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What is cryptocurrency #

Cryptocurrencies are simply digital currencies that are designed to be decentralized or trust-free.

What is not cryptocurrency

A lot of people automatically dismiss e-currency as a lost cause because of all the companies that failed since the 1990’s. I hope it’s obvious it was only the centrally controlled nature of those systems that doomed them. – Bitcoin creator Satoshi Nakamoto, February 15, 2009

Criteria for evaluating cryptocurrencies: #

Security over scalability. A more secure, less scalable currency is more valuable than a less secure, more scalable currency.

A more secure, less scalable currency is more valuable than a less secure, more scalable currency. Decentralization over centralization. This is what cryptocurrency is all about: Decentralization. And everything else being equal, the more decentralized a currency is, the more secure it is. A good example: fiat currencies are much less secure than decentralized currencies, because they have single points of failure. (This also means decentralized currencies are all undervalued. All of the World’s Money and Markets in One Visualization)

This is what cryptocurrency is all about: Decentralization. And everything else being equal, the more decentralized a currency is, the more secure it is. A good example: fiat currencies are much less secure than decentralized currencies, because they have single points of failure. (This also means decentralized currencies are all undervalued. All of the World’s Money and Markets in One Visualization) Proof of work over t raditional proof of stake (Explained here: https://www.truthcoin.info/blog/pow-cheapest/)

Trusted Third Parties are Security Holes – Nick Szabo , 2001

Degrees of Decentralization & Trustless: #

There are no 100% decentralized currencies, but some currencies are designed to be more decentralized than others.

Centralized: 1 Tokens from Initial Coin Offerings ( A person or company issue tokens) 2 Fiat currency (The government and central banks control & print fiat money)

Decentralized: 3 Bitcoin (Mined by miners from all over the world, world currency) 4 New Generation of decentralized currencies(Mined by miners from all over the world, world currency)



Currently there are 4 strategies for mining decentralization: #

1 Using “clever algorithms” or regularly switching POW algorithms. This strategy most likely won’t work because FPGAs(programmable ASICs) can always adapt to new algorithms.

2 Trying to develop Memory Hard algorithms to prevent ASICs. Example: ProgPoW Although this strategy can not stop ASICs, it make ASICs very expensive. (Reference: The State of Cryptocurrency Mining)

3 Proof of work based on IOPS of large RAMs or SSDs : Snowblossom (Currently space requirement is larger than 256GB)

4 Choosing an algorithm that make the coin very easy to make Asics for. This is what Amoveo did. According to Amoveo creator zack: “The goal is for there to be multiple competing asic manufacturers instead of just one. By making it easy to build, more people can afford to compete.”

Learn more about Trustless: Theory of trust by Amoveo Inventor Zack(Must Read)

Note 1: Cryptocurrencies are still at its early days. No projects are 100% guaranteed to succeed in the long term. There’s risk in anything, bitcoin included. If you are an investor of cryptocurrencies, you should only invest what you are willing to lose.

Decentralized Currencies #

The first killer app of distributed ledger technology is decentralized and censorship resistant currency.

Value Proposition: Digital Gold, Store of Value ( Bitcoin’s original goal was to become decentralized medium of exchange, it failed)

Programiming Language: Written from Scratch in C++

Consensus Mechanism: PoW (Proof of work, video: What is PoW &PoS)

Block hashing algorithm: SHA256

No ICO, No premine; It’s estimated that Satoshi controls around 1 million bitcoins based on information publicly available

First decentralized currency, most well known, longest history, strongest network effect, backed by most hashing power(mining), backed by electricity

Secure & Slow

Some of bitcoin’s problems: Mining Centralization The Looming Threat of China: An Analysis of Chinese Influence on Bitcoin https://coin.dance/blocks/thisweek (Bitmain owns 2 mining pools: AntPool & BTC.com): Quantum Computing Risk. Quantum computers are able to break bitcoin and cause the price to drop to zero. It’s also possible for them to become more efficient for mining than traditional bitcoin ASICs. But this isn’t a problem today. And this is only a risk if quantum computers are possible. There is a prize offered by a MIT computer scientist who believe it’s possible: $100,000 Prize For Proving Quantum Computers Impossible The best way to prepare for quantum computers is to build a new cryptocurrency from scratch that allows implementation of new quantum resistant algorithms. But I t should not switch to quantum resistant algorithms now , because QCs won’t be a real threat for many years, and it’s not known yet which algorithm will be the best. (Read more: https://en.wikipedia.org/wiki/Post-quantum_cryptography) Governance (Who will making decisions for bitcoin?)



Note: Most definitions or statements that are made below each project are simply reiterations of what the team has stated themselves. The author is not explicitly or implicitly vouching for the validity of these claims or the efficacy of these projects.

Programming Language: Written from Scratch in Java

Consensus Mechanism: PoW (Proof of work through storage IO, Proof of IOPS of storage)

No ICO, no premine, self-funded Donation: **Developers may get donation from miners, who may support the developers by choosing to mine with a mining pool with dev fee option enabled, or starting a new mining pool that have that option enabled) **

Simple – Modern, Efficient, and Readable Snowblossom is written in a straightforward fashion so that anyone could verify or maybe even contribute. Snowblossom is also built deterministic ally with bazel

Post-Quantum Security: (Read more on snowblossom wiki: Quantum Tough) It’s estimated that 256-bit elliptic curve (what bitcoin uses) could be broken by a quantum computer with about 1600 qubits. Currently, If you use QHARD keys (which is a 3of3 multisig with EC, 8192-bit RSA and DSTU) in your Snowblossom Client you should be safe until quantum computers are in the 16000 qubit range.( In March 2018, the chip google announced is only 72 qbit ) Snowblossom is waiting for a winning quantum resistant algorithm from the NIST Post-Quantum Cryptography process: [1] Since Snowblossom is designed to support multiple signing algorithms, if someone comes up with a new signing method it can be added(assuming it follows the standard form for signing and verification). “ It is possible that the winner or winners will be state-full algorithms that require more data to be tracked or have other requirements that will make them more difficult to add to Snowblossom, however with our flexible protobuf based protocol design we are confident that it can be done.” “So in short, once the algorithms are ready and vetted we will add them to Snowblossom and get to full Quantum Resistant or even Quantum Safe.” Read More about Quantum computing attacks EC – Quantum_computing_attacks how-many-qubits-are-required-to-break-rsa-2048-or-4096-with-a-universal-quantum

Decentralization : ASIC Resistance via storage IO Based Proof of Work ASICs or “Application Specific Integrated Circuits” are super powerful processors made for doing one* thing, /very/ /very/ fast. In other cryptocurrencies, these specially created chips have created severe problems with *miner centralization , and as a result, threatens their censorship resistance, scaling, and more. With OTHER cryptocurrency mining: | Hardware | Hashes Per Second | CPU 50,000 GPU 100,000,000 ASIC 14,000,000,000,000! Snowblossom is designed to cripple specialized hardware attempts by requiring an expanding, massive amount of readily available storage, and relies on the IOPS of that storage. According to Snowblossom Creator: “Consensus is PoW mining based on a random reads into a large snow field. This makes the mining more IO bandwidth intensive than CPU/GPU/ASIC. “ “In more detail, the hashing algorithm is based on doing reads into the large snow field files. They started at 1gb, but are up to 256gb right now. Each hash operation requires 6 lookups into that field. The field is generated using a nightmarish algorithm that ensures that you can’t just quickly make a few chunks of the file in memory as you need them. People can generate the file, the algorithm is checked in, but it writes sectors over and over as it progresses through its rounds so it takes some time. Most people download the torrents. But the merkle roots of these files are checked in as well, so nodes and clients don’t need these huge files to validate blocks. The block headers include a merkle proof for each of those reads to prove the data was there as included in the headers. It makes the headers a few kb larger than other coins but I think it is a reasonable trade-off.”

Scalable

Portable

Ready to go Block Explorer, Pool, Miner software

Technical Design

Why does the world need SnowBlossom? “I’m not entirely sure it does. I made it to try some things and to avoid some of the mistakes that were made in Bitcoin. Not trying to fault Bitcoin, it is just that we have learned a lot in these past 10 years. Some key mistakes as I see it: Combined node and wallet — these should be separate Fee implicit vs explicit . In Bitcoin, the fee is anything left over after you’ve created the outputs. In Snowblossom, the fee has to be explicitly set in the transaction and inputs must equal outputs plus fee. This avoids the situation of a user accidentally sending a huge fee when they just forgot to put in a change output. This isn’t a huge problem, but to a few people, an important and costly mistake to make. Everything about script. I think most of a confusion and complexity of Bitcoin came from the script implementation and all the various ways an output address may be specified and the silly things people can do with scripts. But for a simple currency, you don’t need that. In snowblossom everything is a plain multisig address. (1 of 1 multisig for a single key address) There is no script language to do strange things with and no bugs related to it.” – Fireduck

People behind Snowblossom: FireDuck, Joseph Gleason 2003-2008 – ACM Programming Team member and later coach 2009-2013 – Amazon AWS Messaging (SQS/SNS) 2013-2018 – Google SRE Developer of Satoshi Dice “A little over a week from launch, he became aware of the sizable profit he had generated through his simple concept. With zero knowledge regarding the processes to obtain a legal gambling license, he soon transferred ownership of the service to Erik Voorhees.” “Later, in July of 2013, Satoshi Dice sold to an anonymous buyer for 126,315 Bitcoin. Based on Bitcoin valuations at the time, this was approximately $11.5 million dollars, and was the first recorded M&A deal in blockchain history” Fireduck: “Without really meaning to, the projects I’ve worked on have ended up being an in depth study of Bitcoin internals. With my mining pool software I had to get rather intimate with block details. With my electrum work I got to learn a great deal about UTXO databases, fast and stable local data stores (rocksdb FTW) and the various ways to index and think about block chains. This has put me in the position to do this snowblossom work learning from many Bitcoin lessons.”

Learn more: https://snowblossom.info/wiki/ https://wiki.snowblossom.org/index.php/Main%5FPage

Traded on: Qtrade.io vinex.network

Conclusion: Experimenting with Storage IO based proof of work, and built from scratch with quantum computing risk in mind, snowblossom might become the best back-up plan for Bitcoin.

Community : *Discord channel:* https://discord.gg/as5tw6X Telegram: https://t.me/snowblossomtalk



I think the world may need a simple cryptocurrency that isn’t trying to do everything. One that has the features it needs but no more. – Fireduck (Joseph Gleason)

Financial Derivatives #

The 2nd killer app of distributed ledger technology is blockchain for financial derivatives.

“Financial derivatives are an important part of finance today. They are for risk management and investment. Financial derivatives are the biggest part of the economy that can be put onto a blockchain. The most popular cryptocurrency project that facilitates financial derivatives will be worth hundreds of trillions of dollars.”