What is bitocin BTC How does bitcoin work Satoshi

What are Blockchain Confirmations?

What are Blockchain Confirmations?

Blockchain Confirmations allow users to know that their transactions over blockchain networks have been secured. When a transaction is made on a Blockchain Network–for instance, when you send a few coins to your friend’s digital wallet address– that transaction must be recorded on that blockchain’s digital immutable public ledger. The digital immutable public ledger is a sequence consisting of digital blocks attached to each other, ordered down to the millisecond in a chronological chain, thereby known as a “Blockchain”. After being placed on the blockchain, each transaction must be validated through a process called consensus. Consensus validation is performed by miners on the network using a Proof of Work scheme that rewards miners new coins in exchange for securing and validating transactions, as long as their new blocks are approved by the other miners on the system through participant consensus. However, if your transaction is on the latest block on the blockchain, it is still subject to rejection and reversal by the network. This is because a malevolent user on the network could want to make copies of the same transaction immediately after, pretending as if the previous one did not happen. In this case, the Blockchain Network can check its own transaction history on its own Blockchain Immutable Public Ledger before reversing the transaction. So yes, while a true transaction is not reversible, mistook transactions and malevolently copied transactions can be reversed. If a user is in fear that their true transaction is in jeopardy of being reversed, there is a security protocol that is built into all blockchains. This is where Blockchain Confirmations become useful.

Simply put, a Blockchain Confirmation is a number of times another block or transaction is placed chronologically after your transaction’s block. For example, if your transaction is placed on one block, it is very likely that a new block will be appended to your block soon after as more transactions are made on the network. If a malevolent agent on the network wishes to reverse or corrupt a transaction, not only will they have to get through that block’s security by decrypting its encrypted data, but they will also have to decrypt all of the other data on the blocks ahead of this block since the blocks are all linked together in a chain. Blockchain Confirmations therefore work as a measure of security, since for every block that is added after your transaction, your transaction is much less likely to be reversed and is therefore more secure. In a definitive sense, if you make a transaction on a block, each block afterwards is a confirmation. If there are 3 blocks after your transaction’s block, there would currently be 3 blockchain confirmations on your transaction.


Blockchain Confirmations and Security Standards

In terms of financial blockchain applications, most cryptocurrency exchanges, wallets, and networks require a minimum of 3 confirmations for a transaction to be fully valid and irreversible. Each case is different given the various security protocols of each Blockchain Ecosystem, but it really boils down to the size of each transaction made on the network. Using this logic, it is correct to assume that larger transactions require more confirmations before they are validated by a network and secured on both sides, while a smaller transaction requires fewer confirmations. For example, the Bitcoin Blockchain claims that 1 confirmation is enough to secure a transaction under $1000 United States Dollars while 6 confirmations will be needed to secure transactions greater than $1,000,000 United States Dollars. Fortunately enough, the average time to create a block on the Bitcoin Blockchain is 10 minutes; likewise, almost all Bitcoin transactions will be secured and irreversible after an hour’s time.

Unfortunately, there are some innate issues with this process. While early stage Blockchains like Bitcoin made efforts to seek alternatives to traditional financial networks, their confirmation speeds are not nearly fast enough to compete with current supercomputers on Wall Street. Bitcoin made only 3-7 transactions per second at the beginning of 2018, while the more efficient Gas System running the Ethereum Blockchain was unable to break 30 transactions per second on most days. Fortunately enough, Blockchain Confirmations are not to blame–instead, the culprit is the data storage waste of Proof of Work. Proof of Work gives all nodes or computers access to all of the data on the blockchain for viewing purposes. Newer Proof schemes, such as Proof of Stake, make use of database sharding techniques to break the Blockchain across nodes in the network. This links each set of data with another set with corresponding keys, so that miners must combine their power together to access the whole blockchain if desired, while individual users who do not wish to keep all of the blockchain data are not compelled to.


