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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Bitcoin Basics #001 – What is Bitcoin?

By Albert Szmigielski Quite often I face the question: “What is Bitcoin?” And it comes from people who have not heard about Bitcoin. When I try to come up with a short answer, I usually reply: it is digital, programmable money. However the counterpoint always gets raised: “Digital money already exists, paypal, visa, e-transfers, etc.”. So let’s try to pin down what Bitcoin really is. To that end we started a Bitcoin Basics series, this is part #001. In short Bitcoin is software, a digital currency, a payment system, a decentralized, permissionless network, and an evolving organism with an immune system. Software, Digital Currency, Payment System It is noteworthy that Bitcoin is ever evolving. So the way we will define it today

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Double-spending attack in BitcoinXT

by Albert Szmigielski BitcoinXT implements a double-spending countermeasure that forwards the first double-spend attempt to other nodes. In order to mount a double-spend attack we must make sure that the vendor does not learn about the double-spend transactions As with any other double-spend attack it starts with forming two transactions: TXV which is used to pay the vendor, and TXD which sends the same inputs to an address controlled by the attacker. The goal is to have TXD confirmed in the blockchain, while having TXV accepted by the vendor in exchange for goods/services. Assumptions and requirements: Able to connect directly to the vendor Able to send TXV to the vendor Able to send TXD to the Bitcoin Network Prevent the

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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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