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Why i’m bullish on Zilliqa (long read)

Edit: TL;DR added in the comments
 
Hey all, I've been researching coins since 2017 and have gone through 100s of them in the last 3 years. I got introduced to blockchain via Bitcoin of course, analyzed Ethereum thereafter and from that moment I have a keen interest in smart contact platforms. I’m passionate about Ethereum but I find Zilliqa to have a better risk-reward ratio. Especially because Zilliqa has found an elegant balance between being secure, decentralized and scalable in my opinion.
 
Below I post my analysis of why from all the coins I went through I’m most bullish on Zilliqa (yes I went through Tezos, EOS, NEO, VeChain, Harmony, Algorand, Cardano etc.). Note that this is not investment advice and although it's a thorough analysis there is obviously some bias involved. Looking forward to what you all think!
 
Fun fact: the name Zilliqa is a play on ‘silica’ silicon dioxide which means “Silicon for the high-throughput consensus computer.”
 
This post is divided into (i) Technology, (ii) Business & Partnerships, and (iii) Marketing & Community. I’ve tried to make the technology part readable for a broad audience. If you’ve ever tried understanding the inner workings of Bitcoin and Ethereum you should be able to grasp most parts. Otherwise, just skim through and once you are zoning out head to the next part.
 
Technology and some more:
 
Introduction
 
The technology is one of the main reasons why I’m so bullish on Zilliqa. First thing you see on their website is: “Zilliqa is a high-performance, high-security blockchain platform for enterprises and next-generation applications.” These are some bold statements.
 
Before we deep dive into the technology let’s take a step back in time first as they have quite the history. The initial research paper from which Zilliqa originated dates back to August 2016: Elastico: A Secure Sharding Protocol For Open Blockchains where Loi Luu (Kyber Network) is one of the co-authors. Other ideas that led to the development of what Zilliqa has become today are: Bitcoin-NG, collective signing CoSi, ByzCoin and Omniledger.
 
The technical white paper was made public in August 2017 and since then they have achieved everything stated in the white paper and also created their own open source intermediate level smart contract language called Scilla (functional programming language similar to OCaml) too.
 
Mainnet is live since the end of January 2019 with daily transaction rates growing continuously. About a week ago mainnet reached 5 million transactions, 500.000+ addresses in total along with 2400 nodes keeping the network decentralized and secure. Circulating supply is nearing 11 billion and currently only mining rewards are left. The maximum supply is 21 billion with annual inflation being 7.13% currently and will only decrease with time.
 
Zilliqa realized early on that the usage of public cryptocurrencies and smart contracts were increasing but decentralized, secure, and scalable alternatives were lacking in the crypto space. They proposed to apply sharding onto a public smart contract blockchain where the transaction rate increases almost linear with the increase in the amount of nodes. More nodes = higher transaction throughput and increased decentralization. Sharding comes in many forms and Zilliqa uses network-, transaction- and computational sharding. Network sharding opens up the possibility of using transaction- and computational sharding on top. Zilliqa does not use state sharding for now. We’ll come back to this later.
 
Before we continue dissecting how Zilliqa achieves such from a technological standpoint it’s good to keep in mind that a blockchain being decentralised and secure and scalable is still one of the main hurdles in allowing widespread usage of decentralised networks. In my opinion this needs to be solved first before blockchains can get to the point where they can create and add large scale value. So I invite you to read the next section to grasp the underlying fundamentals. Because after all these premises need to be true otherwise there isn’t a fundamental case to be bullish on Zilliqa, right?
 
Down the rabbit hole
 
How have they achieved this? Let’s define the basics first: key players on Zilliqa are the users and the miners. A user is anybody who uses the blockchain to transfer funds or run smart contracts. Miners are the (shard) nodes in the network who run the consensus protocol and get rewarded for their service in Zillings (ZIL). The mining network is divided into several smaller networks called shards, which is also referred to as ‘network sharding’. Miners subsequently are randomly assigned to a shard by another set of miners called DS (Directory Service) nodes. The regular shards process transactions and the outputs of these shards are eventually combined by the DS shard as they reach consensus on the final state. More on how these DS shards reach consensus (via pBFT) will be explained later on.
 
