Unlike the period in which Bitcoin first emerged, it is a lot easier to buy cryptocurrency today. The major upside of this is that users do not have to break their necks searching for a way to buy their favorite coin.
There are numerous ways to go about it, including exchanges and Bitcoin ATMs, as opposed to attending crypto meetups and hanging around chatrooms in the hopes of meeting people who are willing to sell their tokens. However, most exchanges have not completely figured out how to make it easy for users to buy Bitcoin using fiat currency. In fact, this is a major drawback since people mostly have fiat currency as their starting point for acquiring cryptocurrency.
Normally, fiat purchases can be carried out through third-party applications like Paypal. However, users have found it nearly impossible to do something as simple as buying some Bitcoin straight from their Paypal accounts. With the Paypal active user base falling to 250 million, this is a far-reaching problem.
Currently, attempting to buy cryptocurrency through Paypal is difficult and expensive, mostly due to the potential for users to take advantage of chargebacks. For example, a user could buy some Bitcoins on an exchange, directly from their Paypal account and use its support system to charge it back so that they receive a refund. This can be problematic for exchanges since they can’t request refunds from the Bitcoin wallets they’ve credited.
WAYS IN WHICH BITCOIN CAN BE PURCHASED WITH A PAYPAL ACCOUNT
Although they are few, there are still some other ways in which users can purchase Bitcoin directly from their Paypal accounts, including direct trade, Bitcoin loans, and centralized exchanges and Specialized payment apps.
1. P2P DIRECT TRADE
Since most exchanges do not accept Paypal payments in exchange for BTC, direct trade is the most efficient way forward for those bent on using the payment app.
This involves sites that facilitate peer-to-peer agreements to sell and purchase Bitcoin using Paypal. Essentially, one user connects with another, either in person or through the use of a decentralized exchange like Localbitcoins, Paxful or Cancoin. After connecting, both users can agree on Paypal as a method of payment for their mutual benefit.
LOCALBITCOINS
Localbitcoins is easily the most popular way to buy BTC from a Paypal account. It is a peer-to-peer marketplace that aims to connect buyers and sellers who want to carry out their transactions using Paypal.
The platform method has continuously proven to be an effective way to achieve this. However, users must be careful when choosing sellers to avoid any fraudulent issues. Traders can be filtered by looking at their trade volume and feedback.
PAXFUL
This is another popular marketplace which links buyers and sellers as well as provides escrow services. The fees on Paxful are higher than the market rate but may prove to be worth it. Its user interface bears some slight similarities to Localbitcoins. Apart from Paypal, the platform also conducts transactions via Skrill, Payoneer and gift cards. The site will only accept verified U.S. Paypal accounts.
CANCOIN
Cancoin is a relatively new, decentralized peer-to-peer exchange for Bitcoin traders. It facilitates transactions between users and allows them to carry out these transactions using Paypal. Cancoin greatly emphasizes its security and range of tools to make the user experience more convenient.
Some features include multiple escrow orders, multi-signature transactions, custom alerts via email, SMS, desktop or browser and Interactive price history graphs. Creating an account on the platform is free but sellers pay a 1% fee on each transaction apart from the normal Bitcoin transaction fees. Buyers on the other hand, do not pay fees.
2. P2P BITCOIN “LOANS”
Bitcoin lending is becoming increasingly popular and since a large number of users receive money through Paypal, several bitcoin lending platforms accept it as a payment method. In these systems, users who hold Bitcoin can decide to lend their tokens to other users in hopes of generating profits from interest.
Since Bitcoin lending is still a growing concept, there are not many lending platforms. As a result, the chances of finding one that accepts Paypal as a payment method are slim. xCoins has managed to stand out in this regard.
XCOINS
xCoins is a cryptocurrency exchange, which also serves as a peer-to-peer marketplace, offering additional services including Bitcoin lending. It primarily exists to act as a bridge between Bitcoin lenders and borrowers.
When users fund their xCoins account, they can decide on what interest rates they would like to charge their borrowers, with a starting point of 15%.
Borrowers on the platform are matched with loans, according to the needs they specify.
xCoins guarantees a high level of security through its internal rating system. This way, the credibility of users can be verified easily.
3. CENTRALIZED CRYPTOCURRENCY EXCHANGES
A handful of centralized exchanges have also developed their own systems for ensuring security while accepting Paypal as a payment method. They include Virwox and eToro.
VIRWOX
VirWoX, an acronym for Virtual World Exchange, is a centralized cryptocurrency exchange which accepts Paypal payments. It was launched in 2007 as a digital currency exchange even though it precedes Bitcoin.
Currently, the platform has over 1 million registered users and uses an automatic order system to match them. Like almost any other exchange, a user must create an account to use the platform.
After this step, funds can be deposited in a virtual wallet using Paypal, credit cards, and a host of other options. Subsequently, buy-sell pairs, market limits or order limits can be created on the exchange page and submitted.
ETORO
eToro is a popular social trading and online forex platform where users can invest in several digital assets. The platform offers a wide array of cryptocurrencies and ensures that all user assets are managed in a single place.
It also eliminates the need for a digital wallet and claims to use high-quality encryption technology to secure investors’ funds. Unfortunately, fees on the Etoro platform are relatively high.
4. SPECIALIZED PAYMENT APPS
Some payment apps act as intermediaries to allow Paypal users access cryptocurrency from their accounts. One example is WirexApp which is not an exchange, yet facilitates the purchase of digital currency.
WIREXAPP
WirexApp allows users to set up consistent Paypal cryptocurrency payments. Unfortunately, a user’s first transaction takes about 1-2 days but all transactions after that are carried out instantly.
It is available in several countries including Bahamas, Bahrain, Iceland, Indonesia, Italy, Malaysia, Malta, Philippines, Romania, Saudi Arabia, and the United Arab Emirates among others.
To get started, users must create and verify a WirexApp account. This gets them a free virtual visa card which they have to deposit about $3 into. The card can be added to Paypal and used to pay for cryptocurrency transactions.
FINAL THOUGHTS
Buying cryptocurrency from a Paypal account has many upsides. But fraud, its major drawback seems to trump them all. Until major exchanges find a way around chargebacks, users may be stuck jumping through hoops just to buy cryptocurrency conveniently.
At the same time, platforms that currently offer this service are few and as a result, there is more profit to go around in the form of transaction fees. While this is great for these exchanges it does not do users any favors– since the scarcity of a Paypal payment option on cryptocurrency exchange will only drive up the existing transaction fees on the few platforms that offer this option. Hopefully, exchanges will become fiat-friendly in the next future and allow users to pay for cryptocurrency more conveniently.
It’s no longer a stretch to say that cryptocurrency may play a huge role in how money is generally perceived in the future. For now, however, digital currencies and the teams behind them continue to figure out ways to get from the starting point (Bitcoin) to the future of decentralized storage of value.
The emergence of Bitcoin was a turning point in how financial transactions have been handled for a long time. Vulnerabilities within the banking system such as high transaction fees, relatively slow transactions, and being privy to a central authority were exposed.
For a time, it was exciting to imagine the benefits of Bitcoin, but it begged the question: How exactly could the world expand this alien system so that the average person could benefit from it? Bitcoin, even with its status as an industry pioneer and giant, has been unable to answer that question so far, but Dash and Ethereum, two newer digital currencies, have.
What is Dash?
Dash is a peer-based decentralized system that allows people to send its eponymous token in the form of electronic cash, from one place to another. It aims to be as liquid as fiat currencies such as the US dollar, and, it is built on the Litecoin open source code, which was derived from the original Bitcoin source code. Dash was created by Evan Duffield in 2014; it was known as XCoin and Darkcoin in the past.
In some ways, it is similar to Bitcoin and many other cryptocurrencies in the sense that it is open source, and mostly handles financial transactions, facilitates all transactions through its own blockchain, has an active community, and has relatively low transaction fees when compared to fiat transactions. However, these qualities are quite commonplace in the industry and are even characteristic of lesser-known coins.
Now here’s where Dash gets truly interesting.
To set itself apart from most coins, Dash incorporates a ‘PrivateSend’ function, which allows users to send tokens privately, by hiding the transaction among other ones. Since they are mixed up, it is difficult to identify a particular private transaction. To muddle its transactions, Dash uses a service known as CoinJoin. While this feature is open to all Dash users, there is a limit of 1000 Dash. Even though the PrivateSend feature sounds like an instant sell, Dash has even more to offer.
Formerly known as InstantX, its InstantSend feature lets users carry out transactions within 1.5 seconds, which is leagues faster than Bitcoin. However, higher fees are charged for these transactions. The fees are charged by Masternodes, which are nodes with a higher status on the Dash network. These nodes are responsible for confirming all PrivateSend and InstantSend transactions and receive a block reward of 45% for doing so. Nodes that wish to become Masternodes are required to hold 1000 Dash as a barrier to entry.
What is Ethereum?
With Ethereum, there are many layers to unlock. For one thing, Ethereum is far more complex than Bitcoin or Dash. It also has a very different goal for how people interact with cryptocurrency and employs a lot of moving parts, which can be difficult for the average non-expert to understand.
Founded by Vitalik Buterin and Joseph Lubin in 2015, Ethereum is a decentralized platform on which other decentralized applications can be built, deployed and operated. Its creation has given rise to several modern concepts that are seen as the norm when dealing with cryptocurrency and blockchain technology in general. These include Initial Coin Offerings (ICOs), Smart Contracts, Decentralized Autonomous Organizations (DAOs), and Gas.
Despite the setbacks that Ethereum has faced so far, it was the first platform to give Bitcoin a run for its money. It veered off the traditional financial route and sought to give people a way to interact with the core blockchain technology, building companies and solving problems in the process.
Smart contracts have taken the human flaw out of contract negotiations and executions, from matters as simple as renewing subscriptions to transactions as complex as buying property. From art to real estate, shipping and even entertainment, many industries have felt the impact of Ethereum’s contribution to blockchain as it is currently perceived. But does that make it good enough to win a Dash Vs Ethereum war?
Weighing Both Sides
Since both platforms have fundamentally different value propositions, why should both be compared? The answer is simple. At the end of the day, the blockchain ecosystem exists as a singularity, and these platforms are playing major roles in laying the groundwork for further development. To succeed, they must figure out scalability, volatility, and security regardless of what they do or what industries they cater to.
Scalability
On the scalability end, Ethereum has struggled so far. The structure of the platform shows an urgent need for improvement. Since its price skyrocketed in 2017, sending gas prices over the roof, Ethereum developers have been working on scalability solutions like sharding and launching a Casper protocol. However, both solutions have hit the rocks so many times that it’s starting to look like scalability may never truly happen for the platform.
Unfortunately, not much can be said for Dash either, since it would be unable to handle the type of transaction volumes seen on Bitcoin. Like Ethereum, the platform is continuously working towards improved scalability; Dash has joined forces with Arizona State University, in a partnership worth $350,000, to find a solution. However, if there’s one thing that can be said for the scalability of Dash, it’s that it is immune to bottlenecks from large transactions.
Security
Ethereum security isn’t much better; the platform has been plagued by scam ICOs and security threats. It has also undergone four hard forks to fight the hacks, theft, and fraud on its blockchain. On the other hand, Dash doesn’t have to deal with ICOs and has measures in place to tackle issues such as double spending. It also claims that it cannot be hacked like Ethereum, that it values user anonymity, and that it eliminates third parties.
Volatility
On the issue of volatility, neither currency has been particularly great. Ethereum has been a huge Bitcoin competitor since its creation, and maintained its position as the second largest cryptocurrency by market capitalization before it was overtaken by Ripple in 2018. Within that period, it showed more than 1000% positive and negative volatility. Dash remains in fifteenth place, with a market capitalization of approximately $700 million. Between October and December 2018, its price rose from $160 to more than $1000. While this sounds great on paper, it is not sustainable. These coins have solid value arguments that they cannot meet properly because of the volatility they are subjected to.
Final Thoughts
Cryptocurrency is gradually heading towards mainstream adoption but must face many hurdles along the way. Every day, Dash and Ethereum seem to be fighting different battles towards the same goal: to stay afloat. Where Ethereum has the support of active founders and dApp developers, Dash has loyal supporters suggesting solutions on various forums. Where Ethereum is fast becoming “all smoke and no fire,” Dash is working its way up from underdog status. In the end, one of these coins may outlive the other, but for now, it’s too difficult to tell. One thing is certain: they are both positive additions to the ecosystem, and will hopefully remain so.
As the world of blockchain continues to undergo rapid development, several companies have come into the limelight. While it may be difficult to separate the wheat from the chaff where investment is concerned, some companies clearly stand out. One of such companies is HIVE Blockchain, a mining firm that seeks to bridge the current gap between capital markets and blockchain innovation.
Through the creation of multiple cryptocurrency mining farms, they hope to conquer the mining space. Each farm has been strategically placed and filled with equipment as well as miners who continually work to validate and secure transactions on various blockchain networks.
Apart from being one of the top blockchain stocks, HIVE is currently the largest and farthest-reaching blockchain infrastructure company. Despite its age, the firm has made our list of blockchain stocks to invest in for several reasons and has positioned itself in the industry as one to look out for.
A Brief History
Genesis Mining, one of HIVE’s parent companies, was founded by Marco Streng and a team of early Bitcoinadopters and is currently one of the world’s largest mining corporations. It is considered a global leader in the field and has created several products to advance mining.
Only two years after the first large-scale Genesis mining farm was developed in 2014, the company went ahead to establish the world’s largest Ethereum mining operation.
Genesis Mining also launched the Logos Fund which serves top venture capitalists and has raised more than $100 million in assets since its creation. The firm currently caters to more than 1 million customers and employs hundreds of staff all over the world.
Since the creation of HIVE by Genesis and Foire, the company has successfully raised up to $115 million in funding. According to recent announcements, it is also set to expand its mining operations and capabilities. These expansion efforts include a new large-scale mining facility and up to $100 million in extra funding.
HIVE Blockchain also became the first publicly traded stock on the Canadian TSX venture exchange (a major stock exchange, that solely deals in cryptocurrency mining), which it was added to in September 2017.
The Intended Purpose of Hive Blockchain
Founded in 2017 through a partnership between Genesis Mining and Foire Group, HIVE Blockchain was created for the sole purpose of accelerating and amplifying the development of the industry. It currently carries out mining operations for up to eight different cryptocurrencies including Bitcoin, Ethereum and Litecoin.
Although there are a lot of blockchain firms to invest in, only a few focus on infrastructure. This limits investment options in that particular area, leaving investors on the sidelines, where they miss out on a technology with so much potential.
Genesis and Foire recognized this problem and created HIVE as a solution, which would give investors the opportunity to stand firmly behind blockchain infrastructure. Not only is this profitable for investors, but it’s also beneficial to the industry as a whole. Without proper infrastructure, there is only so much blockchain technology can do to influence other industries.
The applications of blockchain technology are made possible by mining. In essence, this is a term used to describe the process of securing a network through consensus and validation of all transactions on it. It is carried out by a distributed network of computers and is typically done for any of the following reasons:
To ensure that only valid transactions are recorded on the blockchain (an immutable digital ledger which powers the network in question).
To ensure that a log of all transactions is continuously updated.
To earn block rewards (payouts), which in turn ensure distribution of tokens on that network.
To maintain trust and integrity among all nodes within the system.
To decentralize the process of making financial transactions. Where normally, user transactions would have to be facilitated, validated and recorded by a central authority with rights to user data (such as a bank), miners would play this role instead.
For infrastructure to undergo the necessary development, investors must be involved as drivers of the ecosystem.
What Hive Blockchain Actually Does
HIVE Blockchain is leveraging the wealth of experience that Genesis Mining Group commands, to create and maintain the infrastructure that blockchain network users can benefit from.
It operates as a cryptocurrency mining firm and validates transactions on blockchain networks. It also provides cryptocurrency mining services and bridges any gaps between digital currency markets and their traditional counterparts.
Why is Hive Blockchain Important?
The importance of HIVE blockchain as a core driver of infrastructure lies in its promotion of blockchain development and sustenance. Since this technology is central to the concept of most cryptocurrencies, they will cease to exist without the necessary infrastructure.
Since the Bitcoin hype began to die down, people started realizing that its underpinning technology can be used for much more than just storing monetary value. This is just one fish in a sea of blockchain use cases. If developed and used correctly, this technology can disrupt almost every global industry in the world, from real estate to health, agriculture, shipping, and even art, making life easier for people and businesses. For this to happen, infrastructure must be solid and this is why companies like HIVE are important parts of the ecosystem.
The HIVE team’s understanding of capital markets combined with the technical knowledge of Genesis Mining gives investors a chance to view the industry in a different light and approach it more strategically. More importantly, they can be a part of the creation of something new and phenomenal. Many investors missed the chance to be a part of Bitcoin in its early days but now, they are presented with a new opportunity to be part of something even bigger.
Hive and the Future of Web 3.0
Currently, HIVE mining computers work to generate and hold cryptocurrency as part of the company’s long-term investment strategy. This exposes investors to its portfolio of digital currencies as well as the operating margins of mining.
Blockchain technology is still growing at a rapid pace and is set to evolve outside of financial solutions in the near future. There is a possibility that this evolution will give way to a new decentralized future that HIVE refers to as ‘web 3.0’. According to the firm “Our vision is to truly be the backbone of this new web 3.0 decentralized world by building, operating, and acquiring the critical infrastructure that will be required to power it.”
Final Thoughts
Blockchain investment is a topic that comes up more often than it seems and there are so many options to choose from. However, investors should have a strategy for profitable and long-term stock benefits. For an industry that still exists in its early stages, merely choosing any random project to invest in, just won’t cut it and may end up leading to a loss of funds.
When investing, the projects with the most viable use cases should typically get top priority and what better use case is there for blockchain than its own sustenance through the development of infrastructure? Probably none. Apart from the fact that HIVE blockchain makes infrastructural investment more accessible to investors, it is backed by two credible companies.
Most blockchain systems cannot function without the mining process so it makes a lot of sense to invest in that area and be part of something that may change the world, possibly in more ways than the internet ever did.
In recent times, Initial Coin Offerings (ICOs) have become a popular way of raising funds within the crypto ecosystem. Small startups with fully formed teams can convince the public to invest in their projects by buying their tokens, which act as shares.
In the past six years, there have been more than 1,500 ICOs within the cryptocurrency space, and more than $100 million has been raised in the first month of 2019. Due to the hype presented by this form of crowdfunding, many people are unaware of other methods of raising money for blockchain projects. One such method is the Initial Exchange Offering (IEO).
IEOs are a lot less popular than other crowdfunding methods but have a lot of advantages. In the case of an ICO, investor members exchange Ether (ETH), for the coin being offered. The Ether is sent to the smart contract of the development team and is used to develop the product, as pitched to investors. The responsibility of ensuring that everything goes as planned lies solely on the team behind the product. Initial Exchange Offerings, on the other hand, leave such obligations to the exchange where they are hosted.
What is an IEO?
An Initial Exchange Offering is a fundraising event that a cryptocurrency exchange facilitates on behalf of a token issuer. Usually, an issuer is a new project or investment venture that is offering a new cryptocurrency as an asset class, to raise capital for development.
To set up an offering, the issuer typically pays a listing fee as well as a certain percentage of the tokens sold during the IEO, which goes directly to the exchange. After payment, the exchange is expected to sell the new cryptocurrency offered by the issuer, as well as list it, even after the offering. Since exchanges stand to gain something from the arrangement, they usually play an active role in marketing the token to prospective investors.
Unlike ICOs, where investors send Ether to the developer’s smart contract, IEO investors are required to register and verify their profiles on the host exchange, then transfer their funds to their new accounts. They are also required to continue purchasing coins directly from the platform.
Usually, the arrangement between the token issuer and the exchange may depend on several variables, including:
The predetermined token sales cap per investor
A fixed asset price for the new cryptocurrency
The hard cap and soft cap
The percentage of tokens sold (ratio of sold vs. available)
A predetermined amount of funds for the exchange platform
Marketing costs of distribution and coverage
Why Choose an IEO over an ICO?
The blockchain scene is saturated with ICOs. On the surface, it seems like a successful way to raise funds, but developers cannot ignore the apparent problems with the model. There is a lack of trust on the part of investors as a result of ICO scams, fraud and money laundering.
Without the trust of investors, the chances of raising enough funds through this crowdfunding method reduce significantly. So how can Initial Exchange Offerings solve these problems for blockchain project teams? Simple:
Most projects are new, and this means that they do not have a vast network of users yet. As a result, it is more difficult for them to appear credible enough to win the trust of investors. IEOs allow these projects to tap into the user base of the exchanges involved.
IEOs prevent gas wars in which users boost the speed of their transactions by paying more gas (the transaction cryptocurrency, often Ether). Since the exchange handles all transactions, single speeds are uniform on their end.
When a project lists its cryptocurrency on an exchange during an offering, it means that investors can buy it only in those exchanges. This makes it harder for them to become victims of online buying and phishing scams.
IEOs act as a vote of confidence from the exchange to the project, and this boosts its credibility.
After the IEO, the project is automatically listed on the exchange without further stress on the part of the issuer.
Disadvantages
IEOs are not free, and token issuers pay listing fees that can cost hundreds of thousands of dollars. Some exchanges may even demand up to 10% of funds raised, as a part of the listing fee.
The use of an exchange places a geographical limitation on investors since most exchanges only cater to specific countries.
Issuers have to bear the cost of marketing themselves even if it will bring the exchange some exposure as well. These marketing costs can often run into hundreds of thousands of dollars as well.
How to Participate in an IEO
Participating in an Initial Exchange Offering is a safe and easy process depending on the digital currency exchange involved. It is also a lot less complicated than participating in an Initial Coin Offering and can be done in the following easy steps.
First, investors must check if an IEO will be issued for the project that they are looking to invest in. For most blockchain-related projects and startups, Initial Coin Offerings are the most common way to source for funds. So, it is important to ensure that the project is truly conducting an Initial Exchange Offering, to avoid being misled, especially in the case of new investors.
Next, anyone looking to participate in an Initial Exchange Offering must find out about its specific details. This includes knowing when and which exchanges it will take place on. Usually, IEOs can happen on several exchanges at once, but in a lot of cases, it is restricted to just one. This step is essential for two main reasons. Firstly, not every exchange is secure. Some of them have controversial security measures in place, and it is generally riskier to deal with the lesser-known platforms. Secondly, exchanges usually have verification processes that can range from hours to weeks, so investors must sign up early and be prepared.
After researching the exchanges involved, including security details, reliability, and verification process, it’s time to sign up. Cryptocurrency exchanges usually require information such as a name, email address, and password. In some cases, further details such as a country, along with supporting documents such as photographs, government-issued identification, and proof of residency are required as well.
Usually, Ether is the medium of exchange in both Initial Coin Offerings and Initial Exchange Offerings. Since most newly launched projects are composed of decentralized applications built on the Ethereum blockchain, most transactions occur in Ether. However, in some cases, a different cryptocurrency such as EOS or TRON is required. It is essential to find out the primary currency for the IEO and buy some of it.
After buying the transaction currency, investors should wait for the IEO to begin. From that point, all that’s left is to buy the issuer’s token on the exchange, just like any other token would be purchased.
Final Thoughts
Although Initial Coin Offerings remain a great way to crowdsource for funds from the public, the model is beginning to exhaust itself. With IEOs, it is easy to check for credibility. In the case of ICOs, it’s mostly down to blind luck due to regulatory uncertainty, past ICO scams, the unreliability of development teams, leading to non-fulfillment of promises, fraud, money laundering, the bankruptcy of many projects, and the lack of proper security. Hopefully, IEOs will rise out of the ICO frenzy, as a better way to raise funds.
By now Ethereum is the second largest name in cryptocurrency behind Bitcoin and has gained a lot of traction from the blockchain communities as an instrumental blockchain to support further development projects.
Ethereum gained momentum in 2017, seeing its coin (ETH) price go up about 11,000% from $8 per ETH on January 1, 2017, to $900 by the end of the year. This has caused Ethereum to attract a lot of attention from new cryptocurrency buyers and blockchain programmers alike.
The draw behind Ethereum is that it basically enables and supports the development of dozens of new cryptocurrencies to solve various problems using its native blockchain protocol. This has led some in the cryptocurrency communities to dub it Blockchain 2.0.
While the experienced blockchain community is probably familiar with Ethereum, those that are new to the game and less tech-savvy are probably wondering what makes Ethereum so popular. This comprehensive guide will go through the fundamentals of Ethereum and help you understand what’s under the curtain for this major cryptocurrency.
Ethereum vs. Bitcoin
Since most beginning crypto investors and traders are moderately familiar with Bitcoin and how blockchain works, it can be helpful to compare a cryptocurrency to the way Bitcoin works.
To start with the similarities, both Bitcoin and Ethereum operate on distributed blockchain networks. Both are decentralized and have no central authority or central point of control. For each blockchain, miners support the network by verifying transactions to earn either Bitcoin or Ethereum as block rewards. Furthermore, both Bitcoin and Ethereum represent cryptocurrencies that are heavily traded on the crypto markets.
However, there are differences between the two. Ethereum’s co-founder Gavin Wood explains the high-level difference: “Bitcoin is first and foremost a currency; this is one particular application of a blockchain. However, it is far from the only application. Take a past example of a similar situation, e-mail is one particular use of the internet, and for sure helped popularise it, but there are many others.”
So basically, Ethereum is using blockchain technology for a different purpose than Bitcoin. Bitcoin uses the blockchain ledger to keep a permanent history of digital currency ownership, enabling an innovative method for peer-to-peer currency transactions.
Ethereum leverages the blockchain for running the programming code of an application. Developers utilize the Ethereum blockchain to built and support separate blockchains, so the Ethereum blockchain and Ether coins are used for paying transaction fees on the network.
What is Ethereum?
So what really is Ethereum?
Ethereum uses the blockchain to store application code and smart contracts rather than have the sole purpose be for recording transactional information. So instead of a decentralized platform for financial transactions, Ethereum is a decentralized platform where applications can be built.
So what this means for developers creating new blockchain applications is that instead of building their platform and blockchain network from scratch, they can use the framework and Ethereum network to support their application.
Ethereum provides value in a couple of primary ways. First is this notion of building decentralized applications on the Ethereum blockchain using their native programming language called Solidity. Under that framework, there are now hundreds of new businesses being built around decentralized applications developed on the Ethereum network.
The trend is that developers will leverage Ethereum to build their blockchain application, and issue a new cryptocurrency associated with their application. Most blockchain companies release these coins through an Initial Coin Offering (ICO) where they typically raise funds in Ethereum and issue their tokens through the blockchain. The tokens that generated on the Ethereum blockchain are called ERC20 tokens.
Now that Ethereum has gained incredible traction for developers, there’s a growing list of well over 1,300 decentralized applications (dapps) built on Ethereum’s blockchain. We’ll go into some popular examples in more detail below, but running so many dapps on their network has its pros and cons, and sometimes there can be too much traffic that’s congesting the network. One notorious example was late last year when Cryptokitties quickly became massively popular and caused major slowdowns on the Ethereum network.
What is Ether?
The other primary way that Ethereum provides value to its blockchain network is through their token economics and how Ether coins are used in the system.
The Ethereum blockchain is a platform that intends to serve as a decentralized app store. This type of network platform needs a way to support the computational resources it takes to run a program of the app on the network. This is why Ether has value in the system.
Any decentralized applications operating on the Ethereum network needs to spend Ether coins to perform transactions on the blockchain. With so many applications and blockchain businesses running on Ethereum, this creates a lot of demand for Ether.
Additionally, when investors are looking to buy new tokens from an ICO, they often make that purchase using Ether coins. Another driver for the Ether coin’s value is that whenever investors or traders are buying and selling ERC20 coins using the Ethereum blockchain, they need to pay the transaction fee in Ether.
So every transaction on the Ethereum blockchain requires some Ether fees to reward the miners that are verifying the transaction. Ether is often referred to as the cryptocurrency that’s used as ‘gas’ to operate smart contracts and ‘fuel’ the Ethereum network. It’s similar to other cryptos like Bitcoin because a decentralized, open network of users controls Ether tokens.
So if a user is looking to make changes to an app on the Ethereum blockchain, they pay a transaction fee in Ether to compensate the network that is supporting the platform and processing the change on the blockchain. The amount of Ether it will take to complete a transaction on the blockchain is determined based on the required computing power and length of time to process.
How does Ethereum mining work?
Ethereum’s blockchain is based on Bitcoin’s protocol and design, meaning that it uses a Proof-of-Work (PoW) method of mining and supporting the network.
PoW is a technique that many of the first blockchain networks use to support the system by making it difficult, costly, and time-consuming to create a new block of data, but very easy for anyone else to take and verify that data. Effectively it makes it increasingly hard for the nodes on the network to run the computations and create new blocks of data and receive block rewards.
Ethereum uses the same PoW model as Bitcoin but developed the platform in a way so it can support much more than just asset transaction. For the nodes on the Ethereum network, this means they are responsible for maintaining the updated version of the Ethereum blockchain ledger, which tracks current information and status for each smart contract on the network, all the smart contract code and where it’s stored, and each user’s balance.
When new transactions are made using the Ethereum blockchain, that data is grouped by nodes or miners on the network to form a block of data, then chained together with the other blocks on the ledger to create the blockchain. To bundle together a group of transactions, miners use their computing power to solve the computational challenge as quickly as possible to be the block creator and receive the reward.
The trick with PoW mining systems, like Ethereum’s, is that the more powerful a computer, the better chance it has of solving the mathematical challenge quickest and being chosen for the new block. A lot of miners around the world compete for block creation and validation on the Ethereum blockchain network because Ethereum’s coin has been rising in value and every time they add a block to the chain new Ether tokens are generated and awarded to the miner.
This makes miners the backbone of the Ethereum network, along with most other blockchain networks, and especially those that use a PoW mining model to support the network.
Who is Vitalik Buterin?
Vitalik Buterin has gained a lot of fame and popularity for his status as the guy behind Ethereum. As the story goes, Vitalik was a programmer from Toronto who was introduced to Bitcoin in 2011 and saw the immense potential of blockchain technology.
That same year, Vitalik started Bitcoin Magazine which served as an online media platform for information on blockchain and cryptocurrencies. But along the way, he saw the possibilities for blockchain technology past merely creating the perfect ledger of transactions. He dreamt of the idea behind Ethereum that would send blockchain far past the financial use cases of Bitcoin and other digital currencies.
Vitalik released the Ethereum white paper in 2013 that described his proposed blockchain platform designed to support any type of decentralized application that developers could think of building.
To get funding for the project’s development, Vitalik and the other co-founders launched an ICO to raise funds in 2014. Participants in the ICO bought Ether coins to support the development. In total, they raised more than $18 million and released the first version of the platform about a year later in 2015.
What are smart contracts?
While Bitcoin is aiming to unlock new opportunities in the global financial networks, Ethereum is looking to do the same with the global computational networks using smart contracts. Smart contracts are scripts of code that deploy on the Ethereum blockchain.
Developers create this type of contract on the Ethereum blockchain using a language called ‘Turing complete’ and providing a set of instructions to be computationally carried out. Smart contracts can set parameters so that any funds deposited into an account can only be withdrawn when all parties involved agree by consensus.
Another practical example of the use of smart contracts is if two people are trying to carry out an agreement. If someone is renting a car, the contact can outline that the digital keys will be automatically released once payment is received. The smart contracts sort of work on an ‘if-then’ approach, so if the renter doesn’t pay the agreed price, the keys aren’t released, and the network automatically generates a refund.
Smart contracts are simply programs on the blockchain that are executed according to how the programmer developed them. Smart contracts can also act as records or registries and digitally store membership details or identification information on the blockchain.
Here are some of the key benefits of using smart contracts:
Autonomy: Smart contracts don’t rely on third-party confirmation to execute the agreement. This reduces the danger of the contract being manipulated by a third party because the network manages execution of the contract instead of other parties who might have a bias or implement the contracts with errors.
Backup: The blockchain is designed to be distributed across the network to ensure that the document is duplicated many times over, so there is no risk of losing it through one central point of failure.
Speed: Smart contracts use software code to automate tasks, which streamlines efficiency and helps companies implement faster agreements. Using smart contracts helps automate several key parts of an agreement process and make for quick, reliable transactions.
Smart contracts are still fairly new technology, but they have a vast range of application is the world’s voting systems, global supply chains, health and medical records, financial systems, and more.
What are decentralized apps?
So now we have a basic understanding of smart contracts and how they can be used in a blockchain network to create an innovative type of agreement. The Ethereum network uses these smart contracts in the development of decentralized applications on the blockchain.
Traditional applications are well-known to most users who download apps from the App Store on iPhone or Android. Apps allow users to perform unique functions like checking bank account balances, scrolling through a news feed of friend’s pictures, or even play their favorite card game.
Dapps follow the same concept. However, it runs on a platform supported by a network of nodes instead of a central group. This allows for several benefits and advantages over our traditional apps.
Tamper-Proof: Ethereum benefits from the properties of blockchain technology meaning that it’s resistant to third-party tampering. Dapps can deploy on the network without worry of an unauthorized third party hijacking control. Furthermore, the blockchain is built using a principle of consensus, so that all nodes and users of the network are required to agree on each change before it’s executed. This helps mitigate the potential fraud and corruption of the network.
Decentralized: The Ethereum platform also has the key blockchain principle of decentralization. There is no single point of failure for the network, meaning the applications hosted on the network never fail or go offline. This also has security implications that protect the network against possible hacking attempts.
Open Source: Users can look at the dapp’s source code on both the back end and front end. This means there is no code ‘hiding under the hood’ that’s running extra functions that may not be beneficial to the user.
No Downtime: Because dapps run on a network of nodes supporting the blockchain, there is no one point of failure that can take the entire application down and offline. That means the application’s service is always operating and functional, mitigating the risk of system crashes and failures.
Easy Implementation: Dapps built on the Ethereum blockchain provide a lot of value for developers because they don’t have to go out and build a blockchain application from scratch. Instead, the framework exists through the Ethereum protocol and helps save developers precious time and effort when trying to create a new application. Then to use the Ethereum’s decentralized network, the dapps directly pay the network transaction fees in Ether.
Which cryptocurrencies use Ethereum?
With all this talk about decentralized applications using the Ethereum blockchain, there are several notable examples of cryptocurrencies that have their underlying blockchains running on Ethereum.
Some of the cryptocurrencies you may have heard of, but it gives a proper scope of what types of applications can be built and operated on a decentralized blockchain platform like Ethereum.
Golem: Golem is a global decentralized supercomputer that combines the computing power of all machines on its network. Users of the Golem ecosystem can loan out spare and unused computer resources to others who need the additional power to perform complex computations and tasks. Using the same model that brought Uber and Airbnb success, this is a way to capitalize on unused resources to make some extra money.
Augur: Augur is a decentralized prediction market built on the Ethereum network. Using Augur’s prediction market, users can bet on outcomes of future events to receive monetary rewards and prizes. The less likely an event is to occur, the more significant potential reward users can earn predicting its success. Augur uses a method called “The Wisdom of the Crowd” from the various predictors on their platform to create predictive data in real time that can often have higher accuracy than leading experts on a particular subject.
Civic: Civic is an identity management service built on the blockchain that allows users to control protect the use of their identity. Each time you are required to prove your identity, you go through the same authentication process over and over. However, Civic’s ID management enables users to verify their identity data once and then reuse that authentication in other places that acknowledge Civic identification.
OmiseGo: OmiseGo, or OMG, acts as a decentralized blockchain gateway and platform for high-value transactions and settlements. Their goal is to solve inefficiencies within the financial systems to allow for lower cost and higher volume transactions, such as payments, payroll deposits, B2B commerce, asset management, supply chain activities, or loyalty programs.
Storj: Storj is an open source, decentralized solution for file storage that uses encryption and file sharing, along with their blockchain hash table to store files using their peer-to-peer network. Storj is using blockchain technology to make cloud storage faster and cheaper.
Are there disadvantages with Ethereum?
Ethereum has been a game-changing blockchain platform and led to a whole new direction and vision regarding blockchain use cases. However, like most things, there are pros and cons when it comes to Ethereum’s blockchain network.
So what are the potential disadvantages and downside of Ethereum and the future of its blockchain?
Well, just to give a little more credit, because Ethereum has been revolutionary in the blockchain community, they have secured the second spot among cryptocurrencies about the total market cap. Aside from the ultra-popular Bitcoin, Ethereum is the largest cryptocurrency in the space. They have a huge developer community, a massive and broad-reaching media and PR team, along with global distribution and a dispersed group of strong advocates.
But the Ethereum blockchain has been running up against some of the same troubles as Bitcoin lately, and that’s the scalability issues.
What we mean by scalability issues is that in the current state of the Ethereum blockchain, it wouldn’t be able to support a large enterprise level dapp. The way it’s structured now, the platform can only support around 15 transactions per second on the blockchain, which as we know is shared among the entire network of dapps running on the platform. To put this in perspective, Visa alone processes tens of thousands of transactions per second.
So while Ethereum is supposed to act as an operating system for dapps to run on, the practical functionality is limited to larger entities and projects. You can think of it like Apple making an iPhone that isn’t able to make a call or have the phone app, or a Windows system that isn’t capable of running an Excel spreadsheet.
This is where that notion of network congestion really comes into play. The Cryptokitties example mentioned above is just one horror story of how something so trivial in the grand scheme of things can have a major ripple effect throughout the entire Ethereum network. You can think of the Ethereum network like a single lane highway with traffic jams along the way when what’s indeed needed is a major multi-lane interstate highway to allow larger enterprises to use the existing blockchain framework for their applications.
Even with the current unscalable model, people surrounding the Ethereum blockchain know these concerns. The scalability issues aren’t a huge secret, but the supporting community assumes that it will get fixed.
While the core Ethereum development team has been working hard to resolve the scalability concerns for a while now, they’ve provided multiple proposals to the community, and nothing has gained much traction. They haven’t been able to put together and agree on a concrete plan going forward to solve the core scalability problems.
One recent development towards scalability is Ethereum’s new proposed consensus mechanism called ‘Casper.’ The objective behind this proposal is to move Ethereum from a Proof-of-Work to a Proof-of-Stake model. We discussed how the PoW method of mining and supporting the network requires lots of computing power and this is the core reason behind the scalability issues.
All blockchains operating on some form of Proof-of-Work model will eventually run into issues with scaling the network once it reaches a certain usage point. However, moving to Proof-of-Stake (PoS) might be able to alleviate some of the scalability issues. PoS provides an alternative way to process transactions on the blockchain, allowing miners to earn block rewards based on the number of coins they hold. So the larger coin stake a node has, the better chance they have of mining the block and getting a more substantial reward.
The ongoing issue for Ethereum is that they don’t even have a unified direction for Casper or the implementation of a new consensus mechanism. There are competing versions from a couple of prominent Ethereum developers that are supported by various groups within the Ethereum community. And neither proposed solution has a roadmap of timelines outlined.
When it comes to the Ethereum blockchain, there is a good reason to be skeptical of the potential application. At the very least, expectations should be tempered about major organizations and enterprises jumping on the blockchain bandwagon and using the Ethereum platform. It could very well end up that Ethereum is a great platform for issuing ERC20 tokens and providing a launch pad for small-scale applications.
How to invest in Ethereum?
The most convenient way to invest into Ethereum and buy Ether tokens is through a crypto exchange. If you are brand new to the world of cryptocurrency, and you’re considering buying Ethereum, Coinbase is one of the easier exchanges to work with and will take fiat payment in exchange for Ether tokens.
There are plenty of other great crypto exchanges to use if you’re looking to buy Ethereum. A few other popular ones are:
If you’ve purchased Ethereum on one of the crypto exchanges above, you will want to properly store your Ethereum coins to keep them secure and off of the crypto exchange account. This means sending the Ethereum from your crypto exchange wallet to a separate crypto wallet you control.
The good news is there are plenty of crypto wallets that support Ethereum coins. Furthermore, if you start to take a more in-depth look at the applications built on the Ethereum platform, you might consider investing in those cryptocurrencies as well. Various crypto wallets support all Ethereum related tokens, called ERC20 tokens.
One great example is MyEtherWallet. Also commonly referred to as MEW, MyEtherWallet is a web interface that supports Ethereum and ERC20 token storage. Because Ethereum has over 1,300 applications running on the network, MEW makes it easy for users to store all related tokens and cryptocurrencies in one location and wallet.
Other wallets that support Ethereum are:
Ledger Nano: Ledger nano is a hardware wallet that focuses on security, so beginners should be aware of the required two-factor authentication for an extra layer of security. This wallet stores your Ethereum, as well as other cryptocurrencies, on a small flash drive device.
Trezor: Trezor is a hardware wallet and great for storing large amounts of cryptocurrency or Ethereum. The wallet interface is easy to use, and desktop versions are available too.
Exodus: Exodus is a great desktop wallet and supports Ethereum along with many other coins. The user interface is great for new users, and they have a simple guide explaining how to back-up their wallet. One neat feature is in-wallet trading to convert between the variously supported cryptocurrencies.
Jaxx: Jaxx is a crypto wallet that was created by Ethereum’s co-founder Anthony Diiorio in 2014, and supports Ethereum and a wide range of other cryptos. Jaxx is available in the desktop version, mobile application, and as a web browser extension.
Is Ethereum the right investment for you?
We’ve made it through a lot of information detailing Ethereum, its blockchain, its cryptocurrency, and how it all works together. By now you get the basics of how Ethereum is blockchain platform that enables other blockchain projects to become a reality.
It could be argued that without Ethereum, there wouldn’t be the incredible amount of cryptocurrencies on the market today. The enablement of creating ERC20 tokens has allowed new blockchain businesses to pop up and get a running start using the existing infrastructure through Ethereum.
Of course, the ramifications of this approach are two-fold: plenty of innovative and exciting projects are being built and launched through the Ethereum platform, but there is also the potential for bad actors to easily and quickly develop and release ERC20 tokens that have no purpose other than to attract dumb money from novice cryptocurrency traders. That’s why it’s so important to understand the business and use cases behind the tokens you purchase, especially for ERC20 tokens.
When it comes to Ethereum and Ether coins as a potential cryptocurrency for your portfolio, there are several factors to consider. While this isn’t investment advice for investors or traders, several factors that should impact your investing decision.
The first is that Ether coins have purpose and functionality within the Ethereum ecosystem and blockchain network. As mentioned above, Ether is like the gas that fuels the system. All participants need to use Ether to use the underlying blockchain that supports all of the applications.
This gives Ether a lot of value because, without Ether, these other applications wouldn’t be able to function. So it’s easy to see one area of defined value for owning Ethereum based on the cryptocurrency’s necessity for other cryptos and blockchains to exist.
The flip side of that argument is that the Ethereum platform itself is limited, and might not be used at the same rate in the future for developing dapps. If larger organizations aren’t able to leverage the Ethereum framework, they will probably opt for another blockchain platform, or put in the effort and build their own.
There is a realistic chance that the development team isn’t able to figure out the scalability issues and the network congestion problems for Ethereum only get worse. Without solving scalability, the future of Ethereum’s potential is quite limited. We’ve already seen some blockchain projects opt to build elsewhere to avoid the congestion problems.
So potential investors that are considering buying Ethereum need to look at both sides of the coin here and decide if Ethereum is the right cryptocurrency investment.
Who are Ethereum’s competitors?
Also before buying into Ethereum, potential investors should look at the various competitors in the market that are vying for Ethereum’s place as a blockchain platform for decentralized applications. Several projects are trying to succeed where Ethereum falls short and innovate on the concept of Blockchain 2.0.
NEO: NEO is often referred to as the Chinese Ethereum because they also offer a platform for smart contracts and applications to be built on the blockchain. NEO has gained a lot of momentum in China, and Chinese blockchain developers are using their platform for their new projects. NEO has more scalability than Ethereum and can process close to 1,000 transactions per second. They also support multiple programming languages like the popular C# and Java.
EOS: EOS aims to combine the security aspects of Bitcoin and the dapp support of Ethereum to provide a more scalable platform. This includes features like shared databases, built-in authentication systems, account recovery mechanisms, and decentralized storage and hosting. Changes are facilitated through a community voting process to gain a network consensus.
WAVES: Waves is another platform that allows developers to create tokens on the network for their application. The Waves platform has started to become recognized as one of the more accessible blockchain platforms for new businesses to launch an ICO or token. The Waves platform works on a Proof-of-Stake model where nodes with 10,000+ tokens are relied on to support the network.
Final Thoughts
Ethereum is a foundational blockchain platform that has set the stage for a lot of innovation in the cryptocurrency space. Vitalik and team took the concept of Bitcoin and applied it to a multitude of other use cases.
Now other blockchains have subsequently seen the problems with the Ethereum platform, and are trying to build upon its success and improve the value of their application-building protocol. It remains to be seen if these other blockchain platforms can upend Ethereum as the go-to platform for new dapps to be built.
But the limitations of Ethereum are well noted. There are plenty of other competitors in the marketplace. Ethereum’s development team is trying to maintain their top dog status, and for now, they are still dominating the marketplace for new applications. Ethereum probably had its best days behind it, but the good news for the blockchain industry is that innovation is happening all around and Ethereum serves as a great jumping pad for new platforms and applications alike.
You might be somewhat familiar with the idea of blockchains, or you might have only heard of the phrase in passing (or you might not have any idea what a blockchain is but thought the article title sounded more interesting than the topic currently being discussed in the meeting your supervisor is making you sit through…). Either way, there are still a lot of questions that you probably have.
What is a blockchain?
How does a blockchain actually work?
Are blockchains really as secure as they claim to be?
Can you invest in blockchain itself?
What is the advantage of blockchain?
Maybe you’re getting more involved and want to delve deeper into the exciting and fascinating world of blockchains. In that case, your questions might be more advanced like:
What programming language is used for blockchains?
Is blockchain open source?
Is blockchain hackable?
Are there other use cases for blockchain beyond bitcoin storage?
Will blockchain change the world?
No matter what your string of queries, the best place to find the answers is always the internet. There are thousands and thousands of videos out there explaining the definition, uses, and inner workings of the blockchain.
I know what you’re thinking. Great! Let’s sift through thousands of videos to find the ones that actually make sense, answer your questions, and give over the information you want in an appealing manner. If that doesn’t sound as much fun as a barrel of monkeys (why would a barrel of monkeys be fun anyway?!), then you’re in luck.
Since we know how interested our readers are in the topic, we’ve aggregated the best videos from across the web that talk about blockchains. From the straight-up definition to the more advanced jargon that most of us will never really understand, check out the 5 most useful blockchain videos out there to help you get started down the path of blockchain wisdom.
Great Blockchain Video #1: What is blockchain? CNBC Explains by Tom Chitty
And here’s why: It gives you all the important information you want to know, starts from the beginning, and explains the entire concept well
There are a lot of blockchain for beginners videos. You’ll recognize them by the names like, what is a blockchain, blockchain explained, or blockchain for beginners. The truth is, though, that most of these videos take a lot for granted, assume you know more than you actually do about the topic, or don’t really explain the concept in a practical way.
And that’s why this CNBC exclusive done by Tom Chitty is our first recommendation for anyone who is just starting out on the learning journey to blockchain technology. If you can understand the accent and overlook the poor wardrobe choices, then you can actually learn a ton from this explanation video. Chitty goes through the ABCs of blockchains, showing the negatives alongside the positive uses for blockchains. He also shows you exactly how it works, why it is so secure, and what future applications might be possible for this technology.
The CNBC video also takes you through the benefits and possible financial ramifications that are involved in embracing this technology. All in all, Chitty does a great job of explaining a complex topic and gives you a lot of food for thought.
Great Blockchain Video #2: New Kids on the Blockchain by Lorne Lantz
And here’s why: Practical ways people are currently putting blockchain to good use and how they will even more so in the future
Aside from the fact that this is a TED talk, which automatically makes it amazing, Lorne Lantz explains exactly how blockchain works quickly and eloquently. He then moves on to break down how blockchain works within the bitcoin universe, something that most people are curious about. Finally, Lantz illustrates how blockchain can be used in other instances. This is not only fascinating, but it is a great way to educate the public about how this brilliant technology can be utilized in the future and within our day-to-day interactions.
Great Blockchain Video #3: Understand the blockchain in two minutes by Institute for the Future (IFTF)
And here’s why: It’s fast and easy to watch but surprisingly thorough for a two-minute video
We all want to know more about various topics like cybersecurity, the effect of drug and alcohol combinations, or depression and prevention. But let’s face it, we’re lazy! And what’s more, our attention spans are shorter than Michael Jordan’s laughable attempt at becoming a baseball star. For this reason, I am highlighting this video from IFTF.
The Institute for the Future does snapshots of interesting topics, trending concepts, and technological advancements that they deem worthy of a closer look. This video on blockchain is just two minutes long, but somehow it manages to explain everything you really need for a cursory understanding of the topic (and even a little more). So, if you’re already antsy just from reading this intro, check out the IFTF blockchain video (you can watch it double speed if you’re that strapped for time!).
Great Blockchain Video #4: How the blockchain will radically transform the economy by Bettina Warburg
And here’s why: Food for thought on a more advanced technology that is offering a safer and more reliable forum for value exchange
Whether you’re a conspiracy theorist, a budding financial mogul, or just someone who thinks it’s really cool to see entire empires brought to their knees by the unlikely underdog (think David and Goliath or Spartans against the Persians), this is a must watch video. Bettina Warburg explains briefly how throughout history we have used various methods to exchange values within our societies. From protection to fish and coins and now to the more advanced banks and digital currencies, the world has always had its way of trading valuables for desired goods.
In this video (yep, another TED talk), Warburg takes us through the process of how blockchain is the next chain in the evolution of value exchange. She expertly breaks it down, so you can see how this makes sense on a sociological, economic, and technological level. What’s more, she demonstrates how blockchain is the safest, easiest, and most reliable method we have come up with yet.
So basically, Warburg’s video shows viewers how blockchain is like a solid, unbreakable safe, which makes it more trustworthy and evergreen than any other transaction method that came before it. I don’t want to spoil the video for you, so just watch it for yourself.
Great Blockchain Video #5: Blockchain: Massively Simplified Richie Etwaru
And here’s why: A fabulous twist
This video starts off seemingly like all other beginner’s guides to blockchain. It talks about the early days of the internet (those dark times of dial-up modems and even earlier ARPAnet packet switching technologies) and quickly fast forwards to show you how kickass technology has become (as if we needed a video to tell us that).
All very interesting stuff, but nothing new. And then Etwaru does something that nobody else we’ve seen so far attempt. He takes blockchain and explains how it can bridge a gap that no other technology has been able to traverse, a gap that is so fundamental to human interactions and our society as a whole that it’s truly a marvel that we’ve gotten this far in history without having a more reliable failsafe for it.
In this video, Etwaru explains that inventions are all about bridging gaps in our society, world, and lives. He then continues on illustrating how blockchain bridges the gap of trust, one of the most core and necessary element of our society, one that holds trillions of dollars on its wobbly shoulders. With his mesmerizing voice, witty personality, and mind-blowing revelation, Etwaru really blows the top off of this simplified concept. And that’s what makes his video on blockchain really stand out.
Blockchain Explained, Expanded, and Explored
So, there you have it. Sure, you could sit there for hours and hours watching video after video, sifting through the crap and suffering through the clunky terminology, but why bother? We’ve rounded up the cream of the crop, the best videos out there, the ones that’ll give you the biggest bang for your buck. In fact, if you just watch these five videos, you’ll:
Know all the basic information about what blockchain is, how it works, and what it’s used for
Be able to hold your own in a conversation that is arguing the different sides of blockchain
Have some interesting ideas to help stir up controversy when everyone’s talking about this technology at the office water cooler, at your next family barbecue, or this Thursday night at the bar
Just generally sound like a smartass because you know more about an interesting topic than almost anyone else in the room
Of course, if you are a real newbie to the blockchain concept, then here’s some quick information to warm you up to the subject and to ensure you don’t sound like a complete idiot the next time the subject comes up.
Blockchain is an online database that can be accessed by anyone and from anywhere in the world (provided you have an internet connection)
Blockchain is decentralized, which means its ledger is shared on every computer around the world, so it has no single central location
Blockchain can be added to by anyone, but once a record (or block of information) is created, it cannot be tampered with, changed, or deleted
Bitcoin is NOT the only use case for blockchain technology. In fact, it’s just the beginning baby! From banking to cybersecurity, crowdfunding, Internet of Things, and healthcare, blockchain has so many real-life applications.
Now that you’ve got all this information in your head, knowledge is power. So, get out there and do the best thing anyone can do with a boatload of interesting information; flaunt it in front of your friends.
Cryptocurrencies like Bitcoin have demonstrated the application of blockchain technology for new forms of money and currency. They store transactions as digital packs of data within blocks. However, there is no reason this data cannot extend beyond financial data. In theory, any form of data can be stored on a blockchain.
Over the past several years, there has been a keen interest in how we can use blockchains for storing documents. There are many reasons you might want to store documents or hashes of documents on a blockchain, and multiple ways to do this. Various projects are currently innovating around this idea, each proposing different methods with different trade-offs.
Why Use a Blockchain Anyway?
Throughout 2017, there was a huge amount of hype around the applications of blockchain technology and cryptocurrencies.
These expectations were often focused on projects with grand promises and little proof of concept. As a result, the reality did not match the hype, and many of them have yet to attract users to their products.
In contrast, document storage is a much drier and less exciting application. However, it is deliverable, with multiple improvements over existing document storage systems.
Tamper Resistance
Immutability is perhaps the most important benefit a blockchain provides. Cryptographically linked blocks provide a record immune from tampering. This tamper resistance is highly effective in preventing the counterfeiting of documents and document fraud. If you cannot store the actual document on the blockchain due to file size limitations, then even storing a hash of the document makes a lot of sense.
Documents often take up a lot of space, compared to financial transactions, which blockchains like Bitcoin are designed for. It is often not feasible to store a whole document on a blockchain. Hashes take up just a small fraction of this space, therefore, are a much more efficient option.
Storing just the hash still offers you tamper resistance. Whenever you change the input of a file, its corresponding hash value will always change. This is a vital benefit secure hash algorithms provide. Regardless of where you store your document, whether in a centralized system like MySQL or in a distributed database like Azure, you can still verify the document has not been tampered with by rehashing it and comparing it to the blockchain-stored hash.
Visibility
Using a public blockchain is a great way to make your document accessible to the public. Of course, you need to be absolutely confident that you want to make it fully visible. Once you store the document or its hash on the blockchain, it will be there permanently. There is no way to change data once you include it in a block.
A blockchain is certainly not the only way to do this. However, given its level of security and tamper-resistance, you can be confident of permanent visibility.
Of course, you could also use a federated or private blockchain if you wanted to limit access to your documents. Such blockchains can provide you with the ability to offer permanent visibility to a preselected group. These alternatives will, however, undermine decentralization and possibly tamper-resistance.
Need for Decentralization
The final reason to use a blockchain is if you require decentralization. Perhaps the nature of your document means that you cannot reliably trust a third-party storage provider to not tamper with or delete the document.
One such instance would be politically sensitive files, which malicious parties could target, if published. By uploading the document or its hash to a public blockchain you would have peace of mind that it is safe from state or corporate censorship. Of course, choosing the correct blockchain is very important here. Blockchains are not all made alike. If the consensus protocol is not properly decentralized or allows full nodes to reverse or censor transactions, then you will have the same problems as using traditional systems.
The Different Ways to Store a Document on a Blockchain
There are two main ways you might choose to store a document on the blockchain. One option is to store the entire document itself on-chain. Alternatively, you can store a hash of it on the blockchain.
Storing the Entire Document
Storing a whole document on-chain is possible with certain blockchains, however, it is rarely a good idea. Due to the huge data demands, unless it is a very small file or of extreme importance, you would be better choosing another method. If you wanted to store the document on Bitcoin, then you first have to compress it and then format it into a hexadecimal form.
The problem with storing whole documents on a blockchain is because of something called access latency. This just means how long it takes network users to upload and download files, such as documents. Fully decentralized public blockchains have thousands of nodes. Unfortunately, the benefits that come with this number of nodes also results in a corresponding increase in latency. Any file storage, including documents, needs to have low latency otherwise the system becomes clogged up, slow, and expensive to use.
A hybrid strategy can also make sense. This would involve storing a small part of the document, perhaps the signatures, as well as the document hash on-chain. This allows you to maintain decentralization and full transparency of the parts that absolutely require it while maintaining a cap on the data load.
Storing a Hash
The most efficient method is to store a document’s hash on-chain while keeping the whole document elsewhere. The document could be stored in a centralized database or on a distributed file storage system. You would put the document through a secure hash algorithm like SHA-256 and then store the hash in a block. This way you save a huge amount of space and cost. Additionally, you will be able to tell if someone tampers with the original document. The change in input would result in a completely new hash value, different from your original document.
Hash values are far smaller than whole documents and so are a vastly more efficient blockchain storage method. It also scales efficiently. For storing multiple documents, you can put the hashes into a distributed hash table, which you then store on-chain. The downside is that the storage of the original document is not decentralized nor necessarily publicly visible.
Who Is Working on This?
There are few projects that focus on documents alone right now. Most are built around decentralized file storage, which includes documents.
One project that is focused specifically on documents, particularly signed documents, is Blocksign. This uses the hash method. A user will sign the document and send it to Blocksign, where it is then hashed, and the hash is stored on the Bitcoin blockchain. We must warn users that Blocksign has not recently updated their site, and we would encourage further research before use.
Two cryptocurrency projects designed for decentralized storage more generally are Siacoin and Storj.
Siacoin does not use a blockchain for any form of storage. Instead, their distributed network stores an encrypted version of your document. The Siacoin network is comprised of hosts who provide storage and clients who desire storage. Clients and hosts agree upon contracts detailing the commitments made by the storage providers. Sia’s own proof of work blockchain stores these contracts.
Storj, on the other hand, is closer to the hash model. A hash of the document is stored within a hash table on-chain. Additionally, its distributed network also stores your document. Unlike Sia, however, Storj runs atop the Ethereum blockchain rather than its own.
Cryptyk, an enterprise-focused platform to store documents, uses a blockchain more distantly than all of the above. You do not store any documents or hashes on-chain. Instead, a distributed cloud system stores the documents. The platform only uses a blockchain to manage and referee document access and sharing.
