Finance 34 items
Blockchain: From Wall Street To Main Street (
There’s a lot of speculation and confusion around blockchain and what it means for investors. Some people know that blockchain is the technology behind increasingly popular cryptocurrencies like Bitcoin (BTC) and Ethereum (ETH).

However, few know about the full capabilities of blockchain and how it might change the way we execute transactions, contracts, and verify identities.At its most basic level, blockchain is a decentralized ledger that records, verifies, and enforces different types of transactions.

Unlike a centralized ledger used by a central bank or treasury, this decentralized ledger is comprised of a network of ledgers that independently record broadcasted transactions. These independent ledgers then verify transactions by comparing them with other ledgers. If 51% of the decentralized ledgers agree the transaction is verified.

Conceptually, the blockchain can be thought of as a long “chain” in which transactions are recorded in individual “blocks.” Each time a transaction is written onto the blockchain, a block is added to the end of the chain, increasing its length. Information within each block is encoded using mathematical cryptography, making it nearly impossible to change or alter a transaction, reducing fraud and increasing transactional safety.

The true benefit and market-changing ability of blockchain lies in its smart contracts. A smart contract is a way to automatically agree on and enforce a contractual obligation. This is because once the terms of a contract are recorded on the decentralized ledgers they can’t be altered.

Further, all smart contracts have protocols encoded within each block that automatically execute obligations when certain criteria are met. For example, if you agree to purchase goods and services today for a price paid on a future date, you could use the blockchain to execute the contract.

Encoded on the blockchain transaction would be a protocol that’s programmed to automatically pay the funds on that future date if the goods and services were delivered. No middleman would be needed to facilitate the transaction.These smart contracts have the potential to completely change most of the industries that rely on transactions, contracts, and ID verification.

For example, when it comes to 
real estate investing, smart contracts written as blocks on the blockchain will start facilitating the exchange of property.
For example, rather than having to rely on a title company, the blockchain can act as an escrow account that automatically delivers funds to one party and the property’s title to the other.

You can do this by paying for a real estate property in cryptocurrency. The cryptocurrency would be held within the virtual block like an escrow account. When the seller delivers a private entry key to the buyer in a transaction on the same blockchain, the virtual contract releases the funds by writing another transaction.

If the key isn’t delivered by a specified time a refund can be delivered. Currently, however, the way that people use smart contracts is via the transferring of cryptocurrencies. Cryptocurrency is a peer-to-peer digital payment system that lets consumers and businesses purchase goods and services from each other. It can also be held as an investment and exchanged for different sovereign currencies.

Cryptocurrency is like a hybrid currency/commodity because it stores value like currency but has a fixed supply like a commodity.Cryptocurrencies aren’t created by a government and regulated by a central authority like sovereign currencies.

Thanks to the blockchain, cryptocurrencies have decentralized authority and no middleman. Instead, cryptocurrencies incentivize networks of individuals known as “miners” who replaced pickaxes with computer power to run decentralized ledgers in return for the creation of “coins.” These coins are mined by miners, who then use them to exchange for fiat money or use to pay for goods and services.

All cryptocurrency transactions are protected by blockchain cryptography and protocols, making fraud nearly impossible. What’s more, all cryptocurrency transactions recorded and verified on the blockchain are final. It’s therefore important to think about cryptocurrency transactions as individual smart contracts between two parties.

In this scenario, when two parties agree to exchange cryptocurrency for goods, services, and/or sovereign currency, the parties make the exchange using cryptocurrency wallets (like a bank account for cryptos). Once the exchange is made, the independent ledgers record the transaction and verify it with the other ledgers.

Once verified, the transaction is “executed” in that it it can’t be reversed or changed.Cryptocurrency can be bought and sold on exchanges such as CoindeskCoinbase, and Bitpay. These cryptocurrency exchanges also offer wallets for merchants as well as individual consumers.

The most popular cryptocurrency available on these exchanges is Bitcoin (BTC). The value of Bitcoin fluctuates widely, but as of this the publication of this article, a single coin is worth over $4,500 and the total market cap of all Bitcoins exceeds $66 billion.

However, there are other cryptocurrencies available, some of which have become popular in their own right. Ethereum (ETH), for example, is a cryptocurrency that also offers a more flexible blockchain that many believe can be used in the near future to write many of the smart contracts mentioned above.

At the time of publication, Ethereum exceeds $350 per coin and has a total market cap of $30 billion.
As of now, all cryptocurrencies (including both Bitcoin and Ethereum) are highly speculative. I spoke with Ivan Brightly, advisor at COINCUBE wealth management, who told me that “In the western world I think of Bitcoin and Ethereum as a spec investment rather than an investment.

Specifically because we already have access to a banking system with a more stable currency than cryptocurrency.

However, Ivan went on to tell me that cryptocurrency can have some value for developing countries, such as Venezuela, where there are mismanaged banking systems.

Cryptocurrencies can give developing countries a stable 
payment platform and a huge store of value when compared to highly inflated sovereign currencies.

If you’re operating in the US, you’re working with spec investments, but abroad it could be a better store of value....continue reading: