The United States’ trouble with Russian election influence via fake accounts on social media is an easy-to-understand example of a pseudo-Sybil attack. Although the fake accounts and bots didn’t hack into Facebook or Twitter, they still used multiple identities to influence the entire network. Because Sybil attacks are so subversive and easy to conceal, it can be difficult to tell when a single entity controls many accounts. Indeed, Facebook didn’t even realize the extent of fake accounts on their platform until internal investigations months after much of the damage was already done.

The name “Sybil attack” comes from a book, Sybil, about a woman with dissociative identity disorder. Microsoft researchers first investigated and wrote about the implications of Sybil attacks on peer networks in the early 2000s. In this brief guide, we’ll look at the implications of Sybil attacks and how networks can prevent such attacks. If you’re considering using a blockchain platform, it’s important to understand their approach to Sybil threats and undue influence through identity creation on the network.

What Is a Sybil Attack in Crypto: Disproportionate Control

A Sybil attack grants undue influence to a single entity simply because that entity controls many pseudonyms. We hear all the time about fake Reddit accounts that upvote posts on behalf of a given company or cause. Amazon sellers can buy fake reviews from accounts around the world. These pseudonyms are hard to detect and remove.

While election meddling on Facebook and fake reviews on Amazon are bad enough, a successful Sybil attack against a blockchain or file transfer network would allow bad actors disproportionate control over the network. If these fake identities receive recognition from the network, they might be able to vote on behalf of various proposals or interrupt the flow of information across the network.

Sybil nodes might also surround and try to influence the information reaching other nodes on the network, gradually influencing the ledger or database through censorship.

How to Prevent a Sybil Attack

Blockchains and peer networks have various options when it comes to preventing Sybil attacks. Each option comes with its own benefits and drawbacks. Hybrid approaches to Sybil prevention, incorporating each of three key elements, are common to address concerns.

1. Cost to Create an Identity

The first way to mitigate a Sybil attack is to raise the cost of creating a new identity. Since identities can map to entities on a many-to-one ratio, we need a way to make it resource-intensive to create too many identities. The challenge here, though, is there are many legitimate reasons why you might want to operate multiple identities. Redundancy, resource sharing, reliability, and anonymity are all good reasons to create multiple identities on a peer network.

The ideal cost of identity creation shouldn’t restrict people from joining the network or even creating a handful of identities. Instead, it should be just enough to make it unfeasible to create many identities in a short period of time.

Blockchains use the cost of creation as a Sybil protection feature through mining. In proof of work algorithms, in order to create a new identity on the mining network, you’ll need another computer with processing power to contribute. This attaches a significant cost to adding hundreds or thousands of pseudonymous nodes that might be able to influence the adoption of a fork or other blockchain vote.

The same goes for proof of stake, where purchasing computing power is replaced by staking currency. There’s a cost to join the network and have a vote. That resource requirement limits the number of accounts a bad actor can create.

2. Chain of Trust

A second way to fight Sybil attacks is to require some type of trust before allowing a new identity to join the network. This usually takes the form of a reputation system, where only established, long-term users can invite or vouch for new entrants to the network. Other variations rely on a probationary system where new accounts are possible, but they must remain active and unique for a certain period before they receive voting privileges.

The chain of trust also extends to outright identity verification. Some peer networks require you to submit identification before joining. Others allow you to join if you can answer a two-factor authenticated security code. Still others restrict account creation based on IP address.

All of these require some level of identity verification or trust building before an account receives voting privileges, making the creation of pseudonyms more challenging.

3. Unequal Reputation

The final way to mitigate the threat of Sybil attacks is by weighting user power based on reputation. Users who have been around the longest and proven themselves receive more voting power on communal decisions. This makes the system a meritocracy instead of a pure democracy, and it lowers the power of new users. As a result, many new or less-active accounts don’t grant a Sybil attacker any advantage against reputable older, more active accounts.

Sybil Attacks Are Hard, but Not Impossible, to Prevent

Sybil attacks involve false identities and hidden motives. As such, they can be difficult to detect and prevent until they’re already ongoing and apparent. Still, networks that implement a combination of these prevention measures see increased protection from Sybil attacks, mitigating the potential severity of the attack if and when it comes.

The post What’s a Sybil Attack & How Do Blockchains Prevent Them? appeared first on CoinCentral.

1. Decentralized exchanges are peer-to-peer hubs where users can directly trade crypto without intermediaries like centralized exchanges or other financial gatekeepers.
2. It’s a booming sector– The top 10 centralized exchanges have nearly $9 billion in Total Value Locked, with leader Uniswap facilitating between $1.5 to $3.5 billion per day.
3. DEXs are a living, breathing example of smart contracts and liquidity pools at work. The technology is fascinating– DEX smart contracts set prices algorithmically; users can deposit funds and earn rewards in liquidity pools, which makes trading possible.

DEXes offer significant advantages over their centralized counterparts, including wider varieties of tokens and trading pairs, the mandatory use of non-custodial wallets, utility in places with poor banking infrastructure, and anonymity– perhaps their most controversial feature.

Decentralized exchanges also come with a basket of drawbacks and risks, including smart contract vulnerabilities, a higher risk of scams due to the wider availability of unvetted tokens, and sometimes even extremely high costs linked to high gas fees, such as those seen on the Ethereum network.

The following DEX guide explores everything you should know about decentralized exchanges.

Custodial vs. Non-Custodial, Centralized vs. Decentralized

In order to understand DEXs, it’s important to realize that cryptocurrency exchanges exist on two basic axes: custody and centralization.

Custody refers to who holds the keys to accounts on the exchange. When you buy a Bitcoin on Coinbase, for example, it shows up in your Coinbase account, but you don’t actually own and control that Bitcoin yet. You need to request a transfer off Coinbase to an external wallet address that you control before the Bitcoin is really yours. If Coinbase is attacked, slowed down, or has technical issues, you don’t have recourse to secure your Bitcoin. This has been a problem so often with many exchanges that “funds are safe” has become a meme in the community as exchange operators attempt to reassure users in the wake of system problems.

A non-custodial exchange leaves all funds in the private wallets of its users. Users can then submit and confirm trades on their own from their personal wallets, essentially using the exchange as a matching service. An in-between solution involves users submitting funds to open-source, verified smart contracts that execute when a match is made and can be canceled at any time. This has the advantage of security and automation, but there is a period of time when funds aren’t in users’ wallets. If there’s an issue with the contract, the funds could disappear.

Centralization refers to where the order matching, routing, and execution take place. In a centralized exchange, there’s a proprietary order book that reviews all incoming orders and creates matches between users. The exchange software and servers then execute the transaction.

Decentralized exchanges operate on a network of computers. Some function directly on-chain through the use of smart contracts. Others rely on second-layer networks of trusted nodes, known as relayers, to find and make order matches.

Decentralized exchanges typically trade at about 10% to 20% of centralized exchange volume, up from the meager 1% in 2018, when we first wrote this article. Still, the vast majority of crypto trading happens through centralized institutions. To some, this is an enormous shortcoming of the cryptocurrency space, building a decentralized future atop centralized exchange providers.

For others, it seems obvious that an exchange should be centralized. In fact, many have argued that “decentralized exchange” is an oxymoron. After all, an exchange is a gathering point where people congregate to trade. Of course, it should be a single entity to quickly facilitate transactions.

As with most debates, both sides have merit in their arguments. The challenges of building a great non-custodial DEX are highly nuanced, but the benefits are also difficult to deny.

A Deeper Look at the Decentralized Exchange Benefits

Trading on a DEX comes with many benefits that make it attractive to cryptocurrency users. Most importantly, DEXs disintermediate the exchange ecosystem, removing middlemen and allowing free, direct trade between parties. This fits with the decentralizing philosophy and mission of crypto generally. That alone makes DEXs a rallying cry for the decentralization-at-any-cost, libertarian diehards, of which the crypto community has a fair few.

But there are other benefits to DEXs that the average user might also find attractive.

1. Decentralized Exchange Anonymity Trading

Since DEXs in their purest form use only blockchain information, all you need to share in order to use a DEX is a public address. Most centralized exchanges require a complete signup process with name, email, and even bank account information. Even anonymous crypto-to-crypto exchanges still require location information and other personal details to comply with government regulations and restrictions.

That said, if DEXs come to greater prominence, they’ll likely meet up against regulators. Most DEX creators plan to say they’re only releasing open source software and are not liable for what the community does with that software, thus avoiding the KYC and AML issues. However, it remains to be seen if that argument holds up legally long-term, especially if damages result from a poorly written smart contract or security flaw.

2. DEX Control of Funds

DEXs are generally, but not necessarily, non-custodial. As a result, users keep control of their funds throughout the entire transfer process until the moment of exchange, when a smart contract executes the signed trade. No more “funds are safu” messages. Keeping your funds safe is your own responsibility of a DEX.

3. Hacks: DEX vs CEX

Since a DEX exists across a network of computers, it becomes much more complicated to attack. There’s no single point of entry or failure. This makes DEXs exponentially more secure on this front. 

However, DEXes can still be hacked and funds can be put in danger through smart contract bugs and other exploits.

4. Downtime

Because there’s no single point of failure in a distributed exchange, there’s less chance of DEX going down. Rollouts of updates happen on a node-by-node basis. Even if individual nodes have to go down due to maintenance or an attack, the remaining nodes can still operate the exchange network.

Drawbacks of DEXs

DEXs are inherently more complicated than their centralized counterparts. This leads to challenges in implementation and usability that major DEXs have yet to fully address.

1. Usability

The first and biggest challenge is user-friendliness. Creating an account on a major centralized exchange is a fairly straightforward process, and it functions much like banking and brokerage applications that users are familiar with. On the other hand, using a DEX requires connecting to a DApp or even installing a standalone DEX client.

At its simplest, you may only need to set up a MetaMask wallet, fund that wallet, then connect with an Ethereum-based DEX DApp. At its most complicated, you might have to set up an independent node and stay online for long periods of time to sign transactions.

2. Simplified Trading Tools

Centralized exchanges offer advanced tools like options and margin trading. These simply aren’t possible for today’s DEXs. Trading on a DEX typically includes buy or sell orders only.

3. Low Liquidity

DEXs represent about one percent of the cryptocurrency market’s trading volume. As a result, only low volume trading of popular coins is possible. There’s not enough liquidity to allow for high-volume trading, and there are no centralized institutions providing market-maker services.

4. Latency

When you make a trade on an exchange, you want as close to instant execution as possible. Otherwise, you could miss out on a price change. Unfortunately, DEXs so far have shown slow cancelation and slow order processing times, since all requests have to propagate across the decentralized network. As a result, price slipping–price changes between order time and execution time–is common.

5. Front-running

Because you must broadcast your intentions to the entire network in order to execute a trade, it’s possible for bad actors on the network with fast connections to jump ahead of you in line and buy up coins at a lower price in order to sell them back to you. Known as front-running, this practice undermines the fairness of the exchange. There’s no real way to make sure miners or relayers on a decentralized exchange can’t jump in line for orders. Currently, DEX creators are working on potential solutions that involve signatures or collateral, but no concrete solution exists thus far.

6. Real Decentralization?

Some DEXs still require you to hand over custody of your coins. Others involve small, centralized node networks of relayers. Still, others run an off-chain order book that must be maintained somehow by third-party entities. These caveats all subvert the exchanges’ claims of decentralization.

Top DEX Projects

Ethereum-based DEXes like UniSwap lead the pack, but several Ethereum-based  Layer-2 DEXes have emerged with lower network fees, as well as Layer-1 competitors like Solana.

Final Thoughts: What’s the Future of Decentralized Exchanges

Decentralized exchanges are well-positioned for popularity and growth in the near future due to a few factors:

1. 2022 saw several custody-based companies like FTX, Celsius, and Voyager go bankrupt, locking up billions of user funds in the process.  Not a good look for custody-based services.
2. The SEC has been gunning after centralized exchanges in 2023: it charged popular exchange Bittrex with operating as an unregistered national securities exchange, broker, and clearing agent, with the exchange filing bankruptcy in May.  It has also been going after Kraken and Binance with similar claims.
3. DEX trial and error continues to gather favorable data.

The post What Is a DEX? Decentralized Exchanges, Explained appeared first on CoinCentral.

The cool thing about CryptoKitties is they’re a demonstration. Of course, they’re fun and cute on their own. However, they also show the potential of blockchain for trading and securing digital assets. This was the driving principle behind the creation of CryptoKitties. In the white paper, the founders discuss the narrow focus of most blockchain projects on payments. Ultimately, they hoped CryptoKitties would help people expand their vision of what a blockchain could do.

Not a Currency, But an Asset

Most blockchain projects launch with a cryptocurrency. These are tradable tokens that represent some utility value in a project or even a share in a company. Token offerings have become an incredibly successful fundraising device for new startups. In some cases, too successful as projects with minimal expertise or roadmap can raise millions of dollars.

CryptoKitties are not a currency. Instead, they’re blockchain assets. They’re structured similarly to most other tokens. However, they have one major difference. Each CryptoKitty is unique, and they’re not meant to be fungible. Fungibility is key for a currency. It means that a dollar is a dollar, no matter where you got it, what year it was minted, or where it has been before you received it. They have value because we agree on their value.

Non-fungible tokens rely on their uniqueness and scarcity to create value. Each CryptoKitty is an ERC-721 token with unique features. These unique features are written into code as the CryptoKitty’s phenotype and genotype. In other words, the CryptoKitty’s genetic information that determines its appearance and other characteristics is written directly into the code of the ERC-721 token.

The phenotype and genotype combinations mean that there are four billion possible CryptoKitties, making it likely that the CryptoKitty you own is unique in the world.

Built on Ethereum

The game uses the Ethereum network rather than creating its own blockchain. Smart contracts administer every aspect of CryptoKitty creation and trading. As a result, there’s no central authority that can change, remove, or otherwise alter a CryptoKitty once it has been created. The person who owns that ERC-721 token owns the kitty, and can hold it, allow it to mate, or trade it at any time.

Since it’s built on Ethereum, CryptoKitties uses Ether as payment for all transactions. It’s not yet possible to buy CryptoKitties with fiat currency. In the future, the development team hopes to offer options for fiat payment.

Owning and trading CryptoKitties also requires you use a browser integration for your Ethereum wallet. MetaMask is the easiest option to do this. It is possible to write code that communicates directly with the CryptoKitty smart contract. However, to use the online user interface and view your kitties, you’ll need to install MetaMask and keep the CryptoKitty tokens in that wallet.

Where New Kitties Come From

The genesis cat was born and adopted on December 2, 2017. Since then, a new cat has been born every 15 minutes. This will continue until November 2018, at which point no new generation zero CryptoKitties will exist. According to the white pa-purr (yes, that’s the real title of the document), only 50,000 gen-0 kitties will ever exist.

Outside of the generation zero cats, CryptoKitties can also breed with each other. Any kitty can be a sire or a dame for a breeding pair. The owner of the dame will receive the newly-born CryptoKitty. That kitty will have the genetic cattributes (yes, that’s also not a typo) of its parents, but it will also have random variations in some cattributes as well. Those random mutations might be rarer than its parent cattributes. In very rare cases, a “fancy cat” with custom artwork might be born.

There’s no theoretical limit to how many CryptoKitties can exist. As long as you’re willing to pay the transaction fees for breeding two cats, you can create a new one.

A market for breeding rare cattributes has emerged over time. If you’d like to breed your CryptoKitty with another person’s kitty, you’ll likely need to pay a siring fee to that owner. There’s also now a market for “virgin” kitties that have never been bred before, especially gen-0 virgins.

Blockchain Art?

This explosion in digital collectibles and unique assets raises the question: Is this art?

Cryptokitties are beautiful and cute. Nevertheless, they also resemble art in that they’re unique and valuable because they’re scarce. This is especially true in the case of fancy cats that come with custom artwork and are even rarer.

Blockchain art and digital scarcity is an emerging trend. It’s possible to imagine artists using the blockchain to secure the authenticity and provenance of their pieces. CryptoKitties just happens to be blockchain-native. However, that doesn’t mean it’s not art.

Ultimately, the creators of CryptoKitties call it a game, and they don’t seem interested in the artistic aspect. Instead, the company behind the project feels it’s a fun way to help people learn about blockchain. Just the same way Minesweeper introduced people to computers, Flash games showed people the internet, Farmville brought people to social media, and Angry Birds taught people about smartphones.

Technical Stuff: The CryptoKitty Smart Contract

CryptoKitties relies on a modular structure of a core contract plus other smart contract libraries. The core contract tracks ownership and ownership transfer for all kitties. It also checks approval for siring new CryptoKitties. Beyond that, all other functionality comes from pointers in the main contract that call other contracts in the library.

Breeding, genetics, and auctions take place in other contracts. As previously mentioned, all functionality is available to anyone by interacting directly with the smart contracts on the Ethereum blockchain. However, for most users, it’s easiest to use MetaMask and CryptoKitties’ intuitive online user interface.

How to Buy CryptoKitties

The easiest way to get a CryptoKitty is to purchase one at auction on the website. Since kitties can have unique characteristics, each will sell for a different price.

You’ll need Ether before you can buy a CryptoKitty. That’s easy to purchase for fiat through most major exchanges. Bitfinex, Coinbase, Kraken, GDAX, or Gemini will all take fiat.

Next, get the MetaMask browser extension and set up a MetaMask wallet. Transfer your ETH to your MetaMask wallet. Then, follow the prompts on the CryptoKitties website to sign up and bid for a kitty.

How to Store CryptoKitties

You can keep your CryptoKitties in your MetaMask wallet if you want to be able to view and trade them in the browser.

If you’d like to put your kitties in cold storage, a Ledger Nano S can store ERC-721 tokens.

Team: Axiom Zen

The team behind CryptoKitties is Axiom Zen. They create all kinds of projects on the cutting edge of technology like virtual reality and blockchain. CryptoKitties is only one of their ventures.

The funding stream for CryptoKitties is unique in the blockchain space. Axiom Zen is selling the generation-zero kitties at auction and keeping the proceeds. However, they also make a small percentage (3.75%) on every transaction that takes place in the official marketplace. After this year, all generation-zero kitties will be gone and ongoing revenue will come from transactions in the marketplace.

That doesn’t mean that using the marketplace is required. You can negotiate and trade CryptoKitties outside the official marketplace without paying Axiom Zen a cent. The auction smart contract is merely a useful and trusted option to transact.

Timeline & Roadmap

In the first week after its launch in December 2017, the platform had over 60k users, 100k cats, and $5 million in sales. That week, CryptoKitties accounted for 25% of Ethereum network traffic.

The following week, it grew to 150k users and over $15 million in sales.

In 2018, a CryptoKitties mobile app will launch with some of the functionality of the full web version. The project also aims to accept fiat currencies this year. By the end of 2018, all generation-zero cats will have been born.

Final Thoughts: CryptoKitties as an Early NFT Game

Whether you think CryptoKitties is a fad, the fact remains it has been effective at introducing people to blockchain and widening the possibilities of what blockchain could be used for beyond currency. As one of the most successful blockchain projects in terms of news coverage and mass adoption, CryptoKitties has played an important role in the history of blockchain. That alone should make CryptoKitties a valuable collector’s item many years from now, even if the market for such collectibles dies down over the coming years.

The post What is CryptoKitties? A Beginner’s Guide on the Blockchain Collectible Cats appeared first on CoinCentral.

Most of us have heard about digital cash at this point. The rise of Bitcoin has made cryptocurrency mainstream, with Bloomberg and CNBC reporting regularly on the cryptocurrency markets and the prices of these digital coins. However, currency is only one application of the underlying blockchain technology. The most exciting opportunities in blockchain come when you use non-fungible tokens to certify and secure uniqueness and identity. What are non-fungible tokens? In this complete guide, we’ll take a deep dive into the world of non-fungibility, and what it means to create unique digital assets on the blockchain.

NFTs have applications everywhere from video games to fine art to movie tickets. They could be the backbone of a new blockchain-powered digital economy. Alongside their fungible, cash-like counterparts, non-fungible tokens open the door to the digitization of assets and data. The result is exciting new markets could open up for digital (and real-world) goods we can’t even imagine yet.

A Complete Guide to Non-Fungible Tokens (NFTs): A Primer on Fungibility

Before we get into non-fungible tokens (NFTs), we need to address the elephant in the room. We need a good definition of fungibility before we can talk about something that’s not fungible. In fact, if you’ve ever used money before, you intuitively know what fungibility is, you just may not know the vocabulary word used to describe it.

Fungibility refers to a currency’s ability to maintain a standard value and uniform acceptance. It generally means that a currency’s history doesn’t affect its value and each piece of that currency is equal in value to every other piece. The $20 bill in your pocket is just as valuable as the $20 bill in mine. If we take them to the store, the shop owner will accept them equally, even if yours was printed in 2018 and mine in 1980. Even if your $20 bill was used in a drug deal before you received it or came from Satan himself, the bill is still valuable at the store. That’s the power of fungibility.

A currency without fungibility is unstable and likely to collapse. Imagine if you had to investigate the history of every dollar bill before you accepted it. Or, consider a world where some $20 bills are more valuable than others. That would be insanity and economically unfeasible. Fungibility is essential to any currency, be it the dollar or Bitcoin.

Why Would I Use a Non-Fungible Token (NFT)?

Non-fungible tokens are blockchain assets that are designed to not be equal. You might think that doesn’t make much sense, and if we were talking about currencies you’d be right. However, blockchain tokens can represent more than just currency. In fact, the possibilities of blockchain assets are nearly endless.

NFTs work essentially as a database entry for any type of good. Perhaps the easiest example is the most popular NFT in blockchain history, CryptoKitties. There are thousands of CryptoKitties in existence, but they are not created equal. Each is unique, has its own name, eye color, fur color, fur pattern, facial expression, and special features. When you buy a CryptoKitty, you are gaining ownership of a non-fungible token that corresponds with that kitty. Some kitties are more valuable than others, and you can buy and sell your CryptoKitty NFTs for varying amounts of fungible tokens like Ether, depending on the rarity of your NFT.

In order to understand the power of non-fungible tokens for blockchain-based asset and identity security, it’s helpful to think through a few more examples of how NFTs work.

1. Collectibles

We’ve already looked at one example of collectibles secured by an NFT, CryptoKitties. But the collectibles market extends in all sorts of directions. One major avenue is art collecting. Paintings and sculptures could be verified and authenticated by experts before creating a non-fungible token for a given piece of art. When the owner wants to sell the piece of art, they can simply list the non-fungible token on an auction as proof that the asset is real and they’re the true owner.

This kind of certification digitizes the process of provenance and prevents forgery and fraud in the art world because the ownership of art assets exists on the blockchain. The same could be done for baseball cards, stamps, jewelry, autographed guitars, or any collectible item you could imagine. The security of the blockchain guarantees the legitimacy of the transaction.

2. Online Gaming

NFTs are revolutionizing the world of gaming. Often, characters in games acquire tradeable items like weapons, clothing, and even property. Creating non-fungible tokens for these assets makes them tradeable for in-game tokens or even real-world cash. As a result, entire online digital economies for fictionalized goods have appeared. Decentraland is the project closest to the cutting edge of in-game blockchain economies, and they’re testing a complete game built around blockchain, AI, and 3D interaction with a digital world.

Traditional multiplayer video games and even casinos are getting in on the non-fungible token craze as well. They realize that blockchain tokens allow players (and companies) to extract real-world value from playing an online game. That makes for powerful economics as the market for gaming content continues to expand.

3. Tickets

If I have a ticket to see Barcelona play Manchester United and you have a ticket to your local high school basketball game, those are both similar items, but they have wildly different values. Both will grant admission to an event at a certain time and place, but they are hardly transferable. This is the essence of an NFT. It standardizes ownership of a certain category of asset, but the assets within that category can have very different market values. Ticket sales are a great opportunity for NFTs to revolutionize an industry.

4. Identity & Certification

Things start to get really interesting when we consider identity and the role NFTs can play in verifying personhood. You could receive a nontradable digital token as your birth certificate, as your passport, and as your driver’s license. Of course, you wouldn’t be able to trade these tokens, but they would be able to interact and verify with the proper authorities. You could also share this information voluntarily with employers, doctors, or anyone else who needs your personal info.

Maybe you could receive your university diploma as a digital token. Alternatively, you could ask to see your doctor’s verified NFT that they completed medical school, exams, and residency. In addition, data that companies would normally collect about you, like your browsing history or shopping preferences, could be tokenized and then kept private or sold at auction to make money from the personal economic data you create.

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ERC-721: The Standard for Uniqueness

By far, the most popular type of NFT is based on Ethereum’s ERC-721 token standard. The standard codifies the creation of a non-fungible token and guides developers through the process of setting up the smart contract that powers it. A standard is important because it means the tokens play nice with one another and with the Ethereum network. This is especially important when it comes to transfers and creating marketplaces for buying, selling, and trading NFTs. The creation of ERC-721 tokens has exploded over the past year with the huge wave of digital collectibles and game-based assets coming online.

ERC-721 is the most popular, but it’s not the only type of NFT. Counterparty also allows for the creation of non-fungible tokens but powered by the Bitcoin blockchain source code instead of Ethereum. There are other smaller projects and related services that work alongside Ethereum or Counterparty to create unique assets in specific niches, like Codex for fine art or Bitcrystals for gaming.

How to Trade NFTs & Where to Store NFTs

Buying and owning NFTs isn’t like typical cryptocurrency trading. In order to purchase a digital collectible or tokenized asset, you’ll likely need a digital currency like Ether, although individual sellers may accept cash or trade.

You’ll also need someone to transact with. Since each token is unique, there aren’t exchanges for NFTs. Instead, there are marketplaces that connect individual buyers with individual sellers. You’ll have to work out a price with the person selling the token. Then, you can purchase it directly from them.

If you buy an ERC-721 token it will go to your Ethereum wallet address just like an ERC-20 token. However, viewing it in a wallet client won’t tell you anything about its value, only that you hold it. Its value comes from whatever system the token is a part of. So, a CryptoKitty NFT is linked to a drawing of a kitty with certain attributes, and that kitty can be listed on the open market should you choose to sell.

The Non-Fungible Token Future

Once you start thinking about the possibilities of non-fungible assets, it’s difficult to find a theoretical limit to the things NFTs could digitize. It’s more than crypto art tokens– NFTs could represent your identity, qualifications, real-world property, and all sorts of digital collectibles, all existing on the blockchain. These tokens are capable of being stored, showed, shared, or sold. 

NFTs make it possible to transact and do instant business with anyone in the world, and companies can manage entire inventories using digital tokens. NFTs are the foundation for the future economy given a few years and a lot of work developing the ecosystem.

The post What Are NFTs? Non-Fungible Tokens, Explained appeared first on CoinCentral.

Things move quickly in the world of crypto. Just as a coin can climb the charts in a matter of hours or days, so too can exchanges. Take Binance, for example. It has quickly become the most widely used exchange in the world over the course of less than a year. With all the changes and confusion, it can be tough to keep track of the best cryptocurrency exchanges. For those new to the space, finding an exchange you like and trust can also be a challenge with all the options. This guide lays out the key features of the top cryptocurrency exchanges in 2018.

We have to set constraints on this guide somehow, otherwise it would be too long to be useful. That said, for this guide we’ll be focusing on the top cryptocurrency exchanges that serve U.S. citizens.

Without further ado, let’s dive in.

Fiat Exchanges (USD)

The first thing you’ll need to do if you’re new to investing or looking to invest more money in crypto is convert your fiat currency to crypto. For U.S. investors, that means depositing USD with an exchange in order to get BTC or ETH.

We call the exchanges that accept fiat currencies “fiat gateways.” Since they deal in USD, they’re subject to a lot of regulations and they have to meet reporting requirements from state and federal agencies. This makes fiat exchanges more difficult to set up than crypto-to-crypto exchanges.

It also means that fiat exchanges usually have limited trading pairs, since those trading pairs are regulated. As such, if you want to buy a niche altcoin, you’ll usually have to purchase ETH or BTC at a fiat exchange and then transfer those funds to a crypto-to-crypto exchange in order to buy the token you want.

The top cryptocurrency exchanges for USD deposits are below.

Coinbase

One of the most popular and well-known options for USD transactions. Coinbase is headquartered in San Francisco and has been in operation since 2011. They’re generally considered secure and boast over 13 million users. However, they’re known for having some of the highest fees of any fiat gateway.

CoinMama

Since its founding in 2013, CoinMama led the way as the site where you could purchase crypto with a credit or debit card. This makes it super easy to use. Unlike other exchanges, CoinMama is a buy-only marketplace that allows you to immediately transfer funds to other wallets upon purchase. They also have relatively high fees, but the simple experience makes it easy to use.

GDAX

GDAX is Coinbase’s older brother, run by the same company. We say older brother because GDAX’s interface and functionality attract more advanced investors than Coinbase’s beginner-friendly interface. Many U.S.-based traders who are serious investors gravitate toward GDAX.

Kraken

Kraken came on the scene around the same time as Coinbase in 2011. It’s also based in San Francisco, so they’re rivals. Users seem highly divided on Kraken with some praising the smooth experience on the platform while many others decry its customer service and buggy features.

CEX.io

CEX.io is a London-based exchange that’s been in operation since 2013. They’ve received a fairly good reputation over the years for being user-friendly and well-designed. Recently, however, there have been customer service issues, so proceed with caution.

LocalBitcoins

LocalBitcoins isn’t an exchange so much as it’s a matching site for people who want to buy and sell crypto in the real world. You can then meet up in person or trade online via a myriad of payment methods. As long as you do your due diligence on the person you’re trading with, LocalBitcoins is a great way to get into crypto.

BitStamp

BitStamp is one of the most reliable exchanges with some of the lowest transaction fees. Based out of Luxembourg, it has been around since 2011.

Gemini

Gemini distinguished itself with its customer support that’s well above industry average. It’s a New York-based exchange, founded in 2015 by the Winklevoss twins. They don’t offer many cryptocurrencies and deposits are limited to bank transfers, but Gemini is one of the best exchanges out there for beginners.

BitFlyer

BitFlyer is new to the U.S. but not new to the world of cryptocurrency trading. It’s one of the largest Bitcoin exchanges in the world. They’re not yet licensed in all 50 states, but they are operating in a majority of them.

BitQuick

BitQuick is different from most exchanges in that you can physically deposit cash to a bank account in order to fund your orders. This non-traditional structure makes it a little riskier to do business with (since there are no chargeback options), but BitQuick generally has a good reputation in the community.

Paxful

Paxful works in a similar way to LocalBitcoins, creating a marketplace where buyers and sellers can meet up and agree on terms. The exchange launched in 2015 and is based in Delaware. The fees for transactions, however, can be high.

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Crypto-to-Crypto Exchanges

Once you’ve traded your crypto for fiat, you’ll want to move your newly acquired funds to an exchange with more options. Fiat exchanges don’t usually carry niche currencies, so in order to get those, you’ll use a crypto-to-crypto exchange. Here are the best ones:

Binance

The speed at which Binance has become the top crypto exchange in the world is staggering. In a few short months, it has dominated the market. For good reason, too. It offers a lot of features, trading pairs, security, and liquidity along with low fees. Its Binance Coin also incentivizes trading and lowers fees.

Bittrex

Bittrex is based in Seattle and they’ve gained a reputation for wanting to strictly follow U.S. regulations. They’re a safe, well-established option for trading with good customer support.

Cryptopia

Cryptopia is known as an exchange for trading niche or less popular altcoins. They have low fees and good customer support. However, they don’t accept Ethereum and the small nature of the exchange means low volume for trading.

KuCoin

KuCoin is a Hong Kong based crypto exchange. The unique part of their approach is they redistribute the profits from the operation of the exchange through their native currency, KuCoin Shares.

Poloniex

Poloniex was among the top cryptocurrency exchanges in the world. However, its popularity has waned in the face of new competitors, customer support issues, and problems with withdrawals.

Conclusion

Those are the top cryptocurrency exchanges for U.S. investors in 2018. If you find one that strikes your fancy, click the link to learn more in our comprehensive exchange reviews. Then, signing up at each exchange’s website is usually straightforward. If you’re new to crypto investing, be sure to read up on best practices for keeping your crypto secure like using two-factor authentication and moving your coins to a private wallet once you’ve purchased them.

The post Top Cryptocurrency Exchanges in 2020 appeared first on CoinCentral.

If you’re interested in the blockchain space, whether as an investor, businessperson, or developer, one thing you can’t avoid is white papers. Every week, there is a new blockchain or cryptocurrency white paper touting new technologies that will “revolutionize” the industry. In addition, many of the major projects in the industry, like Bitcoin and Ethereum, began with white papers.

As a result, white papers have come to be known as an essential part of creating a new blockchain project or cryptocurrency. Investors, businesspeople, and developers expect to see a document that explains what problem the project solves and how it does so.

Consequently, learning how to read a white paper is a critical task for anyone getting involved in crypto. As most investors and observers in the industry know, there are quite a few scams in the space. Moreover, many projects sound good, with the right buzzwords and marketing speak, but they’re not backed up by any follow-through, and they quickly fizzle out. In this article, we’ll take a look at how to spot a good white paper with a valid idea and technical chops to actually execute on the idea.

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Disclaimer

I know every blog article out there says, “This isn’t investment advice.” But this one really isn’t investment advice. This is a beginner’s guide to basic things to look for in a white paper if you’re interested in a project. Yes, interested might mean investing, but it also might mean contributing to the open source code or helping with the marketing or participating in the community. It also might just mean lurking and being interested from afar. That’s totally cool.

I decided to add this disclaimer after I got a snarky email from a reader saying my white papers 101 guide didn’t include enough information on go-to-market strategy and monetization of ideas. I appreciate the feedback and realize the original version of the article didn’t make it clear enough that reading a white paper isn’t exclusively the domain of investors. Anyone can read the documentation for any project they’re interested in. Not every project is out to make millions, and not even every project has an ICO! There are a lot of great ways to get involved in not-for-profit or open source projects, and those have white papers that you’ll want to read, too.

Introduction to White Papers

White papers are documents that explore a use case for a product or service. While most blockchain investors think of cryptocurrency white papers, they have a long history in technology and business generally.

Moreover, they’re not limited to technical applications, and there really aren’t any rules for what constitutes a white paper. Anyone can publish one. Ultimately, they’ve become as much about marketing as they are about explaining a problem and a solution. Savvy companies use white papers to establish themselves as experts in a domain, in the hopes that competitors in the industry will reference their “research.” However, white papers have no peer review and no limitations. It’s helpful to think of them just as “reports” or even “idea papers.”

The term “white paper” has developed a cachet around it that signals technical expertise. But I hope by now you realize that might not be the case. Just because it’s called a “white paper” doesn’t mean that it’s special or different from any other marketing document. Therefore, you would be wise to not always believe what you read and constantly question any white paper you come across.

That’s not to say that all white papers are garbage. For instance, Satoshi’s original vision for the Bitcoin protocol came in the form of a white paper. The next great blockchain platform will also likely have a white paper ahead of its working product. However, be wary. Scam coins and pointless projects can have white papers, too.

There are a couple key questions you should ask to determine the legitimacy of a cryptocurrency white paper:

1. What does this project do?

The first question should be fairly straightforward, but quite often you’ll find white papers are confusing. The combination of buzzwords, technical jargon, and made up names that you find in the typical cryptocurrency white paper is frequently difficult to decipher.

If you’re not sure what the project does, there are two likely conclusions. Either the project is so advanced that you’ll need more knowledge before you understand it, or the project doesn’t really do anything.

In either of those cases you probably shouldn’t invest in the project yet. No matter what other people say or what you’re reading on Twitter, Reddit, or the forums, if you don’t understand a project, don’t invest in it.

2. How does it work?

After you find out what a project aims to accomplish, the next question is “How?”

A good cryptocurrency white paper should explain how the technology will work, and the best white papers do so with varying levels of complexity and technical knowledge required. This is where the original Bitcoin white paper really shines. It is among the most readable and understandable blockchain white papers ever written. It’s also not very long, in contrast to many modern white papers. If you’ve never read it, the Bitcoin white paper is a good place to start. It will give you a good baseline for what a great cryptocurrency white paper looks like.

By the end of the white paper if you can’t articulate what problem the project solves and how it does so, then the white paper did a poor job. In fact, a well-articulated white paper is a sign of a well-thought out project. On the other hand, the opposite is also true.

3. Why do we need this project?

I could build a blockchain project that specializes in underwater fire protection, but would we really need it?

Obviously, that’s not a serious project. Nevertheless, it does raise an interesting point. It’s critical that you examine the project in the context of the real world. Who will actually use this product, and why is this solution better than anything they currently have? If the cryptocurrency white paper gives a solid answer to who needs this project and why they need it, then you’re onto a good idea.

However, before you invest your time or money in the project, do some research to see if someone else is already doing the same thing better. There are hundreds of blockchain projects out there, and perhaps a similar project already exists.

4. Why do this on the blockchain?

Not every project needs to be built on the blockchain. There, I said it.

Our current internet is a powerful tool, and many of the blockchain ICOs we’re seeing should really just be web apps. Moreover, a lot of ordinary businesses are trying to capitalize on the blockchain trend to get access to capital.

That said, there’s nothing wrong with launching a company with an ICO for the fundraising model. However, many startups try to sell their company as a novel use of blockchain technology when it’s really just a regular business.

The best white papers will be honest about why their solution needs the blockchain. Many projects freely admit that they’ll only be using the blockchain for token generation and some smart contracts management, and that’s perfectly okay. But if a startup claims to have some novel idea for blockchain-based carwashes or something like that, beware.

Go with Your Gut

Of course, you’ll also want to do due diligence on the team members, token allocation, and other key information contained in the white paper. We’ve seen examples of companies plagiarizing or falsifying their white papers, so do some fact checking and background research. Don’t take these documents at face value.

Ultimately, reading a cryptocurrency white paper is about knowing what to look for and then trusting your gut. White papers come from companies that haven’t even launched yet, so there are bound to be a lot of unknowns. If you decide to invest in a project, then follow sound investment philosophy and don’t invest more than you can afford to lose. Even the best white paper doesn’t mean a project will succeed, but a bad white paper can expose a project that’s doomed to fail.

The post How to Read a Cryptocurrency White Paper appeared first on CoinCentral.

Over the past few decades, however, art and technology have developed a love-hate relationship with the rise of the internet. It’s now easy to do a Google Image search for any piece of art, and it’s trivial to copy digital files. While this means greater access to art, it also means true art is cheapened in the face of a flood of copies.

Blockchain technology could change that. In this article, we’ll look at the ways blockchain is helping art to change.

Art is Changing

Visual art is difficult to define, precisely because it’s always changing. Artists are constantly pushing the limits of what’s possible. Recently, those limits have expanded into the realm of digital art–art that exists as a file on a computer and not in the physical world. This transition blurs the technology-art divide even further.

1. Digitally Produced Art

One segment of the digital art movement focuses on creating art on a computer. This may mean sketching something digitally, photoshopping existing imagery, or representing something in GIF form. These types of art begin life as computer code.

Blockchain technology is making this type of art easier to create and authenticate. Many people might even consider blockchain games or blockchain collectibles as types of digitally produced art. Rare Pepes, for instance, have gained a cult status as desirable digital art. After all, art is only as valuable as whatever someone is willing to pay.

2. Digitally Presented Art

Another branch of the digital art world is art created in the real world, but meant to be presented digitally. There’s a saying in the digital art world, “screens are the new walls.” Moreover, with the rise of high-definition displays, screens can represent artwork with incredibly high fidelity to the original piece.

But how do you know the file you’re displaying is original and the highest quality available? Blockchain technology can assist with that, certifying runs of high-quality image files.

3. Digitally Produced and Presented

Increasingly, art is both digitally produced and presented, offering opportunities for blockchain to secure the entire value cycle of a piece of art. The technology-art divide no longer exists as technology becomes an integral part of creating, displaying, signing, and selling art.

4. Cryptocurrency Art Purchases

Another blossoming industry is using cryptocurrency to purchase art. Cryptocurrencies are well suited to these kinds of transactions because they allow you to transfer large stores of value to anyone in the world relatively quickly. There’s no need to wait for banks to authorize the transfer, and no percentage of the transaction goes to the payment processor.

5. Blockchain Art Provenance

The applications of blockchain technology in art don’t stop with just digital art. Physical works of art also benefit from blockchain art verification and decentralized marketplaces.

One important application is blockchain art provenance, helping art buyers establish a history of previous owners all the way back to the original artist. The benefit of using blockchain is its ledger is immutable and append-only. It would be difficult to forge, fake, or change the provenance of a piece of art once listed on the blockchain. As blockchain enters the art market even for older pieces of art, the technology-art divide closes even further, bringing analog art into the digital age.

6. Expanding the Borders of What Art Is

A major side effect of the growth of digital art and the shrinking technology-art divide is an expanding sense of what art could be. Not only are Rare Pepes and Cryptokitties now gaining status as works of art. Anime Coin (ANI) crypto and even MS Paint drawings can now be sold on digital marketplaces. If someone is willing to pay for them, then they have value.

These kinds of technology art projects continue to challenge our preconceived notions of what art is supposed to look like.

7. Making Art More Affordable

Using blockchain, it’s possible to buy a work of digital art directly from the artist with no middlemen. Consequently, it’s never been cheaper in history to become a collector of art. Right now, you can buy a work of art for less than $10 online. The file you receive would not be an reprint of the original. Instead, it would be an original, verified copy that’s part of a limited run (or possibly unique in the world).

8. Making Art More Accessible

Traditional art markets are the realm of the elite. They’re curated and often cater to the tastes of upper-class westerners. As soon as you digitize art and create blockchain art marketplaces, however, it becomes easier for everyone to access those marketplaces. Any artist can sell to anyone else in the world without a gatekeeper or gallery curator standing in the way.

9. Decentralizing Authority to Sell

This trend toward decentralized art sales gives artists and owners power over what to do with their art. Buying and selling art can happen peer-to-peer at rates much faster than traditional art markets. Perhaps you want to buy a piece to display for a week and then resell the piece the next week. With decentralized blockchain art marketplaces, that’s possible.

When you sell, you’ll be able to take bids from all over the world. Soon, smart contracts will facilitate the transaction, making sure you receive your funds, the file is transferred to the recipient, and the original no longer exists on your computer.

10. Digital Galleries

Art galleries have long been a physical space, and it’s not likely they’ll go away any time soon. However, the technology-art transition does mean that galleries are increasingly digital. With blockchain art, it’s possible to set up an art marketplace that is a DAO, entirely ownerless, and uses smart contracts to facilitate art trades.

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Technology, Art, & the Future

The blockchain art relationship is still evolving, but it’s an exciting application of blockchain in a real industry use case where verification and authenticity are sorely needed. As the technology-art gap shrinks, expect art to get cheaper, more accessible, and more eclectic.

The post 10 Ways Blockchain Technology is Changing Art appeared first on CoinCentral.

There’s a reason why we have to go to a polling place to fill out ballots for our elections. Anonymous ballots are the easiest way to protect the integrity of the vote while also protecting voter privacy at the same time. Digital voting has been a difficult challenge because it’s tough to verify that each ballot is valid while also keeping them anonymous. Blockchain voting could change that with its cryptography.

In fact, blockchain voting is already changing some elections. Right now, military from West Virginia, USA who are serving overseas can vote in their home elections using their mobile phones. A combination of encryption and blockchain registry tallies those votes. Other countries like Brazil, Denmark, South Korea, and Switzerland are exploring blockchain voting. By far, however, Estonia is leading the way. Their citizens have unique ID cards that allow them to vote on the blockchain quickly and securely.

Digitizing the most essential part of democracy could have deep and lasting impacts on global governance. Citizens can make decisions much more quickly and public referendum is a feasible option. Representative democracy could get marginalized for direct democracy by the people. But that’s not all. Another result is rigging elections could become more difficult, nearly impossible. This article explores how blockchain voting works, and its implications for the world.

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Fundamentals of Blockchain Voting

Blockchain voting is similar to analogue voting that we’re used to. The same concepts and processes apply. In order to cast a digital vote, a citizen would need to register and prove their citizenship in a given jurisdiction. We could then record that identity and citizenship on the blockchain associated with that user’s key.

Next, a citizen needs a ballot to cast a vote. In the blockchain, this would likely take the form of a special voting token that would be deposited in the user’s account. This token would also likely have a time limit in which it could be used to vote, after which it would burn itself via a smart contract or become useless.

Casting a vote on the blockchain would involve sending the voting token (the ballot) to a specific address. Voters would know which address aligns with which candidate or referendum. Sending a token to that address would represent a vote.

Technically, that sounds simple enough. The vote gets registered on the blockchain where its immutable, verifiable, and transparent. We can easily count up the votes to declare a winner to the election. In addition, we can build nice user interfaces that automate and hide the process of sending a token to a specific address. Instead, voters would see a simple online interface for them to select a candidate or proposal and click submit.

Verifying Voter Identity

If that first explanation sounded simple and you wonder why we’re not voting on the blockchain already, just hold on. It’s actually a lot more complicated than that. There are a lot of issues that need a resolution first.

One major issue is verifying voter identity. In order for blockchain voting to work, we need a system that prevents people from voting more than once or voting in an election where they’re not a citizen. That get’s tricky on the blockchain because it relies on a central authority to verify citizenship or residency documentation.

A blockchain solution would likely rely on submitting passport or driver’s license scans. Then that identity might be connected with a mobile device via a password and two-factor authentication or biometrics (like a fingerprint). The idea is to verify that the person who submitted the citizenship documents is the same person who is actively at the computer or smartphone at the time of the vote.

Maintaining Anonymity & the Secret Ballot

Once we’ve verified identity and eligibility to vote, however, we need to separate it from the ballot itself. Importantly, one of the key parts of democracy is the secret ballot. Nobody should know how you voted so they can’t influence your vote in any way.

With blockchain voting, the information that registers on the blockchain shouldn’t include identifiable information. This means that information about the sender of the voting token has to be hidden. There are different ways to accomplish this, including zero knowledge proofs, ring transactions, or various encryption methods. Each has its benefits, drawbacks, and technical challenges. True anonymity at the same time as verified identity is the big challenge of blockchain voting.

Cybersecurity experts generally agree that blockchains are unhackable (with the right network size and consensus algorithm). Logic proofs and statistics indicate that it becomes increasingly unlikely that a block can be compromised once the network confirms it. However, the anonymity needed for voting is more difficult to secure and be certain that it won’t be compromised.  

Possible Implications

Blockchain voting has huge implications if it grows in popularity and usability for the general public. It could fundamentally change how democracy functions.

1. Increased Transparency in the Voting Process

The biggest benefit of blockchain voting is increased transparency. Right now, once you cast your vote, you don’t really know what happened to it. You trust the poll workers to count it correctly. However, there’s no way to be sure that your vote counted.

On the blockchain it could be possible to track your vote and see that it ended up in the right place. Even though it wouldn’t have your information tied to it, your vote would exist on the blockchain for all of history.

2. Reduced Fraud & Election Rigging

A side effect of increased transparency is reduced fraud. It becomes harder to cheat the system or vote in the wrong jurisdiction with blockchain identity verification. Moreover, in countries where dictators rig elections, the blockchain could bring true democracy. Of course, initiating a blockchain voting system requires buy-in from the current government. However, over time blockchain could become an international voting standard, with the world community advocating for blockchain governance in all nations.

3. Everyday Voting in Real Time

If blockchain makes voting transparent, then we can follow and tally votes in real time. This means that elections can happen on a much shorter timespan. Additionally, if they are digital, they require less investment in polling infrastructure. As a result, elections could be held with a short lead time to vote on a referendum quickly.

This could completely change daily life. Imagine if you could vote on your phone on how traffic in your city would be routed today or whether to increase taxes to pay for a new park in your community. Voting could become highly targeted, even neighborhood specific. There would be little overhead to voting more often, possibly making voting a daily occurance.

4. Corporate Governance & Autonomous Organizations

Governments aren’t the only institutions that could benefit from blockchain voting. Employees or shareholders could vote for initiatives within a company as well. It’s possible to even imagine ownerless businesses where every decision is an open vote from shareholders.

5. Increased Voter Engagement

A big advantage of blockchain voting could be increased engagement. If blockchain makes digital voting possible from your smartphone or computer, voting becomes as easy as logging in and casting your ballot in just a few minutes. This would likely increase voter turnout drastically, leading to more direct democracy. Alternatively, it could lead to voting fatigue, where voters realize they liked electing representatives to worry about policy for them.

Conclusion

Blockchain voting still isn’t perfect or ready for primetime yet. However, it’s likely to be a massive change in democracy once it does reach legitimacy. Making voting easier and more transparent will create a more engaged electorate. It may also remind us of why representatives exist to think about policy full time and make wise decisions about things the general public might not be able to research fully.

There are several organizations currently exploring voting on the blockchain. Easier voting could mean more frequent representative elections or ongoing referendums on our leadership. Even that would be a big change for democracy.

The post How Blockchain Voting Works & Why We Need It appeared first on CoinCentral.

NavCoin is a cryptocurrency designed to be anonymous and simple to use. Established in 2014, it belongs to an older class of cryptocurrencies that came before the recent wave of ICOs. NavCoin has stood the test of time well. Over the past four years, it has implemented various upgrades, features, and improvements. The team is dedicated and knowledgeable, and as a result, the platform has seen consistent growth.

However, NavCoin has not seen the kind of growth that the other competitors in the race to be the top privacy coin have seen. Dash, Zcash, and Monero have all outstripped NavCoin in terms of adoption and funding. In 2017, the project saw a comeback, as they began to emphasize design, usability, and experience. The NavCoin wants to make it simple and fast to use private transactions.

In this NavCoin guide, we’ll dig into:

• How Does NavCoin Work?
• NavCoin Token (NAV)
• NavCoin Team & Progress
• Trading History
• Where to Buy NAV
• Where to Store NAV
• Conclusion
• Additional NavCoin Resources

How Does NavCoin Work?

The original Bitcoin code is the bedrock for NavCoin’s code, but the developers have changed several key features of Bitcoin. First, NavCoin implements a secondary sub-chain known as NavTech. NavTech enables transaction anonymization and mixing (see below). Second, NavCoin exchanges Bitcoin’s proof of work algorithm for proof of stake. Additionally, NavCoin transactions are generally faster and cheaper than Bitcoin. In the future, they will also support decentralized applications coded directly to the blockchain.

Transaction Times, Fees, & Scalability

Since the early days, one of NavCoin’s strong suits has been its fast transaction times. NavCoin sees block confirmations every thirty seconds as opposed to Bitcoin’s ten minutes. This is faster than Monero (2 minutes) and Zcash (2.5 minutes). Dash also averages about 2.5 minute block times, but its masternodes make it possible to send instant transactions. That said, NavCoin has the fastest standard block time of any popular privacy coin.

These fast transactions aren’t expensive either. Where currencies like Bitcoin and Ethereum are having trouble with high miner fees, NavCoin keeps its transaction costs low. The average fee is only 0.0001 NAV to send a standard transaction. Private, encrypted transactions can be more expensive, however.

Nav Coin is also looking ahead for scalability concerns. They already use a proof of stake consensus algorithm that reduces the energy consumption associated with mining. The community has also already voted and activated SegWit, making block size smaller. Future proposals will implement an equivalent of Bitcoin’s Lightning Network, taking some transactions off-chain with instant settlements.

Anonymity & Untraceability

The community firmly describes NavCoin as a “privacy coin.” However, the reasons for wanting privacy aren’t sketchy or malicious. In fact, token privacy and untraceability is an important function for a financial system and a currency. It contributes to a token’s fungibility – the ability for anyone to accept any token – because the token’s history can’t be traced. Each NAV token is equally valuable and has no known history.

Anonymous transactions are not required or even standard on NavCoin. They’re optional. But if you choose to enable NavCoin’s anonymous transactions, the transaction is fully dissociated from your sending account and IP address on the blockchain.

These anonymous transactions take place using the NavTech subchain. This unique solution enables a user to send NAV to a recipient via a subchain of the main blockchain. The transaction is encrypted, and the sender transmits the NAV for the transaction to the NavTech subchain, instead of sending it directly to the recipient. The NavTech subchain involves multiple servers and layers of encryption passing the transaction around. NavTech then sends the final payment to the recipient from a token pool that the NavTech contract manages. The original tokens from the sender are not the same as the tokens the recipient receives.

The layered encryption and mixing in a managed token pool is NavCoin’s privacy method. It ensures no one can follow a NavTech transaction to its final destination. The NavCoin plans to continuously implement even more robust privacy measures like fake transactions and dummy accounts that increase the circulation of NAV through the NavTech subchain, further obfuscating the trail of real transactions.

Valence Platform

In addition to privacy measures in the development pipeline, NavCoin also has projects under development that will turn it into more than just a currency. The Valence Platform is a sister project to NavCoin. It powers the NavTech subchain and also provides functionality for many other uses. Valence seeks to be the first anonymous platform for decentralized apps.

In contrast to other decentralized apps platforms, however, Valence does not use a virtual machine. Instead of coding in an environment hosted on the blockchain, Valence aims to allow developers to code directly to the blockchain. This is a tricky proposition, and there are all kinds of safety concerns that the development team is tackling. Valence, of course, operates a separate blockchain from NavCoin. However, they do interface.

Valence is not yet released, so we don’t have complete information on how exactly it works. Needless to say, it’s a big challenge, but it could be a compelling solution that offers a unique experience for developers should the NavCoin team pull it off.

Proof of Stake Mining

While most other cryptocurrencies implement some form of proof of work mining, NavCoin was among the first to implement proof of stake. Proof of stake relies on users putting up a portion of their NAV holdings in order to gain an opportunity to create a new block. If the network ratifies the new block you created, you’ll receive a reward. If your block is bad or contains fraudulent transactions, the proof of stake algorithm takes away all the coins you staked. This incentivizes honest block creation.

With NavCoin, it’s possible to earn a five percent interest from staking your NAV. In order to do so, however, you’ll need to operate a staking node on the network. You can do this on your computer by downloading the NavCoin Core client and setting the amount of NAV you want to stake. Alternatively, you can buy a Raspberry Pi and set it up to run a staking node for you. The Arduino client for this application is called Nav Pi. The Raspberry Pi uses less energy to stake your coins, and it can always be on. It also doesn’t consume battery or processing power on your main computer like the Core client does.

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NavCoin Token (NAV)

NAV launched in 2014, and it has been publicly listed on exchanges since then. You can use the NAV token as a form of value transfer, similar to the way you would use Bitcoin.

The NAV network is still fairly small, however. Only 100 wallets hold about 60 percent of all NAV tokens. 1000 wallets hold nearly 80 percent, meaning that the number of NAV users is still fairly small.

NavCoin Team & Progress

The team behind NavCoin and Valence is Encrypt S Ltd. However, it’s an open source project. As such, they’ve built up a big community following, and anyone can contribute.

NavCoin features a very active development team. New updates come out regularly, usually every week. The Lead Engineer, hailing from New Zealand, is Craig MacGregor. He is also CEO of Encrypt S Ltd.

Nav is also one of the most beautiful, easily understood coins out there. This is in large part thanks to their marketing and creative team. NavCoin’s focus on style, branding, and communication sets them apart in blockchain space. Usability is important for adoption of any early-stage project, and it’s nice to see NavCoin taking this element of the platform seriously.

Since forming in 2014, the NavCoin team has accomplished quite a lot. They’ve implemented SegWit, created a Community Fund, and created OpenAlias, an open standard that transforms wallet addresses into names that are easy to read and remember.

The next major milestone for Navcoin is the implementation of confidential transactions (CTs) with Bulletproofs. This addition improves the privacy of transactions on the blockchain without significantly increasing transaction sizes.

Trading History

NavCoin’s trading history, like many other altcoins, has been unfortunate lately. Over its nearly five year lifetime, the NAV price has had three almost vertical price jumps. However, they were short-lived.

The first occurred in September 2016 but was allegedly due to market manipulation. At the end of August 2017, the price increased by almost 600 percent in one week to reach an all-time BTC high of ~0.000366. You can likely attribute this monumental run to an increase in privacy coin popularity at the time as well as an updated NavCoin roadmap.

The last major bull-run for NavCoin coincided with a market boom at the end of 2017. At this time, the NAV price reached an all-time USD high of over $4.60. The price has since greatly fallen and is currently sitting at a floor of about $0.15 (~0.00004 BTC).

Simply, NavCoin needs more adoption before a price bounceback. Because other, more popular, privacy coins have already implemented some of the items on NavCoin’s roadmap, it seems that upcoming product releases won’t be enough to give the price a boost.

Where to Buy NAV

NAV is an established coin, and as such, you can find it on most major exchanges.

Binance conducts over 70 percent of all NAV trading. Next is Bittrex with around five percent. You can trade BTC for NAV on both of these platforms. Binance supports NAV trades with ETH and BNB as well.

Where to Store NAV

You’ll need to set up a NAV wallet to store your coins. Just visit NavCoin’s wallets page to get started.

There’s an option for a paper wallet if you just intend to store your NAV. You can create a paper wallet quickly using their web interface.

However, if you want to earn interest from staking, you’ll need to run a NavCoin Core client. You can download these for PC, Mac, Linux, and Raspberry Pi on the downloads page linked above.

Finally, NavCoin also has a light wallet for making payments on the go called NavPay. NavPay is available for mobile and web.

Conclusion

NavCoin has been around for a while, is making progress, and is doing interesting work in the private payments and anonymous DApps space. However, they continue to fly relatively under the radar with a market cap significantly lower than similar privacy projects despite being founded around the same time as them. Ultimately, do your own research to decide if this project is undervalued or if its competitors have outpaced it in the privacy race.

Editor’s Note: This article was updated by Steven Buchko on 2.25.19 to reflect the recent changes of the project.

Additional NavCoin Resources

Website

Discord

Reddit

Twitter

Medium

The post What Is NavCoin (NAV)? | A Guide to the Usability-Focused Privacy Coin appeared first on CoinCentral.

Zilliqa is the first public blockchain designed to implement sharding, allowing for linear scaling as the blockchain grows in size.

To date, scalability has been an issue for existing blockchain technologies.

Right now, Bitcoin can’t process all the demand for its network, and transaction fees have risen accordingly. The same goes for Ethereum where limited throughput means smart contracts can become gas-intensive. For instance, the popularity of Crypto Kitties significantly slowed Ethereum, showing the limits of the network.

Zilliqa fundamentally changes how a blockchain reaches consensus. Their sharding solution scales with the size of the network. Theoretically, there’s no limit to the number of transactions Zilliqa could process per second. Practically, however, depending on the number of nodes on the network, Zilliqa could process tens or hundreds of thousands of transactions per second.

Zilliqa also promises to support smart contracts. Running smart contracts on a sharded network is a major technical challenge for Zilliqa.

In this guide we will cover:

• How Zilliqa Works
• Coin Supply
• Roadmap and Team
• Trading History
• Competitors
• Where to Buy ZIL
• Where to Store ZIL
• Conclusion
• Additional Resources

How Zilliqa Works

Solving the Scalability Problem

Blockchain has an inherent scalability problem. The more nodes you have on a network, the harder it is to reach consensus.

To illustrate the point, it’s helpful to think of consensus scaling in terms of people:

• With a small group of your close friends, it’s simple to make decisions. You may not always agree, but it’s straightforward to see how everyone feels.
• For a larger group of people, like an auditorium full of people, you could have people raise their hands to quickly vote. But it becomes harder to count, and you can’t be sure everyone is acting honestly.
• With groups of thousands or millions of individuals, you’ll need a more complex voting system that takes more energy. You also can’t be sure people are acting in good faith, and it’s hard to achieve finality – the sense that everyone has voted and there’s a clear answer.

While the analogy isn’t perfect, you can see how consensus gets more complicated the larger your network is. Consensus speed/quality and network size are inversely related. When one goes up, the other goes down.

Other solutions to the blockchain scalability problem focus on moving some information off-chain. Or, they seek to increase the block size, effectively establishing consensus on more transactions with each round of consensus. These solutions may work as a stopgap, but they don’t fundamentally fix the scalability problem.

To fix it, you’d need to change the architecture of the entire system so consensus speed and network size are positively correlated.

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Zilliqa’s Scalability Answer

Zilliqa has found a way to process more transactions as more nodes join the network. It involves re-imagining the blockchain from scratch. Their new model implements a hybrid consensus protocol to grow the network’s throughput with every ~600 new nodes that join.

In theory, every 600 new nodes, Zilliqa’s throughput increases by dividing the work. In practice, there are issues with broadcast if the network becomes very big (over one million nodes). Still, one million nodes is an upper bound that we’re nowhere close to reaching. As of this writing, Bitcoin has ~11,000 nodes in operation. 

Bitcoin and Ethereum’s networks of tens of thousands of nodes can still only process 3-15 transactions per second. In contrast, tests on private testnet (AWS virtual test) have shown that Zilliqa’s network has a throughput of 1,218 tx/s when 1,800 nodes are operating. Increase the number of nodes to 3,600, and Zilliqa’s network scales to 2,488 tx/s.

Sharding: Dividing Work Across the Network

How does Zilliqa accomplish this scalability? They use a solution known as sharding. The Zilliqa protocol divides the number of mining nodes on the network into groups of 600 nodes. Each group is known as a shard.

For instance, in the testnet examples above, when operating with 1,800 nodes, the testnet divided itself into 3 shards. When operating with 3,600 nodes, there were 6 shards. As more nodes join the network, Zilliqa can further divide the network, creating more shards.

Those shards each process a fractional portion of the network’s transactions. In simplified terms, if there are six shards, each shard would process approximately 1/6 of the network’s transactions. The more shards there are, the more the network divides the consensus load between shards, keeping computing demands relatively stable.

Each shard processes its assigned transactions into a microblock in parallel with the other shards. At the end of the parallel processing period, known as the “DS epoch,” those microblocks get combined into a full block that’s added to the blockchain.

The DS Committee: Managing the Shards

For each DS epoch, several nodes are randomly selected to manage the various shards. This managing committee, known as the “DS committee,” directs the network. They decide which nodes are assigned to which shard. When new transaction requests arrive, the DS committee assigns the transactions to a shard for processing. At the end of the DS epoch, the DS committee assembles the full block from the microblocks the shards created.

Finding Consensus: PoW + BFT

Zilliqa uses a hybrid consensus mechanism. When you first start mining, you’ll have to complete a proof of work (PoW) hash. PoW requires computing power that guarantees that a machine can only operate one node. As such, PoW helps Zilliqa establish identity. It makes it difficult for one bad actor to create multiple identities to overwhelm the network in what’s known as a Sybil attack. The network does not use proof of work for consensus, however.

After a node has proven its identity, it gets assigned to a shard. Within the shards, Zilliqa uses Practical Byzantine Fault Tolerance consensus. This is a higher-throughput consensus mechanism that has finality. Finality means that most of the nodes in the shard must agree on the miniblock. Once a block is confirmed by the shards and DS committee, it is the only block that can reference the block before it. There is no forking in a consensus mechanism with finality.

Zilliqa isn’t the first distributed ledger to implement BFT. NEO, Tendermint, and Hyperledger use versions of the proven BFT consensus mechanism as well.

Data Flow Contracts & State Sharding

Sharding transactions is fairly straightforward. You can easily assign transaction verifications to various shards, and each verification stands on its own. There shouldn’t be a need for much communication between shards.

The same is not true for running smart contracts and decentralized apps (DApps) on a sharded blockchain. The issue is smart contract actions often rely on checking other states, variables, and functions. Doing so would require lots of communication between shards. These messages back and forth would require bandwidth and processing power that would negate the benefits of sharding.

As such, Zilliqa’s contracts focus on data flow and functional programming, only. They don’t allow for checking, storing, or changing states. At least, not yet.

The consensus so far is that there isn’t a state sharding scheme that is secure and efficient. If you allow contracts to execute separately in various sharded states, there could be all kinds of potential attacks, challenges to reconciliation, and excessive cross-shard communication.

However, Ethereum is currently working on a state sharding solution. It’s not clear how far along that initiative has advanced in its development.

That said, Zilliqa can still be used for DApps that require high throughput. Any DApp that needs transaction rates beyond what’s currently possible on other blockchains could find a home on Zilliqa.

A New Programming Language

With the goal of making functional programming more standardized and secure, the Zilliqa team has developed a new programming language known as Scilla.

Scilla separates state and function. It’s a functional programming language that draws a distinction between the communication aspects of a contract – transferring funds or calling another contract – and the actual computational work the contract does.

The new language is not Turing-complete. This means it doesn’t support applications that need certain types of loops or conditional statements. However, its incompleteness allows it to be subject to formal logic proofs. This is important for security purposes. Proving contracts let users know a contract is safe in a verifiable way before using it.

Scilla helps draw the distinction between functional contracts, supported on Zilliqa, and state-dependent contracts that Zilliqa can’t yet support.

Coin Supply

Zilliqa has a token for its ecosystem. Similar to other DApps platforms like Ethereum or NEO, the ZIL token serves as a mining incentive, gas for contract execution, and tender for paying transaction fees.

Initially, ZIL was an ERC-20 token based on the Ethereum blockchain. The Zilliqa mainnet launched at the end of January 2019. With that launch, ERC-20 ZIL tokens swap out for Zilliqa native tokens. 

There are 12.6 billion total ZIL tokens, with just over 8 billion in circulation as at January 2019. 

Roadmap and Team

Zilliqa raised the equivalent of $12 million in ETH in a private funding round near the end of 2017. After the private round, the surging price of ETH meant that private funding originally worth $12 million was soon valued at the project’s hard cap of $20 million.

Having hit its hard cap, Zilliqa told its community that it no longer needed a public sale. Due to community interest, however, Zilliqa allocated 4445 ETH to a public sale in January 2018.

Since that time, the Scilla smart contract programming language launched in May 2018. In November, the testnet launched, so the project has invited miners and developers to participate in testing the platform. 

The most recent major milestone was the main net launch on January 31, 2019. The initial launch is set for bootstrap mode, with mining rewards allocated but no transactions allowed. This is to safeguard the network against early attacks. Zilliqa will enable smart contract functionality and transactions during the first quarter of 2019. After that, the token swap to native Zilliqa tokens will begin. 

Zilliqa Team

The team behind Zilliqa is largely computer science academics and PhDs.

The CEO, Xinshu Dong, has a Ph.D. in Computer Science from the National University of Singapore. He’s a cybersecurity expert, responsible for several national security projects in Singapore. His research has also appeared at reputable conferences and in journals.

Prateek Saxena is the Chief Scientific Advisor. He has a Ph.D. in Computer Science from the University of California, Berkeley. Now, he’s a professor of computer science at NUS.

Amrit Kumar is the project’s Head of Research. He’s a Research Fellow at NUS. He has a Ph.D. from Université Grenoble-Alpes, France and an Engineer’s diploma from Ecole Polytechnique, France.

The Zilliqa’s advisory board includes the prominent figures in blockchain. They include Loi Luu, Co-founder of Kyber Network; Vincent Zhou, Founding Partner of FBG Capital; Nicolai Oster, Partner at Bitcoin Suisse AG; and Alexander Lipton, Founder and CEO of StrongHold Labs.

Trading History

ZIL has only experienced one major price spike over the year since its launch. This came in May 2018 and appears to have happened immediately prior to the Scilla programming language launch. Therefore,  an announcement of the launch probably caused this spike.

Since then, the price of ZIL has held up well, considering the deeper bear market that Bitcoin and other cryptos experienced during the last months of 2018. 

With a successful mainnet launch at the end of January, it’s possible that ZIL may see further spikes over the first months of 2019. 

Competitors

As a high-throughput smart contract programming platform, Zilliqa does have some competition. EOS and Tron both offer similar functionality. Furthermore, Aelf is another smart contract platform using side chains for scalability. It’s also undergoing a mainnet launch early in 2019, and could be a close competitor. 

Where to Buy ZIL

The ZIL token is currently available on Binance and Huobi. Recently, Coinbase Pro (previously GDAX) also confirmed it will start listing ZIL tokens. 

Where to Store ZIL

If you buy ZIL prior to the token swap in Q2 2019, then you can store them in any Ethereum ERC-20 compatible wallet. As always, we recommend cold storage in a hardware wallet such as the Ledger Nano S. After the token swap, you’ll most likely have to use an official Zilliqa wallet.

Conclusion

Scalability will continue to be a problem for blockchain and distributed ledger technologies. In contrast to many, Zilliqa is an important project that’s tackling scalability head-on. Therefore, the platform itself could prove to be an important development in blockchain. More broadly, however, expect to see Zilliqa’s open source breakthroughs in sharding technology come into use for other blockchain projects in the coming years.

Editor’s Note: This article was updated by Sarah Rothrie on January 28, 2019, to reflect the recent changes to the project.

Additional Resources

Twitter

Github

Telegram

The post What Is Zilliqa (ZIL)? | The Complete Guide to the High Throughput Blockchain appeared first on CoinCentral.