CoinSpectator Blog

Kenneth Rogoff, a Harvard University professor and economist, recently made a bold but frequently repeated prediction about bitcoin–it’s going down. According to Rogoff, “bitcoin will be worth a tiny fraction of what it is now if we’re headed out 10 years from now … $100 [is] a lot more likely than $100,000 ten years from now.” The accomplished academic, who once served as the chief economist for the International Monetary Fund (IMF), went on to say, “Basically, if you take away the possibility of money laundering and tax evasion, its actual uses as a transaction vehicle are very small.”

Time will tell whether or not Rogoff’s bearish prediction is correct. Nevertheless, to Rogoff’s sure dismay, blockchain technology is here to stay. The nascent technology has already disrupted dozens of industries, and undoubtedly, many more are in line. From banking and financial services to supply chain management, blockchains are revolutionizing the way businesses and industry leaders are conducting their operations. Here are three industries that will forever be changed because of blockchain technology.

Blockchain Technology and the Travel Industry

One specialized travel platform, Cool Cousin, has a well-received iOS app that lets local residents give tips and create travel guides on where visitors should go in their hometowns in exchange for money. Vacationers and tourists can explore new areas through Cool Cousin guides developed by city natives. Cousins, as they’re affectionately called, have the responsibility of offering digital tours and pointing out the best local restaurants, businesses, and attractions. What’s more, Cool Cousin is developing blockchain solutions to their app.

The platform’s blockchain implementation is centered on smart contract integration. Smart contracts will both establish and enforce interaction between the platform participants, thereby implementing a system of checks and balances. This will keep the platform truly decentralized. Smart contracts will also be the mechanism that facilitates transactions between cousins and travelers, creating trust between all parties. Cool Cousin will eventually operate using the CUZ coin, its native crypto token. CUZ will remove the need for third parties and allow rapid cross border transactions and international payments to take place. Visitors can save on travel expenses while cousins will benefit from higher profits because they will transact in a peer-to-peer, decentralized manner.

How the Sports Industry is Getting a Blockchain Boost

Another company, Jetcoin, is partnering together athletes and their fans to incentivize success in the sports industry. Through the platform, fans can earn money and directly participate in emerging athletes’ careers. The platform works like as follows. First, an athlete releases a portion of his or her IP rights to the Jetcoin Institute. Second, the Jetcoin Institute, with its expert panel, creates a career plan along with a corresponding budget. Third, the Jetcoin Institute releases the rights in the form of Jetcoin smart contracts, which can be purchased with Jetcoins on the platform. Finally, as the athlete follows the plan and begins to secure revenues, a portion of his or her earnings are distributed back to the smart contract holders. Jetcoins can either be exchanged for another crypto or fiat currency, or used on the platform to purchase tickets to events, VIP access, and other perks.

Data Sharing and Security Meets Blockchain Technology

The world is increasingly dependent on data. But, as history has often shown, data isn’t always as secure as it needs to be, nor is it always easy to share in a safe manner. In response to these issues, Tierion uses the power of blockchain technology to verify data sharing, files, and processes. Their API and other platform tools can be used by companies and organizations to anchor a timestamped proof of data on the blockchain. The platform is particularly helpful for companies that mus share and store large amounts of data, as the platform uses blockchains to create immutable records and verifiable audit trails. The platform is also extremely easy to use and integrates with existing web, desktop, and mobile applications.

Cryptocurrency investors are becoming more discerning, as they more and more appreciate the need to avail themselves of greater understanding of how a particular project’s blockchain works.

As investors learn and explore more deeply the technological issues, they are likely to come across Qtum, a project that is doing something with blockchain that adds value by its team setting by answering the question: how do we blockchain business-friendly?

On first sight, Qtum’s provenance in a fork from Bitcoin might trigger a weary “oh not another one” response from the newly inquisitive investor. That would probably be a mistake.

A good starting point for assessing a blockchain’s worth is the value differential it brings to the table compared to the Bitcoin benchmark for good reason. Bitcoin may have been getting a bad rap for transaction times and high fees and the supposed inefficiency of its proof-of-work consensus mechanism, but in security and adoption it remains way ahead of all comers. From the view, then, there is a reason why Bitcoin is a good starting point for those like Qtum trying to build a blockchain that is enterprise-ready.

