Daily Archives: July 21, 2017

If youve ever had a company or friend offer to pay you with Bitcoins or another type of digital money, youve encountered cryptocurrency, also called crypto-money or cryptoassets.

Cryptocurrency is a digital currency that is created through the use of encryption software. This approach is a solution to security and control issues that prevented a purely digital currency from being successfully developed in the past. If you hear someone talking about one of these currencies, its almost certainly in a cryptocurrency format. This type of digitally created and secured money is currently in a period of very cool experimentation, so lets take a look at how it work, why its popular, and where cryptocurrency is heading in the future.

How does a currency exist in a totally digital format? What is it based on? While the process varies a little between different cryptocurrencies, they all follow the same general system.

First, cryptocurrency chooses a base unit and how much that particular unit is worth when compared to other currencies (often, the U.S. dollar is used as a baseline). Some cryptocurrencies are more imaginative than others at this point. They try to represent debt registries, contracts, or the act of currency exchange itself. It can get a little weird, but ultimately the unitin some way relates to the value of other currency, as is true of all currencies in the world.

Units of cryptocurrency are then created, typically when a transaction occurs. The units are carefully formed and preserved through algorithmic encryption, then linked together in vast chains of data, where the currency can be tracked and exchanged.

However, at this point, cryptocurrency is still too vulnerable and too easy to fake. The currency units need to be timestamped and processed to make them more concrete and harder to copy. A third party developer can do this, but most cryptocurrencies prefer to crowdsource the process to those with the right hardware and software to mine the currency.

Mining uses algorithms to go through each transaction, encrypt the cryptocurrency, and add it to a digital ledger, essentially verifying it and cementing its position online. This process may also be referred to as consensus protocols orconsensus platforms, depending on the currency. This process is meant to make the currency impossible to duplicate, though whether its successful is up for some debate.

Some cryptocurrencies are highly centralized, with someone usually the organization that created the process/software making decisions about how much currency is created and how it is used. Other types are very decentralized, controlled only by how and where people are willing to use them.

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Everything You Need to Know About Cryptocurrency | Digital ...

Investopedia

New Virtual Reality Cryptocurrency Gets $2.1 in Funding Investopedia As the cryptocurrency world expands, it's difficult to say exactly how many other industries it will impact. Nonetheless, one industry that has already been affected by the expanding digital currency realm is gaming. As mining operations have ...

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New Virtual Reality Cryptocurrency Gets $2.1 in Funding - Investopedia

Photos, Stock exchange: CBS via Getty Images; Paper: AssalveGetty Images

In the coming months a startup based in Waterloo, Ontario, is set to kick off a grand monetary experiment, one that will put to the test a new model for business that could prove to be either the webs next great economic engine, or a multibillion-dollar bubble thats as combustible as the Hindenburg.

The concept at stake is cryptocurrency , a form of digital money that exists independent of traditional banks or governments. Over the past few months, the market for cryptocurrencies has rocketed to more than $100 billion (and fallen back to $60 billion) amid extreme enthusiasm and volatility. So-called token sales, or initial coin offerings , also known as ICOs , have raised hundreds of millions of dollars, creating substantial fortunes out of little more than ones, zeros, and pitches. The movements critics compare it to the tulip-bulb manias of centuries past and say it will end the same way.

Advocates, however, believe cryptocurrencies could represent an important way for tech companies to raise cash. Instead of users trading their time, attention, and energy for free services, while a few supermassive landlord corporations reap all the profits (hello, Facebook ( fb ) ), cryptocurrencies could enable participants to be remunerated for their contributions on the platforms, with yet-to-be-invented moneys. Imagine users getting paid by the like.

So far, while their nominal value has soared, cryptocurrencies have mostly been a vehicle for speculators . But in the coming months, for the first time, a mainstream company with an established user base will try its hand at launching a crypto token to its 15 million monthly active users, potentially multiplying by a factor of five overnight the number of people using digital currency, according to estimates by the Cambridge Center for Alternative Finance . The company is Kik, the maker of a chat app favored by American teens , which intends to mint tokens enabling users to transact through its network.

Kik will join more than a hundred early-stage projectswith names like Brave , Civic, and Tezosin hosting token sales in order to fund themselves . But Kik hopes to be among the first to get people to use the tokens for something other than trading, flipping, or speculating.

