Lifeboat Foundation

If you follow Bitcoin at all, then you know that its value is spiking. It has already surpassed a massive spike on Thanksgiving night 2013, and it has just surpassed the cost of an ounce of gold. _{[continue below image]}

Like any commodity, the exchange value of Bitcoin is driven by supply and demand. But, unlike most commodities, including the US Dollar, the Euro or even gold, the eventual supply is capped. It is a mathematical certainty. Yet, demand is affected by many factors: Adoption as a payment instrument, early signs that it is being considered as a reserve currency, fascination by Geeks and early adopters and its use as a preferred tool by some criminals.

But chief among reasons for acquiring Bitcoin is speculation. Whether it is buy-and-hold or day trading, speculators still outnumber those who use Bitcoin to settle debts or to buy and sell other products and services. (Earlier this week, I argued that speculation is responsible for 85% of demand and of transactions—but that’s another story).

Continue reading “Bitcoin ETF Buzz Offers Short Term Opportunity” »

I use to hate it when my dad insisted that I read something longer than 2 paragraphs. (Something related to his interests, but not to my school work, his career or our family). That’s because it shouldn’t require a 30 minute read to determine if it piques my interest, as it does his.

But I am asking Lifeboat readers to invest 37 minutes in the video linked below. Even if you give it just 5 minutes, it will provide sufficient motive for you to stick around until the end. _{[continue below video]}

I want you view it because we are on the threshold of something bigger than many people realize. Bitcoin and the blockchain is not just a new currency or a way of distributing books among network users. We are becoming involved with a radical experiment in applied game theory that is shockingly simple, but nascent. Opportunities abound, and the individuals who recognize those opportunities or learn to exploit them will benefit themselves as they benefit the global community. Because it is so radical (and because it clashes with deeply ingrained beliefs about authority, control mechanisms, democracy and money), it seems complex and risky—but it’s really not.

Continue reading “Antonopolous Clarifies Blockchain’s Profound Leap” »

At Quora, I occasionally play, “Ask the expert”. Several hundred of my Quora answers are linked here. Today, I was asked “How much of Bitcoin’s value is driven by speculation”. This is my answer…

This is a great question! While the value of any commodity is determined by supply and demand, speculation is one component of demand. Another is the unique utility value inherent in a product or process. This is sometimes called ‘intrinsic value’.

It’s ironic that when a high fraction of value is driven by speculation, short-term value becomes volatile and long-term value becomes less certain—and less likely to produce returns for those same speculators.

Editor’s Note: In the past few weeks, a significant spike in Bitcoin’s value and trading volume relates to a pending regulatory decision expected at the end of next week. This activity is certainly driven by speculation. But for this article, I am considering periods in which the demands of individual events are less clear.

Continue reading “What Fraction of Bitcoin Value is Driven by Speculators?” »

MIT has never stood stand still in the presence of change and opportunity. Their Media Lab Currency Initiative is at the forefront of Blockchain and Bitcoin research. With the fracture of the founding core team, MIT stands to become the universal hub for research and development.

The initiative now has a team of 22 people and at least
seven ongoing research projects, and it nurtures three startups that use cryptocurrencies and the underlying technology in a variety of ways. Blockchain research now sits alongside transparent robots that eat real-world fish, solar nebula research, and other imaginative, futuristic projects in progress at the university.

The initiative has already funded the work of bitcoin protocol developers and has supported research, going far beyond bitcoin—even partnering with Ripple Labs and developing enterprise data projects.

Now, the MIT Media Lab Digital Currency Initiative is working on 3 big Blockchain ideas:

Continue reading “MIT is working on 3 BIG Blockchain Ideas” »

At the heart of Bitcoin or any Blockchain ledger is a distributed consensus mechanism. It’s a lot like voting. A large and diverse deliberative community validates each, individual user transaction, ownership stake or vote.