Bitcoin has been around for nine years and it has never been hacked and never had any down time. Ok, but what about those early design decisions in the protocol that could be holding back wider adoption, such as its inability to run smart contracts, in addition to the scaling issues.

And, sure Ethereum is built for smart contracts and decentralised applications but it too has scaling issues and high costs associated with executing code.

Qtum has come up with three innovative contributions to the problem of how to get the good stuff from Bitcoin and Ethereum without carrying the not-so-good stuff baggage: its Account Abstraction Layer, which means you can run Ethereum smart contracts on bitcoin core; a proof-of-stake (PoS) mechanism that is more than a theoretical construct and is now a living, breathing network of thousands of nodes; and lastly a governance system that is both robust and flexible so software upgrades can take place with a minimum of fuss.

Let’s consider those three features of the Qtum blockchain in turn.

Bringing Ethereum contract to bitcoin core

The first is the critical one from which much else flows. Ethereum is sometimes referred to as a second-generation blockchain because instead of just a transactional layer it can also run applications. However, in so doing Ethereum abandoned an important part of the bitcoin approach to handling transactions, known as Unspent Transaction Outputs (UTXO) model. It is a more complex way of handling transactions than Ethereum’s account/balance system. But that’s not the only reason it was rejected be those who built Ethereum – it wasn’t stateful. That’s was seen as a problem because a stateful computing program keeps track of interactions, a critical feature in a framework running applications.

However, bitcoin’s UTXO model doesn’t applications and instead does one thing – handles payment transactions and stateless is not necessary because all transactions must come from a previous transaction and every time a transaction is sent a UTXO is created at the associated address.

A user’s bitcoin wallet “balance” is not represented by a single number but by several UTXOs, each with its own transactional data including the amount being sent or received. User A might have two UTXOs, one with 3 BTC, the other 4. User A wants to send 6 BTC to User B. To do so they would have to send both UTXOs and receive back the “unspent” or “unconsumed” 1 BTC change.

One of the features of bitcoin’s UTXO model is it allows for verification of whether a transaction has been included in a block without having to download the entire block; it is known as Simplified Payment Verification (SPV).

Qtum keeps the benefits of UTXO by extending the Bitcoin Script language so that Ethereum Virtual Machine (EVM) smart contracts can run in a UTXO environment. Qtum calls this method for transporting code the Account Abstraction Layer. It is this breakthrough that enables not just Bitcoin but many other related UTXO blockchains to work with EVM smart contracts, from Litecoin to ZCash.

And Qtum is not stopping there. Work is well advanced on its X86 virtual machine which aims to hugely expand the instruction set available to EVM smart contracts, making code much more performant, that’s to say more efficient.

Mobile-first is a smart move

This first and perhaps most important innovation bestows upon the Qtum blockchain the ability to execute contracts on smartphones. There’s no need to download the 30GB Ethereum blockchain in order to implement a full node on a mobile device. With half of all traffic on the internet originating from a smartphone, running on mobile is no longer optional for many businesses. Qtum is also scalable, therefore when we start thinking about Internet-of-Things devices interacting with a blockchain, Qtum’s mobile-first design decisions are even more important.

This brings us to the second major innovation – the proof of stake (PoS) mechanism that instead of depending on costly proof-of-work (PoW) methods, nodes have to own Qtum tokens and there is no mining. That in itself might not be news, but that having 3,400 nodes up and running in 50 countries around the globe is, because the proof is in the pudding, so to speak. Bitcoin’s PoW might be considered by some to be costly and inefficient but it is very secure.

PoS represents something of a trade-off between security and efficiency and the key to success will be in getting such mechanisms working in the real world and finding the right balance on security and efficiency. In that light, Qtum’s efforts to date are no mean feat – there, as yet, have been no on-chain failures. Contrast that with the Ethereum community’s progress, where there has been much talk about implementing PoS but it is still far away from happening.

On Qtum’s blockchain even the smallest of nodes – holding just 10 Qtum – are able to “book the world ledger”, by-passing the centralisation dangers emergent on the Bitcoin and Ethereum networks. Also, Qtum’s PoS rewards nodes that stake their coins for the longest period of time, which enhances security.

