entire history of the blockchain, i.e. block and transaction headers, the API helps you quickly get point information about previous transactions. For example, If your transactions are located in block 67325 and block 71775, the API will indicate to the node the necessary points for restoring Your balance, which will speed up the “recovery” process. As soon as the information is received, communication with the peers takes place and synchronization begins from the control point, then from this moment, all subsequent block loading is carried out through the blockchain. This method allows you to quickly restore Your existing wallet. ‘’+’’ Speed. ‘’-’’ The API server may fail.
This method loads all block headers (block headers + Merkle) starting from the BIP44 checkpoint and manually validates transactions. ‘’+’’ It always works and is decentralized. ‘’-’’ Loading the entire blockchain may take a long time.
Why do I need to switch the recovery method?
If when creating a wallet or restoring it, a notification (!) lights up in red near the selected cryptocurrency, then most likely the API has failed, so go to Settings — Security Center — Privacy — Blockchain Restore — switch to Blockchain. Syncing will be successful.
Enhanced validation of transactions and blocks in the network
Due to the increased complexity in the Tkeycoin network, we have implemented enhanced validation of the tkeycoin consensus algorithm, and this algorithm is also available for other cryptocurrencies.
What is the advantage of the enhanced validation algorithm for the user
First, the name itself speaks for itself — it increases the security of the network, and second, by implementing the function — we have accelerated the work of the TkeySpace blockchain node, the application consumes even fewer resources than before.
High complexity is converted to 3 bytes, which ensures fast code processing and the least resource consumption on your device.
The synchronization process has been upgraded. Node addresses are added to the local storage, and instant synchronization with nodes occurs when you log in again.
Checking for double-spending
TkeySpace eliminates “double-spending” in blockchains, which is very valuable in the Bitcoin and Litecoin networks.
For example, using another application, you may be sent a fake transaction, and the funds will eventually disappear from the network and your wallet because this feature is almost absent in most applications.
Using TkeySpace — you are 100% sure that your funds are safe and protected from fraudulent transactions in the form of “fake” transactions.
The bloom filter to check for nodes
All nodes are checked through the bloom filter. This allows you to exclude fraudulent nodes that try to connect to the network as real nodes of a particular blockchain. In practice, this verification is not available in applications, Tkeycoin — decided to follow a new trend and change the stereotypes, so new features such as node verification using the bloom filter and double-spending verification are a kind of innovation in applications that work with cryptocurrencies.
Updating the Binance and Ethereum libraries
Updated Binance and Ethereum libraries for interaction with the TOR network.
Function — to hide the balance
This function allows you to hide the entire balance from the main screen.
Advanced currency charts and charts without authentication
Detailed market statistics are available, including volumes, both for 1 day and several years. Select the period of interest: 1 day, 7 days, 1 month, 3 months, 6 months, 1 year, 2 years.
In version 1.3.0, you can access charts without authentication. You can monitor the cryptocurrency exchange rate without even logging in to the app. If you have a pin code for logging in, when you open the app, swipe to the left and you will see a list of currencies.
Transaction verification for Tkeycoin is now available directly in the app.
Independent Commission entry for Bitcoin
Taking into account the large volume of the Bitcoin network, we have implemented independent Commission entry — you can specify any Commission amount. For other currencies, smart Commission calculation is enabled based on data from the network. The network independently regulates the most profitable Commission for the sender.
New digital currencies
The TkeySpace wallet supports +59 cryptocurrencies and tokens.
Technical: A Brief History of Payment Channels: from Satoshi to Lightning Network
Who cares about political tweets from some random country's president when payment channels are a much more interesting and are actually capable of carrying value? So let's have a short history of various payment channel techs!
Generation 0: Satoshi's Broken nSequence Channels
Because Satoshi's Vision included payment channels, except his implementation sucked so hard we had to go fix it and added RBF as a by-product. Originally, the plan for nSequence was that mempools would replace any transaction spending certain inputs with another transaction spending the same inputs, but only if the nSequence field of the replacement was larger. Since 0xFFFFFFFF was the highest value that nSequence could get, this would mark a transaction as "final" and not replaceable on the mempool anymore. In fact, this "nSequence channel" I will describe is the reason why we have this weird rule about nLockTime and nSequence. nLockTime actually only works if nSequence is not 0xFFFFFFFF i.e. final. If nSequence is 0xFFFFFFFF then nLockTime is ignored, because this if the "final" version of the transaction. So what you'd do would be something like this:
You go to a bar and promise the bartender to pay by the time the bar closes. Because this is the Bitcoin universe, time is measured in blockheight, so the closing time of the bar is indicated as some future blockheight.
