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Certificate program teaches how to leverage blockchain technology | Cornell Chro... (news.cornell.edu)Interest in blockchain is rapidly growing, as companies in every industry begin to recognize the many benefits of this innovative new technology. From smart contracts to cloud and supply chain storage, applications of this technology extend well beyond cryptocurrency and financial transactions.
Cornell has launched the new Blockchain for Business certificate program online through eCornell. It will help learners explore blockchain’s cryptographic roots, demystify the technology and recognize how to use blockchain to solve myriad business problems.
“Many associate blockchains with cryptocurrency such as bitcoin, but they have many other applications,” says Ari Juels, professor of computer science at the Jacobs Technion-Cornell Institute at Cornell Tech and author of the program.
“Our Blockchain for Business certificate program will explore the full power of blockchains with learners, enabling them to leverage blockchains’ powerful capabilities, recognize their often-overlooked technical limitations and apply them to real-world business goals.
”Business and technology leaders, entrepreneurs, developers and software engineers interested in learning blockchain fundamentals, and anyone seeking to develop a greater understanding of blockchain and cryptocurrency will find value in the program.
Upon completion of the Blockchain for Business certificate program, learners can apply their new skillset back at work by identifying key areas where blockchain technology can help create efficiency, save time and money, and increase security.
Further, learners will be able to recognize whether a blockchain is backed by solid cryptographic building blocks to avoid bad business decisions. Courses include:·
Cryptocurrencies and ledgers;· Cryptography essentials;· Blockchain fundamentals; and· Applications of blockchain technology.Upon successful completion of all four courses, learners earn a Blockchain for Business Certificate from Cornell Tech.- By Admin
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ON A CLEAR, warm night earlier this year, several dozen students at the University of California, Berkeley, folded themselves into gray chairs for a three-hour class on how to think like blockchain entrepreneurs.
The evening’s challenge, presented by Berkeley city councilmember Ben Bartlett, was to brainstorm how blockchain technology might be used to alleviate the city’s growing homeless problem. “We have at least 1,400 homeless people in our city, and that includes many right here at UC Berkeley,” Bartlett told the class.
“So how can we use blockchain to fund a new prosperity? That’s a challenge I’d like you to take on.”
The course, taught by visiting professor and former venture capitalist Po Chi Wu, is among a growing number of classes and research initiatives on blockchain technology emerging at universities. Blockchain—a method for creating and maintaining a global ledger of transactions that doesn’t require a third-party middleman such as a bank, government, or corporation—is best known for its role in powering the virtual currency bitcoin.
But applications are springing up in other areas as well, including retail, humanitarian aid, real estate, and finance. Although some analysts believe blockchain won't gain widespread adoption for another five or 10 years, companies like IBM, Facebook, and Google are investing heavily in the technology—and universities are taking note.
New York University, Georgetown, and Stanford are among the institutions that offer blockchain technology courses to get students thinking about its potential uses and to better prepare them for the workforce. Job postings requiring blockchain skills ballooned by 200 percent in the first five months of this year, compared with the same period a year earlier, though they remain less than 1 percent of software development jobs, according to the research firm Burning Glass Technologies.
Universities like MIT, Cornell, and Columbia are launching labs and research centers to explore the technology and its policy implications and seed the development of rigorous curricula on the topic.
Ikhlaq Sidhu, founding director and chief scientist of UC Berkeley’s Sutardja Center for Entrepreneurship and Technology, and Alexander Fred-Ojala, research director of Data-X, a UC Berkeley research lab, argued in a recent blog post that not teaching about blockchain “would be equivalent to ignoring internet technology when it emerged 25 years ago.”A Tough Fit for Academic Curricula
There are reasons to be skeptical about blockchain’s potential, and even universities exploring the technology are taking a relatively cautious approach. It is hugely energy-inefficient, and currencies based on blockchain technology have proved susceptible to fraud, money laundering, and tax evasion.
That means research that could form the building blocks of curricula is nascent, textbooks are scarce, and scholars are only beginning to develop the interest and skills to contemplate teaching the subject. Plus, blockchain is multidisciplinary, spreading across such fields as computer science, law, finance, and engineering, making it a tough fit for the relatively rigid world of academia.Not teaching about blockchain "would be equivalent to ignoring internet technology when it emerged 25 years ago."
IKHLAQ SIDHU AND ALEXANDER FRED-OJALA
“Academics feel a lot of pressure to maintain their status as ‘world-class experts’ in some narrowly defined field,” Wu, the Berkeley visiting professor, wrote in an email. “Just keeping up with the advances in their field is challenging enough and demands all their time and energy.
”Sidhu says some universities are hesitant to teach and research emerging technologies because many highly touted tech innovations never really take off and prove to be dead ends. “You can’t expect universities to be out ahead on all these topics,” he says. “It takes so long for everyone to agree that there's something going on, and often, by the time they all get it, it’s irrelevant and not the thing that should be taught anymore.
”But he and others say blockchain appears to have staying power—and the potential to shake up global systems. In his blog post with Fred-Ojala, the pair envision the creation of tamper-proof digital identities and records, a decentralized internet controlled by users rather than service providers, and public infrastructure with fewer intermediaries—such as an electric grid that allows producers and consumers to connect directly.
“Here's where we can help,” he wrote of universities. “We can show [students] the challenges and opportunities, give them access to resources, and then encourage them to solve the problem on their own.”LEARN MORE
THE WIRED GUIDE TO THE BLOCKCHAIN
He and other UC Berkeley professors started to recognize the emerging role for academia in blockchain three years ago, when employees from companies like Google and Yahoo began discussing the technology during presentations to students enrolled in an executive education program run by the Sutardja Center.
In 2017, the center launched a Blockchain Lab and a series of “collider sprints,” projects that connect students with industry experts and challenge them to create innovative solutions to problems. Last fall, it also created its first blockchain class, the one visited by Council member Bartlett. Concurrently, UC Berkeley’s law school launched a coursetitled Blockchain, Cryptocurrencies, and the Future of Technology, Business and Law.
“Other offerings are in the works,” Sidhu says. “It's still a bit decentralized, but you can see the path.”
Columbia began offering a handful of courses in blockchain a few years ago, but they were one-off classes, says Jeannette Wing, a computer science professor and director of Columbia’s Data Science Institute. In an effort to approach the technology more holistically, the university created the Columbia-IBM Blockchain and Data Transparency Center, which plans a multipronged approach to tackle research, education, and entrepreneurship.
With the launch of its center, Wing says Columbia will develop new courses it will offer regularly that cover not just the nuts and bolts of blockchain but also related data transparency and ethical issues. (The Hechinger Report, which produced this story, is an independent unit of Columbia University’s Teachers College.)Students Grow Impatient
Many college students, drawn to blockchain’s multidisciplinary nature, its possible applications in a variety of fields, and the meteoric rise of some cryptocurrencies during 2017, are out in front of their professors in advancing its footprint on college campuses.
Even at UC Berkeley, among the first institutions to incorporate blockchain into the curriculum, some students are downright frustrated with what they see as academia’s glacial pace.
“I think a lot of colleges are falling behind the times and are not really preparing people for these new labor markets,” says Anthony DiPrinzio, a senior economics major at Berkeley. “Whatever your major is, you’re stuck in that silo and you’re just learning this one specific area, with teaching methods that are often outdated.”
DiPrinzio is deeply involved in a student-run nonprofit club called Blockchain at Berkeley, which, in just a few years, has become a force in the blockchain field.
The organization offers two student-taught blockchain classes on the Berkeley campus, and this fall it debuted an open-access, online blockchain certification course. That class, which has so far enrolled more than 13,000 people worldwide, offers students the opportunity to gain in-demand career skills while earning a professional certificate.
Both the campus and online course offer a curriculum for beginners, covering subjects such as blockchain history and mechanics.
Club members also offer consulting services, attracting clients from nearby Silicon Valley and Fortune 500 companies such as ExxonMobil and Qualcomm that are interested in exploring, for instance, how blockchain might make their businesses more efficient.
The club has 100 active members, according to its head of marketing, Cliff Ahn, a UC Berkeley senior; its public-facing Slack channel includes 2,000 people.“This technology isn’t just about being able to buy bitcoin and invest in ether,” Ahn says. “It’s all the implications of the technology and what it can do to democratize money, politics, power, trust.
All these problems that plague our society—a lot of them can be fixed with this technology. It’s just a matter of getting people to understand that.”Andrew Myers, a computer science professor at Cornell, says the technology will filter into university curricula as the well of accumulated blockchain knowledge, research, and policy deepens.
“Blockchain as a technology requires that you understand a bunch of other things first: cryptography, distributed systems, operating systems,” he says.
“Before you know it, you’ve got a pretty long prerequisite chain. To really teach a full-blown blockchain course, you need textbooks, and a lot of that knowledge just hasn’t been distilled into a form that lets you teach a good undergraduate-level course yet.
”Two years ago, Princeton published one of the first textbooks on bitcoin and cryptocurrency technology. The university also offers a free online companion course, based on an on-campus class that explores how bitcoin and other cryptocurrencies work on a technical level.
Columbia’s Wing says one goal of that campus’s center is to publish research papers and develop curricula, but creating a textbook will be harder: “By the time the textbook is written, the technology moves on.”
In some ways, the embrace of blockchain on college campuses, slow as it may be, is part of a broader trend of universities trying to be more responsive to business and labor-market needs. With the cost of college soaring, the long-standing disconnect between what universities teach and what skills employers require is drawing more scrutiny.
Businesses are forming new partnerships with universities to create certifications that will be meaningful in the workplace, and in some cases they're going around universities to offer their own courses and other training.
Wu, whose résumé includes 30 years as a venture capitalist and entrepreneur, ensures that his class blends technical skills, theory, and entrepreneurship. Students receive a mandatory tutorial on blockchain technology taught by a recent UC Berkeley grad, but much of their time is spent developing and pitching business ideas built on blockchain technology.
These are often geared toward social good. A standout example this past semester, Wu says, was a proposal to ensure that artists are fairly compensated for their work by developing a blockchain ticketing platform that would tightly control ticket sales and profit sharing between artists and venues.
Another project, meant to alleviate public distrust in charity organizations, would use blockchain to allow a more direct relationship between donors and charities, with more control over how funds are used."A lot of colleges are falling behind the times and are not really preparing people for these new labor markets."
ANTHONY DIPRINZIO, ECONOMICS MAJOR AND SENIOR AT UC BERKELEY
Meanwhile, the city of Berkeley is pushing ahead with plans to explore the use of blockchain to help publicly finance community projects that would, among other goals, try to alleviate the city’s homeless and housing problems. Under the proposal, the city would use blockchain technology to issue and keep track of “micro-bonds” — in amounts as small as $10 to $20 — to ultimately raise enough money to fund local projects such as affordable housing.
At UC Berkeley, students and professors are continuing to tinker in the blockchain space, rolling out for a second semester the class focused on blockchain applications in technology, business, and law and hiring a tenure-track professor who will dedicate a portion of their research to blockchain.
For students like DiPrinzio, the blockchain-club leader, the future looks bright. “Blockchain is a young industry. We’re not competing with people who’ve been doing this for 30 years.
The people running this industry aren’t much older than me,” he says. “That’s a very cool thing. I get to talk to executives at these big companies, and I’m 21 years old. And they listen to me very attentively.
”This story was produced by The Hechinger Report, a nonprofit, independent news organization focused on inequality and innovation in education.-
Francisco Gimeno - BC Analyst Education and training need to change a lot to give answers to a fast evolving environment. If we add blockchain and everything around it to this, we can realise this is a huge task which needs to be done now with new markets and realities coming so fast. I am pretty sure however many in the Academia think yet with outdated parameters believing they will have time to slowly adapt to changes as it has been done before. Youth (and harsh real world) will not accept this, of course.
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State of Blockchain in Advertising Internet Advertising Bureau
Speaker: Valeska Pederson Hintz, Lowenstein- By Admin
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Blockchain Event in San Francisco about Intro to Blockchain and ICOs.
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You’ve no doubt seen the headlines about how blockchain startups have taken in more capital from token sales/initial coin offerings, ICOs, / token generating events, TGEs, in 2017 than traditional VC/equity financing, CB Insights says 5x more,.
You might also have heard about the $2-billion Telegram token sale.
What is the difference between token sales versus traditional equity fundraising? What factors contribute to success or failure of token sales?
What are the different types of token sale advisors and what do they do? Chris Chan, principal and co-founder of Blockstate, walked through the landscape of token sales and explained where the rules are different or the same between token sales versus equity financing.-
Francisco Gimeno - BC Analyst Nowadays there are so many token categories and new rules that ongoing formation and a lot of reading is needed. Tokenisation has started, is not a theory anymore. Do you understand its consequences? I don't think anyone has a whole understanding of it. Listening to talks like this helps. Be active in the landscape, read more here.
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Highly Recommended: Mini-glossary: Cryptocurrency terms you need to know - TechR... (techrepublic.com)Digital, decentralized currencies known as cryptocurrency are all the rage right now, but let's be honest: Unless you're well-versed in the intricacies of how they work, it's hard to wrap your head around them.
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Making good investments requires expert knowledge, and cryptocurrency is even more complicated than the average financial market. Anyone hoping to make money in the crypto game, or even start getting involved in cryptocurrency, needs to read up. Here's a list of definitions that will help you understand the basics about cryptocurrency.
Altcoin: When people think cryptocurrency, Bitcoin is usually the first thing that comes to mind, and with good reason: It's the first and by far the most valuable of available cryptocurrencies. Altcoins are any form of cryptocurrency that isn't Bitcoin.
ASIC: Application specific integrated circuits (ASICs) are chipsets built to perform a very specific task. Many ASICs are built to mine cryptocurrency, and are a huge improvement in power consumption and speed over graphics processing units (GPUs) that have been the most common hardware to date.
