Ethereum White Paper Explained. Part 3

Ethereum White Paper, Explained. Part 1 & Part 2 aimed to help you understand how the Ethereum ecosystem works, now let us delve into the applications of the Ethereum Platform.

Ethereum has three main applications.

  • Financial Applications

These include currencies, derivatives, contracts, wallets, wills and could even include employment contracts.

  • Semi-Financial Applications

This category involves partial inclusion of money along with a non-monetary aspect. An example would be automatic bounties on finding solutions to computational problems.

  • Governance

Online voting is a possible use case for the Ethereum ecosystem.

 

Token Systems

Tokens have numerous use cases for sub-currencies such as USD, gold, equity, property, coupons and even tokens with no conventional means of value which might be used for incentives. Token systems are quite easy to be implemented on the Ethereum platform. The logistics involved on how the tokens work is well explained in Part 1 & Part 2. The ledger subtracts units from one account and enters units into another.

You can find the basic code implemented in Serpent below:

def send(to, value):
if self.storage[msg.sender] >= value:
self.storage[msg.sender] = self.storage[msg.sender] – value
self.storage[to] = self.storage[to] + value

This is an implementation of a state transition function that works as a banking system. You enter a few lines of code to program conditions of how the currency units are distributed or for numerous other use cases.

 

Financial Derivatives and Stable-Value Currencies

Financial derivatives are one of the most common applications of smart contracts. They are quite easy to be implemented in code as well. One challenge here is implementing contracts that can refer an external price ticker.

Consider the following example:

A smart contract that hedges against the volatility of ETH with USD as the base currency. This application, however, requires one to know the value of ETH/USD traded on an exchange. This can be done by a data feed that is maintained by a third party designed such that the third party can update the price of the contract as and when needed. Other contracts can ping the data feed and get back a response that provides the price.

The contract would look as mentioned in the Ethereum white paper and is pretty much self-explanatory.

  1. Wait for party A to input 1000 ether.
  2. Wait for party B to input 1000 ether.
  3. Record the USD value of 1000 ether, calculated by querying the data feed contract, in storage, say this is $x.
  4. After 30 days, allow A or B to “reactivate” the contract in order to send $x worth of ether (calculated by querying the data feed contract again to get the new price) to A and the rest to B.

Such contracts have high impact use cases in crypto-commerce. Most users stay away from cryptocurrency due its high volatility. Users want the security and convenience of cryptocurrencies, however, the idea of losing 10%-20% of value in a single day is unpleasant. The most common solution used up until now are issuer-backed assets. The idea involves creating a sub-currency that they hold the right to issue, revoke and provide units of the currency to a seller who provides them with one unit of another asset. For example, these assets could be Gold or USD. Although they can be modified to accept a vast number of assets as well. The issuer then exchanges one unit of the sub-currency to one defined unit of the physical asset. This allows numerous different assets to be converted into cryptographic assets and exchanged for value. However, it all depends on the trust and reliability on the issuer.

Cryptographic financial derivatives act as our knight in shining armor in this scenario. They provide an alternative. Instead of a single issuer, we can use a market of traders betting on the price of a decentralised asset like ETH. Speculators do not default while trading as the smart contract holds their funds in escrow. However, this source is not fully decentralised, as we rely on a third-party source to provide the price of ETH. This is still a major improvement and reduces the potential for fraud when compared to issuers that cannot be trusted.

 

Identity and Reputation Systems

Namecoin was one of the first alternative cryptocurrencies that tried to use a Blockchain similar to Bitcoin to provide a name registration system. This allowed users to register their names in a public database with other data. Other use cases include mapping domain names to an IP Address, email authentication and advanced reputation systems.

The following code is for a Namecoin like registration system on the Ethereum network:

def register(name, value):
if !self.storage[name]:
self.storage[name] = value

The smart contract programs a simple database inside the Ethereum network where data can be added, but not modified or removed. Thus, maintaining the immutability feature of the Ethereum platform. Any registration made against a name with some value will be stored on the blockchain forever. A sophisticated program may allow other smart contracts to query and fetch data from it, it may also allow the owner to change or transfer ownership.

 

Decentralised File Storage

There are numerous popular online storage services. Services like Dropbox, Google Drive let you upload a backup of your hard drive on to their centralised servers for a monthly fee. Sure, they have a free storage facility up to a certain size limit, but most the data that we need to store on the cloud exceeds this free storage. Ethereum contracts provide a much better tradeoff for developing decentralised file storage ecosystems, where users can earn money by renting out the free space on their own hard drives.

An example of such a contract on the Ethereum network would work as follows:

  1. Data is split into blocks, encrypted and a Merkle tree is built.
  2. Every N blocks, the contract picks a random index in the Merkle tree, then gives some ether to the first entity to supply a transaction with a simplified payment verification; like proof of ownership of the block at that index, in the Merkle tree.
  3. If the user wants to download their file, they may use a micropayment protocol. This can  be as low as 1 szabo per 32 Kilobytes.
  4. To pay less gas fees, the payer would replace the transaction at the end of 32 Kilobytes with a slightly more lucrative one in order to fetch more data.