Blockchain Confirmations as an Industry Standard

While the Blockchain Community is cranking out more innovative solutions to simplify transaction velocity and security confirmation every day, Blockchain Confirmations still remain an important feature for our Blockchain Networks, especially on the user side. Blockchain Confirmations allow us to tell our users the security status of their transactions on our networks. This feature has become an industry standard and will maintain its presence in the Blockchain Industry for the foreseeable future. Blockchain Confirmations are one of the most important aspects in evaluating both the legitimacy and the security of a given Blockchain, as a blockchain that requires more confirmations and can produce more confirmations in a given time interval is considered  more secure and reliable than others.

Smartkey for Cryptocurrency Wallets

What is a SmartKey?

What is a SmartKey?

A SmartKey is an Ethos service which lets users create a single key for all of their cryptocurrency wallets. The underlying technology is from a Bitcoin Improvement Proposal – or BIP – commonly known as BIP32. Using BIP32, a single 256-bit seed, or small piece of data, can encrypt information for multiple wallets addresses across multiple blockchains. Even better, these wallets can be nested like a folder structure. This is known as Hierarchical Deterministic Wallets, and is an enormously powerful mathematical structure. Ethos integrated this technology as a SmartKey. This means consumers can have the convenience of a single key that is represented by a 24 word phrase that can secure all of their wallets. There are estimated to be a billion possible SmartKeys for every atom on planet Earth, so you can rest easy knowing that your key is yours alone. Your SmartKey lets you take unprecedented control of your assets and lays the foundation for an open, safe and fair financial ecosystem for everyone.

ASIC Miners Cryptocurrency Mining

What are ASIC Miners?

What are ASIC Miners?

ASIC miners use ASICs, Application Specific Integrated Circuits, which are specialized pieces of hardware designed to perform a single activity. In contrast, the majority of computer hardware in your home, such as the circuitry in your smartphone or in your laptop computer, is utilized to perform a variety of tasks. For example, if you have multiple programs open on your computer, such as a web browser and a text editor, then your computer is running multiple tasks and needs hardware that can specifically manage both those tasks. CPUs, or Central Processing Units, usually do the job in this scenario.

The issue with using hardware that is designed to run multiple tasks at once is that the hardware will generally not be the best option if you only want to perform a single task extremely well. ASICs, by their very name and definition, are designed to specialize in one type of task. Much of the computational work needed to maintain a blockchain network’s transactions, connections and account security is usually limited to a small number of power-intensive tasks.

Cryptocurrency mining is required to sustain a blockchain network that operates by using a Proof of Work scheme. In terms of complexity, mining is a very simple process that will usually only utilize one software program, racks of hardware, electric power and time. This is where ASICs become useful for the blockchain.


Bitcoin & Cryptocurrency Mining

In the early days of Bitcoin, most miners used CPUs from home computers to make a profit mining bitcoin. It was simple; if the value of the Bitcoins you received for your mining efforts exceeded your electric bill and the cost of your computer hardware, then you were in the black. As blockchains have become more complex, CPUs and home electric power supplies no longer make mining a profitable endeavour.

More and more transactions occur every day, and the computational resources necessary to secure and validate these transactions has been increasing exponentially. Mining organizations have done everything in the books to cut costs, from moving to cheap power supplies near dams in upstate New York and rural China, to investing in warehouses full of ASICs. Greater research in both the areas of computer science and computer engineering have brought forth advancements in algorithm efficiency, software efficiency and hardware efficiency, and that advancement will continue for the rest of time itself. Whether or not these developments can arrive faster than blockchain’s puzzles’ complexity can increase is the real issue. If accessible progress in hardware and software cannot win the race against the blockchain’s computational complexity, then cost-cutting and other profit-maximizing strategies will have to make an appearance. Whether or not Satoshi Nakamoto saw this coming in his initial conception of the blockchain, cryptocurrency mining has seen huge barriers to entry develop in recent history due to these strategies.


Issues With ASIC Miners

Increasing barriers to entry in mining is an issue of recentralization after decentralization. While the purpose of blockchain is to decentralize the security and processes in maintaining a peer-to-peer network system, Proof of Work mining and ASICs have increasingly become a centralized matter. In other words, only individuals and corporations with deep pockets have the ability to enter the mining arena and still turn a profit. While users of Proof of Work blockchains can still appreciate the security and anonymity of utilizing these networks, it is troubling to know that the largest chunk of both the power running these networks and the collection of newly created tokens and coins will go to a select group of ‘central’ organizations and corporations.