Ted Livingston, founder and CEO of Kik, had the idea for a cryptocurrency in the back of his mind in 2014 when he launched Kik Points, a video-game-like in-app virtual money. The company shuttered the pilot program last year, but Livingston was pleased with it: The points traded hands an average of 300,000 times per day, more than three times the average number of transactions per month on Bitcoins network during that time. Kiks customers mostly used the points to buy stickers and smileys, but the company intends its new Kin tokens, the batch of to-be-released computer coins, to enable users to do everything from tipping peers, to ordering pizza, to paying for premium content.

Kik plans to mint a total of 10 trillion Kin tokens, selling a trillion to the public, holding on to 3 trillion for itself, and setting aside 6 trillion for a nonprofit that will manage a rewards program for loyal users. Its a new way to compete, its a new way to monetize, and its potentially a new way to exit as well, Livingston says.

If past ICOs are any indication, Kiks will bring in a substantial sum no matter what. What industry watchers will be eyeing, however, is whether Kin will actually catch on, fueling a mini-economy within and outside the app. If it works, the experiment could signal to the world the viability of the much-hyped and, until now, mostly theoretical token-based business model.

Success will pave the way for other traditional companies to do it, says Jake Brukhman, cofounder of CoinFund, which advises companies, including Kik, on blockchain tech. Indeed, crypto enthusiasts have proposed companies such as Twitter ( twtr ) , Snap ( snap ) , and Reddit as leading candidates for eventual token sales.

Either that, or the movementwhich depends on widespread adoption to justify multibillion-dollar valuationscould implode and leave many aspiring entrepreneurs and investors in the dust. For the Internets next big thing, that would be a little more than Kin, and less than kind.

A version of this article appears in the Aug. 1, 2017 issue of Fortune.

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Cryptocurrency Gets Its Biggest Test Yet - Fortune

Investopedia

How Do You Get Rich Off of a New Cryptocurrency? Investopedia Cryptocurrencies have been the most exciting financial topic of 2017 for many investors, and with good reason. Bitcoin jumped in price, reaching highs of more than $3,000 earlier this year. Ethereum and Ripple, the second- and third-largest digital ... and more »

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How Do You Get Rich Off of a New Cryptocurrency? - Investopedia

Investopedia

Latest Cryptocurrency Hub: Kazakhstan? Investopedia The Kazakhstan government announced this week that its AIFC will partner with the external financial organizations to make for an accommodating regulatory climate to encourage cryptocurrency, blockchain, and fintech companies to settle in the area.

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Latest Cryptocurrency Hub: Kazakhstan? - Investopedia

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One of the most popular cryptocurrencies in the world is drawing increased attention from hackers, or at least that has been the case this week. For the second time in a span of just three days, hackers have been able to make off with millions of dollars worth of Ethereum, leaving vigilante white hat hackers scrambling to prevent further theft.

In this latest robbery, the hacking group (or individual hacker, we don't know yet) exploited a vulnerability in Parity, a digital wallet service where cryptocurrency miners can store their Ethereum. In doing so, the hackers were able to swipe over 153,000 Ether worth approximately $34 million from three separate multi-signature Ethereum wallets, according to the most recent estimates.

Following the latest heist, Parity founder Gavin Wood issued a critical security notice to users.

"A vulnerability in Parity Wallet's variant of the standard multi-sig contract has been found," Wood wrote. He goes on to advise users to "immediately move assets contained in the multi-sig wallet to a secure address."

In the meantime, white hat hackers have been able to siphon some 377,015 Ether worth more than $85 million to prevent further loss.

"White hat group(s) were made aware of a vulnerability in a specific version of a commonly used multi-sig contract. This vulnerability was trivial to execute, so they took the necessary action to drain every vulnerable multi-sig they could find as quickly as possible," the White Hat Group stated on Reddit.

Those funds will be issued back to their owners after the group is able to create another multi-sig for each individual with the same settings as before, minus the vulnerability that made theft possible in the first place.

This is not the only black eye for cryptocurrencies, or even the only theft this week. Back on Monday, hackers made off with an estimated $10.3 million in Ethereum currency from CoinDash. In that instance, it is believed the culprits simply replaced the legitimate Ethereum wallet address listed on CoinDesk with one that belonged to them.

There are several other examples of thieves stealing large amounts of cryptocurrencies, as Gizmodo points out. Back in June of last year, hackers stole $53 million cryptocurrency from venture capital fund Decentralized Autonomous Organization. And then there was the situation in which $450 million of Bitcoin vanished from trading hub Mt. Gox a few years ago.

Despite the risks, mining for cryptocurrency continues be popular, much to the detriment of PC gaming. If and when things ever settle down, it will likely be due to plummeting values rather than the fear of theft.

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Hackers steal $34 million in second Ethereum cryptocurrency theft this week - PC Gamer