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And, we don’t mean price!
[By MIT Technology Review]
Bitcoin transactions have always been slow, but now they are expensive too, which means that small transactions are no longer worth it. The average cost has gone from less than a dollar at the beginning of 2017 to more than $40 per transaction yesterday, as the growing demand for new transactions has exceeded the network’s capacity to confirm them. Arguments over what to do about the bottleneck have grown into a full-fledged Bitcoin civil war.
One proposed solution is to build a secondary network that lets people transact “off-chain.” Some exchanges already allow users to exchange Bitcoin with each other without using the main blockchain. But in the context of blockchain research and development, “off-chain” means something more sophisticated.
The challenge: Bitcoin maintains its distributed ledger by having each computer running the Bitcoin software, called a “node,” process every single transaction. This is the essence of its decentralized nature, but it also makes the process of confirming transactions very slow, at least compared with traditional credit card networks. (Bitcoin can handle only a few transactions per second, whereas Visa can handle thousands.) Ethereum, the second largest public blockchain system, works similarly, which is why the network was brought to a near standstill recently by a mega-popular new platform for trading digital cats.
Finding a faster, more efficient way to confirm transactions on public blockchains would also reduce fees. Ideally, not every node would have to validate every transaction. But the trick will be achieving this without compromising the rest of the network’s trust.
How off-chain payments would work: It’s possible for multiple users to set up a “state channel,” in which a part of the main blockchain is locked in a certain state and can only be unlocked if each of the users signs off. The individuals can then send payments among themselves in a cryptographically-secure way, but without touching the main blockchain. At some point, users can update the state on the real chain to validate all of the transactions in between. The idea is that this principle can be extended to build a more complex payment network made of multiple channels, with a system for routing payments through them.
The players: One project aimed at creating a “layer two” for Bitcoin that would facilitate off-chain microtransactions is called the Lightning Network. An effort to achieve a similar goal for Ethereum is called the Raiden Network.
The current state of the tech: The Lightning and Raiden networks are still in the early stages of development, and each faces significant technical challenges. A simplified version of the Raiden Network that makes it possible to set up unidirectional payment channels is already available, however. The Lightning Network is said to have achieved a major milestone earlier this month when developers sent two Lightning transactions over the Bitcoin blockchain.
Conclusion
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After the Bitcoin Bubble Bursts
What happens?
https://www.msn.com/en-us/money/markets/after-the-cryptocurrency-bubble-bursts-we-may-see-a-legitimate-valuation-for-some-coins/ar-BBHiEmf?li=BBnbfcN
Kenneth
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Bitcoin Retirement?
https://www.msn.com/en-us/money/retirement/bitcoin-retirement-funds-see-explosive-growth/ar-AAuJNK2?li=BBnbfcN
Bruce
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Bitcoin
Still a disaster?
http://www.msn.com/en-us/money/savingandinvesting/analysis-bitcoin-is-still-a-total-disaster/ar-BBLKIpo?li=BBnbfcN
Dr. David E. Marcinko MBA
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After the Bitcoin Boom
Hard Lessons for Cryptocurrency Investors:
http://www.msn.com/en-us/money/markets/after-the-bitcoin-boom-hard-lessons-for-cryptocurrency-investors/ar-BBM9Ug9?li=BBnb7Kz
Enoch
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Say Bye-Bye Crypto
If you bought at the top of the crypto bubble, here’s how much you’ve lost.
http://www.msn.com/en-us/money/markets/if-you-bought-at-the-top-of-the-crypto-bubble-heres-how-much-youve-lost/ar-BBMYl3L?li=BBnbfcN
Porter
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Hi Ann
I am the managing editor of Newconomy. We soft launched a couple weeks ago and are now ready for our official debut. I am reaching out to you and the readers of Medical Executive Post for your help. We are trying to shape Newconomy into a site that isn’t just news:
http://www.newconomy.us
We’d like it to be driven by its community and the tech, business, and financial industries, so we are looking for your help and your feedback. We’re always in need of tips, suggestions, interviews, and even your latest news, projects, or content you really want to share. We’re also looking for partnership opportunities and business collaboration. Finally, I’d really like to know what you think about the site and the stories we’ve been covering so far.
If you have any questions about Newconomy I’d be happy to answer them.
Cheers,
Chris
—
Chris Abraham
[Managing Editor]
Newconomy.media
@theNeweconomy
@chrisabraham
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SLOWING ….
Too few people use digital currencies for them to really threaten the world’s financial stability.
That’s the conclusion of a new report from the Financial Stability Board (FSB), an international body that keeps tabs on the global financial system and makes recommendations to the G20. Still, the market is developing so quickly that “vigilant monitoring” is needed, the FSB warns.
The primary risks posed by crypto-assets are low liquidity, the use of leverage, volatility, and technological risks like vulnerability to cyberattacks. If the financial system regulators don’t properly account for these risks and they then materialize, it could undermine confidence in financial institutions.
But the most important words in the conclusion may be the caveat that the report is “based on the available information.” Assessing risks is difficult because there is so little available data, particularly on the extent to which investors are borrowing money to buy cryptocurrency, and how exposed financial institutions are. Crypto-specific regulations could force more transparency. Until then, the FSB is developing a new “monitoring framework,” which it says is based mostly on the sliver of public data that does happen to be available.
Jaleal
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On healthcare specific cryptocurrencies
You’ve probably heard of Bitcoin, but we doubt you’ve heard of Dentacoin, MedTokens, or Curecoin.
These are healthcare specific cryptocurrencies born from Initial Coin Offerings or ICOs.
Over on The Health Care Blog, my colleagues Robert Miller and Vince Kuraitis have written an article analyzing financial returns of 138 healthcare ICOs.
The results are enlightening, but disappointing. Here are a few headlines:
– 122 healthcare ICOs are not exchange-listed
– 16 healthcare ICOs are listed on one or more exchanges
– Of these 16, 5 show a positive financial return since the date of their listing
– 2 show a positive return for CY 2018 to-date
The full article contains background on ICOs, a description of our methodology and findings, and a discussion of implications.
Eugene
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CONGRATS Brian Armstrong
Coinbase CEO Brian Armstrong is joining the ranks of billionaires pledging to donate the majority of their wealth for the greater good.
http://www.msn.com/en-us/money/companies/coinbase-ceo-is-first-crypto-billionaire-to-join-buffett-gates-in-donating-bulk-of-fortune/ar-BBRg4wZ?li=BBnbfcL
Lucy
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Winklevoss
The Winklevoss twins are co-founders of Gemini Trust. Despite repeated failed attempts, Cameron and Tyler Winklevoss are determined to secure the industry’s first bitcoin-based ETF.
The Gemini Trust co-founders will launch a new app in 2019 allowing individual investors to purchase bitcoin and other virtual currencies on their exchange.
Any thoughts?
Dr. David E. Marcinko MBA
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Bitcoin
Just a year ago, bitcoin was a speculative sensation and hit a all-time record of $19,870 on Dec. 17, 2017. That’s after kicking off 2017 at nearly $1,000.
Yet after that incredible run up in 2017, we saw one miserable fallout in 2018. Now, we’re talking about an 82 percent drop in just 12 months.
Bitcoin was trading around $3,548 on Dec. 17 after suffering startling losses in just one month. The world’s largest cryptocurrency had kicked off November at an average price around $6,341, according to CoinDesk.
Dr. David E. Marcinko MBA
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