Fortunately, creators of newer altcoins have taken these concerns into account when designing more decentralized block creation and mining schemes. While some blockchain developers adopt alternative mining algorithms to deter ASIC rigs, other blockchain ecosystems have been becoming more popular for their use of alternative proof schemes, such as Proof of Stake. Currently, we are going through a period that will test the blockchain community for the most efficient and accessible consensus schemes and most secure decentralized networks. The influence that ASIC investment has had on cryptocurrency ecosystems has nonetheless pushed blockchain technology in new directions, and has definitely started necessary conversations about revising blockchain algorithms, mining, and block creation schemes.

So you might be asking yourself by now, how does this affect my decisions as a prospective investor? First and foremost, if you are looking at investing in blockchains that use Proof of Work, such as Bitcoin and Ethereum, there are a variety of variables to take into consideration. Since the relative value of a given cryptocurrency is based on both the total volume (the amount of existing coins) and the velocity at which transactions take place over the network, we can infer that the rate at which coins are mined and how mining validates transactions both affect the value directly. If coin mining is too expensive, then we can expect that there will be a limited amount of coins in the near future, making the asset scarce and therefore more valuable. This holds true as long as the velocity of transactions stays the same or speeds up, which is still dependent on the efficiency of mining. Since this is ambiguous terrority, it is more efficient to consider the case in which we hear news that large organizations are investing in mining a specific blockchain. There will be a high chance that through that investment in mining, the blockchain’s volume of coins will increase, as will the efficiency of the blockchain. This would make room for greater transaction velocity and a greater likelihood of a secure, quick and more valuable blockchain.

Here at Ethos we seek to educate our users by bringing them the latest and most reliable information about various blockchain ecosystems. Ethos wants its readers and users to make well-educated, informed decisions and we recommend you check out all the other resources we have on the Universal Wallet and Ethos.io!

What is Proof of Work? Cryptocurrency Mining

What is Proof of Work?

What is Proof of Work?

Proof of work refers to the computational puzzle that miners have to solve which allows many open blockchain networks to remain secure and decentralized.

Proof of Work uses cryptographic functions that essentially guarantee a certain number of computer cycles were spent to solve the puzzle.

In other words, by solving this puzzle, you are proving that you did some amount of work – hence the term Proof of Work.

How much work that takes is dictated by the difficulty, which scales the amount of work it takes to solve the puzzle.

This puzzle can be thought of like a lottery.  Every computer cycle that is used to try and find a solution is a lottery ticket, with the winning reward of issuing the next block and claiming a reward.

Proof of Work is the foundation of many open blockchain networks aligning economic incentives in order to build a system that serves everyone equally.

verified wallet domains

What are Verified Wallet Domains?

What are Verified Wallet Domains?

Each cryptocurrency wallet has an address – often a long set of digits and characters.  An Ethos Wallet domain is a plain English name – like “Johns Wallet” or “ABC Car Rental” – that users can reserve for their wallet.

You can think of a Wallet Domain like an email or a website address.  Once a Wallet Domain is registered, it is unique and linked directly to your wallet.  This can be used to protect a brand, or simply reserve your name on the blockchain.

Ethos tokens are used to reserve wallet domains.  By keeping a minimum amount of tokens in a wallet, the domain is reserved and dynamically linked to the underlying blockchain address. This process reduces domain squatting or and fraud by forcing utilization of a limited resource, similar to how Ethereum allocates compute resources on its network.

Wallet Domains can also be verified.  In this process, the identity of the user or business is confirmed and certified.  This builds trust by turning anonymous blockchain addresses into confirmed identities.

Because the Ethos Universal Wallet supports a wide variety of cryptocurrencies, a single wallet name can be used to accept a wide variety of coins.

Wallet Domains are simple way to protect your brand, create single payment point and build trust – all important things to make cryptocurrencies accessible to a mass audience.

