Vitalik Buterin Explains Ethereum

In 2014, Vitalik Buterin explained decentralized applications (dapps) and Ethereum. He notes that dapps reduce costs, remove points of failure, prevent censorship, promote transparency and trust.

Ethereum borrowed the concept of distributed consensus and cryptographic proof that makes cryptocurrencies such as Bitcoin so effective in trustless payments. Ethereum then extended the use of these technologies to trustless agreements (Smart Contracts). This allows developers to easily build innovative, new products on a collusion-resistant foundation without censorship.

In brief, Ethereum is a platform that makes it possible for any developer to write and distribute next-generation dapps.

Vitalik Buterin is a Russian-Canadian programmer and writer primarily known as a co-founder of Ethereum and as a co-founder of Bitcoin Magazine.

What Is Hashing in Blockchain?

Blockchain validation relies on data encryption using cryptographic hashing.

Simply stated, a hash function takes some input data and creates some output data.  More specifically, a hash function takes an input of any length and creates an output of fixed length.

And more precisely, cryptographic hashing represents processing the data from a block through a mathematical function, which results in an output of a fixed length. A fixed length output increases security, since anyone trying to decrypt the hash won’t be able to tell how long or short the input is simply by looking at the length of the output.

An ideal cryptographic hash function should have five properties:

  1. It would be deterministic so the same message always results in the same hash
  2. It would be quick to compute the hash value for any given message
  3. It would be infeasible to generate a message from its hash value except by trying all possible messages
  4.  A small change to a message should change the hash value so extensively that the new hash value appears uncorrelated with the old hash value
  5.   It would be infeasible to find two different messages with the same hash value

There are lots of different types of hash functions. One blockchain cryptographic hash function is SHA-256 (designed by the United States National Security Agency). When there is a number such as “256,” it generally refers to the length of the output.  In this case, SHA-256 will produce a 256 bit output. So, an input value of “Hi,” “Blockchain” or “1,000,000” will all have an output of 256 bits (64 English characters).

Usages of Blockchain

Blockchain represents data and transaction security: unchangeable blocks of data that are decentralized and distributed on public, private or hybrid computer networks. (“Immutable Distribution.”) Blockchain establishes faster, more efficient, more transparent, more accountable and less expensive operations and transactions.  Following are some examples of blockchain usage.

ACCOUNTING AND AUDITING

Blockchain decreases the possibility of errors and ensures the integrity of the records.

HEALTHCARE

Healthcare devices will be able to store data they generate on a healthcare blockchain and append the data to a person’s medical records.

REAL ESTATE

Property blockchains can quickly verify finances, reduce fraud and provide transparency to the entire process.

ENERGY

Blockchain could be used to execute energy supply transactions, as well as metering, billing and clearing processes.

RECORD MANAGEMENT

Governments are responsible for maintaining individuals’ records, such as birth and death certificates. Blockchain can simplify record keeping and make the records far more secure.

VOTING

Every vote can be transparently and irrefutably traced to its source without sacrificing a voter’s anonymity. You cannot change the past and you cannot hack the present and you cannot alter access to the system.

DATA STORAGE

The fact that every computer on the network is continuously verifying the information makes the blockchain an excellent tool for storing public data.

TOKENIZATION

Tokens bind the physical and digital worlds.  Tokens stand as the identity of their respective blockchains, offering access to the services or solutions provided by their resident platforms.  More famously, they also serve as digital assets and opportunities for investment, depending on how much the community values their platforms. In the physical realm, tokens are used for supply chain management, intellectual property identification, anti-counterfeiting and fraud detection. 

Self-Learning and Self-Starting in the Blockchain Industry

In this brief video by Udacity, Marie Leaf describes herself as a lifelong learner. Leaf built a unique career path that led her to a position in the blockchain industry. She describes how she leverage self-education and her self-starter mindset to pursue the technology-centric career she desired.

Udacity provides online education courses and offers nanodegree programs such as blockchain developer, front-end and senior web developer, full stack web developer, data analyst, machine learning engineer, iOS and Android developer, programming introduction, tech entrepreneur, iOS app development beginning, Ruby beginning, and 2D mobile game developer courses.

Blockchain Letter-of-Credit Demo

IBM posted this short video to demonstrate a simple example of real-world blockchain application.

In this example, blockchain provides a small business faster access to credit.  More specifically, what is demonstrated is how blockchain facilitates a small business purchase of a number of computers from an oversea supplier via a letter-of-credit from a bank.  Blockchain facilitates the transaction by making available pertinent information as a transparent and trusted data chain so that all parties can readily identify details to ship the computers and transact payment.

What is Delegated Proof of Stake?

blockchain technology

Fundamental to different blockchain projects is the manner in which transactions are verified, or more technically speaking, how a “consensus” is achieved to ensure blockchain integrity.

Different consensus algorithms have evolved – and are still evolving – to support efficient blockchain scaling.

To better understand Delegated Proof of Stake, it’s best to grasp what it is intending to improve.

PROOF OF WORK

Proof of Work has been a fundamental consensus solution, which relies upon a network of “miners” to solve a cryptographic puzzle to form network consensus and by that receive compensation for their efforts. However, this method is energy inefficient, restricted in its potential scalability and is vulnerable to undue influence by limited entities, which is antithetical to the decentralized intention of blockchain.

PROOF OF STAKE

Proof of Stake evolved to solve the shortcomings inherent with Proof of Work. It is faster, more scaleable and consumes far less energy. It also doesn’t require special hardware, which further contributes to the intention for a democratization and decentralization of blockhain.

Instead of using miners, Proof of Stake reaches consensus by way of “validators” who stake a certain amount of their earnings to support the system in exchange for rewards. In this case, validators seek to be rewarded for their efforts as in Proof of Work, but the opportunity to achieve that compensation is more decentralized by virtue of the system randomly selecting validators for their support. However, validators can gain greater influence by way of wealth.

Hence, Proof of Stake has evolved to various flavors, and a common variant is called Delegated Proof-of-Stake.

DELEGATED PROOF OF STAKE

Delegated Proof-of-Stake builds upon the original Proof of Stake consensus mechanism and further increases speed and scalability.

Delegated proof of stake uses real-time voting combined with a social system of reputation to achieve consensus. It can be seen as the least centralized consensus protocol compared.

Daniel Larimer invented Delegated Proof of Stake to establish a consensus system that was much faster, used little energy and was more secure via greater decentralization. In this system, community participants (owners of the pertinent cryptocurrency) vote for Witnesses and Delegates to secure and validate their blockchain network.

Witnesses are those who actually do the work of validating the network and reaching consensus and the top witnesses are paid the most.

Due to the remuneration opportunity, there are many who desire to be Witnesses, as well as backup witnesses. Voting is a continuous process and each witness in the top tier is always at risk of being replaced by a user who gets more votes and is therefore considered more trusted.

Users in Delegated Proof of Stake systems also vote for a group of Delegates who oversee the governance and performance of the entire blockchain protocol, but do not play a role in transaction validation and block production.

A drawback of Delegated Proof of Stake is the potential for voter apathy, which, like a political system, could then evolve power into a more centralized system.

Cardano Foundation Changes

In a November 13th press release, The Cardano Foundation “announced that Michael Parsons, Chairman of the Foundation Council of the Cardano Foundation, has resigned with immediate effect. Pascal Schmid, Council Member, will take over as Chairman of the Foundation Council on an interim basis. “

In the above video, Charles Hoskinson discusses the change and expresses that the Cardano Foundation needs to spend the next few months re-establishing itself.

Hoskinson outlined three things he believes needs to be done.

  1. The foundation needs to restore credibility and trust with the community
  2. The foundation needs to be a good citizen and invest in its Swiss jurisdiction
  3. The foundation can reinvent itself from this crisis to become more effective for the community.

Additionally, Hopkinson outlined his personal wish list and outlook for the future.

In this article, the relationship between The Cardano Foundation and its counterparts are outlined. 

  • IOHK — Responsible for developing the core protocols that compose Cardano while meeting established academic and scientific standards.
  • Emurgo — Builds global relationships with developers and instigates projects for Cardano.
  • The Cardano Foundation — Created to promote Cardano while managing, informing, and responding to the needs of their growing international community.

In brief,  each of the three separate legal entities serve as a system of checks and balances, designed to prevent the failure of one branch from taking down the entire project

Additional details are available in this article: Cardano Foundation Says Goodbye To Its Chairman.


Moving En Masse to Blockchain

Elixxir’s David Chaum and Madeira Global’s Christina Alfonso-Ercan speak with Fortune’s Robert Hackett at Web Summit 2018 in Lisbon, Portugal, earlier this month (Nov 5-8).

Chaum believes blockchain’s potential will surpass the hype and will unleash more human creativity and establish a new digital world.

He remarks that Bitcoin did not evolve into the vision delineated in Satoshi’s original white paper.

Alfonso-Ercan sees the opportunity for crypto as a convenience to human culture’s desire for instant gratification. Banks are going to be resistant to the change until it makes financial sense.

Chaum considers security to be the primary factor for big adoption. 

He elaborates that Blockchain is the next logical step and evolution for information technology. It will be the fundamental architecture for the democratization for entrepreneurs any where in the world. He also talks about his recent breakthroughwith Elixxir, which solves blockchain’s primary challenges.

Does Your Biz Need Blockchain?

Mustafa Inamullah wrote 4 Questions Your Company Should Ask Before Pursuing Blockchain Technology, accompanied with an infographic.

He outlines points related to requirements for data security, network speed and cost.

An additional note worth emphasizing for many businesses is that the costs will come down.  In fact, it’s likely that the majority of businesses will use blockchain-as-a-service solutions that will be relatively simple to deploy (compared to today).

Think of the relative ease of which website deployments exist today, compared to the 90’s.  And of course the costs are a fraction of what they used to be.

Blockchain will likely follow a similar trajectory.

Good Dollar Experiment

As noted on their website, “The GoodDollar experiment is a series of tests with the ultimate purpose of reducing wealth inequality through blockchain technology. Our mission is to build a new, global, open-source cryptocurrency – called GoodDollar – to distribute money using the principles of universal basic income (UBI).”

“GoodDollar, a 100% not-for-profit project, is nurturing an ecosystem – including academics, NGOs, ethical investors, crypto supporters, and anyone who cares about reducing inequality.”

The “GoodDollar” experiment was started by eToro and the firm has contributed $1 million to it as it seeks further contributions for the project.

The initiative calls for stakeholders who desire an end to inequality.

The GoodDollar home page highlights that 42 of the world’s richest people have more combined wealth than the poorest 3.7 billion.