For your first drink, you'd make a transaction paying to the bartender for that drink, paying from some coins you have. The transaction has an nLockTime equal to the closing time of the bar, and a starting nSequence of 0. You hand over the transaction and the bartender hands you your drink.
For your succeeding drink, you'd remake the same transaction, adding the payment for that drink to the transaction output that goes to the bartender (so that output keeps getting larger, by the amount of payment), and having an nSequence that is one higher than the previous one.
Eventually you have to stop drinking. It comes down to one of two possibilities:
You drink until the bar closes. Since it is now the nLockTime indicated in the transaction, the bartender is able to broadcast the latest transaction and tells the bouncers to kick you out of the bar.
You wisely consider the state of your liver. So you re-sign the last transaction with a "final" nSequence of 0xFFFFFFFF i.e. the maximum possible value it can have. This allows the bartender to get his or her funds immediately (nLockTime is ignored if nSequence is 0xFFFFFFFF), so he or she tells the bouncers to let you out of the bar.
Now that of course is a payment channel. Individual payments (purchases of alcohol, so I guess buying coffee is not in scope for payment channels). Closing is done by creating a "final" transaction that is the sum of the individual payments. Sure there's no routing and channels are unidirectional and channels have a maximum lifetime but give Satoshi a break, he was also busy inventing Bitcoin at the time. Now if you noticed I called this kind of payment channel "broken". This is because the mempool rules are not consensus rules, and cannot be validated (nothing about the mempool can be validated onchain: I sigh every time somebody proposes "let's make block size dependent on mempool size", mempool state cannot be validated by onchain data). Fullnodes can't see all of the transactions you signed, and then validate that the final one with the maximum nSequence is the one that actually is used onchain. So you can do the below:
Become friends with Jihan Wu, because he owns >51% of the mining hashrate (he totally reorged Bitcoin to reverse the Binance hack right?).
Slip Jihan Wu some of the more interesting drinks you're ordering as an incentive to cooperate with you. So say you end up ordering 100 drinks, you split it with Jihan Wu and give him 50 of the drinks.
When the bar closes, Jihan Wu quickly calls his mining rig and tells them to mine the version of your transaction with nSequence 0. You know, that first one where you pay for only one drink.
Because fullnodes cannot validate nSequence, they'll accept even the nSequence=0 version and confirm it, immutably adding you paying for a single alcoholic drink to the blockchain.
The bartender, pissed at being cheated, takes out a shotgun from under the bar and shoots at you and Jihan Wu.
Jihan Wu uses his mystical chi powers (actually the combined exhaust from all of his mining rigs) to slow down the shotgun pellets, making them hit you as softly as petals drifting in the wind.
The bartender mutters some words, clothes ripping apart as he or she (hard to believe it could be a she but hey) turns into a bear, ready to maul you for cheating him or her of the payment for all the 100 drinks you ordered from him or her.
Steely-eyed, you stand in front of the bartender-turned-bear, daring him to touch you. You've watched Revenant, you know Leonardo di Caprio could survive a bear mauling, and if some posh actor can survive that, you know you can too. You make a pose. "Drunken troll logic attack!"
I think I got sidetracked here.
Bears are bad news.
You can't reasonably invoke "Satoshi's Vision" and simultaneously reject the Lightning Network because it's not onchain. Satoshi's Vision included a half-assed implementation of payment channels with nSequence, where the onchain transaction represented multiple logical payments, exactly what modern offchain techniques do (except modern offchain techniques actually work). nSequence (the field, but not its modern meaning) has been in Bitcoin since BitCoin For Windows Alpha 0.1.0. And its original intent was payment channels. You can't get nearer to Satoshi's Vision than being a field that Satoshi personally added to transactions on the very first public release of the BitCoin software, like srsly.
Miners can totally bypass mempool rules. In fact, the reason why nSequence has been repurposed to indicate "optional" replace-by-fee is because miners are already incentivized by the nSequence system to always follow replace-by-fee anyway. I mean, what do you think those drinks you passed to Jihan Wu are, other than the fee you pay him to mine a specific version of your transaction?
Satoshi made mistakes. The original design for nSequence is one of them. Today, we no longer use nSequence in this way. So diverging from Satoshi's original design is part and parcel of Bitcoin development, because over time, we learn new lessons that Satoshi never knew about. Satoshi was an important landmark in this technology. He will not be the last, or most important, that we will remember in the future: he will only be the first.