Bitcoin: Bitcoin is the original form of cryptocurrency; it was developed by a programmer or a group of programmers going by the name Satoshi Nakamoto. Bitcoin is a decentralized cryptocurrency that relies on the blockchain to distribute its ledger and record proof of work.
Bitcoin Cash: This cryptocurrency is a hard fork of Bitcoin that was created to decrease fees associated with Bitcoin transactions by increasing block size. It's also designed to be more spendable than Bitcoin.
Block: Blockchains consist of individual blocks that are added to the ledger as they are mined. Once a block has reached a predetermined size (which varies from cryptocurrency to cryptocurrency), it is verified and added to the blockchain.
Blockchain: Blockchain is the driving force behind cryptocurrency, but its uses aren't limited to monetary ones. A blockchain is a decentralized, distributed ledger that can consist of cryptocurrency transactions, computer code, and other forms of data. It's split between all the notes that participate in the network so that a consensus can be formed as to what is a valid transaction and what is not.
For a more thorough explanation of blockchain technology see TechRepublic's blockchain cheat sheet.
SEE: IT leader's guide to the blockchain (Tech Pro Research)
Centralized ledger: Not all blockchain ledgers are decentralized and distributed. Some ledgers, like the blockchain that is associated with the Ripple altcoin, are controlled by a single entity that has ultimate authority over its contents.
Consensus: Blocks can't be added to a blockchain without a majority of users reaching a consensus as to their validity.
Cryptomining malware: As cryptocurrency has gained value, malware creators have quickly stepped up their efforts to build malware that uses infected CPUs to mine cryptocurrency—then, the coder adds it to their personal wallet. Different forms of cryptomining malware exists—some of the malware installs apps on mobile devices and computers, and some malware operate as scripts that run from the web.
SEE: Cryptocurrency-mining malware: Why it is such a menace and where it's going next (ZDNet)
Cryptographic hash: Hashes are the cryptography part of cryptocurrency, and are what makes a blockchain secure, verifiable, and unhackable. Cryptographic hashes can take inputs of variable length, but always output a fixed-length string of numbers and letters. Most cryptocurrencies use SHA-265, which always outputs a 256-bit string regardless of whether the input is "hello" or an entire sentence.
Decentralization: One of the key reasons cryptocurrency has been such a hit is because it has changed the way data like ledgers and applications are stored. Instead of relying on a central node like a server, blockchains, Bitcoins, decentralized applications, and all the data they contain are distributed between nodes. The greatest strength of decentralization is its resilience: If one node goes offline, there's no data lost and no downtime since individual nodes contain no unique information.
Decentralized applications: Also known as dapps, decentralized applications take the concept of distributing blockchain ledgers and go a bit further: Dapps distribute actual applications among redundant nodes. The most popular dapp platform is the Ethereum Virtual Machine, which uses its own unique cryptocurrency called Ether to pay rewards to block miners and fuel its peer-to-peer app hosting.
Difficulty: Difficulty is a measure of how hard it is to successfully mine a single block in a blockchain. Cryptocurrency miners are attempting to find cryptographic hashes for specific blocks of data, which becomes more difficult the longer a blockchain becomes. Difficulty continues to rise, making mining a more intensive process as time goes on.
Distributed ledger: Distribution involves decentralizing data between multiple nodes. A distributed ledger is a blockchain ledger that is redundantly shared between peers so there are multiple valid copies to prevent data loss. Centralized ledgers are the exact opposite: Centralized ledgers are held by a single node and are not redundant.
Distributed network: What a distributed ledger is to cryptocurrency a distributed network is to decentralized applications. As opposed to using a single source like a server to run a dapp, a distributed network (e.g., the Ethereum Virtual Machine) shares the processing work and stored data between its nodes.
Ethereum: Ethereum is a decentralized computer network, also known as the Ethereum Virtual Machine (or EVM), that operates dapps and is fueled by the cryptocurrency Ether.
Ether: Often mistakenly called Ethereum, Ether is the cryptocurrency that powers the EVM, commonly called Ethereum. Ethereum is used to reward blockchain mining and dapp nodes for participating in the work of the EVM.
SEE: How blockchain will disrupt business (ZDNet special report) | Download the report as a PDF (TechRepublic)
Fiat currency: Fiat currency (e.g., dollars, euros, pounds, yen) is the form of money that we use every day, and it derives value from the government that issued the currency. Cryptocurrency isn't fiat currency because it isn't given value by a central authority.
Fork: Forks are points at which an existing blockchain splits into two or more different blockchains. Up to the point of forking, both blockchains contain the same data, but after that point are different. Forks can be both hard (i.e., not backwards compatible) and soft (i.e., backwards compatible), and can occur due to a change in consensus or a change in blockchain protocol (i.e., underlying code).
