Daily Archives: March 29, 2017

Cryptography, its all around us, and its here to stay. My name is Carsen Klock, I am a developer, designer, and crypto entrepreneur. I want to share several things Ive learned about developing cryptocurrency with you.

Back in 2013 and 2014, I created a plethora of altcoins, aka. cryptocurrencies based off the Bitcoin Core source. Specifically at that point in time, version 0.8. Going into crypto I saw a lot of coins that were just blatant copies of Bitcoin, Litecoin, with no new innovation.

During this time, I saw a gap in the cryptocurrency industry. A very large gap between; innovation, and scams. I decided to create several coins that helped to change the industry for the better. I had invented the X13, X14, X15, and FRESH (NIST5) hashing algorithms and python mining modules. Unfortunately a lot of coins that I had implemented these features with, were more so small projects to test these new algorithms.

With the PoW consensus methods, most of my coins failed due to a lack of consistent development on my end and a huge amount of FUD within the Bitcoin community. I had also created the first working PoS transition hybrid coin where after a set amount of blocks the coin would transition from a Proof Of Work consensus to a Proof Of Stake. These consensus methods are still very controversial, PoW or PoS? We can see this now with the crypto called Ethereum. In my opinion the PoS consensus method is flawed, the rewards are low, miners are cancelled out, and the rich get richer.

The point of cryptocurrency to me is for decentralization and wealth transfer. I do still believe the PoW consensus method is the best, as long as ASIC miners arent able to mine that particular hashing algorithm. To this day the FRESH algo I had created, does not support ASIC mining, however the X series of hashing algos can be mined with an ASIC.

A couple of tips. Invest small first, Diversify your crypto holdings, and invest in innovation. It is a rough industry and very hard to tell what is what. So these are the top coins that I think currently have a great chance of going to the moon: DASH, Monero, Ethereum, and Lisk.

I am starting to come back into the crypto industry, you can find my old coin projects and my recently created Ethereum Block Explorer at my GitHub at http://github.com/carsenk

If you liked this article, follow us on Twitter @themerklenews and make sure to subscribe to our newsletter to receive the latest bitcoin, cryptocurrency, and technology news.

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My Experience as a Cryptocurrency Developer The Merkle - The Merkle

ShapeShift, a cryptocurrency exchange platform that converts between blockchain-based tokens, has raised $10.4 million in a series A round led by Earlybird Venture Capital, with participation from Lakestar, FundersClub, Blockchain Capital, Pantera Capital, and Access Venture Partners.

Founded out of Switzerland in 2014, ShapeShift is a simple concept it allows anyperson or non-person (such asa trading bot) to convertbetween cryptocurrencies such asbitcoin and ethereum, with no user accounts required.

Above: ShapeShift

The company had previously raised around $2.4 million, and it says its latest cash injection will be used forfurther expansion of the team to keep up with its rapid growth, according to a statement, which also announced it now manages 50,000 bitcoinseach month. The company says it willalso release two groundbreaking exchange productslater this year.

ShapeShift founder and CEO Erik Voorheeswas an early cryptocurrency adopter, and hesold his gambling site SatoshiDice in 2013 for 126,315 bitcoins, a value of $11.47 million back then. This was touted at the time as the first big bitcoin acquisition.

When we started ShapeShift, a future world of natively digital assets was very theoretical, said Voorhees, in a statement issued to VentureBeat. Yet this world is quickly arriving; one in which millions of forms of digital value, from access keys to tokenized derivative contracts to video game items, will trade between people and machines all over the world, every second of every day. Just as information has gone natively digital, so too now goes value. Bitcoin taught a skeptical world how to do it, and the gold rush is on.

There are many exchanges out there already, including the likes ofPoloniex,which is arguably ShapeShifts biggest direct competitor, but Voorhees says that where it differs from traditional exchanges it that its the actual buyer and seller of coins, rather than a peer-to-peer marketplace. So when you come to the site and you have bitcoins, and want ethereum, we sell you our ethereum, he said.This is different from a traditional exchange which pairs you with other buyers and sellers. We are kind of like a vending machine.

ShapeShift says it currentlysupports more than 40 digital currencies and assets, including bitcoin, litecoin, ethereum, and dash.

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ShapeShift raises $10.4 million to grow its cryptocurrency exchange ... - VentureBeat

Smart contracts are forms of computer programs that can be executed by a network of trustless nodes, without having to rely on any third partys arbitration process. Due to their resistance to tampering, smart contracts are attractive solutions throughout many scenarios, especially those that rely on transferring a given amount of money to respect a group of pre-agreed rules. Throughout the past few years, several platforms for creating and executing smart contracts have been designed, and many of these have been actually deployed and used. Throughout this article, I will discuss the cryptocurrency blockchains that permit the usage of smart contracts.