The Zilliqa network produces two types of blocks: DS blocks and Tx blocks. One DS Block consists of 100 Tx Blocks. And as previously mentioned there are two types of nodes concerned with reaching consensus: shard nodes and DS nodes. Becoming a shard node or DS node is being defined by the result of a PoW cycle (Ethash) at the beginning of the DS Block. All candidate mining nodes compete with each other and run the PoW (Proof-of-Work) cycle for 60 seconds and the submissions achieving the highest difficulty will be allowed on the network. And to put it in perspective: the average difficulty for one DS node is ~ 2 Th/s equaling 2.000.000 Mh/s or 55 thousand+ GeForce GTX 1070 / 8 GB GPUs at 35.4 Mh/s. Each DS Block 10 new DS nodes are allowed. And a shard node needs to provide around 8.53 GH/s currently (around 240 GTX 1070s). Dual mining ETH/ETC and ZIL is possible and can be done via mining software such as Phoenix and Claymore. There are pools and if you have large amounts of hashing power (Ethash) available you could mine solo.
 
The PoW cycle of 60 seconds is a peak performance and acts as an entry ticket to the network. The entry ticket is called a sybil resistance mechanism and makes it incredibly hard for adversaries to spawn lots of identities and manipulate the network with these identities. And after every 100 Tx Blocks which corresponds to roughly 1,5 hour this PoW process repeats. In between these 1,5 hour, no PoW needs to be done meaning Zilliqa’s energy consumption to keep the network secure is low. For more detailed information on how mining works click here.
Okay, hats off to you. You have made it this far. Before we go any deeper down the rabbit hole we first must understand why Zilliqa goes through all of the above technicalities and understand a bit more what a blockchain on a more fundamental level is. Because the core of Zilliqa’s consensus protocol relies on the usage of pBFT (practical Byzantine Fault Tolerance) we need to know more about state machines and their function. Navigate to Viewblock, a Zilliqa block explorer, and just come back to this article. We will use this site to navigate through a few concepts.
 
We have established that Zilliqa is a public and distributed blockchain. Meaning that everyone with an internet connection can send ZILs, trigger smart contracts, etc. and there is no central authority who fully controls the network. Zilliqa and other public and distributed blockchains (like Bitcoin and Ethereum) can also be defined as state machines.
 
Taking the liberty of paraphrasing examples and definitions given by Samuel Brooks’ medium article, he describes the definition of a blockchain (like Zilliqa) as: “A peer-to-peer, append-only datastore that uses consensus to synchronize cryptographically-secure data”.
 
Next, he states that: "blockchains are fundamentally systems for managing valid state transitions”. For some more context, I recommend reading the whole medium article to get a better grasp of the definitions and understanding of state machines. Nevertheless, let’s try to simplify and compile it into a single paragraph. Take traffic lights as an example: all its states (red, amber, and green) are predefined, all possible outcomes are known and it doesn’t matter if you encounter the traffic light today or tomorrow. It will still behave the same. Managing the states of a traffic light can be done by triggering a sensor on the road or pushing a button resulting in one traffic lights’ state going from green to red (via amber) and another light from red to green.
 
With public blockchains like Zilliqa, this isn’t so straightforward and simple. It started with block #1 almost 1,5 years ago and every 45 seconds or so a new block linked to the previous block is being added. Resulting in a chain of blocks with transactions in it that everyone can verify from block #1 to the current #647.000+ block. The state is ever changing and the states it can find itself in are infinite. And while the traffic light might work together in tandem with various other traffic lights, it’s rather insignificant comparing it to a public blockchain. Because Zilliqa consists of 2400 nodes who need to work together to achieve consensus on what the latest valid state is while some of these nodes may have latency or broadcast issues, drop offline or are deliberately trying to attack the network, etc.
 
Now go back to the Viewblock page take a look at the amount of transaction, addresses, block and DS height and then hit refresh. Obviously as expected you see new incremented values on one or all parameters. And how did the Zilliqa blockchain manage to transition from a previous valid state to the latest valid state? By using pBFT to reach consensus on the latest valid state.
 