Document blockchain storage is a sector of this industry moving forward steadily. Right now, we are waiting to see what role blockchains will play in storing documents. Fortunately, the competition among projects is furthering our understanding of this promising use case.
Currently, cryptocurrencies have a combined market cap that skyrocketed from $17.7 billion in January to over $186 billion in November. This shows the difference in adoption between both years and sets the course for the realization of blockchain as a major solution to problems in various industries, including fintech, cybersecurity, healthcare, insurance, logistics, real estate, and even cloud storage.
In response, major firms all over the world are finding ways to integrate the technology. In 2016, Microsoft announced its partnership with R3CEV, a consortium of over 40 banks working to develop their own blockchain platform. Another major blockchain player is Amazon, the e-commerce giant that has filed several patents and created services to suit its growing community.
AMAZON’S RELATIONSHIP WITH CRYPTOCURRENCY
Amazon has been active in the blockchain space for a significant amount of time. From its partnership with Kaleido to create enterprise-facing solutions to the recent launch of two new products (Amazon Quantum Ledger Database and Amazon Managed Blockchain), the firm is continuously on the move.
Also in 2016, Amazon web services (AWS), partnered with Digital Currency Group (DCG), one of the largest investors in blockchain startups who has been able to raise funds from other institutional investors. Both corporations, in their partnerships with funded blockchain platforms, have continued to evolve, delving a little deeper into the cryptocurrency industry every day.
While it may have partnered with exchanges in the past, the e-commerce megalith has not yet made any mention of cryptocurrency exchange or custodial services, prompting speculation on whether or not such a big player could venture into the business of exchanges.
The question on everyone’s minds now seems to be: will Amazon create a digital currency exchange of its own? Several recent moves on the part of the company directly point to the possibility of its own crypto exchange in the near future. One of such moves that raises eyebrows is the acquisition of several questionable domain names by Amazon.
DOMAIN NAME REGISTRATIONS IN NOVEMBER 2017
Amazon has been known to buy up local domains in the past. In April 2017 the firm dropped over $500,000 USD on Amazon.se, a Swedish-owned domain name. In November 2017, it acquired several cryptocurrency-related domain names including:
Amazonethereum.com
Amazoncryptocurrency.com
Amazoncryptocurrencies.com
This further fanned the flames, prompting even more speculation that the firm is planning something big in the crypto exchange world. According to the information on the registration documents, the firm’s legal department is responsible for the domain names. However, no formal announcements concerning these purchases have been made to the public so far.
Each domain is connected to Amazon Technologies, Inc., a subsidiary company of Amazon.com which is mostly involved in filing patents by its parent company. It is located in Sao Paulo, Brazil and also handles the computer and software systems, logistics, as well as research on the environmental viability and techno-economic studies.
Although these names suggest a possible association with digital currency, the available data which the company has actually shared concerning its blockchain affairs, is insufficient to tell whether the firm has any such plans. It seems that Amazon would have no need to register such domain names, only as a way for users to carry out crypto transactions. This is why it sounds palpable that the firm could only have reserved the chosen domain names for a possible future exchange.
THE POTENTIAL FOR AN AMAZON CRYPTOCURRENCY
Amazon is widely known as a creator of in-house solutions, it is not unlikely that the company would build its own private controlled blockchain solution rather than run a bunch of operations based on a public decentralized one. This system would also likely include its own specific cryptocurrency that would act as a supporting factor on the network.
Such a currency would be integrated into the firm’s other services including Twitch, Amazon Prime, and Audible. However, it is difficult to say that this solution would be an exchange. For now, even the largest cryptocurrencies– Bitcoin and Ethereum, still have many issues relating to scalability and transaction speeds. As a result, they cannot keep up with the high performance of a site like Amazon which requires up to 600 transactions each second.
It can be argued that Amazon is headed down a path that would eventually have the firm needing its own cryptocurrency. Such a development would allow its users to have a better shopping experience, especially those who are residents of countries with highly volatile currencies who have conversion problems when purchasing products. Its own cryptocurrency payment system could also reduce the need for region-specific sites since digital currencies work well regardless of geographical barriers.
AN AMAZON EXCHANGE DOES SEEM LIKELY ANYTIME SOON
With all the points discussed above, the data suggests that the answer to the question “will Amazon launch its own cryptocurrency exchange?”, is: no, it will most likely not. According to the Amazon Web Services CEO, Andy Jassy, in a report by Fortune, the absence of blockchain technology in the company’s operations is deliberate since they do not want to focus their resources on a technology that is mostly driven by hype. AWS may even plan to avoid blockchain technology for now, but the firm has added additional features which are closer in functionality to IoT and machine learning.
Every day, blockchain-related companies emerge as the global population grows more interested in the technology. Businesses are also attracted to the types of benefits which blockchain provides. AWS would rather observe its customers who require integration with a digital ledger like blockchain.
WHAT ARE THE INTENTIONS OF AMAZON?
Rumors concerning Amazon’s alleged plans for an exchange began in 2013 when the company registered the domain name: amazonbitcoin.com. The page redirected to the Amazon home page, prompting the spread of rumors that many believed to be true.
When the news first broke, there was general speculation that Amazon was attempting to break the cryptocurrency market. However, the company has shown that a digital currency exchange is simply not in the works anytime in the future. Instead, just like a normal user account or even domain name on the internet would create backup pages to preserve its content, Amazon may simply be safeguarding its brand. It may also be preparing for plans which it has not yet made. This may also have been done to eliminate the mistake of mixing up various coins due to confusion. In fact, there could be a ton of other reasons, who knows?
FINAL THOUGHTS
Amazon is one of the largest tech companies in existence and its reach often feels never-ending. This, and the company’s tendency to buy cryptocurrency-related domain names are enough to convince the public that there may be an exchange in the works. There are also rumors that Amazon plans to buy Coinbase, the largest US-based cryptocurrency exchange.
But after examining the data closely, it is easy to see that Amazon has no intentions of launching a full cryptocurrency exchange. At most, the firm may end up having its own digital asset and blockchain system to improve its payment process. As for a full exchange, it seems highly unlikely at this time.
Unlike the period in which Bitcoin first emerged, it is a lot easier to buy cryptocurrency today. The major upside of this is that users do not have to break their necks searching for a way to buy their favorite coin.
There are numerous ways to go about it, including exchanges and Bitcoin ATMs, as opposed to attending crypto meetups and hanging around chatrooms in the hopes of meeting people who are willing to sell their tokens. However, most exchanges have not completely figured out how to make it easy for users to buy Bitcoin using fiat currency. In fact, this is a major drawback since people mostly have fiat currency as their starting point for acquiring cryptocurrency.
Normally, fiat purchases can be carried out through third-party applications like Paypal. However, users have found it nearly impossible to do something as simple as buying some Bitcoin straight from their Paypal accounts. With the Paypal active user base falling to 250 million, this is a far-reaching problem.
Currently, attempting to buy cryptocurrency through Paypal is difficult and expensive, mostly due to the potential for users to take advantage of chargebacks. For example, a user could buy some Bitcoins on an exchange, directly from their Paypal account and use its support system to charge it back so that they receive a refund. This can be problematic for exchanges since they can’t request refunds from the Bitcoin wallets they’ve credited.
WAYS IN WHICH BITCOIN CAN BE PURCHASED WITH A PAYPAL ACCOUNT
Although they are few, there are still some other ways in which users can purchase Bitcoin directly from their Paypal accounts, including direct trade, Bitcoin loans, and centralized exchanges and Specialized payment apps.
1. P2P DIRECT TRADE
Since most exchanges do not accept Paypal payments in exchange for BTC, direct trade is the most efficient way forward for those bent on using the payment app.
This involves sites that facilitate peer-to-peer agreements to sell and purchase Bitcoin using Paypal. Essentially, one user connects with another, either in person or through the use of a decentralized exchange like Localbitcoins, Paxful or Cancoin. After connecting, both users can agree on Paypal as a method of payment for their mutual benefit.
LOCALBITCOINS
Localbitcoins is easily the most popular way to buy BTC from a Paypal account. It is a peer-to-peer marketplace that aims to connect buyers and sellers who want to carry out their transactions using Paypal.
The platform method has continuously proven to be an effective way to achieve this. However, users must be careful when choosing sellers to avoid any fraudulent issues. Traders can be filtered by looking at their trade volume and feedback.
PAXFUL
This is another popular marketplace which links buyers and sellers as well as provides escrow services. The fees on Paxful are higher than the market rate but may prove to be worth it. Its user interface bears some slight similarities to Localbitcoins. Apart from Paypal, the platform also conducts transactions via Skrill, Payoneer and gift cards. The site will only accept verified U.S. Paypal accounts.
CANCOIN
Cancoin is a relatively new, decentralized peer-to-peer exchange for Bitcoin traders. It facilitates transactions between users and allows them to carry out these transactions using Paypal. Cancoin greatly emphasizes its security and range of tools to make the user experience more convenient.
Some features include multiple escrow orders, multi-signature transactions, custom alerts via email, SMS, desktop or browser and Interactive price history graphs. Creating an account on the platform is free but sellers pay a 1% fee on each transaction apart from the normal Bitcoin transaction fees. Buyers on the other hand, do not pay fees.
2. P2P BITCOIN “LOANS”
Bitcoin lending is becoming increasingly popular and since a large number of users receive money through Paypal, several bitcoin lending platforms accept it as a payment method. In these systems, users who hold Bitcoin can decide to lend their tokens to other users in hopes of generating profits from interest.
Since Bitcoin lending is still a growing concept, there are not many lending platforms. As a result, the chances of finding one that accepts Paypal as a payment method are slim. xCoins has managed to stand out in this regard.
XCOINS
xCoins is a cryptocurrency exchange, which also serves as a peer-to-peer marketplace, offering additional services including Bitcoin lending. It primarily exists to act as a bridge between Bitcoin lenders and borrowers.
When users fund their xCoins account, they can decide on what interest rates they would like to charge their borrowers, with a starting point of 15%.