It might seem like trust is distributed among random nodes so that the file is not forgotten, but this risk can be reduced by splitting the file into many pieces and watching the contracts to check if each piece is still in some node’s possession. If there is enough ether in the contract and it is still paying out money, that is enough proof that the file is still stored somewhere according to the programmed protocol.

 

Decentralised Autonomous Organizations

The concept behind a DAO (“Decentralized Autonomous Organization”) is that a certain set of members or shareholders, perhaps with a 67% majority, may spend the funds of the entity and modify its code. Members will come to a collective decision on how to allocate the funds of the organization. This may range from bounties, salaries, to even more complex mechanisms like rewarding internal work. It tries to replicate the functioning of a company by using only Blockchain technology as the solution. Most discussion surrounding DAOs has focused on the capitalist model of a DAC (Decentralized Autonomous Corporation) with shareholders who receive dividends. An ideal alternative, however, is a Decentralised Autonomous Community where all members have a share in decision making and where they require at least 67% of existing members to add or remove a member.

Following is a general outline of how to code a DAO. A simple design is a piece of code that can modify itself when two thirds of members agree on a change. The code is immutable, however, there is a work around. Code can be divided into separate contracts having de-facto mutability and the addresses of each contract can be stored in mutable storage. This would allow us to mix and match code from smart contracts in order to change the code. There would be three transaction types as mentioned in the Ethereum White Paper:

  • [0,i,K,V] to register a proposal with index i is to change the address at storage index K to value V
  • [1,i] to register a vote in favor of proposal i
  • [2,i] to finalise proposal i if enough votes have been made

The contract would store clauses for each of these. It would maintain a repository of all open storage changes along with the list of people who voted for them. This would accompany a list of all members. Whenever a storage change would get the bare minimum of the members voting for it, a final transaction would execute the change. Further sophisticated features would include built in voting ability for sending transactions, adding/removing members, delegation of votes, etc. This would let DAOs grow as a decentralised community.

 

Further Applications

There are numerous applications on the Blockchain and following are a few instances:

  • Savings Wallets

Alice wants to keep her funds safe but worries that someone might hack her private key, or she might lose it. She transfers ether into a contract with Bob who will act as a bank in this scenario.

  • Alice alone can withdraw a maximum of 1% of the funds per day.
  • Bob alone can withdraw a maximum of 1% of the funds per day, but Alice can make a transaction with her key, shutting off this ability.
  • Alice and Bob together can withdraw anything.

Normally, 1% per day is enough for Alice, and if Alice wants to withdraw more she can contact Bob for help. If Alice’s key gets hacked, she runs to Bob to move the funds to a new contract. If she loses her key, Bob will get the funds out eventually. If Bob turns out to be malicious, then she can turn off his ability to withdraw.

Such conditions can easily be programmed into an Ethereum smart contract.

 

  • Crop Insurance

A Financial Derivatives contract can be made using a data feed of the weather instead of a price index. A farmer purchases a derivative that pays out inversely based on the precipitation in any selected area. If there is a drought, the farmer gets paid and if there is rain, crops will do well which implies the farmers business is safe. Farmers can essentially hedge their businesses. This use case can be expanded to natural disaster insurance as well.

 

  • Decentralised Data Feed

There is a protocol called ShellingCoin that lets you decentralise data.

The working of SheelingCoin is mentioned below:

N number of parties enter the value of ETH/USD in a system and everyone between the 25th and 75th percentile get rewarded with a token. This way, any person will only get the incentive if they give the answer that everyone else provides. Theoretically, this protocol can create any number of values.

 

  • Smart Multisig Escrow

Multi signature transaction contracts are where, for example, at least 2 out of 3 keys are mandatory to spend the funds. On the Ethereum platform a lot of more complex conditions can be programmed. Being a Turing complete language, the programming capabilities of Ethereum are limitless.

 

  • Cloud Computing

Ethereum can also be used to create a computing environment, which will allow users to carry computations on other systems on the Ethereum Blockchain, optionally also asking for proofs for computations done at random checkpoints. This allows creation of a Cloud Computing market where anyone can participate. This kind of computing, however, is not suitable and recommended for all tasks

 

  • P2P Gambling

Peer to Peer Gambling protocols can be implemented on the Ethereum Blockchain. There are numerous Ethereum gambling websites that are already exist.

 

  • Prediction Markets

Prediction markets are also easy to implement. They allow you to bet on the prediction of a certain outcome and which is then verified on the Blockchain and those who predict correctly are rewarded.

 

  • On-Chain Decentralised Marketplaces

Such marketplaces use identity and reputation systems as a base.

 

This concludes the third part of the Ethereum White Paper series. Stay tuned for more updates on the BBOD and follow us on Twitter.

Bitcoin Scarcity: Perception Vs. Reality

Earlier this year the press flooded the internet with articles stating that only 20% of total Bitcoins remained to be mined, causing a frenzy of fear of missing out for those who were not already invested. They were correct, 80% of the total fixed supply of 21 million Bitcoins set by mysterious Satoshi Nakamoto was now accounted for, with the 16.8 millionth transaction occurring on the 13th of January 2018. Despite this, many news outlets failed to convey how that, with time, Bitcoins would become increasingly more difficult to mine as a result of minings inherent complexity and the diminishing reward scheme over time. As a result, many have suggested that a vague approximation of the last Bitcoin block to be mined will take place in 2140. This article aims to ensure that market participants are aware of the facts surrounding Bitcoins fixed supply, the evolution of mining Bitcoin and how scarcity, or the perception of it, could affect demand in the future.

Bitcoins 21 Million Hard Cap

Unlike in traditional nation-state economies, Bitcoin operates in an entirely decentralised manner with a fixed supply. Whereas a central bank usually issues currency as they wish – according to the growth of the number of goods which are being exchanged in the economy (commonly known as Quantitative Easing). Bitcoin is produced at a predetermined rate defined by the initial algorithm that was implemented by its anonymous creator. The algorithm has set rules which cannot be altered. As such, how the currency is created and at what rate was inherently finalised at inception. Hence, one can be certain that only 21 million Bitcoins will ever be created.

The certainty of the fixed supply of 21 million Bitcoins can be explained as follows. Bitcoins are created every time a miner discovers a new block. Since the first block on the Bitcoin Blockchain was created (otherwise known as the Genesis Block), the rate that blocks have been mined has adjusted every 2016 blocks in order to maintain a two week adjustment period, as six blocks are created per hour. The total number of Bitcoins generated per block is predefined to decrease every 210,000 blocks by half, equating to approximately four years. These predetermined conditions mean that the rate of new Bitcoin created exponentially slows down over time and ensures that no more than 21 million Bitcoins will ever be created.

(Source: Controlled Supply: Timeline Estimation)

 

The intentional decreasing supply algorithm was chosen in order to introduce the concept of digital scarcity to the cryptocurrency. Certain individuals compare Bitcoins scarce attributes to precious metals such as Gold. For instance, as time passes large quantities of Gold are becoming increasingly impossible to find without large-scale investment. This process continues until the cost of sourcing Gold almost outweighs its market value. Capturing this phenomenon in the digital sphere is no easy feat and thus scarcity is one of the defining characteristics of Bitcoin. It should be noted that the concept of scarcity is not widely seen in the cryptocurrency marketplace, projects like Ripple, Nem and Lisk released all coins into the market at once.

The Evolution of Bitcoin Mining

To continue the analogy of Gold, in order to obtain the raw material huge amounts of physical effort must be expended to mine the scarce asset. In Bitcoin, this equates to the large amount of computational power which is necessary to solve extremely complex mathematical problems in order for a new block to be created. Hence, those who endeavour to solve such challenges are coined ‘miners’.

As discussed previously, every 210,000 blocks miners receive half the reward for solving a new block. When Bitcoin was originally created in 2009, miners received an astonishing 50 BTC for solving a block as a reward for being innovators within the space, albeit with much easier equations to solve. For instance, when Bitcoin was first released in 2009, an average retail computer would have been able to mine approximately 200 BTC in a few days. Nowadays, it would take the same computer 98 years to mine just 1 BTC. As a result, such mining is not as available to retail clients as it was previously. Instead, more industrial institutions have moved into the market with Application Specific Integrated Circuit (ASIC) computer configurations to maximise the amount mined. This truly displays the exponential increase in difficulty in a relatively short space of time.

(Source: Controlled Supply)

Today, miners receive 12.5 BTC as a reward for solving a new block. The next ‘halving’ event is expected to take place in 2020. As this process unfolds, miners will receive less and less reward for the blocks they create whilst the equations they need to solve will become increasingly complex, thus requiring much more computational effort and expense. This intentional paradox implemented by Satoshi ensures that the supply of coins cannot rise too quickly. As previously stated, the last block will be mined in approximately 2140. Consequently, with Bitcoins supply remaining constrained until 2140 and demand likely continuing to rise, as a result of Bitcoins scarcity amongst numerous other factors, the value of Bitcoin is almost certain to increase exponentially over time. This ensures that Bitcoin is an excellent store of value, once again similar to Gold.