Bitcoin:

Even though the main goal for innovating bitcoin was to create a decentralized currency, the immutability and transparency of its blockchain protocol have inspired the creation of protocols that deploy, a rather limited form of, smart contracts. Bitcoin offers a non-Turing programming language, which permits redeeming of a transaction, under specific predefined conditions. The programming language is of rather limited capabilities, as it only features a group of basic logical, arithmetic and crypto operations (e.g. hashing and validation of digital signatures).

Ethereum:

Ethereum is the second biggest cryptocurrency by market capitalization. Just like bitcoin, ethereums blockchain is immutable, with a consensus procedure that resembles that of bitcoin. Ethereums blockchain features its own cryptocurrency, ether (ETH). Smart contracts are coded using a stack based bytecode programming language, which is a Turing-complete programming language, apart from bitcoins. There are several high level programming languages, the most popular of which is Solidity, which can be compiled into the bytecode language. Users create smart contracts and customize their functions via sending cryptocurrency transactions to the blockchain, whose effects are then verified by the nodes across the network. Both users and smart contracts can store coins and send and/or receive ETH to other users or smart contracts.

Counterparty:

Counterparty is a platform without a special blockchain. Instead, it embeds its data in transactions across bitcoins blockchain. Even though nodes across bitcoin network ignore data embedded in such way, Counterpartys network nodes identify and interpret them. Smart contracts can be coded using the same language used when coding smart contracts for ethereums network. Nevertheless, oppositely to ethereum, the results of computation processes are not validated by a consensus protocol. Counterparty has its own cryptocurrency, that can be transacted between users, and spent when smart contracts are executed.

Stellar:

Stellar has a public blockchain with its own cryptocoin, which is governed by a consensus algorithm that relies on federated Byzantine agreements. Oppositely to ethereum, there is no specific language for scripting smart contracts, yet it is possible to collectively gather some transactions and then store them atomically in the blockchain. This can be utilized to deploy some basic forms of smart contracts.

Lisk:

Lisk is a cryptocurrency that has its own blockchain that relies on a delegated proof-of-stake consensus protocol. To be more precise, 101 active delegates, so each one elected via the stakeholders has the authority to create blocks. Stakeholders can participate in the electoral process. Lisk is compatible with the execution of Turing-complete smart contracts which are either scripted Node.js or JavaScript. Unlike ethereum, determination of the pattern of execution of contracts is not ensured by the programming language; the programmers must handle it.

Monax:

Monax supports the execution of Ethereums smart contracts, without having a special cryptocurrency. Monax allows users to build private blockchains and to define specific authorization policies for accessing these blockchains.

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6 Cryptocurrency Blockchains For the Design and Application of ... - Live Bitcoin News

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As far as cryptocurrencies have come in recent years, a number of security and fraud risk elements still remain. But developers are working to bring the seedier side of bitcoin to a close.

Anti-money laundering and blockchain analysis software developer Chainalysis and Danish electronic payments provider Nets have reportedly teamed up to create solutions for Nordic banks that will validate bitcoin transactions and help financial institutions comply with regulations.

Nets reportedly provides payment services to over 240 financial institutions in the Nordic countries, including Danske Bank, DNB and Nordea. Chainalysis collaborates with Europol to link digital identities to digital currency, helping banks and law enforcement investigate suspicious activity.

We can make risk assessments and analyze blockchain activities, Chainalysis CEO Michael Gronager told Reuters. And banks are interested in being able to risk-score customers, so they do not end up being used for money laundering . If a banks customer is a risk, the financial institution can choose to send a suspicious transfer report to the authorities, which can use our tools to trace and identify the customer.

This isnt the only cryptosecurity news to come out of Denmark as of late. Recently, the nations cybercrime police unit claimed to have successfully prosecuted drug traffickers based on bitcoin transaction information sourced by a specialized software developed by the Danish National Cyber Crime Center.

All bitcoin transactions by design are recorded in a permanent public ledger accessible to anyone. While transaction are openly traceable and wallet addresses are public, they are not directly tied to any personally identifying information, which has led to the adoption of the cryptocurrency by crime syndicates and hackers. The ability to reliably tie cryptocurrency transactions to individuals could be a game changer for law enforcement.

Police chief Kim Aarenstrup was quoted by Berlingske as saying, The potential of this is groundbreaking. The investigation can now proceed from where it used to stop before . We are in dialogue with a number of other nations right now to develop additional methods and teach them how we do it here.

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Danish Firms Partner On Cryptocurrency Security For Banks - PYMNTS.com

Is there a correlation between the price movements of bitcoin and other cryptocurrencies and crypto assets?

The answer to that question varies quite a bit based on which asset and which time period you look at, according to a recent CoinDesk analysis of CryptoCompare data through February 2017.

In some cases, the answer is relatively simple. Cryptocurrencies have repeatedly entered periods where several have moved in tandem.

For example, alternative protocol assets rallied following the SEC's 10th March rejectionof a proposed bitcoin ETF, after suffering widespread losses roughly one month earlier.

