Blockchain Architecture: Technical Brief

Just recently, on October 31, 2018, Bitcoin celebrated its first anniversary – the first cryptocurrency turned 10 years old. Now almost all modern people have heard about Bitcoin. But only few of them can clearly and concisely answer the question: what are cryptocurrencies, and moreover, what is blockchain? In this article we will try to describe in simple words, what blockchain is and how it works.

Content:
(please, click the topic to scroll down to it)

  1. The history of creation and a brief description of Blockchain
  2. Technical Brief
  3. Private and public blockchain
  4. Advantages and disadvantages of blockchain technology
  5. Conclusion

 

1.  The history of creation and a brief description of Blockchain

Blockchain technology is the basis of cryptocurrency, and since recently it is being applied in other areas of life. From its name it becomes clear that, in fact, it is a chain of interconnected blocks.

The most important feature of the Blockchain technology is decentralization. That means, that the network operability is provided not by a single center, but by all its participants at the same time. For ease of understanding, the principle of operation of the blockchain can be compared with Torrent, where the user and the server are the same. Files that are downloaded from the tracker, are not located on the central server – they are stored by other users. Operations in the blockchain occur exclusively between users, without any intermediaries as well.

The term “blockchain” was first used on October 31, 2008. On the same day, the mysterious creator of Bitcoin Satoshi Nakamoto published his legendary article “Bitcoin: a one-time electronic monetary system.” The Bitcoin network was launched in early January 2009. But the concept of the modern blockchain itself was announced in the 1990s. Satoshi Nakamoto has put a lot of effort into the systematization of cryptographic works, which has been published over the past 20-25 years.

2. Technical Brief

We will not go delve into of cryptography, use narrowly defined terms and draw complex graphs. Firstly, 99.99% of people simply will not understand this (including us), and secondly, in order to open this topic completely, not one article, but an entire book is needed. In this article we are talking only about the basics of the architecture of blockchain systems.

So, the blockchain ledger can be conditionally compared with a book. It contains blocks that can be called “pages” of this book. Each block has a name that contains information about the previous block and the key from the next one. This is called a “chain of blocks”. All information is contained in an encrypted HASH. The keys from blocks are found by miners who maintain network performance.

3. Private and public blockchain

We all are used to associate blockchain with finances only, and more specifically with cryptocurrencies. But it is worth noting, that this technology is much more versatile, it can be applied in other areas of life, such as:

  • logistics;
  • identification;
  • proof of intellectual property rights;
  • voting;
  • music;
  • charity;
  • property;
  • etc.

The Bitcoin or any other cryptocurrency network uses a public blockchain, the keys of which are publicly available. It is perfect for the concept of cryptocurrency, but it cannot be used to maintain the workflow of private companies. The private blockchain is perfect for this. Lately it causes increased interest in many companies. For example, it can be used for tracking of goods trade and shipping companies. Such a solution will significantly reduce costs, as well as eradicate all sorts of fraud.

4. Advantages and disadvantages of blockchain technology

First, let’s talk about the advantages:

  • Decentralization. Such network is almost impossible to be closed, because for this it is necessary to disconnect all its members from the network.
  • Safety and reliability. Technical features of the technology exclude falsification, data fraud, and hacker attacks.
  • Versatility. This technology is predicted a great future, because it can be used in various industries.

Unfortunately, the blockchain technology is not perfect and has several disadvantages:

  • Scaling issues.
  • Irreversibility of operations. After the operation was recorded in blockchain, it is impossible to cancel it, even if it was done by mistake.

5. Conclusion

Blockchain technology can cardinally change our lives. Only narrow specialists are able to understand all mechanisms of its work. Basic principles, which we discussed in this article, will be enough for the vast majority of people.

Subscribe to The Coin Shark news in Facebook: https://www.facebook.com/coinshark/

No Panic: Crypto Community Reaction on Bitcoin Collapse

The beginning of 2018 pleased the crypto community much more, than current week. This year, Bitcoin set a positive record on January, 7th. According to CoinMarketCap, when the rate of the first cryptocurrency flew up to the mark of $17 527 for one coin. The Anti-record was settled this week, November, 20, with the rate of $4 279. As a result, within 11 month, Bitcoin fell by 75%.

Today, November, 21, at the moment of 11:30 UTC, Bitcoin rose slightly – up to $4 665 for one coin. Despite the drop in prices, BTC is still confidently covers more than half of the crypto market in terms of capitalization,
and $ 81,114, 287, 644 in total.  

Not only the Bitcoin rate has been a victim of collapse. Even Ethereum  has seeded his 2nd position by Ripple capitalization. The crypto industry has become more and more discussed in a last few days.  But incredibly, the panic within the community is mild, and some individuals are treating the situation inside the market  with some kind of irony. You may learn about it from different crypto enthusiasts Twitter profiles.

CoinShare security manager Meltem Demirors, noticed the possibility of a broad cultural shift for the industry in front of depreciation:

Binance CEO Changpeng Zhao, commented the collapse of BTC in his Twitter:

Also added:

The entrepreneur Andreas Antonopoulos, who is regarded in the crypto community as a preacher of cryptophilisophy, in his Twitter gave recommendations about the current market situation:

The trader and publisher of the weekly Factor Service Peter Brandt, shared his observation about cryptocurrency liquidity:

American trader Jacob Canfield, in his Twitter gave a comic forecast for the Bitcoin price:

In general, the crypto-community is divided into two camps : the first one blames Bitcoin Cash hardfork, and the second one is convinced that such low drop is a common economic phenomenon and we just have to wait. For example, Fundstrat Global Advisors analyst Tommy Lee, believes that Bitcoin will grow up to $15 000 by the end of 2018.

We want to remind you, that previously Tom predicted the rate’s growth  by $25 000, but in July, he suddenly changed his mind and decreased the rate till $20 000.

Tom Lee: Bitcoin Might or Might Not Reach $25K by the End of 2018

Subscribe to The Coin Shark news in Facebook: https://www.facebook.com/coinshark/

What Cryptocurrency Exchanges Own the Wealthiest BTC Addresses?

It is quite obvious that a single person can not own the richest crypto wallet, it obviously has to a company, in our case, a crypto exchange.

5 major digital asset exchanges currently possess around 3.5% of the total amount of BTC. At the rate of approximately $5300 per BTC in monetary terms, it is almost 600 thousand BTC (more than 3 billion dollars).

Let’s find out who made it to the top-5.

1. Binance, which is also #1 in the CoinMarketCap rating in terms of trading volumes. It owns over 141 thousand BTC (almost 750 million dollars).

2. Bitfinex. #3 on the CoinMarketCap and holds almost 139 thousand BTC (around 737 million dollars).

3. Huobi. This exchange ranks 4th on the rating according to its trading volume and owns a bit more than 108 thousand BTC (almost 575 million dollars).

4. Bittrex. Being only the 32nd on the CoinMarketCap, Bittrex managed to become the 4th richest BTC holder with its approximately 107 thousand BTC (around 570 million dollars).

5. Bitstamp. Last, but not least is Bitstamp, #15 on the rating. Almost 98 thousand BTC (close to 520 million dollars) belongs to this exchange.

Here are the richest crypto exchanges holding Bitcoin. As for the famous crypto personalities who can boast of their BTC wallets, we can’t help mentioning Roger Ver and the Winklevoss twins. These two own $11 million worth of Bitcoin.

We remind you:

Founders of Alibaba, Bitmain, Binance, Huobi, OkCoin Got On the List of 2018 China’s Richest Businessmen

Subscribe to The Coin Shark news in Facebook: https://www.facebook.com/coinshark/

Why None of Positive Forecast Has Come True: Three Main Reasons for Bitcoin Collapse

The stability of Bitcoin’s rate and other cryptocurrencies is a big question. At the moment , everything  that cryptocurrency does stably is rushing through the Hell into suspense.

Infernal flight started on November,14 at 11:34 UTC. At that time, BTC rate was around $6 365, and ETH was $206, according to CoinMarketCap.

Source: https://coinmarketcap.com/

At the time of writing this article, November, 20 at 11:00 UTC, the same resource updated the data to an even more disastrous rate: the cost of one BTC is $4 459, and ETH $132.

At the same time, the Coin 360 monitoring resource shows a BTC rate of $4 460, and an ETH $131.

