Uphold, Inc. – Disrupting Global Banking

COMPANY PROFILE Uphold, Inc. is a leader in the rapidly emerging FinTech sector. Uphold’s online platform has a global reach, allowing verified members speed and flexibility in managing their money. Funds can be deposited using standard bank transfers, credit cards, and even bitcoin. Uphold account holders, which include individuals and businesses, can instantly send and receive funds amongst each other, and convert between twenty-three major currencies, four precious metals, and two cryptocurrencies. New commodities and currencies are being added regularly to expand the choices available to Uphold’s members.   VALUATION In January 2015, Uphold closed a Series B round, raising $9.6 million via crowdfunding from institutional and individual investors located in the US and UK. Equity was sold on the

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Case Study: A Rural Farmer in a Less Developed Country

Background and Assumptions The premise of this paper is that I am a farmer living in a rural region of a LDC; Mexico in my case. I have an entrepreneurial streak. My farm is a modestly successful enterprise, and in order to increase my profits, I have plans to expand and purchase 10 hectares of land next to my present farm. Fortunately, I live in a region with cell phone and Internet access, and use a smartphone to help manage my business affairs. I have also had the good fortune to be educated in a MDC institution of higher learning and am fully aware of the potential digital currencies and blockchain technologies can bring to my situation. My parents made

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Ripple vs. Bitcoin (security and privacy)

by Albert Szmigielski Fairness Bitcoin’s public ledger, the blockchain, allows any entity to check the transactions in the system. Furthermore, as long as 66.7% of the miners are honest no entity can change the history of transactions. Both of those properties ensure fairness. However in light of recent research into attacks on the Bitcoin network, several double-spending attacks have been identified. Such attacks negate the fairness property. Ripple has not been studied as extensively as Bitcoin. Ripple relies on ledgers that can be inspected. However, Ripple’s validating nodes are currently run and therefore controlled by Ripple labs, it seems that there are not sufficient incentives to run a Ripple validating node. Double spending attacks have not been identified in Ripple

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Bitcoin and blockchains are here to stay.

by Albert Szmigielski This post will argue why Bitcoin, blockchains, and blockchain-based applications are here to stay and thrive. Bitcoin The Bitcoin network and ecosystem is enormous. The computational power of the Bitcoin network is mind boggling (around 600 Petahashes per second as of Dec 2015). The amount of investment in the Bitcoin ecosystem is already in the Billions. Currently Bitcoin’s market cap is only around five billion US dollars, but this is a lot for a peer-to-peer, open source project. Bitcoin also solves a problem that has eluded people for quite some time, how to send money cheaply, efficiently, and quickly? The services that exist now do not have any of these traits. Just ask anyone who routinely sends

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Countermeasures to information leakage of Bloom Filters in Bitcoin lightweight clients

by Albert Szmigielski Keep the state about the seed. When a device restarts and uses a different seed (as well as other filter information) to create a new bloom filter, the probability of having the same false positives is very low. Therefore an adversary with access to two bloom filters from the same client, created with different seeds can easily check if addresses appear in both filters. If so, they are addresses of the SPV client, otherwise they are false positives. Keeping the state about the seed would not give that advantage to the adversary. When an SPV client restarts it will create the exact same filter. Disadvantages The need to store a seed and some other information about the

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Bitcoin Security and Privacy

Bitcoin Security and Privacy By Albert Szmigielski Bitcoin is a decentralized currency and payment system. In order to be an effective and secure payment system it should satisfy several security requirements. The first of these requirements is fairness. On the surface Bitcoin meets the property as users can only sign for coins that they control. However, upon further examination of recent research we do see that several double-spend attacks have been performed that would negate the fairness property of Bitcoin. On the other hand Bitcoin does satisfy resistance to impersonation attacks very well. No one can obtain the private keys (assuming they are stored properly and securely) of another person in the system to sign their transactions. As a result

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Bloom Filters in Bitcoin SPV (Lightweight) Clients – Part I

