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Decentralized Exchange working explained

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Peer- to-peer or decentralized exchanges work purely dependent on a software.

Peer- to-peer or decentralized exchange

Peer- to-peer or decentralized exchanges work purely dependent on a software. All their computations are operated and maintained by this. There is no requirement of a trusted third party to establish trust and facilitate a trade directly between two willing parties in the market. No such processing of trade or maintenance of records needs to be done by this third party, all transactions occur based on trust established by cryptographic methods.

Like any other place, a cryptocurrency exchange is where buyers and sellers conduct their purchases and transactions. For eg, a Bitcoin seller uses the exchange’s address to deposit his or her bitcoins. One can then use their balance on this exchange to sell their bitcoins for other coins, dollars and other digital assets. On the other hand, a person or party looking to buy anything on this exchange would deposit his or her money with the exchange and this balance would then be used to buy bitcoins from the sellers. This way, it facilitates a direct merchant-customer relation, without a government authority or centralized bank having to meddle in between. Significantly reducing any sort of processing fees, transaction fees, additional extra charges, and processing time for transactions to settle, these exchanges are steadily gaining popularity among people and more and more people and institutions, and even the government, is looking to explore this whole new technology based upon the concept of blockchain. China has already added blockchain technology into its 13th 5 year plan.

 

Evolution of peer – to – peer exchanges

Owing to how very few online and physical stores and outlets actually accept cryptocurrencies as a legal form of payments for their products or services, online exchanges have been the primary source of transactions in the world of digital currency. Cryptocurrency exchanges serve as an interface for people to connect cryptocurrencies and the economies of real world.

Unlike Bitcoin, online exchanges are themselves run by companies thus making its existence a complete redundancy. The company’s staff oversees and manages transactions between the users and collect fees for their services. This is the reason why a decentralized peer to peer exchange idea was formulated and now these exchanges are not run by people but a software, and the network is maintained by a group and dedicated volunteers all over the world.

 

Prevention of fraud in decentralized exchange

Fiat money transfers are refundable however, transactions concerning cryptocurrencies are non refundable, irreversible and irrevocable. As a result, one might buy a cryptocurrency like bitcoins, in exchange for their fiat currency and then ask their financial institution like banks for a refund. This ultimately would leave the seller with absolutely nothing. In order to eliminate the chances of such fraudulent activities, different methods are used by different cryptocurrency exchanges. Coinffeine, a very popular decentralised peer to peer bitcoin exchange requires the two willing parties to make a deposit before a transaction between the two is initiated. This deposit can be understood as a security deposit one pays to ensure the owner that no scam would take place. If the transaction is initiated, processed and logged onto the blockchain uncontested, without any issues, this deposit is returned back to their payer. Another Bitcoin startup company known as LocalBitcoins actually has the option for the two willing parties to meet in person. Although this limits trading options because of geographical limits, one can ensure that a transaction has been made earnestly and honestly before parting ways.

 

Advantages of peer to peer exchange

Although a single point of central control provides faster trading solutions, it also incurs for additional service charges and and serves as a single point of complete system failure. Any attack or failure at this central point would affect the working and trading of the entire network involved. Eliminating the requirement of such a single point of authority, a decentralised peer to peer exchange provides high resistance to transaction censorship. There are not vulnerable or obligated to the interference of the government or a centralised financial institution. Even if a particular chunk of the network is forced to shut down its working, the remaining chunk can keep making trades and transactions without any system or network failures. There is virtually no point of control which can be pressurised or dealt with to shut down the operation of the entire network.

#Bitcoin

Is Bitcoin Mining still Profitable?

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Heres a guide to bitcoin and bitcoin mining in2019 and of course the very important question, is bitcoin mining still worth it?

The word bitcoin has been around a lot lately, and you have probably been wondering about it. You have probably also head about bitcoin mining.

 

Heres a guide to bitcoin and bitcoin mining in2019 and of course the very important question, is bitcoin mining still worth it?

Satoshi Nakamoto invented bitcoin as a peer-to-peer electronic cash system. The early days of bitcoin were exploited by the technically informed often garnering outrageous profits. Mining bitcoins was easier then and could be done by a single individual in her bedroom. Now the industry has exploded from a few individuals to a high-level venture; mining bitcoins requires specialized, expensive, machinery.

 

Here are a few basic definitions.

Block -A group of Bitcoin transactions. They are chosen from the mempool (the list of all currently pending transactions) and recorded by a miner into the ever-growing record of blocks known as “the blockchain.”

Hash – to mine bitcoins miners have to solve a cryptographic puzzle. This needs computational power and miners are rewarded freshly-mined bitcoins.