Hash rate: A hash rate is a measurement of how efficiently cryptocurrency mining rigs are operating and is measured in hashes per second.
ICO: When a new cryptocurrency venture begins it can make an initial coin offering (ICO), similar to an initial public offering (IPO). Instead of company shares being sold to early investors, ICOs involve the sale of cryptocurrencies to early backers of the project. Companies offering ICOs have to surpass a minimum earning threshold before the ICO or all money is returned to backers and the project fails.
SEE: The top 5 security threats posed by ICO projects (TechRepublic)
Ledger: A ledger is usually a record of a specific type of transaction such as money, purchases, etc. Ledgers in the cryptocurrency world are also known as blockchains, which contain complete records of the history of a cryptocurrency's use. In this case, the ledgers are not physical objects—ledgers are digital lists of cryptographically hashed data validated through group consensus.
Litecoin: Litecoin is an altcoin that is a fork of Bitcoin, and it was launched in 2011. Litecoin is nearly identical to Bitcoin, but it differs in several key ways: Litecoin has a faster block generation time than Bitcoin; Litecoin has a higher maximum number of coins than Bitcoin; and Litecoin uses the scrypt cryptographic hash algorithm instead of SHA-256.
Mining: Cryptocurrency mining is the act of attempting to solve hashes in order to add blocks to a blockchain. It takes an intense amount of computing resources, with many miners building their own specialized rigs or buying into a share of a cloud-based mining computer. When a block is successfully mined and added to the blockchain, anyone who did work to help solve it is paid a small amount of cryptocurrency as an incentive to mine.
SEE: Here's why Apple is banning cryptocurrency mining on iPhones and iPads (TechRepublic)
Monero: Monero is another altcoin, and was specifically designed for anonymity. Monero transactions can't be traced, which has made it a popular cryptocurrency among cybercriminals and crypto mining malware coders.
Private/public keys: Keys are used in all cryptocurrency transactions and come in two forms: Public and private. A public key is what is sent by the owner of a cryptocurrency wallet when they want to send currency to another user or use their coins for a purchase.
Private keys are unique to all cryptocurrency wallets and are used to validate the public key and act as unique signatures for each cryptocurrency transaction. Private keys should never be shared, as someone with access to a private wallet key has control over the cryptocurrency in that wallet.
Proof of stake: Proof of stake (PoS) is a consensus algorithm that rewards cryptocurrency miners based on the amount of cryptocurrency they hold. The more cryptocurrency a miner owns, the larger the share of the payout for each solved block they receive. There is no actual block reward in a PoS, with miners directly earning transaction fee currency instead. PoS is the newer of the two consensus algorithms, and it is slated to begin being used for Etherium mining sometime in 2018.
Supporters of PoS argue that it's more cost effective than proof of work mining.
Proof of work: Proof of work (PoW) is the traditional consensus algorithm that rewards cryptocurrency miners based on how much they contributed to a solved block. The more work performed the more the cryptocurrency miner earns when a block is added to the chain. PoW is used by most cryptocurrencies, but it makes it more difficult for those with low-end mining rigs to earn money.
Reward: Rewards are cryptocurrency paid to blockchain miners whenever a block is solved and added to the blockchain. The currency rewarded comes from two sources: Transaction fees and incentive coins that are generated as blocks are solved, thus adding more coins to the total supply.
Ripple: Ripple is a centralized cryptocurrency that is designed to make international payments easier by eliminating exchange rates and cross-border fees. It has faced criticism due to its centralized ledger, which gives the Ripple company—instead of purchasers and investors—the ability to control prices.
Scrypt: Scrypt (pronounced ess-crypt) is a cryptographic hash algorithm that is used by several cryptocurrencies as an alternative to SHA-256. Scrypt is simpler, less resource-intensive, and easier to solve than SHA-256, making it a more popular choice for individual miners since they don't need specialized hardware to mine it. The trade-off is that scrypt is supposedly less secure, though there has been no real-world case of it being cracked.
Supply: Supply refers to a total amount of a particular cryptocurrency and is divided into three terms: Circulating supply, total supply, and maximum supply. Circulating supply refers to the estimated number of coins being used by the public or available in markets; total supply is the total amount of coins that currently exist; and maximum supply is the total amount of coins that will ever be issued. Most forms of cryptocurrency have a theoretical maximum supply, but in many cases it's unlikely to ever be reached.
Token: Cryptocurrency tokens, like physical tokens used in the real world, are representations of some kind of asset. Tokens in the cryptocurrency world typically represent a certain amount of cryptocurrency (similar to how poker chips represent certain amounts of fiat money), and are usually issued on top of another blockchain to represent a utility or asset used by that blockchain. Tokens are a key part of ICOs—when an ICO investor buys in, they are typically awarded with tokens instead of actual hard cryptocurrency.