Source: https://coin360.io/

Apparently, the collapse of the coin rate is not going to stop, and this is clearly indicates, that a fateful event happened in the crypto industry, which collapsed the market.

Due to specifics of cryptocurrency, it is impossible to determine now what exactly the main cause of  the falling prices. However, The Coin Shark conducted its own, independent investigation and identified three most logical versions of why crypto “tends to zero”.

So, the reasons for the collapse of the market can be:

1.The split of Bitcoin Cash into BCH SV and BCH ABC;
2.The refusal of the China authorities to provide the miners with the cheapest electric power;
3.The theft of 600 BTC from the Bitmain company.

Now, let’s consider each reason in a more detailed way.

1. The split of Bitcoin Cash hard fork

It is possible, that the sudden collapse of the market is a consequence of the Bitcoin Cash hard forks. History has proved once again, that serious network updates provoke the panic within the crypto community. Especially among investors, who fitfully begin to sell their coins. Panic attacks are not so unprecedented, but rather very thoughtful. If during the fork there is a malfunction, it is guaranteed to have an impact on the future of the crypto market.  

Presumably, the cause of today’s “successes” of cryptocurrency is a backdoor, that hackers manage to discover and made a hashrate diversion from BTC.

We want to remind you, that now Bitcoin Cash is divided into Bitcoin ABC and Bitcoin SV.  

In this regard, Australian programmer Craig Wright wrote on his Twitter:

The founder and CEO of BKCM, Brian Kelly, also considers that Bitcoin Cash is involved into collapse of BTC rate and and other cryptocurrencies. He shared this during an interview at CNBC Fast Money.

Most likely, this pseudo-war between BCH SV and BCH ABC in the nearest future will cause a decrease of hashrate in BTC, which in its turn, will reduce the network speed.

“People are concerned that both Bitcoin and Bitcoin Cash markets, their networks might slow down, they might not work as well, the software upgrade may not go through or if it does go through, we will end up with some chaos. People started selling, that triggered stops, everybody got concerned. The entire market settled down. In my view, a very short-term event”,  – explained Kelly. 

 2. Insufficient speed of Bitcoin network

The authorities of provinces of Xinjiang and Guizhou stopped to provide the Chinese miners with cheap electricity. Now, the miners are forced to look for an alternative method of mining Bitcoin and other cryptocurrencies.

Because of this, main mining facility, located in China, suspend their activities in order to find an alternative resource for mining cryptocurrency. This caused the decrease of Bitcoin hashrate network by almost 20%.

3. Theft of 600 Bitcoins

A major Chinese company, Bitmain, has announced that its account has been hacked at Binance crypto exchange. At the time of the hack, more that 600 BTC were stolen – which is about 2.7 million dollars at the time of writing this article. The hacker has not been found yet, but it is known that he tried to increase the speed of a little-known cryptocurrency MANA with the help of this money.

This kind of news has already changed the mood of the market, while reducing the rate. It’s likely, that this particular incident could undermine Bitcoin and other digital coins. 

Why none of the positive forecast did not come true?

It is impossible to predict the cryptocurrency rate in advance, as it can be done on the usual market for fiat. On the crypto market, we see the outcome and only than the reason. For example, the dollar increases after raising discount rate in the USA, but the cryptocurrency doesn’t. Since, its rate doesn’t depend on the ordinary economy and on decisions of the authorities.

The cryptocurrency rate is not backed up by anything. It depends  only on supply and demand. Therefore, it is impossible to predict the behaviour of the rate in advance. For instance, exactly one year ago, on November 20, 2017, the Bitcoin rate was $8 039.

Source: https://coinmarketcap.com/

After just one month, the rate set the first historical record – $19 440.

Source: https://coinmarketcap.com/

Based on the last year’s situation on the crypto market, it cannot be stated, that this year it is going to be the same. This market is sensitive and unpredictable.

In relation to the worsening situations, all cryptocurrency holders are worried about – “What to do next?” – that’s a good question. But unless the true  reason of the collapse of the rate is revealed, there will be no exact answer. As for now we can only guess how the events will unwrap.

For example, a financial analyst, Alexey Polovinkin, in an interview with OBOZREVATEL, shared the view, that the rate of the world’s most massive cryptocurrency by capitalization will increase by $40 000 for one coin.  The expert explained, that Bitcoin will grow due to the possible legalisation of cryptocurrencies, which will have an effect on institutions and investment companies. According to Alexey’s point of view, they will start considering the entering of cryptocurrencies in the marker in a large amount.  We want to remind you, that Polovinkin predicted the growth of Bitcoin in 2017.

Also, a venture investor Tim Draper is trying to make a good forecast, reports The Daily Hodl.  The investor is confident that in the 2022 the price of Bitcoin will rise to $250 thousand. While, an investment banker and millionaire Mike Novogratz, makes more modest forecasts, stating that the rate will reach only $10 thousand.

Not all sharks of the crypto world are optimistic about the future of the market. In this regards, CEO of the BitMEX exchange, Arthur Hayes, state that the next 18 months will be not the best period for cryptocurrency. He is confident that the interest in digital money will decrease, which will affect the rate of coins.

Vinny Lingham, CEO of the American startup Civic, state that Bitcoin had no chance of existence. Even if his rate rises , he will still fall to $100 per one BTC.


“Do i think we’ll have another bubble? Probably, because people just don’t learn. When it hits $20,000 again, it will fall back to $100 or something like that”, – said Lingham.

As you can see, the estimates are diverse, and there is no clear idea about the upcoming growth or reduce. Therefore, any forecast should be reasonably judged. Till then,  cryptocurrencies continue their hellish way to a stop “Anti-record rate of 2018”.

Subscribe to The Coin Shark news in Facebook: https://www.facebook.com/coinshark/

The Forecast of Bloomberg Analysts: Bitcoin Rate Will Drop to $1 500

Bloomberg Intelligence analysts claim, that at the moment Bitcoin has not yet established the final anti-record, but only “continue to fall”.
According to their forecasts, the rate is expected to fall to $1 500, which is 70% less than the current rate – $5 140 (at this point).

As one of the reasons for the fall of the course, the  publication notes the hard fork Bitcoin Cash network. After it the largest scale collapse of the cryptocurrency rate occurred, which was the beginning of the “boring life for Bitcoin” and inspired several industry experts to make forecasts.

Travis Kling, founder of the hedge fund Ikigai, made an assumption, that in the future BCH hard fork will no longer affect the market:  

“There’s a small chance that, it’s difficult to estimate, that something really bad could happen related to Bitcoin Cash that could then impact the entire crypto market.”

Bloomberg Intelligence analyst Mike McGlone gave a forecast for two versions of Bitcoin Cash, namely that because of them the investments of depositors and miners will continue to provoke a way out of rates to increase and further decline in market quotations.

The president and the main investment specialist of Creative Planning, Peter Mallouk, drew the attention of the crypto community to the financial result of the III quarter of  the GPU manufacturer – NVIDIA. Mining products of the company are losing its relevance, which is according to the analysts, signals about the deterioration of the whole cryptocurrency market in general.     


“The drop in the stock price of Nvidia is reflective of a future where cryptocurrency fueled demand has cratered,” said Peter Mallouk, president and co-chief investment officer of Creative Planning, in an email. “While this is, of course, bad news for NVIDIA, it is really the canary in the coal mine for Bitcoin and other cryptocurrencies.”

We want to remind you, that the founder of Fundstrat Global Advisor, Tom Lee, is optimistic about the future of the world’s first cryptocurrency. At the beginning of the year, he made a prediction, in which Bitcoin will reach the $25 000 by December. However, in July Tom made an adjustments , changing the estimate rate by $22 000. Early in November, the forecast was changed again to $15 000. Eventually,  BTC should grow by more than 170% in a short term.

Subscribe to The Coin Shark news in Facebook: https://www.facebook.com/coinshark/

Are Crypto and Blockchain Jobs Still Relevant?

As it may be seen from the statistics taken from the job search site Indeed.com, the popularity of crypto-related jobs has begun decreasing as the hype over cryptocurrency slowly but surely fades away.


Source: Indeed.com

According to the graph, the employee’s interest in crypto jobs (blue line) has remained pretty much the same as one year ago, but did drop significantly compared with the November and December of 2017. As for the employer’s interest (red line), it has stayed quite stable, however, it is also starting to decline.