How Scarcity Affects Demand

Undoubtedly, scarcity has had a great impact on the demand for Bitcoin and this will feed into the self-perpetuating snowball effect as time goes on and supply continues to decrease. As with any limited supplied asset, when the underlying resource becomes harder to source, the scarcity of supply causes significant demand for the market when the asset is perceived to have value. As previously suggested and widely acknowledged, Bitcoin is now viewed as a desirable store of value comparable to Gold. Thus, with only 21 million Bitcoins ever to be created, the market shows, or certainly will in the future, a significant gap between the number of individuals who wish to purchase the asset and the amount available. As this process unfolds, digital scarcity will make Bitcoin exponentially more valuable over time.

To further perpetuate this, individuals perception of Bitcoin scarcity over the actual reality will only increase the rate of adoption. It won’t be long until we see headline articles stating that only 15% of all Bitcoins ever to be created have been already been mined. No doubt the masses will hoard the asset once more, before they feel it is too late. The fact of the matter is, as displayed in this article, the supply of Bitcoin rapidly slows down with time, as the complexity of solving blocks becomes increasingly difficult and miners are rewarded less. Bitcoin will continue to be mined until the approximate year of 2140. Hence, there is still plenty of time to invest. As Bitcoin continues to be recognised as a store of value and understood and adopted by the layman, one may wish they invested sooner rather than later.

Conclusion

This article has aimed to bridge the gap between one’s perception of the scarcity of Bitcoin and the actual reality of the matter. There is no denying that the majority of Bitcoins have already been mined, yet the excellence of the mysterious creators’ code ensures that supply cannot be created too quickly. This inherent attribute makes Bitcoin an excellent store of value, akin to Gold, yet in the digital sphere. Something truly pioneering and unique in our digital world. Instead of investing for the fear of missing out, perhaps we should marvel in the astonishing technology behind the project itself. Either way, one can be certain that the price of Bitcoin will increase as its supply slowly decreases whilst people perceptions remain unchanged.

Check out the BBOD Research Blog for more similar articles.

Public beta testing has ended

BBOD is excited to announce that the public beta testing period is successfully finished. Thank you all traders and BBD token holders for valuable feedback. Based on the feedback we are now implementing new features (including  and upgrading our trading system and BBOD Protocol.

During the time of the upgrade, trading and entering the platform is suspended.

Soon, we will announce when the trading platform will be launched

$250 BBD Token Giveaway

 

$250 BBD Giveaway
10 WINNERS. 50 BBD Each (almost 25USD).

How to participate:
1) Follow us @BBODTrading
2) Re-Tweet this post
3) Make a comment using #BBOD

🎖 PRIZE
We will draw 10 lucky winners on October 8th.
TCs apply
Promotion ends on 7th October at 10pm Singapore Time

TERMS AND CONDITIONS:

  1. Promotion starts on 29th September at 03:30 Singapore Time.
  2. Promotion ends on 7th October at 22:00 Singapore Time. Any submission after the period will be considered as ineligible.
  3. One subscription per participant.
  4. To enter the promotion the participant must follow @BBODTrading, Retweet and comment the contest tweet: #BBODContest.
  5. 10 lucky winners will be drawn by BBOD on October 8th and announced on @BBODTrading.
  6. Each winner will receive 50 BBD Tokens
  7. BBOD will contact the winners for prize redemption via Twitter Message
  8. Prizes will be sent to the winners BBOD wallets within 7 working days
  9. In case of any dispute, BBOD reserves the right to determine the final outcome.

Introduction to BBOD (Part 1)

What is BBOD

BBOD ‘Blockchain Board of Derivatives’ is a next-generation cryptocurrency trading platform that offers high-leverage margin trading and spot exchange (crypto-crypto).

 

Problem

While centralised exchanges (Bitflyer, Bithumb, Binance) are fast and responsive, they are highly susceptible to custodial risk. On the other hand, fully decentralized exchanges (IDEX, EtherDelta) often face problems with high latency and high cost, which makes them impractical for high volume use and high-frequency trading.

 

Solution

BBOD decentralises the most security-critical features of cryptocurrency trading (settelment and custody) by utilising smart contracts.

 

BBOD’s Technical Infrastructure

Off-chain Architecture

  • Matching engine: The transaction system that routes and executes orders
  • Order management system: The graphical user interface for performing a wide variety of trading activities

BBOD’s custom trading engine was designed to be scalable to ensure that all orders are executed in real time. It can handle upwards of 1,250,000 messages per second with a latency of fewer than 25 microseconds. This places it ahead of the highest performance trading systems currently in global production.

In addition to the industrial-grade matching engine, BBOD offers a cutting-edge web platform to trade cryptocurrencies ensuring scalability and providing multi-language support.

On-chain Architecture

BBOD’s Protocol is a multi-Blockchain protocol that performs two main functions:

  • Enables custodial decentralisation
  • Facilitates mutual settlements between all the exchange participants

The first function means that each trader deposit coins into his personal wallet that is visible on Blockchain. There is no one point of failure (one central wallet) in case of an attack of an attempt to steal coins. The second function means that facilitates mutual settlement of cryptocurrencies on Blockchain every day. For example, if you bought BBD token and sold Ethereum – this transaction is visible on Blockchain on your personal smart contract.  

BBOD vs Centralised exchanges

Let’s compare BBOD’s protocol to that of centralised exchanges.

At standard centralized exchanges, like Bitflyer, traders deposit coins into one central wallet which is fully controlled by the owners of the exchange who have access to the private key. At BBOD, a trader deposit coins into their personal smart contract wallet that does not have a private key at all. This feature eliminates the possibility of hacks and ensures transparency.

Additionally, at centralised exchanges, a physical settlement on the Blockchain only occurs when traders ask to withdraw their funds. This is the moment when the exchange sends the coins to the traders’ personal wallet. Apart from the fact that an exchange can choose not to accept the request, there is another significant problem – the exchange may not be able to fulfil the request because of their lack of funds. BBOD’s protocol autonomously executes mutual settlements between participants every day using smart contracts. Traders do not need to ask to withdraw their funds. Moreover, due to the fact that the settlement is executed once a day, BBOD may prove solvency once the settlement is executed by the smart contract system.

The diagram below illustrates the high-level architecture of the BBOD Protocol

 

 

The following steps explain BBOD’s protocol:

  • Traders deposit Ethereum from their private wallet (eg. Metamask) to a segregated smart contract wallet at BBOD.
  • Traders are able to trade all available products at BBOD.
  • Once a day, BBOD’s Smart Contract Protocol calculates unrealised and realised profit or loss for each trader. The appropriate amount of coins are then added or subtracted from the traders’ smart contract wallet.
  • Once a day, traders may request to withdraw from their smart contract wallet to their private wallet. This request is then automatically accepted by BBOD’s Protocol if the amount to withdraw is equal to or less than their Available Balance.

Our next Introduction to BBOD article will explain our protocol in more detail.

Currently, the BBOD Protocol supports mutual settlements between all network participants on the Ethereum Blockchain. However, the protocol is easily scalable to any other Blockchain. In the future, the BBOD Protocol will additionally support mutual settlement between participants on the Bitcoin, EOS and NEO Blockchains.

 

Markets and Products

CryptoFX contracts: our high-leverage margin products that never expire.

  • Ethereum/USD
  • Bitcoin/ETH
  • Ripple/ETH
  • EOS/ETH
  • NEO/ETH
  • Binance/ETH
  • Elastos/ETH
  • Decred/ETH
  • Digibyte/ETH

Spot transactions:

  • BBD/ETH

BBOD will focus on expanding its product range offering more cryptocurrencies in both CryptoFX and Spot segments of the trading platform in addition to adding new deposit currencies (Bitcoin, EOS, NEO).

Deposit and Settlement Currency

BBOD accepts Ethereum as collateral. All profits and losses are calculated and settled in Ethereum. Traders may only deposit ERC-20 tokens. BBOD does not handle fiat currency.

BBD Token

The BBD token is the native currency of the BBOD trading platform. Just like Binance’s BNB coin, when you own BBD on BBOD, you save a considerable amount of money on trading fees.

Conclusion

In the next article, we will provide more insight into the BBOD Exchange, including details and examples of how profit and loss settlement is executed by our protocol.

 

BBD Token Overview

BBD Token.png

Blockchain Board of Derivatives (BBOD) launched their cryptocurrency trading platform in August 2018.

Below we present basic information about BBD token and a few advantages you can expect from participating in the purchase of BBD tokens.

Contract #: 0xb79fc5505ea4f3b920ee7e3349de064226692717

Total Supply: 275,803,582.451 BBD

Current Price : 0.00268000 ETH (BBOD Exchange as of 20-08-2018 )

What are BBD tokens?

BBD is a coin, issued by BBOD, that will run exclusively on Ethereum Blockchain Platform along with other ERC-20 tokens. BBD token is the native currency of the BBOD trading platform. Just like BNB coin by Binance, when you use BBD to trade on BBOD, you save a considerable amount of money in the trading fees or in some cases you pay zero fees.

How / where I can buy BBD tokens?

You can directly buy BBD tokens only at BBOD: www.bbod.io in July. Please be aware of scams. To buy BBD, you should deposit Ether on BBOD and exchange Ether to BBD.

Exchange tokens price potential

Based on analysis of the key metrics of other exchange tokens, shown in the following table, it can be seen that BBD could potentially trade at much higher prices than when tokens are initially offered to customers on the platform. For instance, Binance (BNB) coin has increased by an outrageous 12 243% since it was launched, an opportunity that most individuals missed. Even on the lower end of the spectrum, BridgeCoin (BCO) and KuCoin Shares (KCS) have still provided excellent returns for those who got on board when the exchange opened. BBOD could be the next big opportunity, it is the first token to ever be created by a decentralised trading platform with leverage that allows users to control the custody of their own funds. Be sure not to miss out!