Bitcoin lightweight clients are wallets that do not download and store the whole blockchain locally. Currently (Oct 2015), the Bitcoin blockchain is about 45GB and growing. Downloading the whole blockchain onto a smart phone makes no sense. Satoshi envisioned lightweight clients in the original whitepaper [1]. The whitepaper introduced Simple Payment Verification – a way to verify payments without having to download the complete blockchain. A thin client (another name for a lightweight client) only downloads the block headers by connecting to a full node. Then it requests transactions matching its own addresses. To be clear a lightweight client sends its addresses to a full node requesting all the transaction that mach those addresses. The full node responds with those

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Bitcoin local reputation management system for peer nodes

by Albert Szmigielski  Recently I have heard about a Bitcoin local reputation management system for peer nodes , so i decided to look into it. The system is in the source code, mainly in main.cppI looked at Version 0.11.99.0 (from clientversion.h) main.h /** Increase a node’s misbehavior score. */ void Misbehaving(NodeId nodeid, int howmuch); main.cpp int nMisbehavior; void Misbehaving(NodeId pnode, int howmuch) { if (howmuch == 0) return;     CNodeState *state = State(pnode); if (state == NULL) return;     state->nMisbehavior += howmuch; int banscore = GetArg(“-banscore”, 100); if (state->nMisbehavior >= banscore && state->nMisbehavior – howmuch < banscore) { LogPrintf(“Misbehaving: %s (%d -> %d) BAN THRESHOLD EXCEEDED\n”, state->name, state->nMisbehavior-howmuch, state->nMisbehavior); state->fShouldBan = true; } else LogPrintf(“Misbehaving: %s (%d -> %d)\n”, state->name, state->nMisbehavior-howmuch, state->nMisbehavior);

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Bitcoin Basics – Part One – Mining Basics

by Albert Szmigielski Mining serves different purposes in Bitcoin. Miners verify transactions, by making sure they are valid. Then they include these transaction in a newly created block. This is how the blockchain gets extended, miners add new blocks on top of it. Then there is the securing the blockchain function. The more processing power miners have the more difficult it is for someone to mount an attack against the Bitcoin network. Finding a new block. The terminology around this varies, some people say finding a new block, others refer to it as solving a new block. All the miners compete against each other in finding new blocks. They are motivated by the rewards they get when they do find one

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Blockchain & Investment Opportunities.

  Introduction In short Bitcoin[1] is the first digital, not centralised (ie not issued by any government, and not controlled by any one entity), global, internet-based currency. It is also a payment network, open to use by anyone. By convention we refer to the network as Bitcoin, with an uppercase ‘B’. The unit of account, is referred to as bitcoin with a lower case ‘b’. Blockchain Bitcoin is however, just a first app, built on a new technology that, because of Bitcoin’s success does not get much attention. That technology is called blockchain. A blockchain is an append-only database of records, we can also view it as a chronological order of records. In Bitcoin’s case the blockchain is used to

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Some Thoughts on Fedcoin – a Fed backed cryptocurrency.

Since the invention of Bitcoin some have given significant thought to cryptocurrencies issued by central banks or governments. Recently the idea of Fedcoin stimulated a lot of discussion after David Andolfatto from the Federal Reserve Bank of St. Louis presented the idea at P2P Financial Systems 2015. David also discussed the idea in a post. As a concept the idea is intriguing, but a flurry of questions about details have quickly been raised. Among those are issuance, distribution, peg to the dollar, miner rewards, restriction on users and miners, monetary policy and others. I will attempt to address these issues as I see them. Why Fedcoin? Think of it as digital cash, just like Bitcoin but without the volatility. It

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Insurance products and the Blockchain

Describe a plausible scenario of the state of the cryptocurrency ecosystem that would allow traditional insurance products to be built/delivered in a decentralized manner. For the first time in history, distributed, decentralized, and autonomous entities are capable of existing and functioning in cyberspace. Blockchain is the underlying technology that makes it possible. In this brief paper we will outline how an insurance operation can utilize blockchains to its advantage. We will also touch on some societal benefits of blockchains in the insurance industry. Furthermore, we will outline a case where an insurance company as a DAC could exist with technology that is currently available (but perhaps is not fully deployed). Blockchains are essentially databases. Insurance companies can utilize them in

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