But a distributed consensus mechanism is only effective and faithful if the community is impartial. To be impartial, voters must be fairly separated. That is, there must be no collusion enabled by concentration or hidden collaboration. They must be separated from the buyer and seller; they must be separated from the big stakeholders; and they must be separated from each other. Without believable and measurable separation, all sorts of problems ensue. One problem that has made news in the Bitcoin word is the geographical concentration of miners and mining pools.

A distributed or decentralized transaction validation is typically achieved based on Proof-of-Work (POW) or Proof-of-Stake (POS). [explain]. But in practice, these methodologies exhibit subtle problems…

The problem is that Proof-of-Work can waste an enormous amount of energy and both techniques result in a concentration of power (either by geography or by special interest) — rather than a fair, distributed consensus.

Continue reading “Distributed Objective Consensus: Beyond POW & POS” »

Research can seem bland to us laypersons. But, Marko Vukolić shares many of my research interests and he exceeds my academic credentials (with just enough overlap for me to understand his work). So, in my opinion, his writing is anything but bland…

Vukolić started his career as a post-doc intern at IBM in Zurich Switzerland. After a teaching stint as assistant professor at Eurecom and visiting professor at ETH Zurich, he rejoined the IBM research staff in both cloud computing infrastructure and the Blockchain Group.*

As a researcher and academic, Vukolić is a rising star in consensus-based mechanisms and low latency replicated state machines. At Institut Mines-Télécom in Paris, he wrote papers and participated in research projects on fault tolerance, scalability, cloud computing and distributed trust mechanisms.

Now, at IBM Zurich, Vukolić has published a superior analysis addressing the first and biggest elephant in the Bitcoin ballroom, Each elephant addresses an urgent need:

Continue reading “Blockchain Scalability: Proof-of-Work vs BFT Replication” »

There are at least four ways to acquire Bitcoin and three ways to store it…

Acquire Bitcoin: You can trade Bitcoin in person, accept it as a vendor, mine it, or buy on an exchange.

Store Bitcoin: You can keep your Bitcoin in an online/cloud service (typically, one that is connected to your exchange account), keep it on your own PC or phone, or even print it out and store it on a piece of paper. Like a physical coin, the piece of paper has value. It can be placed in your lock box or under your mattress.

Let’s look at the market for Bitcoin Wallets (all of these are free), and then we shall talk about Bitcoin exchange services. This includes my personal recommendation for the typical consumer or coin enthusiast…

Continue reading “Getting your First Bitcoin; Choosing a Wallet” »

Nice try; no faith it will succeed long term with QC.

Singapore-based Quantum Foundation announced that it is working on a new project called Qtum, which combines the technology of both bitcoin and ethereum to facilitate blockchain technology adoption for corporations. Qtum is an open-source blockchain project that aims to build smart contract functionalities that can be implemented at an enterprise level.

The initial financial backing of $1 million by several industry leaders is a testament to the validity of the technology that the Qtum project is creating but also demonstrates full faith in its team of developers. Early-stage angel investors in the project include ethereum co-founder Anthony Di Iorio, Fenbushi partner Bo Shen, and OKCoin CEO Star Xu, among others. The Qtum project also intends to launch its native cryptocurrency to support the project through a crowd sale to raise further funds.

Continue reading “Quantum Foundation Combines Bitcoin and Ethereum to Create Qtum” »

The answer may be counter-intuitive: Not only can Bitcoin be widely adopted under a supply cap, its trust and integrity are a direct result of a provably limited supply. As a result, it will flourish because it is capped.

Everyone Can Own and Trade a Limited Commodity, IF…

…if it is both measurable and divisible. Bitcoin has a capped supply just as gold has a capped supply. Although both assets will be mined for some time into the future, there is only so much that will ever be uncovered. Thereafter, the total pie cannot grow.

But the transaction units will continue to grow as needed, because the pie is divisible into very, very tiny units:

Continue reading “Can Bitcoin Flourish with a Capped Supply?” »