After having obtained the entry ticket, miners execute pBFT to reach consensus on the ever-changing state of the blockchain. pBFT requires a series of network communication between nodes, and as such there is no GPU involved (but CPU). Resulting in the total energy consumed to keep the blockchain secure, decentralized and scalable being low.
 
pBFT stands for practical Byzantine Fault Tolerance and is an optimization on the Byzantine Fault Tolerant algorithm. To quote Blockonomi: “In the context of distributed systems, Byzantine Fault Tolerance is the ability of a distributed computer network to function as desired and correctly reach a sufficient consensus despite malicious components (nodes) of the system failing or propagating incorrect information to other peers.” Zilliqa is such a distributed computer network and depends on the honesty of the nodes (shard and DS) to reach consensus and to continuously update the state with the latest block. If pBFT is a new term for you I can highly recommend the Blockonomi article.
 
The idea of pBFT was introduced in 1999 - one of the authors even won a Turing award for it - and it is well researched and applied in various blockchains and distributed systems nowadays. If you want more advanced information than the Blockonomi link provides click here. And if you’re in between Blockonomi and the University of Singapore read the Zilliqa Design Story Part 2 dating from October 2017.
Quoting from the Zilliqa tech whitepaper: “pBFT relies upon a correct leader (which is randomly selected) to begin each phase and proceed when the sufficient majority exists. In case the leader is byzantine it can stall the entire consensus protocol. To address this challenge, pBFT offers a view change protocol to replace the byzantine leader with another one.”
 
pBFT can tolerate ⅓ of the nodes being dishonest (offline counts as Byzantine = dishonest) and the consensus protocol will function without stalling or hiccups. Once there are more than ⅓ of dishonest nodes but no more than ⅔ the network will be stalled and a view change will be triggered to elect a new DS leader. Only when more than ⅔ of the nodes are dishonest (66%) double-spend attacks become possible.
 
If the network stalls no transactions can be processed and one has to wait until a new honest leader has been elected. When the mainnet was just launched and in its early phases, view changes happened regularly. As of today the last stalling of the network - and view change being triggered - was at the end of October 2019.
 
Another benefit of using pBFT for consensus besides low energy is the immediate finality it provides. Once your transaction is included in a block and the block is added to the chain it’s done. Lastly, take a look at this article where three types of finality are being defined: probabilistic, absolute and economic finality. Zilliqa falls under the absolute finality (just like Tendermint for example). Although lengthy already we skipped through some of the inner workings from Zilliqa’s consensus: read the Zilliqa Design Story Part 3 and you will be close to having a complete picture on it. Enough about PoW, sybil resistance mechanism, pBFT, etc. Another thing we haven’t looked at yet is the amount of decentralization.
 
Decentralisation
 
Currently, there are four shards, each one of them consisting of 600 nodes. 1 shard with 600 so-called DS nodes (Directory Service - they need to achieve a higher difficulty than shard nodes) and 1800 shard nodes of which 250 are shard guards (centralized nodes controlled by the team). The amount of shard guards has been steadily declining from 1200 in January 2019 to 250 as of May 2020. On the Viewblock statistics, you can see that many of the nodes are being located in the US but those are only the (CPU parts of the) shard nodes who perform pBFT. There is no data from where the PoW sources are coming. And when the Zilliqa blockchain starts reaching its transaction capacity limit, a network upgrade needs to be executed to lift the current cap of maximum 2400 nodes to allow more nodes and formation of more shards which will allow to network to keep on scaling according to demand.
Besides shard nodes there are also seed nodes. The main role of seed nodes is to serve as direct access points (for end-users and clients) to the core Zilliqa network that validates transactions. Seed nodes consolidate transaction requests and forward these to the lookup nodes (another type of nodes) for distribution to the shards in the network. Seed nodes also maintain the entire transaction history and the global state of the blockchain which is needed to provide services such as block explorers. Seed nodes in the Zilliqa network are comparable to Infura on Ethereum.
 
The seed nodes were first only operated by Zilliqa themselves, exchanges and Viewblock. Operators of seed nodes like exchanges had no incentive to open them for the greater public. They were centralised at first. Decentralisation at the seed nodes level has been steadily rolled out since March 2020 ( Zilliqa Improvement Proposal 3 ). Currently the amount of seed nodes is being increased, they are public-facing and at the same time PoS is applied to incentivize seed node operators and make it possible for ZIL holders to stake and earn passive yields. Important distinction: seed nodes are not involved with consensus! That is still PoW as entry ticket and pBFT for the actual consensus.
 