Transaction block: Each block that is mined and added to the blockchain consists of a list of transactions, such as buying or selling coins, trades, or purchases using cryptocurrency.
SEE: Considering investing in cryptocurrency? Get ready to pay some hefty fees (TechRepublic)
Transaction fee: Whenever an individual buys, sells, trades, or otherwise uses cryptocurrency, they have to request that a miner mines their transaction, adds it to a transaction block, and then adds the completed block containing their transaction to the blockchain. In order to ensure a transaction is mined, a fee has to be paid to incentivize miners to solve it. Transaction fees aren't fixed, but offering too little can result in a failed transaction, while offering too much simply means the user is wasting money.
Failed transactions can be dangerous for cryptocurrency users—if a transaction doesn't make it to the blockchain, someone else could theoretically spend the same coin, robbing the user of its value.
Wallet: A wallet is a digital storage space for cryptocurrency.
Wallets can be apps, cloud-based websites, or just a plain TXT document stored on a hard drive.
If a cryptocurrency wallet is stolen, or its private key is revealed, anyone has access to the coins it contains—just like having your wallet stolen in real life.- By Admin
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Francisco Gimeno - BC Analyst New technologies, like new philosophies need a new vocabulary. Even if you are already a so called "expert" in blockchain and crypto is good to revise terms, like in this small lecture. These definitions are useful when explaining to others blockchain and crypto too.
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An overview of the technology everyone is talking about.
Adam Levy(TMFnCaffeine)
Blockchain might seem like magical fairy dust that companies throw about that suddenly sparks interest in their businesses. But the complexities of fairy dust far exceed the real inner workings of blockchain technology.
A blockchain is a distributed public ledger that uses cryptography to ensure the record is practically immutable. The idea was created by an anonymous programmer that goes by the pseudonym Satoshi Nakamoto, and it's the underlying technology that makes peer-to-peer bitcoin transfers possible without the need for financial institutions to verify transactions.
But blockchain technology has applications well beyond bitcoin. Anything that relies on access to a database can benefit from using blockchain technology.Before you can understand how businesses and governments could use blockchain technology in various applications, you first have to understand what exactly a blockchain is. In this article, we'll review:
What exactly a block isHow new entries are written to the public ledgerWhy it's called a blockchainWhat makes the blockchain secure, andPotential applications for blockchain technology
IMAGE SOURCE: GETTY IMAGES
What is a block?
A block is simply a collection of data. Theoretically, it can be any kind of data, but typically it includes transactional data.For example, the block may contain data that says things like party A wants to send money to party B along with proof that party A has that money to send.
That's primarily what's included in bitcoin's blockchain -- it's just a public ledger of transactions.It could also contain more complicated data like a contract -- party A will send party B a certain amount of money if and when X occurs. That's the main idea behind Ethereum, a cryptocurrency platform built on blockchain technology that specializes in "smart contracts."
How data gets added to a block
When a person wants to add data to the public ledger, they must prove that they are authorized to add that data to a block. This is done through a system called public-key encryption.Each person that's authorized to add data to the blockchain has both a private key and a public key. The private key must be kept secret from everyone else, but the public key is available to anyone with access to the blockchain.
The private key is used in combination with the data a person wants to add to create a digital signature. The computers on the blockchain network can then use a person's public key to verify the private key was used to sign the data. That public key cannot, however, be used to determine the private key.
This cryptography system ensures the data in each block is supposed to be there, which is very important.
That's a responsibility typically held by financial institutions or trusted third parties, but blockchain technology eschews intermediaries in favor of a decentralized structure. As you'll see, any additions to the blockchain are very difficult to undo, so it's imperative each transaction is authorized.
Why is it called a chain?
Each block in the blockchain contains a reference to the block that immediately precedes it in the chain. This ensures that each block is ordered chronologically.
The reference data is generated by a cryptographic hash function, which takes all of the data in the previous block and maps it to a digest -- an alphanumeric string.
If any of the data in the block changes, perhaps you want to add a few extra 0s to a number, the hash function will produce an entirely different digest.By linking blocks together this way, it makes it practically impossible for a single person to change the data in the blockchain. Doing so would require that person to not only change the data in one block but also change it in every block that follows it.
What makes it so hard to make new blocks?
Each block also contains important information that allows the network of computers using the blockchain to verify the validity of the block -- such as a solution to a complex math problem called a proof-of-work. The proof-of-work requires a large amount of computing power to solve, but only a moderate amount is required to verify a solution.
A new block cannot be amended to the blockchain without solving the proof-of-work.In many cryptocurrency blockchains like bitcoin and Ethereum, computers on the network are incentivized to produce proof-of-work and add blocks to the blockchain through a reward.