Token Open Price (USD) Price 13/06/2018 Price increase Circulating supply Mkt Cap [USD]
BNB 0.115 14.22 12,243% 114,041,290 1,631,000,000
BCO 0.202 1.21 498% 27,000,000 32,749,000
KCS 0.692 2.34 238% 90,730,576 212,633,00

Owning BBD tokens offers multiple benefits for investors and traders.

Traders may use BBD to pay for trading fees and they can expect a discount on trading fees. This allows for incredibly cheap transactions as a result of the standard rate fees being low themselves. The detailed information about the discount is available directly on BBOD Trading Platform. Additionally, unlike on any of trading platform, makers will always receive a rebate for their part in the transaction!

Investors may see a great potential of increase in the price of BBD token. Please bear in mind that BBD token is the first ever token issued by cryptocurrency trading platform that allows to trade futures contracts with leverage. When you think about CME or CBOE, you may see what can be a potential market capitalisation of BBD token in the future.

As you can see, with a great potential for a price increase and excellent trading fee discounts for utilising the token on the platform, the BBD token is a great opportunity for those who believe in the project long-term or are looking to get the most out of the BBOD trading platform. Be sure to purchase these tokens whilst they are still cheap!

Welcome to BBOD!

Hello (non-fiat) World!

The future is here. Our dream has just become a reality.

The moment over two dozen people have worked on for over 10 months has finally come to fruition. Over this period we have mapped out a path and hired a team of specialized and experienced professionals spanning over ten countries who actively communicate with our clients in nine different languages. The journey has only just begun! As of now, we invite you to register & trade on our Trading Platform.

Welcome to BBOD. Trade the Future.

Visit our website: https://bbod.io/

Start Trading Cryptocurrency and make money: https://live.bbod.io/bbod/

Blockchain – Value Proposition

architecture-bridge-city-1115737.jpg

Considering you now have a basic overview of how blockchain works from our previous blog post, let us dive into the possible use-cases of this beautiful technology. I am not over exaggerating when I call it beautiful, because once you understand the sophistication of this tech, you will go head over heels too.

To understand why blockchain is so important and why most people swear by its applications, let us understand the use case of blockchain in the transfer of value/cryptocurrency.

Exchange of value has been happening ever since human civilization began. Early humans used to barter goods to express value. Then came cowry shells and precious metals like gold, silver, etc. Value exchange is based on consensus and trust.

To understand this concept, let us consider the following example:

Suppose you have a handful of cowry shells, a couple silver coins, and some standard American dollars. You manage to build a time machine which takes you into the past and you go on a journey equipped with cowry shells, silver coins, and some USD.

Pre-Medieval Markets

In this pre-medieval market of the past, you approach a rice seller and offer him a couple USD. He looks at you strangely and throws away this bizarre-looking piece of rectangular paper. You hurriedly fetch the USD because you know it’s worth a lot more in modern markets than this rice seller considers it to be.

You then offer him some cowry shells. This is instantly recognized by the rice seller and he offers you a bag of rice in exchange.

Medieval Markets

You now travel to Medieval Europe again and offer the European rice seller a couple hundred USD sporting Benjamin Franklin. You are pretty certain that this rice seller could not possibly deny a couple hundred USD for a measly bag of rice!

This rice seller is also confused about your strange behaviour and tries to shoo you away. You then offer him a couple of silver coins and he parts with a bag of rice willingly.

Modern Markets

You come back to present day NYC and call your online grocer to ask if they accept cowry shells or silver coins instead of USD (because you have spent all the money you had in the medieval markets and in building a time machine). The grocer calls you several unpleasant things and hangs up.

Now on further inspection of these situations, you realize that markets at a particular time in history only accept a certain commodity as an exchange for value. If people do not know about different currencies as value stores, there is no consensus between buyers and sellers on the underlying value of a commodity. Because of a lack of trust, there is no transfer of value and an active trading market ceases to exist.

Cowry shells have value in pre-medieval markets because there is enough liquidity for them as both buyers and sellers trust in the prevalence of cowry shells.

People in medieval Europe believe in Silver because the sovereign issues silver coins and the general population trust in the sovereign to protect their assets and rights.

Similarly, people in current market places trust the USD because it is backed by the government of the United States and people trust the USA to uphold the value of their currency.

There is a grave problem emerging here. If you notice, as time progresses, centralised institutions like Sovereigns and Governments often tend to have higher control and monopoly over the transfer of value. This is beneficial for governments but is a huge red flag for the general public. The concentration of power in the hands of a few often leads to disastrous events, history is proof.

Future Markets

Blockchain disrupts the centralisation of trust by creating a distributed ledger that is not owned by a central authority. Instead, the decentralized trust mechanism is facilitated by millions of machines throughout the world by expending processing power using electricity. Like other markets, when we have buyers and sellers of a particular currency and they attain a consensus on how much a particular currency is worth, we have a post-modern cryptocurrency market.