Yet in other instances, bitcoin's losses have resulted in gains for alternative cryptographic assets.

One key factor analysts have cited as influencing these price relationships is major events in the cryptocurrency space, like the rise and fall of distributed organization The DAO or the SEC'sETF rejection.

Leading up to this event, bitcoin prices surpassed $1,300, reaching an all-time high, according to the CoinDesk Bitcoin Price Index (BPI). Following the ruling, bitcoin prices plunged nearly 30%, while other digital currencies experienced a rally that pushed some to fresh, all-time highs.

Ether, for example, surged more than 200% in the week or so after the SEC shot down the proposed fund, according to CoinMarketCap. Likewise, the price of monero rose more than 100% since the ruling at points, while ether classic also saw notable gains.

But how do they compare on a longer timeline? Let'sreview the findings from our data:

The most objective way to examine the price relationship that exists between bitcoin and other digital currencies is to examine the available data. Using this information, market observers can get a far better sense of exactly what these relationships look like.

For some currency pairs, looking at quarterly data is sufficient, as doing helps convey a strong sense of the relationship between the two digital assets in question.

BTC/LTC (litecoin) is agreat example, as price data reaching back to the final quarter of 2013 shows six quarters where the pair's correlation surpassed 0.7, and three quarters where it exceeded 0.8.

This strong, positive relationship makes sense, as litecoin is to some extent a 'spin-off' of bitcoin,using similar technologies and designs.

It's important to keep in mind that bitcoin and litecoin prices have not always had a strong relationship, as their correlation has at times broken down. ARK Invest's Chris Burniske has noted that leading up to the SEC's decision on the proposed Winklevoss ETF, the two digital currencies moved in different directions.

Another example of a currency pair with a relatively straightforward relationship is BTC/XRP, whose correlation remained below 0.2 during every quarter in 2015 and 2016.

When averaging all available price data, the currency pair's correlation falls to 0.02.

The two currencies are quite distinct, a situation noted by cryptocurrency fund manager Jacob Eliosoff, and this situation might help explain their weak price relationship. Bitcoin and litecoin have differing value propositions and target separate audiences from XRP.

Miguel Vias, head of XRP markets at Ripple, offered a different take on BTC and XRP's price relationship.

"I think that markets view XRP as a very stable digital asset, so they feel safe parking funds in XRP when they exit other assets. If someone wants to get out of BTC, but doesn't want to necessarily move into fiat, he or she moves the value into XRP," he said.

For other digital currencies, a deeper dive is needed to understand the situation.

While quarterly price data for BTC/ETH (ether) shows some modest correlations as high as 0.57, looking at seven-day averages paints a more vivid picture.

When viewed through this more short-term lens, correlations have reached as much as 0.98 during some periods. In the seven-day period 1st7th August, 2016, the BTC/ETH price relationship remained above 0.90.

However, the correlation between these digital currencies fell sharply at times, reaching as little as 0.04 during seven-day periods in August and October 2015.

Ether classic is another cryptocurrency that has had a varied relationship with bitcoin. The correlation between the two has fallen to as little as 0.004 and risen to as much as 0.96, according to CryptoCompare data ranging back to July 2016.

The BTC/ETC pair displayed a particularly strong relationship early this year, surpassing 0.90 during several seven-day periods in January. However, their correlation has repeatedly fallen to very low levels, declining below 0.1 on many occasions and reaching as little as 0.004 in January 2017.

The BTC/XMR pair has had a similar story to that of BTC/ETH and BTC/ETC, as its seven-day price correlation has approached zero and surpassed 0.9 repeatedly.

This weekly relationship became particularly strong earlier this year, surging to 0.94 in January. In contrast, the pair hit a patch in February 2016 where five straight seven-day sessions produced an average below 0.2.

These two digital currencies have largely different situations. While bitcoin was the first cryptocurrency to scale, monero has focused far more on ensuring the privacy of its users. While bitcoin was originally designed to offer users privacy in their transactions, its pseudonymous nature has made its users vulnerable to identification.

Monero, on the other hand, has done a far more effective job of providing user anonymity through ring signatures and stealth addresses.

As a result, this digital currency isbuilding widespread adoption on the darknet.

The digital currencies examined in this article have highly dynamic price relationships. Sometimes they move in tandem, while other times they move in opposite directions. In certain cases, their correlation is very low.

In certain instances, the markets develop clear trends where many cryptocurrencies move either higher or lower over specific periods of time. During others, these digital currencies may display little or no price correlation.

As the cryptocurrency space becomes more mature, however, the individual digital assets that compose this market may very well progress in terms of carving out their own individual niches, a development that could cause their price determinants to change over time.

Should these digital currencies successfully differentiate themselves in the eyes of traders, their correlations could deteriorate further.

Follow the leader image via Shutterstock

EthereumLitecoinPricesXRP

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Follow the Leader: Analyzing Cryptocurrency Price Correlations - CoinDesk