Hashrate – This is a measure of computational power. With an increase in hashrate, it would seem that more and more bitcoins can be mined, but the difficulty is set such that a block is found roughly every 10 minutes.

 

Now let’s calculate the profit gained by an American solo miner.

This explains that an average American would make$1348 a year provided bitcoin price is around $1150 and difficulty and hash rate remain constant. But this is not a likely scenario. Bitcoins difficulty and hashrate have been increasing since the early years. In conclusion, the average miner working solo would find it difficult to mine bitcoins unless he has easy access to cheap electricity.

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#Blockchain

Can Blockchain Replace The Current Credit Scoring System?

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The credit scoring system is nothing new. For years we’ve been told to watch how we spend, to spend only what we have, and to monitor our credit card usage.

The credit scoring system is nothing new. For years we’ve been told to watch how we spend, to spend only what we have, and to monitor our credit card usage. We know that debt—whether school loans, car loans, or medical debt—can be used against us.

With the current credit scoring system, this can mean problems when we want to borrow money or rent an apartment. So what if that system experienced an upheaval? What if blockchain can make that possible?

 

What is Blockchain?

If you’re unfamiliar with blockchain, it’s the creation of Satoshi Nakamoto which is believed to be a pseudonym for a group of people, who are working together under a single name.

Blockchain allows digital information to be easily distributed without making it available to be hacked or copied. Like a digital ledger, new information can be added, but because of how it’s stored, old data cannot be easily altered or deleted.

Blockchain technology began with the creation of Bitcoin, a digital currency. Since then, it has evolved into something much more significant. Blockchain has essentially created a new foundation for improved internet infrastructure.

Is there potential for it to continue evolving until our current credit scoring system is obsolete? It’s a possibility.

You don’t necessarily need to know how Blockchain works to take advantage of it. If you’re curious, though, here are the basics.

 

How Does Blockchain Work?

If you’re at all familiar with computers and the data they host, you know there’s usually one centralized location that stores information. That information is susceptible to hacking, and what’s stored there can quickly become corrupt.

Blockchain changes the way this infrastructure of data works. Rather than one central location where data is housed, the data is duplicated and kept in multiple locations. Regularly updated, the information is no longer available for hackers to invade or corrupt.

Blockchain creates an indeed shared platform. Information is accessible to anyone at any time on the internet.

Like an outdated approach to editing documents in a group, our original understanding of the internet and documentation is limiting. Think of Google docs as an example. As people begin to gravitate toward shared platforms, we become more efficient with both our time and storage space.

Likewise, our understanding of how best to use and store data on the internet is evolving as well.

Blockchain allows for more sophisticated maintenance of information and records. There will be no mistaking whether or not you have the latest version or if some information has been misplaced.

 

What Are the Benefits of Blockchain?

While there are many benefits of using a blockchain style system, there are two highly important ones worth mentioning.

The first benefit is that there is no one single place where information is stored. This also means it has no single point of failure.

Something would have to happen to the millions of computers that have access to the information for it to be lost. It’s highly unlikely that would ever happen.

The second is that no single entity or person has control over inputting or maintaining the information. The information held within blockchain parameters cannot be altered or corrupted easily.

This is, in essence, a public platform, where information can be shared and accessed.

 

What Does All of This Mean for Our Current Credit Scoring System?

We don’t need to get too caught up in the ins and outs of the blockchain system. For now, let’s look at how this technology can change the way we approach credit scores.

Consider that the current (outdated) centralized system in this instance is the bank. The bank has all of your information. If you want to access any of it, you have to go through your bank to retrieve it.

This is the case whether you need the information for a mortgage, a new car, or educational loans.

Once that information is obtained, you then go ahead and pass it on to the party in question. This kind of system means sensitive data passes through many different hands. In this situation, there are multiple moments of vulnerability for the information that keeps your identity—and credit score—protected.

Another problem with this current method is that changes to your credit history are often slow to appear. Quite a bit of trickling down has to happen, to reflect any positive changes you’re making.

Positive changes might have taken place that should be reflected in your credit score. But this isn’t always captured quickly in the information that can be pulled by the bank.

These systems are maintained and passed along by humans. You need to worry about the security of the individual computer networks your information is traveling through. You also need to be concerned about the possibility of human error.

A blockchain system entirely changes how this information is communicated. Data breaches (such as the Equifax hack) can be a thing of the past if we move to Blockchain.

Good credit is one of our most valuable assets. We frequently need to prove our credit history by providing sensitive information. Social security numbers, driver license numbers, passport numbers, and other identifiers are passed back and forth during credit inquiries.

It’s worth repeating that, during the process, we are vulnerable to having information stolen. A traditional system need only have that central computer hacked to gain access or control of information.

Alternatively, a blockchain system requires a hacker gain control of over 50 percent of the network to be successful. It is doubtful to happen—and certainly not without someone noticing.

Using blockchain means credit checks no longer expose or endanger sensitive data. You will have faster, more current results to an inquiry. And at the same time, you won’t be putting your identity at risk of theft.

With blockchain, we can also seamlessly pass information back and forth outside of the existing structures in the United States. In the past, credit histories haven’t been easy to take abroad with you. Moving to a new country could result in needing to start over entirely, regarding establishing your credit.

Blockchain technology allows for a global credit platform. You’ll no longer be confined to a single country, and can take your credit history with you wherever you go. In today’s “global village” of a world, this kind of flexibility is extremely useful.

 

Who Does Blockchain Benefit?

The changes blockchain brings with it can impact everyone. However, some pockets of the population will reap more significant benefits from the transition. Those groups of people are minorities, youth, and those who are underbanked.

In a rapidly changing economic environment, these groups need more help than they ever have before. In recent decades, the entire backdrop for our financial system has experienced upheaval.

The cost of real estate and education are growing much faster than pay rates. Young adults are finding themselves saddled with more financial debt and worry. They have also noticed they aren’t in control of their credit history.

Large credit bureaus, like Equifax, aren’t viewing the average person as their client. Instead, the company sees that person’s information as something to share with other banks and lenders. Far from a client, the person in question becomes a commodity to be used as the firm sees fit.

Moving toward a blockchain system for credit scores will allow people to take back some of the control. Not only can they see and maintain their credit information, but they can also disseminate it as they see fit.

In the post-Equifax environment, two things have become increasingly apparent. The first is that the bulk of our credit information shouldn’t be stored on credit bureau systems. The second is that social security numbers shouldn’t be used as a primary identification tool.

Before the Equifax hack, there was limited interest in moving toward a blockchain credit storing system. There was a strong inclination not to change something that had been working for so long.

The Equifax breach brought home the fact that this system isn’t working quite as well as it was thought to have been. There are, however, still some things that need to be addressed in the blockchain system—speed and expense are both issues. Even so, a future involving blockchain looks mighty bright.

 

The Future of the Credit Scoring System

It’s not likely that the traditional credit scoring system is going to fade out into nothing overnight. The big names in the industry are most likely going to be around for a while to come.

There’s still a lot of work to do with the blockchain platform before we can access all the advantages that come along with it.

It’s promising that this push toward a blockchain credit scoring system can allow for less identity theft. Individuals will have more control over their information and who has access to it.

With some adjustments and improvements, a blockchain system might revitalize our understanding of credit scoring and share entirely.

Keep your eye on the blockchain system and how it continues to evolve. You may be pleasantly surprised by the overhaul our credit scoring system could experience shortly.

 

Guest Post by John Blakely

John Blakely has had a passion for all things personal finance for over a decade. He is a firm believer in having big financial dreams and executing on a plan to realize them. He is an Education Ambassador for ScoreSense, where you can find more of his writings.

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BLOCKCHAIN

Covered: EOS Global Hackathon, United States

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Block.One conducted the 4th EOS Global Hackathon in San Francisco, the United States where winners were awarded prizes worth $144,000.

Block.One the company behind the EOS Blockchain conducted the 4th EOS Global Hackathon in San Francisco, the United States where winners were awarded prizes worth $144,000.

 

What was the challenge?

The hackathon participants were told to build an application on the EOSIO Blockchain that would foster a fundamental competitive advantage by implementing a business model that aligns interests among stakeholders and drives more value back to users.

 

Winners

1st Price ($100000)

The 1st price was won by NouGit Team who developed a fully decentralized and incentivized GIT repositories.

 

2nd Price ($25000)

The 2nd price was won by Pollinate Team who developed an EOSIO based application that awarded a percentage of the shipping cost to the people for last-mile deliveries by picking up and delivering packages.

 

3rd Price ($10000)

The 3rd price was won by Six Degrees Team who developed an EOSIO based application that assists in facilitating need-based personal and professional relationships.

 

Endorsements

The hackathon was endorsed by Mike Novogratz, the CEO and founder of Galaxy Digital and Mike Lempres who is the chief legal and risk officer at Coinbase Exchange who were both judges for the contest.

Novogratz said that Block.One is a leading company in the Blockchain Industry and has a great hand in the blockchain revolution by bringing in the EOSIO platform and producing the environment for the broad adoption of the technology.

 

Block.One is also hosting the upcoming EOSIO Hackathon in Hong Kong, London, and Sydney. The Grand Finale of the Hackathon will happen in South Africa, Cape Town on 7th December 2018.

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