Incentive-compatible time-limited unidirectional channel; or, Satoshi's Vision, Fixed (if transaction malleability hadn't been a problem, that is). Now, we know the bartender will turn into a bear and maul you if you try to cheat the payment channel, and now that we've revealed you're good friends with Jihan Wu, the bartender will no longer accept a payment channel scheme that lets one you cooperate with a miner to cheat the bartender. Fortunately, Jeremy Spilman proposed a better way that would not let you cheat the bartender. First, you and the bartender perform this ritual:
You get some funds and create a transaction that pays to a 2-of-2 multisig between you and the bartender. You don't broadcast this yet: you just sign it and get its txid.
You create another transaction that spends the above transaction. This transaction (the "backoff") has an nLockTime equal to the closing time of the bar, plus one block. You sign it and give this backoff transaction (but not the above transaction) to the bartender.
The bartender signs the backoff and gives it back to you. It is now valid since it's spending a 2-of-2 of you and the bartender, and both of you have signed the backoff transaction.
Now you broadcast the first transaction onchain. You and the bartender wait for it to be deeply confirmed, then you can start ordering.
The above is probably vaguely familiar to LN users. It's the funding process of payment channels! The first transaction, the one that pays to a 2-of-2 multisig, is the funding transaction that backs the payment channel funds. So now you start ordering in this way:
For your first drink, you create a transaction spending the funding transaction output and sending the price of the drink to the bartender, with the rest returning to you.
You sign the transaction and pass it to the bartender, who serves your first drink.
For your succeeding drinks, you recreate the same transaction, adding the price of the new drink to the sum that goes to the bartender and reducing the money returned to you. You sign the transaction and give it to the bartender, who serves you your next drink.
At the end:
If the bar closing time is reached, the bartender signs the latest transaction, completing the needed 2-of-2 signatures and broadcasting this to the Bitcoin network. Since the backoff transaction is the closing time + 1, it can't get used at closing time.
If you decide you want to leave early because your liver is crying, you just tell the bartender to go ahead and close the channel (which the bartender can do at any time by just signing and broadcasting the latest transaction: the bartender won't do that because he or she is hoping you'll stay and drink more).
If you ended up just hanging around the bar and never ordering, then at closing time + 1 you broadcast the backoff transaction and get your funds back in full.
Now, even if you pass 50 drinks to Jihan Wu, you can't give him the first transaction (the one which pays for only one drink) and ask him to mine it: it's spending a 2-of-2 and the copy you have only contains your own signature. You need the bartender's signature to make it valid, but he or she sure as hell isn't going to cooperate in something that would lose him or her money, so a signature from the bartender validating old state where he or she gets paid less isn't going to happen. So, problem solved, right? Right? Okay, let's try it. So you get your funds, put them in a funding tx, get the backoff tx, confirm the funding tx... Once the funding transaction confirms deeply, the bartender laughs uproariously. He or she summons the bouncers, who surround you menacingly. "I'm refusing service to you," the bartender says. "Fine," you say. "I was leaving anyway;" You smirk. "I'll get back my money with the backoff transaction, and posting about your poor service on reddit so you get negative karma, so there!" "Not so fast," the bartender says. His or her voice chills your bones. It looks like your exploitation of the Satoshi nSequence payment channel is still fresh in his or her mind. "Look at the txid of the funding transaction that got confirmed." "What about it?" you ask nonchalantly, as you flip open your desktop computer and open a reputable blockchain explorer. What you see shocks you. "What the --- the txid is different! You--- you changed my signature?? But how? I put the only copy of my private key in a sealed envelope in a cast-iron box inside a safe buried in the Gobi desert protected by a clan of nomads who have dedicated their lives and their childrens' lives to keeping my private key safe in perpetuity!" "Didn't you know?" the bartender asks. "The components of the signature are just very large numbers. The sign of one of the signature components can be changed, from positive to negative, or negative to positive, and the signature will remain valid. Anyone can do that, even if they don't know the private key. But because Bitcoin includes the signatures in the transaction when it's generating the txid, this little change also changes the txid." He or she chuckles. "They say they'll fix it by separating the signatures from the transaction body. They're saying that these kinds of signature malleability won't affect transaction ids anymore after they do this, but I bet I can get my good friend Jihan Wu to delay this 'SepSig' plan for a good while yet. Friendly guy, this Jihan Wu, it turns out all I had to do was slip him 51 drinks and he was willing to mine a tx with the signature signs flipped." His or her grin widens. "I'm afraid your backoff transaction won't work anymore, since it spends a txid that is not existent and will never be confirmed. So here's the deal. You pay me 99% of the funds in the funding transaction, in exchange for me signing the transaction that spends with the txid that you see onchain. Refuse, and you lose 100% of the funds and every other HODLer, including me, benefits from the reduction in coin supply. Accept, and you get to keep 1%. I lose nothing if you refuse, so I won't care if you do, but consider the difference of getting zilch vs. getting 1% of your funds." His or her eyes glow. "GENUFLECT RIGHT NOW." Lesson learned?