Borrowers on the platform are matched with loans, according to the needs they specify.
xCoins guarantees a high level of security through its internal rating system. This way, the credibility of users can be verified easily.
3. CENTRALIZED CRYPTOCURRENCY EXCHANGES
A handful of centralized exchanges have also developed their own systems for ensuring security while accepting Paypal as a payment method. They include Virwox and eToro.
VIRWOX
VirWoX, an acronym for Virtual World Exchange, is a centralized cryptocurrency exchange which accepts Paypal payments. It was launched in 2007 as a digital currency exchange even though it precedes Bitcoin.
Currently, the platform has over 1 million registered users and uses an automatic order system to match them. Like almost any other exchange, a user must create an account to use the platform.
After this step, funds can be deposited in a virtual wallet using Paypal, credit cards, and a host of other options. Subsequently, buy-sell pairs, market limits or order limits can be created on the exchange page and submitted.
ETORO
eToro is a popular social trading and online forex platform where users can invest in several digital assets. The platform offers a wide array of cryptocurrencies and ensures that all user assets are managed in a single place.
It also eliminates the need for a digital wallet and claims to use high-quality encryption technology to secure investors’ funds. Unfortunately, fees on the Etoro platform are relatively high.
4. SPECIALIZED PAYMENT APPS
Some payment apps act as intermediaries to allow Paypal users access cryptocurrency from their accounts. One example is WirexApp which is not an exchange, yet facilitates the purchase of digital currency.
WIREXAPP
WirexApp allows users to set up consistent Paypal cryptocurrency payments. Unfortunately, a user’s first transaction takes about 1-2 days but all transactions after that are carried out instantly.
It is available in several countries including Bahamas, Bahrain, Iceland, Indonesia, Italy, Malaysia, Malta, Philippines, Romania, Saudi Arabia, and the United Arab Emirates among others.
To get started, users must create and verify a WirexApp account. This gets them a free virtual visa card which they have to deposit about $3 into. The card can be added to Paypal and used to pay for cryptocurrency transactions.
FINAL THOUGHTS
Buying cryptocurrency from a Paypal account has many upsides. But fraud, its major drawback seems to trump them all. Until major exchanges find a way around chargebacks, users may be stuck jumping through hoops just to buy cryptocurrency conveniently.
At the same time, platforms that currently offer this service are few and as a result, there is more profit to go around in the form of transaction fees. While this is great for these exchanges it does not do users any favors– since the scarcity of a Paypal payment option on cryptocurrency exchange will only drive up the existing transaction fees on the few platforms that offer this option. Hopefully, exchanges will become fiat-friendly in the next future and allow users to pay for cryptocurrency more conveniently.
SelfKey is a self-proclaimed identity management platform that allows individuals and organizations to keep full control of their identity. The creators have introduced a concept known as the Self-Sovereign Identity (SSID).
The SelfKey foundation manages the project and plans to govern it based on principles of self-sovereign identity. In other words, the core theme for users of the network is to limit risk by storing and managing sensitive data themselves.
The internet has made the world a smaller place. With a few words and a click of a button, you can send messages tens of thousands of miles in only a few seconds. While that obviously means an easier life in many respects, it also introduces a new set of problems for the modern person.
Identity theft is a growing issue worldwide. Results from the Federal Trade Commission and private consulting group Javelin reveal that fraud victims in the US were up 8% in 2017 alone. Recent data leaks from Facebook and Google, considered by many as the darlings of the tech revolution, haven’t helped either.
Blockchain just might be the solution here, and fortunately, several startups have emerged and are racing to get in front of the problem. In this article, we’ll cover one of these popular projects known as SelfKey:
Documents are shared with third parties using public/private key cryptography similar to that used in pioneer projects like Bitcoin. This ensures that these parties only have access to personal data when users specifically grant them access.
In addition, SelfKey has built a claims protocol which allows only the necessary information (like age, nationality, or gender for example) to be shared with third parties as and when needed. This should prevent the overflow of information between parties which often leads to data leaks and potential identity theft problems.
Project Details
The SelfKey project evolved out of several startup accelerators to become an organization known as KYC-Chain. The company enables organizations and individuals to better manage their know-your-customer (KYC) processes. The logical next step for the company was to raise funds in the ICO market and SelfKey was born. KYC remains a hot topic for the emerging cryptocurrency industry.
The Team
The team page is well-documented and provides a breath of fresh air compared to a host of other cryptocurrency startups out there. Most profiles have LinkedIn profiles attached – a good sign.
A section of the SelfKey growth team.
Edmund Lowell is the founding member of SelfKey and previously founded KYC-Chain as mentioned previously. His skills merge the fields of finance, technology, and law. These days, however, most of his time is spent recruiting the right members to keep the SelfKey project on course.
We won’t analyze all profiles here as the team is quite extensive. We will, however, provide a snapshot here of the core members in each of the other development, legal, and advisory teams:
A few key members of the Design & Development teams.
A section of the SelfKey legal team.
Some of SelkKey’s more prominent advisory figures.
Partnerships
SelfKey already has a growing number of partners including notable mentions from established projects like Kyber Network and Polymath. It’s worth highlighting, though, that their partnership with Standard & Chartered Bank out of Singapore is what got people in the industry to stand up and notice. Together they manage KYC for token sales and Fintech startups around the world.
Roadmap
No official roadmap appears to have been given before the ICO. There is, however, a fair amount of update and progress tracking on their site for a roadmap from early 2018. Other than updates from Lowell, potential investors will want to keep their eyes on the remaining goals for 2018 which include the Cryptocurrency Exchanges Marketplace, Key Token Staking Functionality, SelfKey Browser Extension, and the Incorporations Marketplace.
Roadmap goals and updates
Trading History & Sentiment
Selfkey review and community sentiment on the web remains mixed. Some Reddit posts have suggested that the project may be nothing other than a pump-and-dump scheme. On the other hand, many other Reddit threads are hailing it as an innovative solution which may completely change the nature of the identity management landscape.
It’s particularly difficult to determine the value of projects like these in their early stages of development. Add to that the bear market which has played out year-to-date in 2018 and you may wonder about the long-term viability of SelfKey.
The KEY token was listed on exchanges earlier this year and has unfortunately performed quite poorly against other assets. After SelfKey news of the Binance listing in July, prices moved sharply higher. Prices have since fallen back to even lower levels than before the listing.
Many investors will want to see consistent strength from buyers before adding the token to their crypto portfolio.
The KEY token runs the SelfKey ecosystem and was used as the primary way to fund the project. The token allows you to verify documents, access the network, and buy additional services via the SelfKey marketplace. It’s listed on several reputable exchanges including Binance,KuCoin, and OKEx. This is an important point since the bulk of new traders/investors will be found at these places of purchase.
As with most new tokens, you won’t be able to buy it on fiat-to-crypto exchanges just yet. So you’ll have to get hold of some Bitcoin or Ethereum first and then transfer to the exchanges listed above before grabbing some.
Identity Wallet
SelfKey has created their own storage solution known as the SelfKey identity wallet which allows users to store, manage, and authorize documents. The wallet also provides additional features like cryptocurrency management and a marketplace for your typical administration – things like bank accounts, setting up a business, or passport control.
The SelfKey wallet in action
Advantages
Security
Decentralizing identity management is a huge step forward in preventing identity fraud. Centralized record keeping can be really wasteful and time consuming with traditional paper methods. More importantly, however, is removing the possibility of the so-called “honeypot” from the equation.
When a large number of records are stored in one location this naturally draws the attention of thieves looking to score big. In a decentralized scenario, hackers would need to break into many individual accounts to get the same payday. In most cases, this is just not worth the hassle.
One Time KYC
Know Your Customer is a pretty annoying requirement in the cryptocurrency space. Traders and investors often have accounts with several exchanges. Having to verify each one can be an incredibly time-consuming process. Think back to the end of 2017 when exchanges were turning customers away due to high demand and limited customer resources.
SelfKey would effectively do away with this by creating a verify once process. Once a certifier has validated an initial KYC claim, users can validate that proof just about everywhere with a few clicks of a mouse. This kind of scalability will be necessary for the future. Cryptocurrency markets are forecasted to grow and more people are bringing their identities online than ever before.
Risks
The Middleman Bottleneck
According to SelfKey, the network is highly dependent on third-party certifiers to verify identity claims. This works almost exactly the same way we do today, except by making the process more efficient on the blockchain. Lawyers, bankers, accountants, and government authorities, amongst others, as usual, are eligible to be certifiers
This, however, doesn’t really address the issue of decentralization which is fundamental to building any project with blockchain tech. In other words, these certifiers are still middlemen and the potential bottleneck of the system. Unfortunately, certifiers still have excessive power which can be used to abuse the system. This can be illustrated by the recent arrest of an Immigration and Customs Enforcement (ICE) senior lawyer in Seattle.
Certifiers are still the bottleneck. These kinds of systems will only work if they are open to audit from the public. This is one of the biggest challenges when trying to merge decentralized blockchain solutions with traditional centralized processes.
Lack of Simplicity
The SelfKey website and whitepaper are not easy to follow. If users are going to trust in the possibilities of a blockchain future we need to make it easy for them to understand and adopt the technology. You can always explain great services in an easy way. Many cryptocurrency projects, however, suffer from very technical examples and convoluted explanations. SelfKey, unfortunately, falls in this category.
Final Thoughts
Nobody should deny that identity management is an area of the modern era that needs some serious attention. The anonymity of the internet makes it super easy for trolls, hackers, confidence tricksters, and fraudsters to attack from miles away. This begs the question of how jurisdictions of the world will function in the future.
Central authorities may not have many options as these kinds of problems cross international borders. Blockchain doesn’t stop at the border, however. And SelfKey is in a prime position to capitalize on this advantage. It does, however, already have serious competition from the likes of Civic and The Key. Who will come out on top? Just like the rest of us, you’ll have to stick around to find out.
More information on the project can be found on the following channels:
