Not only Bitcoin, why the Blockchain will change the World


As I wrote three weeks ago, in the post Why will Bitcoin continue to grow in the coming month, while bitcoin is a crypto-currency that allows you to perform transactions recorded on a BlockChain, the latter is actually the foundation on which the technology of Bitcoin and all the other cryptos in circulation are based.

AN EXAMPLE

To give an example like "Marco Montemagno" told in one of his videos, Bitcoin is like a company listed during the new Economy, it could be successful but also be replaced by a better technology, while Blockchain is like the internet and was born not only to stay but also to revolutionize our world as we see it today.

WHAT ARE ICOs

In recent months, ICOs, Initial Coin Offers or emission of new crypto-currency released by anyone who wants to raise money to develop a project, have been rampant.

In the era of the new economy, I am talking about the years from 1992 to 2000, thousands of companies have been listed that promised to revolutionize the world by exploiting the Internet and its enormous potential.

I myself have invested in some of them, they earn a mountain of money and even lost it with an impressive speed.

As shown in the table above, the number of technological IPOs in the years 1992 to 2000 have always been more than 100, which means at least one every two working days. Very often these IPOs were SCAMs (read the glossary below for the definition), an example in the United States was the listing of pet.com, an e-commerce for the sale of animal equipment and food, quoted at incredible prices on the hypotheses of non-existent multiples.

DO YOU REMEMBER?

In Italy, some people will remember CDB Web Tech, a venture capital company that was listed in mid-March 2000 (perfect timing) that was practically liquid and the unsuspecting investors paid them the liquidity 16 times hoping to multiply their investments as it had actually happened in previous IPOs.

IS HISTORY REPETITION ITSELF?

This phenomenon is being repeated with the ICOs i.e. with these emissions not of equity shares, but of Coins that allow in many cases, so far, to earn a lot of money in a short time; to give an example reported by www.icostats.com the ICOs that have obtained the most impressive returns in entirety.

I distinguish myself by being transparent, I will also talk about the table of the worst ICOs at the moment, in the middle there are hundreds of other emissions of new crypto-currency that on average have generated 400% in a few months.

Crypto experts such as Giacomo Zucco consider most of these ICOs as straw fires and he is probably right, but the technology behind these ICOs will allow us to have more distributed wealth in the future and this is the part that personally fascinates me the most.

ICO FOR COMPANIES

Let me give you an example: imagine that you want to build a 30-stories skyscraper with a cost of 20 million euros (the real estate entrepreneurs will understand that I do not mean buildings..., but it is just to give an example); obviously, using 20 million euros to build a skyscraper is not something that everyone can do and it is not easy to obtain funding from the bank.

COIN AS A GUARANTEE

Then think about issuing a Crypto-currency called Skyscraper Coin and distribute tokens (or newly issued Coins) to 20,000 small investors for 1,000 euros each. Through a smart-contract, another innovation that we will perhaps discuss in the future if it interests you, you can define the reward (the benefit) that will be given to these 20,000 investors who have given you confidence that you do not even know their names, for example you commit to buy back the token in circulation within two years at 1,500 euros, provided that at least 80% of the apartments of the skyscraper have been sold.

WHAT ARE THE ALTERNATIVES?

If you wanted to do such a thing today you would have two possibilities, either the banks (and so wealth accumulates more and more between entrepreneurs who have money and the banks lend to them ) or find partners not too many or else it will be difficult to control them, go to the notary with all of them, create a company making all the partners shareholders, then if you can manage not to dispute among yourselves, you can build the skyscraper and share the dividends, with significant additional costs due to the accountant, lawyer, notary, etc....

DISTRIBUTED ECONOMY

With ICOs you can gain thousands of people easily, at low costs thanks to technology, with the guarantee from Blockchain and smart-contacts, which are not humane and are not tempted to change the rules of the contracts in progress.

SCAM

Of course, you could argue me that if the entrepreneur who organizes the ICO is a scammer who collects the money and then never builds the skyscraper and runs away with the loot, you don't earn any money, you lose all the money; it's true, but this is the risk of investors, it happened with the IPOs and will happen also with the ICOs and it has also happened thousands of times in the real world, so the defenses and the precautions in order not to be cheated is to remain well alert, but it is the hardest job for the entrepreneur or the investor.

GIFTS IN EXCHANGE FOR SHARES

I hoping to have made you understand the phenomenon a little better, in exchange for your kind sharing on social networks, I have listed a glossary of the main terms used in the world of crypto-currency below (without any pretense that it is exhaustive or even perfect, having collected it here and on the internet or rather if someone can suggest any term that I missed it will be very welcome), so maybe when you are talking to an expert on this fascinating sector, what you are talking about will be well understood.

DB

BLOCKCHAIN GLOSSARY

Address Addresses (Cryptocurrency addresses) are used to receive and send transactions on the network. An address is a string of alphanumeric characters, but can also be represented as a scannable QR code.

Agreement Ledger An agreement ledger is distributed ledger used by two or more parties to negotiate and reach agreement.

Attestation Ledger A distributed ledger providing a durable record of agreements, commitments or statements, providing evidence (attestation) that these agreements, commitments or statements were made.

ASIC ASIC is an acronym for "Application Specific Integrated Circuit". ASICs are silicon chips specifically designed to do a single task. In the case of bitcoin, they are designed to process SHA-256 hashing problems to mine new bitcoins.

Bitcoin (uppercase) The well known cryptocurrency, based on the proof-of-work blockchain.

bitcoin (lowercase) The specific collection of technologies used by Bitcoin’s ledger, a particular solution. Note that the currency is itself one of these technologies, as it provides the miners with the incentive to mine.

Blockchain A blockchain is a type of distributed ledger, comprised of unchangable, digitally recorded data in packages called blocks (rather like collating them on to a single sheet of paper). Each block is then ‘chained’ to the next block, using a cryptographic signature. This allows block chains to be used like a ledger, which can be shared and accessed by anyone with the appropriate permissions.

Block Height Block height refers to the number of blocks connected together in the block chain. For example, Height 0, would be the very first block, which is also called the Genesis Block.

Block Reward The reward given to a miner which has successfully hashed a transaction block. Block rewards can be a mixture of coins and transaction fees, depending on the policy used by the cryptocurrency in question, and whether all of the coins have already been successfully mined. The current block reward for the Bitcoin network is 25 bitcoins for each block.

Central Ledger A central ledger refers to a ledger maintained by a central agency.

Confirmation A confirmation means that the blockchain transaction has been verified by the network. This happens through a process known as mining, in a proof-of-work system (e.g. Bitcoin). Once a transaction is confirmed, it cannot be reversed or double spent. The more confirmations a transaction has, the harder it becomes to perform a double spend attack.

Consensus Process The process a group of peers responsible for maintaining a distributed ledger use to reach consensus on the ledger’s contents.

Consensus Point A point – either in time, or defined in terms of a set number or volume of records to be added to the ledger – where peers meet to agree the state of the ledger.

Cryptocurrency A form of digital currency based on mathematics, where encryption techniques are used to regulate the generation of units of currency and verify the transfer of funds. Furthermore, cryptocurrencies operate independently of a central bank.

Digital Commodity A digital commodity is a scarce, electronically transferrable, intangible, with a market value.

Digital Identity A digital identity is an online or networked identity adopted or claimed in cyberspace by an individual, organization, or electronic device.

Distributed Ledger Distributed ledgers are a type of database that are spread across multiple sites, countries or institutions. Records are stored one after the other in a continuous ledger. Distributed ledger data can be either "permissioned" or "unpermissioned" to control who can view it.

Difficulty Difficulty, in Proof-of-Work mining, is how hard it is to verify blocks in a blockchain network. In the Bitcoin network, the difficulty of mining adjusts verifying blocks every 2016 blocks. This is to keep block verification time at ten minutes.

Double Spend Double spend refers to a scenario, in the Bitcoin network, where someone tries to send a bitcoin transaction to two different recipients at the same time. However, once a bitcoin transaction is confirmed, it makes it nearly impossible to double spend it. The more confirmations that a particular transaction has, the harder it becomes to double spend the bitcoins.

Genesis Block The very first block in a block chain.

Halving Bitcoins have a finite supply, which makes them a scarce digital commodity. The total amount of bitcoins that will ever be issued is 21 million. The number of bitcoins generated per block is decreased 50% every four years. This is called “halving.” The final halving will take place in the year 2140.

Hashrate The number of hashes that can be performed by a bitcoin miner in a given period of time (usually a second).

Initial Coin Offering (ICO) An Initial Coin Offering (also called an ICO) is an event in which a new cryptocurrency sells advance tokens from its overall coinbase, in exchange for upfront capital. ICOs are frequently used for developers of a new cryptocurrency to raise capital.

Ledger An append-only record store, where records are immutable and may hold more general information than financial records.

Litecoin A peer-to-peer cryptocurrency based on the Scrypt proof-of-work network. Sometimes referred to as the silver of bitcoin's gold.

Mining The process by which transactions are verified and added to a blockchain. This process of solving cryptographic problems using computing hardware also triggers the release of cryptocurrencies.

Multi Signature Multi-signature (multisig) addresses allow multiple parties to require more than one key to authorize a transaction. The needed number of signatures is agreed at the creation of the address. Multi signature addresses have a much greater resistance to theft.

Off-Ledger Currency A currency minted off-ledger and used on-ledger. An example of this would be using distributed ledgers to manage a national currency.

On-Ledger Currency A currency minted on-ledger and used on-ledger. An example of this would be the cryptocurrency, Bitcoin.

Oracles

Oracles work as a bridge between the real world and the blockchain by providing data to the smart contracts.

P2P Peer-to-peer (P2P) refers to the decentralized interactions that happen between at least two parties in a highly interconnected network. P2P participants deal directly with each other through a single mediation point.

Participant An actor who can access the ledger: read records or add records to.

Peer An actor that shares responsibility for maintaining the identity and integrity of the ledger.

Permissioned Ledger A permissioned ledger is a ledger where actors must have permission to access the ledger. Permissioned ledgers may have one or many owners. When a new record is added, the ledger’s integrity is checked by a limited consensus process. This is carried out by trusted actors — government departments or banks, for example — which makes maintaining a shared record much simpler that the consensus process used by unpermissioned ledgers. Permissioned block chains provide highly-verifiable data sets because the consensus process creates a digital signature, which can be seen by all parties. A permissioned ledger is usually faster than an unpermissioned ledger.

Private Currency A currency issued by a private individual or firm, typically secured against uninsured assets.

Private Key A private key is a string of data that shows you have access to bitcoins in a specific wallet. Private keys can be thought of as a password; private keys must never be revealed to anyone but you, as they allow you to spend the bitcoins from your bitcoin wallet through a cryptographic signature.

Proof-of-Stake An alternative to the proof-of-work system, in which your existing stake in a cryptocurrency (the amount of that currency that you hold) is used to calculate the amount of that currency that you can mine.

Proof-of-Work A system that ties mining capability to computational power. Blocks must be hashed, which is in itself an easy computational process, but an additional variable is added to the hashing process to make it more difficult. When a block is successfully hashed, the hashing must have taken some time and computational effort. Thus, a hashed block is considered proof of work.

Ripple A payment network built on distributed ledgers that can be used to transfer any currency. The network consists of payment nodes and gateways operated by authorities. Payments are made using a series of IOUs, and the network is based on trust relationships.

Replicated Ledger A ledger with one master (authoritative) copy of the data, and many slave (non-authoritative) copies.

Scrypt An alternative proof of work system to SHA-256, designed to be particularly friendly to CPU and GPU miners, while offering little advantage to ASIC miners.

SHA 256 The cryptographic function used as the basis for bitcoin’s proof of work system.

Smart Contracts Smart contracts are contracts whose terms are recorded in a computer language instead of legal language. Smart contracts can be automatically executed by a computing system, such as a suitable distributed ledger system.

Solidity

Solidity is Ethereum’s programming language for developing smart contracts.

TGE

Token Generation Event, the exact moment when a Token is generates, also the name of the fundraising for a new Token issue

Tokenless Ledger A tokenless ledger refers to a distributed ledger that doesn’t require a native currency to operate.

Transaction Block A collection of transactions on the bitcoin network, gathered into a block that can then be hashed and added to the blockchain.

Transaction Fee A small fee imposed on some transactions sent across the bitcoin network. The transaction fee is awarded to the miner that successfully hashes the block containing the relevant transaction.

Unpermissioned ledgers Unpermissioned ledgers such as Bitcoin have no single owner — indeed, they cannot be owned. The purpose of an unpermissioned ledger is to allow anyone to contribute data to the ledger and for everyone in possession of the ledger to have identical copies. This creates censorship resistance, which means that no actor can prevent a transaction from being added to the ledger. Participants maintain the integrity of the ledger by reaching a consensus about its state.

Wallet

A file that houses private keys. It usually contains a software client which allows access to view and create transactions on a specific blockchain that the wallet is designed for.

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