5% of the block rewards are being assigned to seed nodes (from the beginning in 2019) and those are being used to pay out ZIL stakers. The 5% block rewards with an annual yield of 10.03% translate to roughly 610 MM ZILs in total that can be staked. Exchanges use the custodial variant of staking and wallets like Moonlet will use the non-custodial version (starting in Q3 2020). Staking is being done by sending ZILs to a smart contract created by Zilliqa and audited by Quantstamp.
 
With a high amount of DS; shard nodes and seed nodes becoming more decentralized too, Zilliqa qualifies for the label of decentralized in my opinion.
 
Smart contracts
 
Let me start by saying I’m not a developer and my programming skills are quite limited. So I‘m taking the ELI5 route (maybe 12) but if you are familiar with Javascript, Solidity or specifically OCaml please head straight to Scilla - read the docs to get a good initial grasp of how Zilliqa’s smart contract language Scilla works and if you ask yourself “why another programming language?” check this article. And if you want to play around with some sample contracts in an IDE click here. The faucet can be found here. And more information on architecture, dapp development and API can be found on the Developer Portal.
If you are more into listening and watching: check this recent webinar explaining Zilliqa and Scilla. Link is time-stamped so you’ll start right away with a platform introduction, roadmap 2020 and afterwards a proper Scilla introduction.
 
Generalized: programming languages can be divided into being ‘object-oriented’ or ‘functional’. Here is an ELI5 given by software development academy: * “all programs have two basic components, data – what the program knows – and behavior – what the program can do with that data. So object-oriented programming states that combining data and related behaviors in one place, is called “object”, which makes it easier to understand how a particular program works. On the other hand, functional programming argues that data and behavior are different things and should be separated to ensure their clarity.” *
 
Scilla is on the functional side and shares similarities with OCaml: OCaml is a general-purpose programming language with an emphasis on expressiveness and safety. It has an advanced type system that helps catch your mistakes without getting in your way. It's used in environments where a single mistake can cost millions and speed matters, is supported by an active community, and has a rich set of libraries and development tools. For all its power, OCaml is also pretty simple, which is one reason it's often used as a teaching language.
 
Scilla is blockchain agnostic, can be implemented onto other blockchains as well, is recognized by academics and won a so-called Distinguished Artifact Award award at the end of last year.
 
One of the reasons why the Zilliqa team decided to create their own programming language focused on preventing smart contract vulnerabilities is that adding logic on a blockchain, programming, means that you cannot afford to make mistakes. Otherwise, it could cost you. It’s all great and fun blockchains being immutable but updating your code because you found a bug isn’t the same as with a regular web application for example. And with smart contracts, it inherently involves cryptocurrencies in some form thus value.
 
Another difference with programming languages on a blockchain is gas. Every transaction you do on a smart contract platform like Zilliqa or Ethereum costs gas. With gas you basically pay for computational costs. Sending a ZIL from address A to address B costs 0.001 ZIL currently. Smart contracts are more complex, often involve various functions and require more gas (if gas is a new concept click here ).
 
So with Scilla, similar to Solidity, you need to make sure that “every function in your smart contract will run as expected without hitting gas limits. An improper resource analysis may lead to situations where funds may get stuck simply because a part of the smart contract code cannot be executed due to gas limits. Such constraints are not present in traditional software systems”. Scilla design story part 1
 
Some examples of smart contract issues you’d want to avoid are: leaking funds, ‘unexpected changes to critical state variables’ (example: someone other than you setting his or her address as the owner of the smart contract after creation) or simply killing a contract.
 
Scilla also allows for formal verification. Wikipedia to the rescue: In the context of hardware and software systems, formal verification is the act of proving or disproving the correctness of intended algorithms underlying a system with respect to a certain formal specification or property, using formal methods of mathematics.
 
Formal verification can be helpful in proving the correctness of systems such as: cryptographic protocols, combinational circuits, digital circuits with internal memory, and software expressed as source code.
 
Scilla is being developed hand-in-hand with formalization of its semantics and its embedding into the Coq proof assistant — a state-of-the art tool for mechanized proofs about properties of programs.”
 
Simply put, with Scilla and accompanying tooling developers can be mathematically sure and proof that the smart contract they’ve written does what he or she intends it to do.
 
Smart contract on a sharded environment and state sharding
 
There is one more topic I’d like to touch on: smart contract execution in a sharded environment (and what is the effect of state sharding). This is a complex topic. I’m not able to explain it any easier than what is posted here. But I will try to compress the post into something easy to digest.
 
Earlier on we have established that Zilliqa can process transactions in parallel due to network sharding. This is where the linear scalability comes from. We can define simple transactions: a transaction from address A to B (Category 1), a transaction where a user interacts with one smart contract (Category 2) and the most complex ones where triggering a transaction results in multiple smart contracts being involved (Category 3). The shards are able to process transactions on their own without interference of the other shards. With Category 1 transactions that is doable, with Category 2 transactions sometimes if that address is in the same shard as the smart contract but with Category 3 you definitely need communication between the shards. Solving that requires to make a set of communication rules the protocol needs to follow in order to process all transactions in a generalised fashion.
 
And this is where the downsides of state sharding comes in currently. All shards in Zilliqa have access to the complete state. Yes the state size (0.1 GB at the moment) grows and all of the nodes need to store it but it also means that they don’t need to shop around for information available on other shards. Requiring more communication and adding more complexity. Computer science knowledge and/or developer knowledge required links if you want to dig further: Scilla - language grammar Scilla - Foundations for Verifiable Decentralised Computations on a Blockchain Gas Accounting NUS x Zilliqa: Smart contract language workshop
 
Easier to follow links on programming Scilla https://learnscilla.com/home Ivan on Tech
 
Roadmap / Zilliqa 2.0
 
There is no strict defined roadmap but here are topics being worked on. And via the Zilliqa website there is also more information on the projects they are working on.
 
Business & Partnerships
 
It’s not only technology in which Zilliqa seems to be excelling as their ecosystem has been expanding and starting to grow rapidly. The project is on a mission to provide OpenFinance (OpFi) to the world and Singapore is the right place to be due to its progressive regulations and futuristic thinking. Singapore has taken a proactive approach towards cryptocurrencies by introducing the Payment Services Act 2019 (PS Act). Among other things, the PS Act will regulate intermediaries dealing with certain cryptocurrencies, with a particular focus on consumer protection and anti-money laundering. It will also provide a stable regulatory licensing and operating framework for cryptocurrency entities, effectively covering all crypto businesses and exchanges based in Singapore. According to PWC 82% of the surveyed executives in Singapore reported blockchain initiatives underway and 13% of them have already brought the initiatives live to the market. There is also an increasing list of organizations that are starting to provide digital payment services. Moreover, Singaporean blockchain developers Building Cities Beyond has recently created an innovation $15 million grant to encourage development on its ecosystem. This all suggests that Singapore tries to position itself as (one of) the leading blockchain hubs in the world.
 
Zilliqa seems to already take advantage of this and recently helped launch Hg Exchange on their platform, together with financial institutions PhillipCapital, PrimePartners and Fundnel. Hg Exchange, which is now approved by the Monetary Authority of Singapore (MAS), uses smart contracts to represent digital assets. Through Hg Exchange financial institutions worldwide can use Zilliqa's safe-by-design smart contracts to enable the trading of private equities. For example, think of companies such as Grab, Airbnb, SpaceX that are not available for public trading right now. Hg Exchange will allow investors to buy shares of private companies & unicorns and capture their value before an IPO. Anquan, the main company behind Zilliqa, has also recently announced that they became a partner and shareholder in TEN31 Bank, which is a fully regulated bank allowing for tokenization of assets and is aiming to bridge the gap between conventional banking and the blockchain world. If STOs, the tokenization of assets, and equity trading will continue to increase, then Zilliqa’s public blockchain would be the ideal candidate due to its strategic positioning, partnerships, regulatory compliance and the technology that is being built on top of it.
 
What is also very encouraging is their focus on banking the un(der)banked. They are launching a stablecoin basket starting with XSGD. As many of you know, stablecoins are currently mostly used for trading. However, Zilliqa is actively trying to broaden the use case of stablecoins. I recommend everybody to read this text that Amrit Kumar wrote (one of the co-founders). These stablecoins will be integrated in the traditional markets and bridge the gap between the crypto world and the traditional world. This could potentially revolutionize and legitimise the crypto space if retailers and companies will for example start to use stablecoins for payments or remittances, instead of it solely being used for trading.
 
Zilliqa also released their DeFi strategic roadmap (dating November 2019) which seems to be aligning well with their OpFi strategy. A non-custodial DEX is coming to Zilliqa made by Switcheo which allows cross-chain trading (atomic swaps) between ETH, EOS and ZIL based tokens. They also signed a Memorandum of Understanding for a (soon to be announced) USD stablecoin. And as Zilliqa is all about regulations and being compliant, I’m speculating on it to be a regulated USD stablecoin. Furthermore, XSGD is already created and visible on block explorer and XIDR (Indonesian Stablecoin) is also coming soon via StraitsX. Here also an overview of the Tech Stack for Financial Applications from September 2019. Further quoting Amrit Kumar on this:
 
There are two basic building blocks in DeFi/OpFi though: 1) stablecoins as you need a non-volatile currency to get access to this market and 2) a dex to be able to trade all these financial assets. The rest are built on top of these blocks.
 
So far, together with our partners and community, we have worked on developing these building blocks with XSGD as a stablecoin. We are working on bringing a USD-backed stablecoin as well. We will soon have a decentralised exchange developed by Switcheo. And with HGX going live, we are also venturing into the tokenization space. More to come in the future.”
 
Additionally, they also have this ZILHive initiative that injects capital into projects. There have been already 6 waves of various teams working on infrastructure, innovation and research, and they are not from ASEAN or Singapore only but global: see Grantees breakdown by country. Over 60 project teams from over 20 countries have contributed to Zilliqa's ecosystem. This includes individuals and teams developing wallets, explorers, developer toolkits, smart contract testing frameworks, dapps, etc. As some of you may know, Unstoppable Domains (UD) blew up when they launched on Zilliqa. UD aims to replace cryptocurrency addresses with a human-readable name and allows for uncensorable websites. Zilliqa will probably be the only one able to handle all these transactions onchain due to ability to scale and its resulting low fees which is why the UD team launched this on Zilliqa in the first place. Furthermore, Zilliqa also has a strong emphasis on security, compliance, and privacy, which is why they partnered with companies like Elliptic, ChainSecurity (part of PwC Switzerland), and Incognito. Their sister company Aqilliz (Zilliqa spelled backwards) focuses on revolutionizing the digital advertising space and is doing interesting things like using Zilliqa to track outdoor digital ads with companies like Foodpanda.
 
Zilliqa is listed on nearly all major exchanges, having several different fiat-gateways and recently have been added to Binance’s margin trading and futures trading with really good volume. They also have a very impressive team with good credentials and experience. They don't just have “tech people”. They have a mix of tech people, business people, marketeers, scientists, and more. Naturally, it's good to have a mix of people with different skill sets if you work in the crypto space.
 
Marketing & Community
 
Zilliqa has a very strong community. If you just follow their Twitter their engagement is much higher for a coin that has approximately 80k followers. They also have been ‘coin of the day’ by LunarCrush many times. LunarCrush tracks real-time cryptocurrency value and social data. According to their data, it seems Zilliqa has a more fundamental and deeper understanding of marketing and community engagement than almost all other coins. While almost all coins have been a bit frozen in the last months, Zilliqa seems to be on its own bull run. It was somewhere in the 100s a few months ago and is currently ranked #46 on CoinGecko. Their official Telegram also has over 20k people and is very active, and their community channel which is over 7k now is more active and larger than many other official channels. Their local communities also seem to be growing.
 
Moreover, their community started ‘Zillacracy’ together with the Zilliqa core team ( see www.zillacracy.com ). It’s a community-run initiative where people from all over the world are now helping with marketing and development on Zilliqa. Since its launch in February 2020 they have been doing a lot and will also run their own non-custodial seed node for staking. This seed node will also allow them to start generating revenue for them to become a self sustaining entity that could potentially scale up to become a decentralized company working in parallel with the Zilliqa core team. Comparing it to all the other smart contract platforms (e.g. Cardano, EOS, Tezos etc.) they don't seem to have started a similar initiative (correct me if I’m wrong though). This suggests in my opinion that these other smart contract platforms do not fully understand how to utilize the ‘power of the community’. This is something you cannot ‘buy with money’ and gives many projects in the space a disadvantage.
 
Zilliqa also released two social products called SocialPay and Zeeves. SocialPay allows users to earn ZILs while tweeting with a specific hashtag. They have recently used it in partnership with the Singapore Red Cross for a marketing campaign after their initial pilot program. It seems like a very valuable social product with a good use case. I can see a lot of traditional companies entering the space through this product, which they seem to suggest will happen. Tokenizing hashtags with smart contracts to get network effect is a very smart and innovative idea.
 