Crypto industry is a sphere where real specialists can get quite decent salaries. Hopefully, as the market stabilizes, the demand of jobs will increase as well.

Subscribe to The Coin Shark news in Facebook: https://www.facebook.com/coinshark/

Bitcoin Cash: Overview, Advantages and Disadvantages, Details of The Hard Forks

In this article we will talk about the most famous bitcoin`s hard fork – the Bitcoin Cash: it`s advantages and disadvantages, forecast for the future, as well as the hard fork, which will happen on November 15, 2018.

Content:
(please, click the topic to scroll down to it)

  1. Briefly about the Bitcoin Cash and comparison with Bitcoin
  2. Disadvantages of Bitcoin Cash
  3. Briefly about the hard fork Bitcoin Cash
  4. Conclusion

1. Briefly about Bitcoin Cash and comparison with Bitcoin

The main popularizer of the “new” coin is Roger Ver. He is quite famous person in crypto world. He was one of the first cryptocurrency investors. Due to increased attention to this industry, he became known as Bitcoin Jesus. But later, Ver decided to actively promote the hard fork (a branch) of the first cryptocurrency – the Bitcoin Cash. The network split occurred on August 1, 2017.

What is the difference between the BTC and the BCH?

  • Increasing of transaction`s speed in several times. The main feature of the new coin is an increased block`s size to 8 MB. On May 15, 2018, developers released the update, after which the block`s size increased to 32 MB. This solution made it possible to record much more transactions in one block, and thereby to increase network bandwidth.
  • Low commissions. Bitcoin Cash has very small commissions $0,05 – $0,010, which is significantly lower than that of the “older brother” $8 – $15.
  • With the current network load, a queue of unconfirmed transactions does not exceed 200 – 250, whereas with the original Bitcoin, this number can reach 7,000 – 10,000.

2. Disadvantages of Bitcoin Cash

Significant disadvantage of this fork is the automatic adjustment of the network`s computing complexity. Unfortunately, it has direct dependence on the speed of extraction of new data. That is, if for a certain amount of time miners get an insufficient number of blocks, then complexity decreases. This pattern works in both directions.

Miners started to use this vulnerability and got BCH in periods of complexity recession, and when the situation changed, they turned to BTC. Such actions led to the network`s destabilization and increased volatility of the BCH rate. This problem has not been solved till this day, but the development team manages to restrain it.

Cryptocurrency investors do not consider Bitcoin Cash as a long-term asset yet. This coin is more used as a speculative tool. For this reason, at the moment BCH has rather vague and uncertain future.

3. Briefly about the hard fork Bitcoin Cash

The hard fork of Bitcoin Cash was on November 15, 2018. After this event, the network received two incompatible consensus protocols BCHABC и BCHSV. The community of coin divided into two parts: on the one hand Roger Ver, and on the other Craig Wright. The outbreak of the conflict is considered to be Bitcoin ABC update, which began to support smart contracts and atomic swaps. In response to this update, Craig Wright offered the community his vision for the future development of the project. He proposed to increase the block`s size up to 128 MB. Such decision was not supported by Roger Ver and his part of miners. Because of this, another coin will now appear in the cryptocurrency world.

This is very good news for BCH holders. The matter is that after hard fork, investors received the same amount of coins of the new network, which complies with their BCH`s balance.

Against this background, the Bitcoin Cash rate grew up by almost 50% only for the first week of November.

Source: https://coinmarketcap.com/

This growth was artificial, therefore, we observed the same rapid rollback before the hard fork.

Source: https://coinmarketcap.com/

4. Conclusion

Bitcoin Cash is a project with rather big ambitions, ultimate goal of which is to push the original Bitcoin from the first place. In fact, BCH has fewer problems with scaling, and also can boast of low transaction commissions. But on the other hand, there is conflict between developers, still unsolved problem of automatic control of complexity, as well as increased volatility. Now it is hard to make long-term forecasts for Bitcoin Cash, as it is not clear yet, which of two networks will be more stable.

Subscribe to The Coin Shark news in Facebook: https://www.facebook.com/coinshark/