Tag: crypto

Why security is more important than speed

On By mehranmuslimiblogIn BlockchainLeave a comment

If you have read much about blockchain technology, you will be aware that there is an obsession about transaction speed within the community. Indeed, it is possible to conclude that every problem the blockchain and cryptocurrencies are curently experiencing comes down to the issue of speed.

But this obsession is blinding us to the fact that speed isn’t everything and it certainly isn’t going to be a deal-breaker that ends the future of blockchain projects. Certainly most people working in the fintech sector don’t believe it will and for good reason. If you use PayPal as an example, there is an average of 193 transactions per second. Blockchain-based platforms are aiming for one million transactions per second. However, that is a long way off happening. Still, even if PayPal is ‘slow’ compared to what blockchain developers believe they can achieve, nobody thinks the lack of speed is going to be the end of PayPal forever.

Ethereum is the blockchain network most used for transactions and scaling has presented an issue for it. People using the ethereum platform would like to see it scale faster, but there is something else that is more important to them, and that is security. As James Halladay writes at Hackernoon; “Of course, rapidly scaling the Ethereum network would be fantastic — no one’s disputing that — but making it the goal seems misguided.” He calls the obsession a smokescreen and a distraction.

And here is why: do we really need the kind of transaction speed that blockchain enthusiasts have set as the “holy grail”? No, because for fintech platforms security and stability are much more important than being fast. And, the obsession with speed is off-putting to the more conventional financial institutions that might be wooed over to using blockchain solutions if there was more focus on security and stability.

Security is the major advantage that the blockchain has to offer, so if we talk about a ‘Three S’ blockchain, it should be Security –Stability- Speed in that order.

Have ICOs reached the end of the road?

On By mehranmuslimiblogIn Blockchain, ICOLeave a comment

In 2017, Initial Coin Offering (ICO) was probably one of the biggest buzzwords in the fintech and other blockchain-based sectors. There were ICO calendars, journalists tracked how various ICOs were doing and reported on the final amount raised, looking for the ICO that would break all ICO records. However, the negative reaction of media giants like Facebook and Google to the ICO sphere had the effect of making it more difficult for those fledgling businesses holding ICOs to market their offering, and ultimately could be said to be responsible for dampening enthusiasm for this new form of crowdfunding.

Then 2018 brought with it a change in wind direction: the cryptocurrency market started to behave in a way that disappointed the small investor. Institutional investors were still apparently wary of the entire ecosystem, regulatory bodies debated how to handle it, and on top of that, the word ‘ICO’ became almost toxic thanks to the social media rulings on promoting them. Instead, people started to look for ways around it, calling them ‘token sales’ and talking about ‘digital assets’ rather than cryptocurrency. And, lets be honest, the glamour and excitement associated with ICOs in 2017 was beginning to wear a bit thin.

This is not something I made up: data from Crunchbase published this summer and in the Q3 of 2018 shows that there has been a massive decline in ICO fundraising. A report from ICORATING reveals, “a total of just over $1.8 billion was raised by a total of 597 ICO projects in Q3 2018, down significantly from the over $8.3 billion that was raised in Q2 2018.”

America’s SEC is also responsible for some of the problems faced by ICOs; its scrutiny has made the country a cold place for the blockchain-based startups. And America isn’t the only jurisdiction presenting barriers for the sector.

ICOs aren’t dead; they’re being reborn

The fact that ICOs seem to be declining in terms of the funds raised this year doesn’t mean that funding is not coming in for new blockchain businesses. Instead, what is happening is that the environment is simply changing: ICOs may no longer be the fashion, but there is an increase in crypto funds coming from venture capital sources. What we are going to see are better funding solutions in a different format.

The point I really want to make is this: just because there is a decline in ICO activity, don’t take this as a sign that cryptocurrencies, tokens and blockchain technology have also had their day. This is a new market where various roles and functions are constantly evolving, and there’s nothing surprising about that as history shows us.

