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Sunday, April 13, 2014

Blackcoin, The First POS (Proof of Stake) Cryptocurrency!

Most of the "alternative" cryptocurrencies that exist today are copycats of either Bitcoin or Litecoin with a few exceptions. Bitcoin and Litecoin are POW(proof of work) cryptocurrencies that require miners to do work with their mining equipment in exchange for getting coin rewards. Blackoin is a POS (proof of stake) cryptocurrency with a built in 1% annual inflation rate. What this means is that there are no miners who do any mining like in Bitcoin, instead new coins are generated by everyone who has Blackcoins in his/her wallet that are "staked". "Staking" is when you leave the coins sitting in your wallet and let them accumulate interest that is paid out every few days depending on several factors. The 1% annual inflation model was chosen because it does not encourage hoarding, and is enough to provide a steady supply of minting that is not too inflationary which is very important for stability. The whole point of Blackcoin's POS structure is that miners are not required to purchase mining equipment and spend lots of money on maintenance and electricity costs. This makes Blackcoin a very efficient and most importantly, a "Green" cryptocurrency. I tried sending some BC to and from several wallets to test the speed of the transfers and I was absolutely blown away by how quickly the network confirmed my transactions. The Blackcoin network requires 10 confirmations, but those 10 confirmations were done in almost under a minute. I had become frustrated with how slow Bitcoin had become in the recent weeks, sometimes waiting for up to 1 hour for my transfers to complete. When I saw how quickly the Blackcoin network sent my payments I knew this is exactly what I had been looking for. If you are a long time user of Bitcoin or any other cryptocoin you will be very pleasantly surprised with the lightning fast transfers that BC is offering.

The other very interesting thing about Blackcoin is the introduction of the "multipool". Because Blackcoin is a "proof of stake" coin, there is no mining directly taking place on the network. The multipool allows traditional Bitcoin and Litecoin miners to mine other crypoticurrencues and get paid in BC. The multipool takes the coins that are mined by the miners and automatically buys BC before paying out to the miners. This results in a very steady stream of new Blackcoin buying every single day, I don't have to tell you what this means for the future price of Blackcoin. The multipool is already sporting north of 6000 Mh/s on scrypt and 50 TH/s on SHA256 cryptocoins. If the pool continues to grow or at least maintains it's current mining power, this could be a very stabilizing force for the value of Blackcoin and will ensure adoption by merchants. Other cryptocurrencies do not have this stabilizing force that dampens the effect of speculators cashing out of the market. The multipool is a very reassuring thing to those merchants who wish to accept Blackcoin because it gives them a sense of security that the BC they receive in exchange for good and services will not be devalued overnight. There have already been several online point-of-sale portals like Coinkite that have accepted BC and I am sure many more will join in very soon. I see a bright future for Blackcoin because many online and offline merchants will be just as amazed as I was at how quickly transaction are confirmed on the Blackcoin payment network.

When I first started researching BC the exchange rate for BC/BTC was 0.00004. In the past week the exchange rate for Blackcoin has exploded to 0.0004 as of the writing of this article. What is even more impressive was the amount of volume on which this rise happened. I have been around cryptocurrencies for about 2 years now and I have seldom seen 2000-3000 Bitcoin daily trading volumes on any alternative cryptocurrency. Whether this trend continues or not I have no idea, but so far the support and vote of confidence from the cryptocurrency community has been nothing short of stellar.

Chart courtesy of Mintpal.

Monday, February 17, 2014

Darkcoin, The Anonymous Cryptocurrency!

Official Darkcoin Site

Privacy and anonymity these days are a very tricky proposition. Everyone is snooping on everyone else. Government agencies and hackers are on the prowl, how is one to keep any form of basic financial privacy and security in their life with all these mounting threats? Bitcoin and other cryptocurrencies provide a layer of anonymity in that everyone looking at the public ledger of transaction can see who sent what to whom and the balances of all the accounts in the system, but you can't tell which account belongs to who. So that is a nice feature of Bitcoin, but it is not a hundred percent anonymous.

Darkcoin is a new cryptocurrency that is promising to create a fully anonymous transaction network and anonymous blockchain using "coinjoin" technology. Unlike the publicly visible transaction of the Bitcoin network where you can see who sent what to whom, this information will be hidden on the Darkcoin network. Darkcoin will be implementing a method called "coinjoin" to obfuscates the transactions in a manner that renders any tracking impossible. I will attempt to give a very crude example of how "coinjoin" works in a simple diagram, the actual cryptography that allows this transaction merging is a lot more complex.

