Bitcoin: Blockchain hype and a mature ecosystem

Many investors are still suffering from the price drop and consolidation of Bitcoin in 2015, but under the bonnet hides a huge potential and an engine that is starting to roar.

The Bitcoin code was quite cautious

With a limited rise in speculative interest and more than 3,600 freshly unified Bitcoin code available to the market every day, the price was quite cautious throughout 2015. Many major investors sold shares of their Bitcoin assets out of necessity rather than personal interest like this Thus many of these Bitcoins were placed in the hands of new interested parties and investors and were thus scattered among the people.

Many startups, driven by inexperienced businessmen, did not make it through 2015 and had to close their doors. The risk capital invested in 2014 will not last a lifetime, especially not if one does not manage to generate sufficient sales on one’s own. This was the case for many companies in 2015 and the wheat gradually separated from the chaff. To get an idea of what a serious situation some Bitcoin companies were in, I talked to a manager who wanted to partner with a Bitcoin company.

At some point the managing director of the Bitcoin code company admitted

“You know, we are at a stage where we are seriously considering whether we should continue our Bitcoin code business”. Meanwhile, many private hobby miners are throwing in the towel in favour of the large mining farms because the difficulty is too great and the revenues can no longer cover the costs. Mining farms often have a geographical advantage with a cooler climate for chip cooling or pay many times less for electricity. Due to a newer generation of mining chips, the hashrate increased from 300 to more than 600 petahashes.

The currently low price also has a positive feature – mass acceptance has increased steadily in 2015 and the transaction volume is currently around 3 transactions per second (the network can currently process a maximum of 5-7 transactions). In the summer, due to the natural transaction limitation, a hot debate was sparked that lasted until the Hong Kong Scaling Conference in December. Here the appearance of a consensus arose, if perhaps only in part: “This is not about Bitcoin, it’s about the blockchain.”

The idea that Bitcoin may be too volatile and too radical for the financial world is increasingly calling for more institutions to create private and malleable blockchains with their own tokens.

Nine banks, including Goldman Sachs and Barclays, have already announced a “blockchain partnership”. IBM has already started to develop a blockchain without Bitcoin applications and supports several blockchain projects: Ethereum (USD 15 million), Chain (USD 30 million) and Ripple Labs (USD 32 million).

On June 9, a company called Blockstream released the first open source code for “sidechains”, a technology that allows Bitcoins to be transferred from the blockchain to a sidechain from where they can be equipped with new features such as high-speed transactions, smart contracts or for issuing shares.

The technology gained more and more attention in the press and the price per BTC finally broke through the resistance at 300 US dollars on 27 October. As a result, media interest was further fuelled by the alleged identification of the Bitcoin founder and the price rally continued beyond the 400 dollar mark.

What is the potential of 2016?
Here is my assessment for the year 2016:

1. the Bitcoin network will scale up
After months of discussions, there will be a decision in 2016 for the future scaling of Bitcoin.

There are already prudent and effective proposals on the table, such as Pieter Wuille’s Segregated Witness and Adam Back’s BIP248.

I think some proposed solutions will be implemented by summer.

2. Bitcoin will shine as a safe asset
I again expect high volatility in the global marketplaces and as a result I think there will be unexpected liquidity problems.

As a result, investors will be looking for low counterparty risk assets. I think Bitcoin Bitcoin will be one of those assets, even more than in previous years.

3. sidechains will prove to be a technical breakthrough
Just as Bitcoin had to defend itself against the accusations of a snowball system, the sidechains of scepticism

Saving the world’s oceans – Possible with the Blockchain?

Plastic waste in the oceans is one of the most urgent environmental issues of our time. Nevertheless, the countries of the world in particular have not yet found a way to deal with this issue – not least because none of them feels responsible. The Plastic Bank initiative presents a solution based on blockchain technology. Could this be the salvation of the oceans?

In many areas, blockchain technology is already in the focus of authorities, companies and NGOs. Environmental organisations, on the other hand, are often less euphoric about decentralised technology. This is primarily due to Bitcoin, the first and still most important application of the blockchain. The mining process, in which transactions are processed and new units of the Bitcoin are created, consumes an extremely large amount of energy. Depending on how the energy is generated, this can be a burden on the environment.

Everyone can help to make the Bitcoin profit review

The proposal presented by Shaun Frankson and David Katz at the Me Convention in Stockholm on 5 September could change this. The two Canadians are the founders of the Plastic Bank initiative, which has set itself the task of saving the world’s oceans. They want to use blockchain technology to gradually break down the Bitcoin profit review plastic waste that has been spread across the oceans in recent decades by human consumption.

Bitcoin profit scam makes it possible

Founded in 2013 in Vancouver, Canada, by environmental activists Shaun Frankson and David Katz, Bitcoin profit scam is committed to stopping the flow of plastic into the oceans. To do this, it wants to persuade a billion people to actively combat the production of plastic waste. The name Bitcoin profit scam is not chosen by chance – Frankson and Katz want to monetarize plastic waste in the style of a bank. The collectors of plastic waste should be made aware of the value of the good by being compensated for the amount of garbage with a countervalue.

This is where the blockchain solution comes into play. To illustrate the value of the plastic, collectors should be able to convert it into blockchain-based assets or tokens. In order to get the most out of it for the environmentalists, the reward for plastic waste is significantly higher than the usual retail price. The exchange of plastic waste for money helps with recycling. At the same time, the poverty of the local population is being combated, especially in countries and regions that suffer particularly from plastic waste.

Environmental protection and poverty reduction in one: The initiative wants to finance the plastic purchases with a surcharge on the recycled product. This, in turn, is labelled Social Plastic and thus labelled as supported by the Plastic Bank. Anyone who purchases a product that contains a piece of Social Plastic not only contributes to saving the world’s oceans, but also to fighting poverty. The more people who take part in the campaign, the greater the incentive for collectors of plastic waste.

The initiative has already achieved its first successes. The project started in Haiti in 2015, and one year later they expanded their field of work to the Philippines. In order to put the project on a sound footing, Plastic Bank also worked with the US technology group IBM at an early stage. This allowed them to benefit from IBM’s blockchain expertise and build their own blockchain application on the LinuxOne system.

Ethereum reaches $400 mark – we look back

Ethereum changed the rate from 300 to 400 US dollars. About a year ago, the blockchain revolutionary’s young history almost failed. But now growth seems to have no limits.

Record breaker

Just to remind you: A month ago today, the price of ether (ETH) was still around 90 US dollars. So anyone who bought a month ago is already recording a plus that is seldom found in this form on any traditional financial market. Around 344 % growth in one month – you can already hear some calling for a “bubble”!

The chart above shows the growth of the Ethereum addresses since the early beginnings at the end of 2015. Even those who found mathematics difficult at that time, and I count myself among them, notice something in the graph. Its growth is increasing – exponentially. The slope “seems to amplify itself”, to put it in lay terms. That at least somewhat explains the current increase. But those who have been following Ethereum for some time are astonished and ask themselves at least one question: Why has nothing changed in the middle of 2016?

The DAO disaster

A year ago something began that resembled the “Tower of Babel” on the Ethereum block chain. The DAO, or Decentralised Autonomous Organisation, was to take full advantage of Ethereum’s new top function: the Smart Contracts.

The DAO was to be a huge smart contract, a program that could manage itself and unite the votes of thousands of investors. The DAO was supposed to support the early Ethereum development. Investors could buy DAO tokens (see picture below) to get a voting right in the DAO. The DAO served like a huge voting machine: Everyone could vote for a pre-determined startup project. Then the DAO counted the votes. There is no electoral fraud, as the block chain is not fraudulent. A perfect democracy and the best catalyst for a young market – at least that’s how it should be.

But the DAO has been hacked!

At the beginning of June 2016 there were still about 12 million ethers in the DAO Smart Contract. At that time it was already an investment that set records! On 17 June, however, there were strange debits in the Smart Contract. An alarm was sounded and within hours 3 million ethers were transferred to an address by the attacker. An error in a so-called Split() function was exploited by the hacker. In response to criticism from the community, Ethereum boss Vitalik Buterin made it clear:

“This is an incident that specifically affects the DAO, Ethereum itself is perfectly secured.”

The hack brought the DAO and the Ethereum blockchain to their knees. It is the reason why we now have Ethereum (ETH) and Ethereum Classic (ETC). When the Ethereum Foundation team intervened in the source code to shut down the DAO, part of the community saw the immutability of the blockchain in danger. The community split into two camps:

ETH – According to the motto: “The blockchain is unchangeable, but as soon as the law is broken, the status can be changed – ‘Law is Code'”.
ETC – According to the motto: “The blockchain is unchangeable, even if the law is broken, the status must not be changed – ‘Code is Law'”.
About 3.6 million ethers were finally stolen at that time – today about 1.44 billion US dollars…

And Ethereum did not break. It remained silent for months around the Smart Contract blockchain. Since its price of 18.59 US dollars in June 2016, it has experienced a tremendous growth of 2,051%!