Good governance matters

Lastly, the third innovation is in governance matters. A cursory glance at the ideological infighting that has crippled software development on the Bitcoin network, this is an issue of increasing importance. Qtum has thought about on-chain governance from the get-go, and which has come to fruition in its distributed governance infrastructure. In it, parameters of properties such as blocksize, gas price, gas limit can be easily adjusted, dispensing with the need for incessant forking.

The ultimate governance arbiter is the Judgement Committee of the Qtum Foundation, elected from the community of token holders, so there can be no log-jams as seen in bitcoin core development.

It’s worth investors taking some time out to read up on Qtum. Perhaps there are problems yet to arise and there are certainly other platforms with equally robust, albeit different, blockchain technology, but on current form Qtum is in contention as a blockchain that could be one of the winners.

‘Sweet coin of mine’ isn’t going to be Guns N’ Roses next hit single, but their former drummer Matt Sorum has been putting a great deal of effort into the launch of a new crypto payment solution, called Artbit.

The Rock and Roll Hall of Famer, who was also a member of Velvet Revolver, is helping launch the payment crypto for artists, which is built on top of Hashgraph and works via blockchain technology.

The aim of Artbit is for artists to receive their fair share of money after a gig and for that payment to be made into a digital wallet, without any middlemen involved in the transaction.

Although it is still a little sketchy with the details, Artbit has announced that it will work using gamification and augmented reality. It is thought that artists and bands can generate income by posting and hosting live performances. The curating public will also have an option to take home a share of the pie.

Sorum told Yahoo finance that he feels that this new currency is an essential development within the music industry.

He said: “My interest is in cutting the middleman,That’s been something on artists’ minds for years. There’s all these people you got to pay along the way. With blockchain, imagine if you bought a song online for 99 cents and that money was automatically distributed straight to all the contributors—the producer, all the writers of that song.

“With this technology, the money can go into everybody’s wallets automatically, it doesn’t go into a bank account where somebody’s making all that money and interest.”

Sorum added that he believes the current industry isn’t working hard enough for the artists, but cryptocurrencies can change all that.

He added: “Any new or young artist has really got to work really hard to even get on the front page of a platform like Spotify—and even at that point you can’t really monetize your art.

“With Artbit, we’re going to have direct access, people are going to be able to get online right away, not be served a bunch of ads, and have a direct community to be able to monetize their craft now, with no middleman, direct payout, with a wallet, with crypto, and a community that’s safe and secure, powered by Hashgraph.”

There will be a token sale, but no details regarding the ICO have yet been released. Artbit hopes to launch by the end of this year.

Kyber Network, a highly anticipated decentralized cryptocurrency exchange who conducted one of the most successful crowdfunding events of 2017, has today announced that their public beta is open to the public. The company hopes to provide a trustless, fully decentralized exchange that provides a high level of liquidity for users, an industry first.

“This is an incredible milestone that is a testament to the incredible team we have built at Kyber Network,” said Loi Luu, co-founder and CEO of Kyber Network. “There is a need for more decentralization in the cryptocurrency trading markets and we feel that what we have built will become one of the primary trading hubs for crypto assets over the coming year.”

The public launch of Kyber Network comes at a time when there is increasing scrutiny about the transparency of centralized exchanges and security is as big of a concern as ever. Kyber Network is a fully decentralized exchange, meaning it exists entirely on the blockchain, is trustless and holds no user funds.

Kyber Network is a new type of decentralized exchange because it addresses one of the primary issues plaguing decentralized trading marketplaces today: liquidity. A system with high liquidity would enable instant transactions on the block time that can be achieved securely and completely decentralized for any type of asset.

Kyber Network solves this issue by introducing a new system for any user to trade any token instantly and completely securely with guaranteed liquidity. Their approach is through the utilization of reserve managers, who are incentivized by monetizing their otherwise idle assets. By serving trade requests from users, reserves earn profit from the spread determined by reserve managers. As the network gains more traffic through collaborations with wallet providers and various other token projects, reserve managers will benefit directly from the trading volume due to network effects within Kyber Network.

Since launching their platform on the Ethereum mainnet, the exchange was made available to whitelisted addresses only. By limiting the number of users that access the exchange, they have improved the platform in a controlled environment. This testing period has unfolded with great success, and after slightly more than a month of constant feedback and improvement Kyber Network is ready to release our platform to the public.

Kyber Network raised 200,000 ETH in a public crowdsale in September 2017. On Monday the 19th at 3pm (GMT+8) the public mainnet beta stage will begin. The company has stated that all users should keep in mind that as our platform is still in beta testing, there are areas in need of improvement and to report any issues to the company here.

To learn more visit: https://kyber.network

Cardano (ADA) will support Ledger Nano s hardware wallets in the future

Open-source crypto wallet Daedalus is currently the safest and only supported option for thousands of Cardano users who are looking to store their ADA cryptocurrency. However, it’s been riddled with teething problems over the last couple of months. But, the good news is that Ledger support is coming in the near future.

Users seem to have no initial problems when setting up the Daedalus wallet, creating a seed or downloading the blockchain, but are later locked out of accessing the wallet when they restart the software due to the screen freezing and displaying the sprint message, “Connecting to network…”

Users have tried a plethora of potential fixes, from completely uninstalling the wallet to tinkering with firewall settings and everything in between, with no success in sight.

On the March 7th, 2018, Daedalus released version 0.9.0 and Cardano 1.1.0 but, for many, this does not seem to have not provided any solution.

We spoke to the team behind Cardano regarding the wallet problems that we have witnessed, to see if a more successful solution would be coming soon. We are pleased to say that it’s good news all round, as we can announce that users will be able to store ADA on their Ledger hardware wallets in Q3 2018.

CS: Lots of users are reporting problems with syncing the Daedalus wallet, this seems to be a common problem in the community?

The latest Cardano SL release 1.1 is designed to address syncing problems experienced recently by some users. This update was released by IOHK on the 7th March, and they are now monitoring the performance of the Daedalus wallet to assess if further action is required.

CS: When will users be able to store Cardano on their Ledger Wallets, will this be pushed in 2018?

Stage one of the Ledger integration project is complete. This means that we now have a functioning Ledger app, but this still needs to be fully tested. Stage two of this project requires IOHK to develop an interface and test it. At present this work is scheduled to be completed by Q3 2018. This will provide Cardano holders with the highest level of security by allowing users to store Ada offline.

Hardware wallet support for cryptocurrencies once seemed like an overzealous way to store digital assets, but it’s now become the de facto method due to exchanges being regularly hacked, phishing attempts and all sorts of weird and well thought out hacking methods which are used to steal your assets.

We had the pleasure of chatting with Antoni Trenchev, Managing Partner at Nexo, in an exclusive CoinSpectator.com interview, to find out more about one of the most exciting crypto startups we have come across this year.

Not heard of Nexo? They are the world’s first instant crypto-overdrafts service, which enables anyone to access traditional fiat without selling their digital crypto assets. The whole process is powered by blockchain technology.

Although new to the blockchain industry, the team behind Nexo is no stranger to the world of finance, with its ten years of expertise and innovation running Bulgarian FinTech firm Credissimo.

CS: What are the benefits of having asset-backed lending on the blockchain?

Nexo’s primary mission is to enable the community to enjoy its crypto-wealth without selling it. You simply place your crypto asset in an Overdraft Wallet and instantly start using a credit line based on their value. With Nexo’s product, you have the cash to spent whenever you might need to while keeping the upside potential of your crypto. We have been in the consumer lending space for over 10 years now with our successful European FinTech Credissimo, so we are in an excellent good position to offer a unique proposition to the blockchain.

Please see our short video explainer:

CS: Who is providing the FIAT funds for the loans? Is this accredited lenders on the NEXO platform or will it come from NEXO reserves?

Here is where we differ from other services that are mostly P2P and borrowers have to match willing lenders. Nexo bridges that gap and makes the product more efficient, ensuring constant supply and liquidity. That is why almost all funds from the Token Sale will be used to fund our Crypto Overdrafts. We are also in advanced talks for the acquisition of an FDIC Bank, which would allow Nexo to extend even more overdrafts and even offer interest-rate bearing deposits.

CS: As you are probably aware lots of banks are unhelpful let’s say when buying/ selling cryptocurrency. Do you expect any problems with clients receiving fiat and having to explain where that money has come from if they mention crypto?