Payback's a bitch.
Transaction malleability is a bitchier bitch. It's why we needed to fix the bug in SegWit. Sure, MtGox claimed they were attacked this way because someone kept messing with their transaction signatures and thus they lost track of where their funds went, but really, the bigger impetus for fixing transaction malleability was to support payment channels.
Yes, including the signatures in the hash that ultimately defines the txid was a mistake. Satoshi made a lot of those. So we're just reiterating the lesson "Satoshi was not an infinite being of infinite wisdom" here. Satoshi just gets a pass because of how awesome Bitcoin is.
CLTV-protected Spilman Channels
Using CLTV for the backoff branch. This variation is simply Spilman channels, but with the backoff transaction replaced with a backoff branch in the SCRIPT you pay to. It only became possible after OP_CHECKLOCKTIMEVERIFY (CLTV) was enabled in 2015. Now as we saw in the Spilman Channels discussion, transaction malleability means that any pre-signed offchain transaction can easily be invalidated by flipping the sign of the signature of the funding transaction while the funding transaction is not yet confirmed. This can be avoided by simply putting any special requirements into an explicit branch of the Bitcoin SCRIPT. Now, the backoff branch is supposed to create a maximum lifetime for the payment channel, and prior to the introduction of OP_CHECKLOCKTIMEVERIFY this could only be done by having a pre-signed nLockTime transaction. With CLTV, however, we can now make the branches explicit in the SCRIPT that the funding transaction pays to. Instead of paying to a 2-of-2 in order to set up the funding transaction, you pay to a SCRIPT which is basically "2-of-2, OR this singlesig after a specified lock time". With this, there is no backoff transaction that is pre-signed and which refers to a specific txid. Instead, you can create the backoff transaction later, using whatever txid the funding transaction ends up being confirmed under. Since the funding transaction is immutable once confirmed, it is no longer possible to change the txid afterwards.
Todd Micropayment Networks
The old hub-spoke model (that isn't how LN today actually works). One of the more direct predecessors of the Lightning Network was the hub-spoke model discussed by Peter Todd. In this model, instead of payers directly having channels to payees, payers and payees connect to a central hub server. This allows any payer to pay any payee, using the same channel for every payee on the hub. Similarly, this allows any payee to receive from any payer, using the same channel. Remember from the above Spilman example? When you open a channel to the bartender, you have to wait around for the funding tx to confirm. This will take an hour at best. Now consider that you have to make channels for everyone you want to pay to. That's not very scalable. So the Todd hub-spoke model has a central "clearing house" that transport money from payers to payees. The "Moonbeam" project takes this model. Of course, this reveals to the hub who the payer and payee are, and thus the hub can potentially censor transactions. Generally, though, it was considered that a hub would more efficiently censor by just not maintaining a channel with the payer or payee that it wants to censor (since the money it owned in the channel would just be locked uselessly if the hub won't process payments to/from the censored user). In any case, the ability of the central hub to monitor payments means that it can surveill the payer and payee, and then sell this private transactional data to third parties. This loss of privacy would be intolerable today. Peter Todd also proposed that there might be multiple hubs that could transport funds to each other on behalf of their users, providing somewhat better privacy. Another point of note is that at the time such networks were proposed, only unidirectional (Spilman) channels were available. Thus, while one could be a payer, or payee, you would have to use separate channels for your income versus for your spending. Worse, if you wanted to transfer money from your income channel to your spending channel, you had to close both and reshuffle the money between them, both onchain activities.
Poon-Dryja Lightning Network
Bidirectional two-participant channels. The Poon-Dryja channel mechanism has two important properties:
No time limit.
Both the original Satoshi and the two Spilman variants are unidirectional: there is a payer and a payee, and if the payee wants to do a refund, or wants to pay for a different service or product the payer is providing, then they can't use the same unidirectional channel. The Poon-Dryjam mechanism allows channels, however, to be bidirectional instead: you are not a payer or a payee on the channel, you can receive or send at any time as long as both you and the channel counterparty are online. Further, unlike either of the Spilman variants, there is no time limit for the lifetime of a channel. Instead, you can keep the channel open for as long as you want. Both properties, together, form a very powerful scaling property that I believe most people have not appreciated. With unidirectional channels, as mentioned before, if you both earn and spend over the same network of payment channels, you would have separate channels for earning and spending. You would then need to perform onchain operations to "reverse" the directions of your channels periodically. Secondly, since Spilman channels have a fixed lifetime, even if you never used either channel, you would have to periodically "refresh" it by closing it and reopening. With bidirectional, indefinite-lifetime channels, you may instead open some channels when you first begin managing your own money, then close them only after your lawyers have executed your last will and testament on how the money in your channels get divided up to your heirs: that's just two onchain transactions in your entire lifetime. That is the potentially very powerful scaling property that bidirectional, indefinite-lifetime channels allow. I won't discuss the transaction structure needed for Poon-Dryja bidirectional channels --- it's complicated and you can easily get explanations with cute graphics elsewhere. There is a weakness of Poon-Dryja that people tend to gloss over (because it was fixed very well by RustyReddit):
You have to store all the revocation keys of a channel. This implies you are storing 1 revocation key for every channel update, so if you perform millions of updates over your entire lifetime, you'd be storing several megabytes of keys, for only a single channel. RustyReddit fixed this by requiring that the revocation keys be generated from a "Seed" revocation key, and every key is just the application of SHA256 on that key, repeatedly. For example, suppose I tell you that my first revocation key is SHA256(SHA256(seed)). You can store that in O(1) space. Then for the next revocation, I tell you SHA256(seed). From SHA256(key), you yourself can compute SHA256(SHA256(seed)) (i.e. the previous revocation key). So you can remember just the most recent revocation key, and from there you'd be able to compute every previous revocation key. When you start a channel, you perform SHA256 on your seed for several million times, then use the result as the first revocation key, removing one layer of SHA256 for every revocation key you need to generate. RustyReddit not only came up with this, but also suggested an efficient O(log n) storage structure, the shachain, so that you can quickly look up any revocation key in the past in case of a breach. People no longer really talk about this O(n) revocation storage problem anymore because it was solved very very well by this mechanism.
Another thing I want to emphasize is that while the Lightning Network paper and many of the earlier presentations developed from the old Peter Todd hub-and-spoke model, the modern Lightning Network takes the logical conclusion of removing a strict separation between "hubs" and "spokes". Any node on the Lightning Network can very well work as a hub for any other node. Thus, while you might operate as "mostly a payer", "mostly a forwarding node", "mostly a payee", you still end up being at least partially a forwarding node ("hub") on the network, at least part of the time. This greatly reduces the problems of privacy inherent in having only a few hub nodes: forwarding nodes cannot get significantly useful data from the payments passing through them, because the distance between the payer and the payee can be so large that it would be likely that the ultimate payer and the ultimate payee could be anyone on the Lightning Network. Lessons learned?
We can decentralize if we try hard enough!
"Hubs bad" can be made "hubs good" if everybody is a hub.
Smart people can solve problems. It's kinda why they're smart.
After LN, there's also the Decker-Wattenhofer Duplex Micropayment Channels (DMC). This post is long enough as-is, LOL. But for now, it uses a novel "decrementing nSequence channel", using the new relative-timelock semantics of nSequence (not the broken one originally by Satoshi). It actually uses multiple such "decrementing nSequence" constructs, terminating in a pair of Spilman channels, one in both directions (thus "duplex"). Maybe I'll discuss it some other time. The realization that channel constructions could actually hold more channel constructions inside them (the way the Decker-Wattenhofer puts a pair of Spilman channels inside a series of "decrementing nSequence channels") lead to the further thought behind Burchert-Decker-Wattenhofer channel factories. Basically, you could host multiple two-participant channel constructs inside a larger multiparticipant "channel" construct (i.e. host multiple channels inside a factory). Further, we have the Decker-Russell-Osuntokun or "eltoo" construction. I'd argue that this is "nSequence done right". I'll write more about this later, because this post is long enough. Lessons learned?
Bitcoin offchain scaling is more powerful than you ever thought.
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BINANCE BITCOIN MINING POOL Coming Soon! XRP Not A ...
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