Blockchain Developer Platform

What is Ethos Bedrock?

What is Ethos Bedrock?

Ethos Bedrock is a developer platform designed to make blockchain protocols as easy and accessible as internet protocols.

Bedrock can be thought of as an abstraction layer that sits above lower level blockchain protocols like Bitcoin or Ethereum.

Some of the applications that can be built on Bedrock include Verified Identities, Remittances, Verified Source of Funds and Tokenized Securities, creating the foundation for a safe and regulatory compliant blockchain solution.

This allows Ethos, developers, institutions and regulated partners to harness the innovation pioneered by blockchain technology while creating a traditional financial industry level of professionalism, security and compliance.

The goal of Bedrock is to allow developers and institutions to create sophisticated next-generation financial applications that will power the decentralized economy of the future.

What are Cryptocurrency Verified Sources of Funds?

What are Verified Sources of Funds?

What are Verified Sources of Funds?

Bad actors in the cryptocurrency space are a problem and regulators often struggle to identify legitimate companies.

When you open an account at the bank, they verify your identity. But on the blockchain, nobody is attesting to the legitimacy of a transaction.

However, blockchains can be used to create a safer, more ethical financial ecosystem through a standard that Ethos calls Verified Source of Funds, or VSF for short.

Using VSF, entire financial structures can be moved to the blockchain allowing good actors to access its full potential.

VSF records an ID with the block transaction for source of funds, protecting consumers while keeping institutions honest through auditable histories. This holds institutions to a high regulatory standard while bridging the existing financial system with the rapidly growing digital economy.

VSF is an important proposal that can bring industry level regulatory standards to the digital asset space helping to create an open, safe and fair financial ecosystem for everyone.

key sharding cryptocurrency

What is Key Sharding?

What is Key Sharding?

Key Sharding or Shamir’s Secret Sharing is a process by which a private crypto key is split into separate pieces or shards.

Each shard is useless, but when enough are assembled they reconstruct the key.

As the technology is based on cryptography, it allows for unique systems that aren’t traditionally possible.

For example, you could distribute 5 shards where any 3 can reconstruct the key.

Imagine this like a safety deposit box with 3 keyholes and 5 keyholders.

Any 3 of the keyholders could gather to open up the box and access anything inside.

Key Sharding is very flexible so any number of shards could be required to restore the key.

Secret sharing enables applications like clearinghouses without custody or recovery mechanisms where nobody has the key.

As cryptocurrencies and blockchain use grows, key sharding will likely be used to decentralize risk and create a more trustless economy.

cryptocurrency exchanges

What are Cryptocurrency Exchanges?

What are Cryptocurrency Exchanges?

Exchanges are places where you can turn one kind of digital asset into another.

Cryptocurrency exchanges do this through trading pairs. A trading pair is a market between two assets, like Ethereum and Bitcoin allowing you to trade one for the other.

Many exchanges only support crypto pairs, but a few also support fiat pairs like the U.S. Dollar and Bitcoin.

A centralized exchange takes custody of your funds to trade.

Because many of these exchanges are unregulated, you should carefully research an exchange before giving them your assets.

A new wave of decentralized exchanges called DEXes are emerging that let you trade directly from your wallet, but are early in development and technically limited.

Cryptocurrency exchanges are powerful tools that enable savvy crypto investors to gain access to liquid markets and a large number of digital assets and are a necessary component of a rapidly growing cryptocurrency ecosystem.

cryptocurrency self custody

What is Self Custody?

What is Self Custody?

Traditional Financial Custodial Services

In the overall history of human finance, currencies and other liquid loose assets have always had the benefits of ease-of-transfer, ease-of-use and ease-of-transport. These benefits though have come with respective problems that remained unsolved for centuries. Fiat currencies and metal minted coins are also easy to steal, easy to lose and generally are fairly flammable or easy to melt. Since these issues are all rather innate by nature, there have been institutions and firms that have worked to remedy these issues since the beginning of the history of currencies. Most of these institutions have come to be known as “banks;” financial intermediaries who will secure, monitor and manage your assets for a cut of the profits. Whether you have seen banks in movies, photographs or in your locality, banks feature huge metal safes, armed guards and clerks behind desks all for the purpose of acting as the custodians of your wealth. In exchange for keeping safe custody of your wealth, banks will take a cut of the wealth as a custodian’s fee and will pay or take interest from your accounts based on whether you are depositing or taking loans from the bank. As long as financial assets have kept a physical form, whether it be on paper or metal bars, we have always needed the help of physical custodians.