It is true that not all banks yet accept the inevitability of cryptocurrencies and blockchain solutions. That is one of the reasons we are looking to acquire a bank, we want to operate a company that understands what crypto assets are all about. Of course, KYC and AML are important for us and the community in general, so the source of funds is a must for larger amounts, but that should not interfere with the customer experience.

As for the Crypto Overdrafts – they are purely fiat transactions so we have solid banking partners even today. Starting April 2018, our clients will have a seamless experience and get access to cash in just a few clicks, all the while retaining full ownership of their assets.

CS: Similar companies are utilising asset-based lending such as “Salt Lending” “ETH Lend”, what benefits does Nexo have over these?

The Nexo Overdrafts are instant and automatic, as we fully appreciate the fact that speed is of the essence when a client needs liquidity. Nexo’s overdraft terms are standardised, so unlike P2P platforms, there is no back and forth between borrower and lender and the process is much more user-friendly.

Furthermore, Nexo is very flexible with regards to the crypto you can keep in your Overdraft Wallet. We will be revealing more details soon. Nexo offers a variety of options: besides fiat, you can also use crypto at market prices to make instant repayments. There are no geographic restrictions at Nexo, you can be anywhere in the world and still receive a Crypto Overdraft from us.

Nexo’s Overdrafts have fixed interest rates and the same Loan-to-Value for everyone and availability is instant and automatic. P2P platforms take а commission in the interest of each loan. Nexo’s income is the interest rate on the overdraft, we do not make money from anything else. An important aspect is that no minimum overdraft repayment is required if the outstanding overdraft balance is within the available overdraft limit.

Bottom line, Nexo’s Overdrafts are simple, extremely flexible, cost-efficient and with the customer in mind.

CS: Can Nexo overdrafts/ loans be used for purchasing property or mortgage purposes?

Of course, everyone can spend their cash the way they please.

CS: What regulatory hurdles do you still need to overcome?

Nexo’s model as a whole does not face any particular hurdles. But the crypto space has its challenges and in general what we would expect to see is more regulation kicking in. This could be either positive or negative. Some countries, like Switzerland, are very good at giving broad enough rules so that companies that bring value to the community, can operate with a higher degree of certainty. Rules are good, but concise, unobtrusive and business-friendly ones, and we hope for that.

We believe that security tokens are the future – most tokens are security tokens anyway, pretending to be a utility token, obviously, this is unsustainable. That is why we have opted for a security token with Nexo. It is interesting to see how exchanges will adapt to the new circumstances.

We are quite bullish and believe that crypto and tokenized assets will become a multi-trillion industry that will bring immense and exciting opportunities for all of us.

CS: According to a report by Morgan Stanley the p2p marketplace will be worth $150 to $490 billion by 2020. Does Nexo aim to take a large slice of this?

At Nexo we aim at delivering the best possible Crypto Overdrafts to the widest possible audience. We would like to convince the clients of our unique proposition by letting the users experience the ease of use and that will lead to market share that is satisfactory. For this reason we are launching the product prior to listing the NEXO Tokens on exchanges.

CS: Do you expect a high number of interest from companies as opposed to regular users?

Actually, we are experiencing a growing interest on all fronts.

CS: How do you plan to tackle money laundering, as you can appreciate around new technology you will always have a 3rd party trying to taking advantage. What markers do you have in place to stop someone using stolen/ hacked crypto to take out a loan?

In our 10+ years experience with Credissimo we have always adhered to the highest security and regulatory standards. We continue to do the same with Nexo, utilizing in-house solutions where we have the necessary expertise and contracting leading third party providers where this makes sense – escrow/custodian accounts and parts of our KYC/AML/CFT processes, for instance.

CS: The NEXO sale has been cancelled due to raising funds privately from investors, can you mention any institutions or firms that have invested?

It is part of our agreement with investors that they should make the first step and disclose their involvement with Nexo. Just like Michael Arrington, Founder of TechCrunch and the Arrington XRP Fund chose to do.

CS: You state that the overdraft benefits from not liable to capital gains tax (which is the case when selling crypto profits) but what if the borrower took out an overdraft but defaulted on the interest payments. In this scenario would any taxes be applicable?

As long as the client does not default, no tax liabilities kick in. If however we are forced to liquidate an asset, all depends on the price. Should the liquidation price be higher than the purchase price, capital gain tax will be owed to the relevant tax authority on the profit made.