How does "coinjoin" work?

Steve wants to send one coin from address A to address B

Bob wants to send one coin from address C to address D

Coinjoin will combine those two transaction into one and a third party looking from the outside will not be able to tell if A or C belong to Steve or to Bob!! Now imagine you have 100 transactions combined into 1, it becomes impossible to determine who sent what to whom, and that is a big improvement over the publicly visible transaction on the Bitcoin network.

Darkcoin was launched on January 18th, 2014 and since then has been growing in popularity in the cryptocurrency community. From what I have observed on the official Darkcoin forum thread, the developers are very competent and have done a lot of work on implementing the "coinjoin" technology into the blockchain. Development on the encrypted transaction network is a work in progress and the "coinjoin" technology is currently in Alpha testing with very promising results so far. If you would like to keep on top of any new developments you can visit the official Bitcointalk thread here.

If the current price of DRK/BTC is any indication of investor confidence, then the future of Darkcoin is looking very bright indeed. It seems anonymity in this day and age is extremely important and people are willing to pay good money for it. Just a few days ago the exchange rate for DRK/BTC was hoovering around the 0.0005, in just one day DRK/BTC hit a high of 0.002 on very heavy volume on the C-CEX crypto exchange. If that is not a vote of confidence, I don't know what is.

Sunday, February 2, 2014

Bitcoin Adoption = Bitcoin Price Stability?

Every time I open up the news section I am confronted with a story on how yet another online retailer is now accepting Bitcoin as payment. I don't believe the giant online retailers are interested in Bitcoin itself, the only motivation they have for accepting digital currencies is the publicity it brigs and the increase in business. I also do not believe that these retailers are going to be using the Bitcoin they receive from customers. The most likely scenario is all that Bitcoin will be converted to Fiat currency and that will put sustained selling pressure on BTC/USD exchange rate. If you have bought Bitcoin as a long term or even medium term speculative investment thinking that the value of BTC/USD will continue to rise, greater adoption by online retailers might put the brakes on any further price increases. I watch the exchanges very closely on a daily basis and the for the past few weeks the volatility on the BTC/USD has decreased quite a bit. The trading range has become more tight and the massive rallies that we saw just a month ago are nowhere to be found now. I may be wrong about this, but it seems to me that ever since news started to trickle in that companies like Overstock started to accept Bitcoin as payment, volatility decreased.

When I look at the chart on the BTC/USD pair you can see it was a pure speculators market with large swings until early January and then all of the sudden the market went into a sideways chop. Financial markets do go through different phases, but somehow I doubt all the greed of the Bitcoin traders has somehow tapered out. Either the speculators have found a new instrument or there is now another counter balancing force in the Bitcoin marketplace. I think as more online retailers join the Bitcoin ecosystem, greater stability will be brought to the BTC/USD exchange rate.

Saturday, February 1, 2014

Which Cryptocurrency Should You Invest In?

That is the question, isn't it? Where do I invest my money or mining resources when there are countless of new coins coming out every single day? I frequent the "Alternative cryptocurrencies" section on Bitcointalk very often and I am absolutely in awe at the amount of new coins that are launched every single day. As of today there are over 80 alternative cryptocoins and more being created on daily basis. You would need several days just to remember some of the wacky and downright bizarre names of some of these "Alt coins" and let's not even talk about deciding which one's to mine or invest in.

How to evaluate a cryptocoin?

All cryptocoins today run on the SHA-256 cryptographic algorithm or the Scrypt algorithm with a few exceptions. The first SHA-256 coin was Bitcoin and the first Scrypt coin was Litecoin. Most of the 80+ alternative cryptocoins with a few exceptions are copycats of either Bitcoin or Litecoin. So one has to ask, what is the point of all these alternative currencies? What possible benefit can these alternative currencies offer other than what Bitcoin and Litecoin already provide? That is the most important question one should ask themselves before investing a single cent of their own money or resources on any of these alternative currencies.

Many of the creators of these alternative currencies are nothing but clones of Litecoin/Bitcoin. All they do is slap a nice new logo on their new coin, come up with a clever or maybe not so clever new name for their coin, modify some parameters in the original Litecoin/Bitcoin wallet client and VoilĂ , you have yourself a new coin. Anyone can create a new cryptocoin and start spamming it of every forum they can find. Do you really want to invest in something like that???? I sure as hell DO NOT!!