Nouriel Roubini’s Project Crypto Fear

On By mehranmuslimiblogIn Bitcoin, BlockchainLeave a comment

There have been some voices in the banking community that are determined to undermine the legitimacy of cryptocurrencies; Jamie Dimon is one, but the loudest voice is that of Nouriel Roubini. This American economist, who made his name on the back of accurately predicting the global financial crisis of 2008 has been making sure that US government senators listen to his dire warnings about digital assets if they are adopted.

Roubini claims that crypto is all about greed; for him there is no case for democracy and decentralisation according to him. His actual words were: “Crypto is the mother or father of all scams and bubbles.” That is what he told the US Senate Committee on Banking, Housing and Community Affairs.

His criticism of the industry is founded in some truth. Yes, there have been scams and some crypto assets will turn out to be worthless, but not all. Still, since when has everybody unilaterally agreed about everything? There is a point to debating the case, because it enables us to come to a clearer conclusion about the potential of the new technology.

Roubini is also an economist who likes to shout pretty loudly about it all being a ‘bubble’. Of course, he wasn’t alone in going on about the Dutch tulip fever of several hundred years ago. He said the bubble would burst, and some might think it has, because in 2018 the market hasn’t lived up to the hype of 2017. But what is happening now isn’t necessarily a bubble bursting; in the future we may look back and see that it was more a case of the market finding its own level before moving forward again. And, Roubini has ignored the potential of stablecoins, which could protect us from the kind of crash we experienced in 2008.

The mainstream media has supported Nouriel Roubini’s view. Crypto sceptics are more regularly interviewed than crypto supporters, and these anti-crypto talking heads fan the flames of the anti-crypto propaganda. But they may have egg on their face when crypto ETFs make their debut.

Roubini told CNBC, which gives him a lot of air time: “Folks with zero financial literacy — individuals who could not tell the difference between stocks and bonds — went into a literal manic frenzy of Bitcoin and Crypto buying.” Well, yes, because not everyone can invest in Wall Street! But this doesn’t make it a scam, or a bubble, or something to be feared.

Give crypto, blockchain and all the attendant new tech tools, such as AI, a chance, because it might deliver something unexpectedly good.

What blockchain is and what it isn’t

On By mehranmuslimiblogIn Bitcoin, Blockchain, EthereumLeave a comment

The ‘blockchain’ word has been in popular use since 2017 and it has come to mean anything from the technology that will change to world to a digital form of snake oil. It was also going to make every investor in it very rich.

Part of the blockchain legend has been based on all the hype around cryptocurrencies, and it is fair to say that its powers have been inflated to the point where some people have come to believe it is capable of delivering things that it most likely can’t. After all, it is just a database with new features.

Jack Dossman writes at Hackernoon defines it thus: “It allows multiple parties to record and share information on a database in real time, and not need to trust each other, as they are incentivised to do the right thing through tokens/coins.”

As he says, blockchain has a certain specificity that only makes it useful in certain circumstances. It’s great for cryptocurrencies and for faster, cheaper cross-border payments services, but it isn’t a solution for absolutely everything.

It has some flaws: for example, the proof-of-work mechanism uses extraordinary amounts of electricity. But, we must also remember that we are still in the early days of blockchain and to dismiss it now would be the equivalent of saying in 1995 that the Internet would never work.

It isn’t a ponzi scheme and it isn’t a way of making a company’s share price rocket simply by adding ‘blockcian’ to a company name; especially when there is no blockchain involved. Neither is it a tool exclusively used by scammers as some would like you to think. That’s just a side effect of the technology, not its ultimate purpose. Plenty of scammers use email and social media channels, but that doesn’t stop us from using the Internet.

It won’t revolutionise you business, unless your company really needs blockchain technology to grow — so don’t add it in just for the sake of it. Plus, you’ve probably heard that it’s a ‘disruptor’; well, it probably won’t disrupt every industry sector, because it isn’t needed everywhere.

So what is blockchain?

It is technology that provides:

· A shared, add-only database

· Removes need for intermediaries

· It’s trustless

· It offers consensus and validation

This makes it perfect for cryptocurrencies and the finance world. There may be other mass-market cases for blockchain use that will come to light in the future, but just don’t believe absolutely everything you hear about what blockchain can do.