Some blockchains rely entirely on transaction costs to incentivize people to spend money on computing resources like hardware and electricity to run it.Thus, a person acting alone would need a large portion of the computing power on a network to even have a moderate chance of adding multiple blocks to a blockchain back-to-back.
IMAGE SOURCE: GETTY IMAGES
Where is the blockchain stored?
An important characteristic of most blockchains is that they're publicly distributed across the network. That's to say every computer on the network has a copy of the blockchain.
When a computer on the network solves the proof-of-work and adds a block to the blockchain, that new blockchain is immediately distributed to every other computer on the network. The other computers verify transactions in the block, as well as the proof-of-work solution.
There are instances when two computers solve the proof-of-work and try to add a block to the blockchain at the exact same time. And the blocks they add might not have the same data. Some computers get one copy of the chain while others get a different copy.In this case, each computer keeps the first copy of the chain it received.
The next computer to solve a proof-of-work will amend the new block to the copy it received and broadcast that new chain to the rest of the network, breaking the tie. The longest chain is always considered the only valid blockchain.The rule that the longest chain is the only valid chain is another reason it's incredibly difficult to change a record.
A person would not only have to solve the proof-of-work for the block they want to change, but they would also have to solve it for the next block before any other computer on the network solves it.Since the blockchain is stored on every computer in the network, there's no single point of failure. That adds yet another level of security to the system.
Possible applications for blockchain technology
Any business or system that relies on a database could potentially benefit from blockchain technology to make it more secure and accessible.Possible applications include:
Peer-to-peer money transfers. Satoshi Nakamoto conceived the blockchain as a solution for making bitcoin transactions. Transactions on the blockchain are extremely fast. While it might take days to send money around the world through traditional financial institutions, bitcoin takes a matter of minutes. Other cryptocurrencies are even faster than bitcoin, and developers have built systems such as the lightning network to verify transactions on the bitcoin or Ethereum networks more quickly.Smart contracts. Smart contracts are pieces of computer code that execute themselves upon certain criteria being met. Writing the contract to the blockchain removes the need for an intermediary like a financial institution to enforce the contract. Once the contract is on the public ledger, it's hard to change. An example application of a smart contract is a stock call option, which gives a person the right to buy a stock at a certain price on a certain date in the future. When that date comes, the smart contract executes and the person buys the stock.Other financial services. Smart contracts could be used for transacting with any financial instrument. Blockchain technology could revolutionize stock exchanges as shares could change hands within minutes instead of taking three days to settle. In fact, the Nasdaq Stock Market developed an exchange for private securities called Linq in 2015. Another example is using blockchain technology for insurance claims. A blockchain could document property insured and pay out claims more quickly.Internet of Things (IoT). There's a growing number of things connected to the internet, and they're all producing data. IoT applications range from garage doors you can control with your smartphone to entire cities that have thousands of devices all communicating with each other to control traffic and manage resources efficiently. Using a blockchain can provide security for smart cities to ensure traffic lights continue operating properly and the power stays on when you're at work.Supply chain tracking. Along the same lines as IoT applications, supply chain companies use billions of sensors to track packages from point A to point B. The chronological nature of a blockchain lends itself well to keeping track of items at any point in time.Health records. Keeping individual health records on a blockchain would give doctors all over the world instant access to a person's medical records. So, if you're traveling abroad and get hurt or just seeing a new doctor at home, blockchain could make it a lot easier for a doctor to access your medical history.Voting. With all the worry about hackers tampering with electronic voting in the 2016 U.S. Presidential election, blockchain technology could provide a solution. Since a person must authorize data before it's added to the blockchain, it would be easy to ensure each person votes just once by issuing private keys to eligible voters. Additionally, the hard-to-change nature of the blockchain means it would be tough to tamper with the results. And perhaps best of all, you might not have to wait in line at a polling place to vote if governments used a blockchain and public key encryption for voting.
There are dozens of other potential applications for blockchain technology, and developers will likely continue to think of new ways to use Satoshi Nakamoto's original idea to bypass financial institutions in ways he would never have imagined.Companies are coming out every week saying they're going to apply blockchain technology to their business.
Some of them are legitimate applications while some of them are just PR stunts. With an understanding of what blockchain is, you'll be able to determine whether it actually has a useful application for a business or not.Adam Levy owns bitcoin.
The Motley Fool recommends Nasdaq. The Motley Fool has a disclosure policy.
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Francisco Gimeno - BC Analyst Are you reading this page for the first time? Do you want to know more about Blockchain? Apart from other articles on this website, this one also offers a comprehensive explanation on what Blockchain is.
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Bitcoin is a cryptocurrency whose origins are shrouded in mystery and whose current circumstance no one could’ve predicted. This is a currency that’s completely online and not tied to any central bank.
Instead, it’s verified by individuals in an open ledger available for all to see. It was created in 2009 by an anonymous person called Satoshi Nakamoto, a Japanese man’s name as common as John Smith in America.
After being steady for years, the price of bitcoin has taken off since January of last year, and has been on an absolute tear since November.
At the time of writing, it’s over $9,000. It first broke the $1,000 threshold on Jan. 1, 2017, and reached $19,000 in December of that same year. Afterward, it lost 50% of its value, only to begin a dramatic climb back up.Since it’s not tied to any bank, bitcoin is unregulated and its control decentralized.
As a result, bitcoin owners remain anonymous. Records of transactions however are accessible via a public log. But bitcoin owners’ names are never revealed, only their bitcoin wallet IDs—an encrypted bank account where one’s digital currency is stored.
People can purchase bitcoin through online exchanges, on websites like Coinbase, Bitstamp, and Bitfinex.It’s not totally safe, however. Bitfinex was hacked in 2016 and $60 million worth of bitcoins were stolen. The sheer nature of bitcoin makes them untraceable.
This reveals another dark aspect. It’s made the cryptocurrency popular among those looking to buy or sell drugs or other black market products online.
Bitcoin’s trajectory over one year, February 14, 2017-18. Credit: Coindesk.com.
A person can give bitcoins as a gift or use them to pay off a debt. A few small businesses accept them and in this way, avoid the vendor charges that come with processing a credit card payment.
Due to its decentralized nature, transactions using bitcoins have to be verified, which is where mining comes in. And just as with every resource, there’s scarcity.
For instance, there will only ever be 21 million bitcoin in the world. So far, about 12 million have been mined. It’s estimated that the remaining 9 million remaining will all be mined by the year 2140. Since there’s a finite supply, bitcoins are thought to gain value over time, a fact which has motivated a mining boom.
Miners use computers to solve complex math puzzles in order to verify the bitcoins used in a transaction. The first person to crack the math problem becomes the winner. As a reward, they are usually given 12.5 bitcoins. Note that a bitcoin goes to eight decimal places.
As you might expect, this setup causes some competition among bitcoin miners.Thousands of miners worldwide compete to mine any one bitcoin transaction. Think about this—every ten minutes a miner earns bitcoins as a reward for verification.
The network keeps a record of each bitcoin transaction. These records are bundled together with all the others made within that same time-period. A bundle is called a “block.” Blocks are then entered into the public record in chronological order, which is known as the blockchain. You can check the latest real-time bitcoin transactions through websites like Blockchain.info.
A bitcoin mining operation in Russia. Credit: Getty Images.You don’t have to necessarily be proficient in computers to mine. You’d need some open source, basic software such as GUI miner.
As for hardware, you’d require a motherboard, some graphics processing chips, and fan to cool down your rig. It used to be that anyone could mine bitcoins.
But today with the heightened interest and the math problems growing exceedingly difficult, outfits with more computing power have come to dominate this activity. It’s gotten to the point where bitcoin mining centers have become the majority of the network.
These are places around the world where mining takes place on a large-scale, usually where energy is either inexpensive or free. So operators pack a facility with computers, servers, and cooling devices.
Certain areas of China see many such centers due to free hydroelectric power. But the country is looking to curtail bitcoin mining, which may send operations elsewhere. Canada is one possible location.
While in Iceland, where bitcoin mining has become a sensation, a number of such centers have been proposed and officials warn these operations will use more electricity than is required to power all the homes in the country. Johann Snorri Sigurbergsson, the spokesman for Icelandic energy firm HS Orka, told the BBC, “If all these projects are realized, we won’t have enough energy for it.”
Large-scale bitcoin mining centers are low investment. In places with inexpensive or free power, returns can be significant. Credit: Getty Images.
Energy is inexpensive in Iceland since they get all of it from renewable sources like wind and hydroelectric power. The small population of the island, just 340,000 people, use about 700 gigawatt hours of energy annually. Whereas, the bitcoin centers are expected to suck down 840 gigawatt hours of electricity per year.
Since massive amounts of power are used, the environmentally-minded consider the practice extremely wasteful. Bitcoin mining is a smart business model because it requires no staff, a small investment, and today, the taxes on such operations are low, although that may change, as Iceland’s politicians have been made more aware of issues surrounding bitcoin mining.
An Icelandic member of parliament, Smári McCarthy, told the AP, "We are spending tens or maybe hundreds of megawatts on producing something that has no tangible existence and no real use for humans outside the realm of financial speculation.
That can't be good."One report found that all the cryptocurrency mining occurring worldwide could power Ireland for a year, but those figures may not be accurate. As a result of concerns over power usage and a lack of control over bitcoin overall, some countries such as South Korea are mulling over a system to license and regulate bitcoin transactions.
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