Here the value of cryptocurrency is determined by the unique value it offers and how much the buyers and sellers think the system is worth. Such cryptocurrency marketplaces have the potential to obliviate several aristocratic legacy systems that only hinder progress. Blockchain Board of Derivatives is one such cryptocurrency marketplace.

The two biggest cryptocurrencies are currently Bitcoin and Ethereum.

Bitcoin’s value proposition is the pure exchange of value. It acts as a virtual currency specifically for value transfers.

Ethereum, on the other hand, can be used for the exchange of value along with a number of other promising use cases. One of them is smart contracts. Smart contracts enable you to program a set of predefined conditions in the blockchain to perform a certain task on the trigger of an activity.

Possession of property

agreement-business-businessman-872957.jpg

 

A simple example of this could be possession of a property. The smart contract acts as a facilitator between the buyer and seller. The buyer transfer funds into the smart contract and the seller transfers relevant titles of property. The smart contract holds information transferred by both parties in escrow, validates it on the decentralized network and facilitates the transaction only after sufficient confirmations

 

This is just one example of a use case developed on the Ethereum protocol. There are countless applications that can be developed using this powerful system. We will discuss the Ethereum White Paper in-depth in upcoming blog posts which will reveal how the Ethereum protocol works.

Apart from Bitcoin and Ethereum, there are numerous other cryptocurrencies and blockchain systems in the market and each has a unique use case that they propose. Blockchain has the potential to revolutionise almost all centralised trust based legacy systems.

Blockchain technology is truly the future and BBOD is committed to being at its helm.

Blockchain – Introduction

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This article is a brief introduction to the world of Blockchain. You might have read Blockchain related articles or come across discussions on how Blockchain is going to change the world. Centralised institutions are either defensive or accepting of this disruption by defining their own terms.

 

So, what is all the fuss about? Let’s understand blockchain in its raw form.

Blockchain is a distributed database system. This means instead of storing files on a single computer, information is stored across millions of computers all over the globe.

FACEBOOK AS A CENTRALIZED ENTITY

When we log in to Facebook, all the content that we and our friends share on Facebook are stored in Facebook’s central server. Facebook technically owns all that data (even though they claim that they don’t own our data); they use that data to directly target ads towards us.

Blockchain technology disrupts this and gives users the power to control their personally identifiable information.

DECENTRALISED, DISTRIBUTED AND CENTRALISED SYSTEMS

The diagram shows three images sourced from Wikipedia.

 Source : Wikipedia

Source: Wikipedia


The first image depicts a centralised repository like Facebook, Google, Amazon, etc. where one central entity controls all information.

The second image is a decentralised system where a few nodes maintain the solidarity of the network through mutual consent yet allow free nodes to live by storing minimal data.

The third image is a distributed system where each node on the network will absolutely need to store all the information that is present in the network.


In the first image, if the central node is compromised, the whole system breaks down. But in decentralised and distributed systems, these kinds of attacks are impossible as at any given point in time, there are multiple copies of information throughout the network.

CONFUSED?

Well, the below example will clarify this concept.

Suppose Alice is transferring $100 to Bob via a traditional bank transfer. They both have an account in the same bank. When Alice initiates the transaction, the bank has a central database which deducts $100 from Alice’s account and adds $100 to Bob’s account. Now, this isn’t an ideal scenario because banks usually charge transaction fees

If something happens to the bank’s central database and that transaction is lost, neither Alice nor Bob get the $100. There are backups and safeguards in traditional banks to help prevent this, but this is still a very valid scenario. In case of a cyber-attack, all our funds in centralised servers are at tremendous risk. We as account holders, acknowledge and accept this risk because of the trust we have in these banking institutions.

Now, what if I told you, blockchain prevents all of this by creating a decentralised value exchange system with 100% uptime and a distributed trust system which is extremely difficult and highly improbable to crack.

In a distributed ledger system, once Alice initiates a transaction, all the nodes in the network confirm the transaction and the ledger is written in stone. It is immutable, and the transaction is secured. Even if an attacker tries to compromise one node, the transaction is still present in another node and to modify the transaction only in one node is still extremely difficult.

To change the details of one transaction, the attacker must modify all the following transactions in hopes of generating an alternate chain faster than the honest chain which is being processed by miners. Miners are facilitators of the transactions in the blockchain. They verify each transaction that comes across to their respective nodes by solving computationally difficult and processor intensive puzzles. The attackers’ transactions will not go through as honest nodes will reject transactions and blocks that are invalid. The attacker needs ample processing power to overcome the cumulative processing power of honest nodes which is highly improbable to achieve in well-established blockchain systems.

We will discuss more on Mining along with Public Keys and Private Keys (your crypto username and password) in future posts.

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BLOCKCHAIN AS A CHAIN OF BLOCKS

Blockchain, as the name suggests, is a chain of blocks that are linked together one after the other. All nodes on the network have the full replication of all transactions that have taken place on the blockchain ever since the genesis block was mined. The ledger is open and the transaction between accounts will be displayed on the ledger for the whole world to see.

The transactions are cryptographically encrypted and the digital signature of one block is used to encrypt the next block. This is a perpetual system and to modify one transaction in the ledger is impossible. If an attack is tried, cryptographically encrypting all future blocks is computationally and economically a very expensive task.

We hope you now have a basic idea of what blockchain technology is all about. The implications of this technology are far and wide and will soon be at the helm of all trust-based systems.

BLOCKCHAIN – AS MANY HAVE PREVIOUSLY SAID, IS THE NEW INTERNET.

Fundamental Pick: Power Ledger

 

 

THE WORLD LEADING PEER-TO-PEER MARKETPLACE FOR RENEWABLE ENERGY

 

SYNOPSIS


It is no secret that global warming has been at the top of the world’s agenda over the past decade. However, whether such high-level conversations yield beneficial results is extremely questionable.

As a result, the energy sector has been of heavy interest in the business sector, with many firms trying to find solutions to provide for what will inevitably be a green future. Despite such efforts, one key party in the equation is clearly missing, the consumers who require the energy in the first place. Without empowering communities themselves to change their energy habits, demand for such green energy will remain low and ultimately the cost of respecting the planet will remain high.

Blockchain technology may provide one avenue to solve the world’s energy crisis, and Power Ledger (POWR) appear to have placed themselves at the forefront of this sustainable revolution.

POWR propose a decentralised model which cuts out middlemen and places the power in the hands of the consumers themselves. One might wonder why consumers would want such a responsibility, the answer lies in that they will be provided with the opportunity to profit from their own green habits. Users of the project will be able to buy and sell unused renewable energy utilising the Ethereum blockchain to record their consumption and production. Transactions will be made using the native POWR token which can be held for speculation, stored for future use or sold back to the users’ fiat currency of choice. All users of the network are required to install solar panels to produce such energy and as a result, the project promotes solely green energy.

The system works as follows, individuals produce energy to cater for their individual needs and if they have any surplus energy they can sell this energy peer-to-peer to another user who has not produced enough energy to cater for their household consumption. The privately generated energy can be transmitted through existing traditional infrastructure to consumers in need. This initiative allows consumers to manage their own energy and chose the destiny of their own fate. If they chose to provide additional energy by purchasing more solar panel units then they will likely profit long-term. Alternatively, if users cannot afford to buy many solar panel units or chose not to they will have energy slightly subsidised by what they own and buy the rest through the POWR marketplace.

Consequently, the POWR marketplace encourages users to be as green as possible by becoming efficient prosumers in order to reap the rewards of the system. This innovative economic approach to promoting the use of renewable energy is extremely unique compared to traditional models as a result of Blockchain technology allowing individuals to immutably trust each other and trade without needing to confirm energy will be sent or that payments will be made.

Ultimately, this should empower communities to go greener by placing a large emphasis on the economic returns of such a decision. As the world continues to overuse raw materials and abuse the earth, global warming is certain to stay at the forefront of global debate, consequently, unique solutions such as POWR certainly have the potential to become extremely popular in years to come.

For this reason, Power Ledger could see substantial growth if they achieve their goals and is certainly a project to keep an eye on long-term.

 

CATALYSTS


diverse team comprising of both blockchain specialists and conservation experts, Co-founder Dr Jemma Green has multiple PHDs from the University of Cambridge relating to renewable energy
Power Ledger have already completed trials of the project in Australia which allowed consumers access to cheaper renewable energy than available from large distributors and to profit from their surplus energy, a rare proof of concept not regularly seen in the Blockchain space
The consumer/prosumer economic model proposed will likely become more desirable as green energy turns mainstream as a result of global regulations and energy restrictions
Although the project is built on top of the Ethereum Blockchain it is highly adaptable and could be employed on any Blockchain platform if the market dynamics change in the future.

 

RISK FACTORS


The project is highly dependent on whether renewable energy becomes widely utilised by individuals in the future, although with strict UN regulations already in place and consumers becoming more conscious, this shift in the market already appears to be taking place
There are several other Blockchain firms trying to solve the energy crisis including Grid+ and WePower, although such projects are yet to have a proof of concept
Power Ledgers business model means that wealthy individuals will benefit the most as they have the purchasing power to buy more solar units initially, although even those who cannot afford solar panels should be able to benefit from cheaper prices as a result of intense peer-to-peer market competition

 

CONCLUSION


As individuals become more conscious of their carbon footprint and regulating bodies tighten energy use from non-renewable resources, renewable energy use is only set to become more prevalent in mainstream society. When this occurs, individuals will seek the most cost-efficient way to consume their energy. If Power Ledger can empower communities by helping them realise the economic and environmental benefits of such an application, they have the potential of becoming a market leader in the space. Thus, POWR should be on your long-term watchlist.


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