Recent advancements in information technology have disrupted this field in numerous ways. Online payment services and banking accounts have abstracted currencies to just numbers in online books. While this sounds simple and naive, this is not that far off from the idea of paper and metal currency. If slips of paper and coins can represent assets that are worth more than their physical worth, can numbers on secure internet networks do the same justice? Skeptics of internet finance have also posed problems that are not too original and are similar to issues with previous forms of currency. Problems of theft, cyber-attacks and internet corruption have deterred internet users from depositing assets online. Banks who work online have to have the latest state of the art internet security in order to keep custody and trust with their clients.

There is an issue though with all of these systems. Whether your assets are in a bank vault or on a bank website, your assets can be found in a central location. Placing your assets in one place has always made it easier for potential perpetrators to find your assets, so it would make sense to split your assets and hide them in different locations, right? Decentralizing wealth has always been a solution for the books, such as when rich Italian Merchants would hide their gold all over the Papal States or when European Monarchs would split their estates for inheritance to multiple children. The issue with decentralization is that it has always been hard to track and maintain multiple stores of wealth. Whether it has been holding multiple keys or multiple bank account passwords, decentralization has not been a realistic way to manage assets. That is, until now.


Blockchain Finance & Financial Self-Custody

Recent advancements in information technology have given us the blockchain. Blockchain technology brings one of the most secure ways, if not the most secure way, to create decentralized financial applications. The decentralized nature of a blockchain ecosystem ensures users that they will be able to deposit and access assets in a decentralized network using fundamental principles of cryptography. By being able to secure assets in a network owned and watched by no single entity, users are able to achieve safe financial self-custody of their assets. That means no more cuts, no more interest and no more financial intermediaries for investment placement and security. At the same time, self-custody on decentralized blockchain networks brings about a new era of universal accessibility to secure financial custody. For centuries, the storage and security of liquid assets has always been a privilege to those who have local access and the funds to pay for bank and other financial intermediary services. Now, all that users need to secure their assets is a legal identity and an internet connection.

These technological advancements have not come without downsides. To invest in a cryptocurrency or blockchain asset, a user needs to sign up for a digital wallet, and these wallets are usually specific to each different type of cryptocurrency, meaning you need a different digital wallet for each cryptocurrency you own. The primary current issue with blockchain finance is that there are so many cryptocurrency wallets and assets to use and invest in across a variety of blockchain networks. Even if a user can maintain multiple accounts, how would that user keep track of all of their security information? That is where the Ethos Universal Wallet and SmartKey comes in. At Ethos, we have worked hard to create a Universal Wallet in which users can learn about, store, send and receive  assets from a multitude of blockchains using one account and therefore one single wallet. Typically, setting up a cryptocurrency wallet requires the creation of a public address to receive assets and a private key to access the assets. SmartKeys allow users to access a variety of assets in a variety of respective wallets using one single key.

Our aim in developing and releasing the Ethos Universal Wallet is to bring additional layers of safety, security and convenience to the realm of financial self-custody. The primary concerns with furthering financial self-custody have always been questions of security, ease-of-use and accessibility, and we aim to address all of these concerns through implementing this comprehensive solution. Through our use of the Ethos Universal Wallet, we have created a means for everyone to regain full control of their financial assets through self-custody, made possible by the security brought to all through the blockchain. With the prospect of such independence in financial management, we do however encourage all of our prospective users to educate themselves and to use all of the informational tools at your disposal to make educated investing decisions. With such great power comes great responsibility, and through our published content and Universal Wallet we will continue to encourage concurrent self-custody with responsible self-education.