If you notice a particular cryptocoin being hyped up and massive amounts of hysteria surround it, WATCH OUT! Unless that particular coins truly brings something technologically ground breaking, it quite simply will not survive in the long term. Yes, it may initially rise in value on whichever exchange it is being traded on, but that is not a signal to jump in head first. Many potential investors get mesmerized by the volatility and excitement of day to day price fluctuations and they start fantasizing about how much money they are going to make. That is not investing, that is gambling. Fear is much more powerful than greed, once the volatility and the novelty aspect wears off, all the gamblers will head towards the next best thing and whoever "invested" will be left holding the bag! Do not judge a cryptocoin based on how whacky the daily price fluctuations are, or how much it is being hyped up.

When evaluating a potential cryptocoin to invest in, spend some time with the community on the forum. Observe how the developers act towards other members on the forum and how helpful other members are to each other. The behavior of the community can tell you a lot about the caliber of people that are involved and if they truly stand behind the coin or are just looking to make a quick buck and bail. Even if a coin is technologically innovative and groundbreaking, but something seems "Off" with the members or something rubs you the wrong way, that is a big red flag. Intuition is very important in investing, we all have it, learn to use it. I have spoken to many of my fellow cryptocoin investors, and sometimes they tell me that even though they liked the idea behind a coin, something just did not feel right about it. If you get that feeling, then just walk away.

If you decide to research a particular cryptocoin on Google, beware of any articles that you encounter. Many articles are paid for by the makers of the cryptocoin and written as pure promo pieces. When reading these articles, evaluate to the best of your ability if the writer is trying to give a balanced review of the coin or if it is trying to get you all pumped up. I understand cryptocoins are a very exciting new technology, but try to be as level headed as possible.

One final point I would like to make. Only invest money that you can afford to loose. Cryptocurrencies are still in the early stages and even Bitcoin and Litecoin are still not fully adopted yet by society. There are more and more businesses that are now willing to accept digital currencies, but that can quickly change if the governments of the world decide to crush the cryptocoins. For anyone who thinks that is unlikely or impossible, let me remind you how long the "War on Drugs" has been going on and how much damage it has done to society in general. Do not underestimate the arrogance and stupidity of crooked politicians!!

May the Cryptocurrency Gods smile upon you! :)

Tuesday, January 28, 2014

Crypto Exchange C-CEX Accepts Gridcoin!!

Gridcoin, the crypto currency that donates to Boinc science projects has found it's first cryptocurrency exchange. As of January 28, 2014 Gridcoin is available for trading at C-CEX Crypto Exchange. If you have read my previous writeup on Gridcoin, you know I have been a big supporter of the project since it's inception. So far the Gridcoin Project has donated approximately 8.8 million credits to the Boinc system.
There are members of the Gridcoin team that also donate to the World Community Grid as well. So far Team Gridcoin has donated about ten million points and returned about 17,578 results as of today. If you would like to join team Gridcoin you can do so by clicking here.

Trading Binary Options and MT4.

As the forex and financial markets become more accessible to the general public there is also a proportionate rise in financial instrument innovation. Binary options are a fast growing instrument in today financial markets. What exactly is a binary option? A binary option is a type of option where the proft is either some fixed amount of some asset or nothing. There are only two possible outcomes to the binary option and thus the name "binary", meaning dual. Binary options can be bought on any financial instrument and in both directions, long and short. A binary option can be for any length of time, from one minute to one hour. There are also some brokers that offer binary options on MT4 trading platform as well. So there is quite a bit of brokers that offer binary options on many different trading platforms. If you are an MT4 user you can also use "Expert Advisors" to help you in your trading decisions which makes it that much more fun to trade.

Saturday, December 21, 2013

Canadian and Toronto Forex Brokers

In my previous article on picking good forex brokers, I emphasized the importance of the jurisdiction in which the broker is located in. If the security of your assets is a top priority then it is be highly advisable to pick a broker that is located in either U.S.A, England or Europe. There have been many brokers that have gone bust over the years, and as a trader you want to make sure that no matter what happens you get your money back. Having said that, the one part of the world I have not written about is Canada. The city of Toronto is a major financial and economic center and there are quite a few reputable forex brokers that are headquartered in Toronto. Unlike the U.S.A where traders are permitted to only use national-licensed brokerages, in Canada you are allowed to trade with any brokerage of your choosing. Before picking a currency exchange in Toronto or Canada in general, make sure to do a lot of due diligence both online and offline.