Regarding Zeeves, this is a tipping bot for Telegram. They already have 1000s of signups and they plan to keep upgrading it for more and more people to use it (e.g. they recently have added a quiz features). They also use it during AMAs to reward people in real-time. It’s a very smart approach to grow their communities and get familiar with ZIL. I can see this becoming very big on Telegram. This tool suggests, again, that the Zilliqa team has a deeper understanding of what the crypto space and community needs and is good at finding the right innovative tools to grow and scale.
 
To be honest, I haven’t covered everything (i’m also reaching the character limited haha). So many updates happening lately that it's hard to keep up, such as the International Monetary Fund mentioning Zilliqa in their report, custodial and non-custodial Staking, Binance Margin, Futures, Widget, entering the Indian market, and more. The Head of Marketing Colin Miles has also released this as an overview of what is coming next. And last but not least, Vitalik Buterin has been mentioning Zilliqa lately acknowledging Zilliqa and mentioning that both projects have a lot of room to grow. There is much more info of course and a good part of it has been served to you on a silver platter. I invite you to continue researching by yourself :-) And if you have any comments or questions please post here!
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Why i’m bullish on Zilliqa (long read)

Hey all, I've been researching coins since 2017 and have gone through 100s of them in the last 3 years. I got introduced to blockchain via Bitcoin of course, analysed Ethereum thereafter and from that moment I have a keen interest in smart contact platforms. I’m passionate about Ethereum but I find Zilliqa to have a better risk reward ratio. Especially because Zilliqa has found an elegant balance between being secure, decentralised and scalable in my opinion.
 
Below I post my analysis why from all the coins I went through I’m most bullish on Zilliqa (yes I went through Tezos, EOS, NEO, VeChain, Harmony, Algorand, Cardano etc.). Note that this is not investment advice and although it's a thorough analysis there is obviously some bias involved. Looking forward to what you all think!
 
Fun fact: the name Zilliqa is a play on ‘silica’ silicon dioxide which means “Silicon for the high-throughput consensus computer.”
 
This post is divided into (i) Technology, (ii) Business & Partnerships, and (iii) Marketing & Community. I’ve tried to make the technology part readable for a broad audience. If you’ve ever tried understanding the inner workings of Bitcoin and Ethereum you should be able to grasp most parts. Otherwise just skim through and once you are zoning out head to the next part.
 
Technology and some more:
 
Introduction The technology is one of the main reasons why I’m so bullish on Zilliqa. First thing you see on their website is: “Zilliqa is a high-performance, high-security blockchain platform for enterprises and next-generation applications.” These are some bold statements.
 
Before we deep dive into the technology let’s take a step back in time first as they have quite the history. The initial research paper from which Zilliqa originated dates back to August 2016: Elastico: A Secure Sharding Protocol For Open Blockchains where Loi Luu (Kyber Network) is one of the co-authors. Other ideas that led to the development of what Zilliqa has become today are: Bitcoin-NG, collective signing CoSi, ByzCoin and Omniledger.
 
The technical white paper was made public in August 2017 and since then they have achieved everything stated in the white paper and also created their own open source intermediate level smart contract language called Scilla (functional programming language similar to OCaml) too.
 
Mainnet is live since end of January 2019 with daily transaction rate growing continuously. About a week ago mainnet reached 5 million transactions, 500.000+ addresses in total along with 2400 nodes keeping the network decentralised and secure. Circulating supply is nearing 11 billion and currently only mining rewards are left. Maximum supply is 21 billion with annual inflation being 7.13% currently and will only decrease with time.
 
Zilliqa realised early on that the usage of public cryptocurrencies and smart contracts were increasing but decentralised, secure and scalable alternatives were lacking in the crypto space. They proposed to apply sharding onto a public smart contract blockchain where the transaction rate increases almost linear with the increase in amount of nodes. More nodes = higher transaction throughput and increased decentralisation. Sharding comes in many forms and Zilliqa uses network-, transaction- and computational sharding. Network sharding opens up the possibility of using transaction- and computational sharding on top. Zilliqa does not use state sharding for now. We’ll come back to this later.
 
Before we continue disecting how Zilliqa achieves such from a technological standpoint it’s good to keep in mind that a blockchain being decentralised and secure and scalable is still one of the main hurdles in allowing widespread usage of decentralised networks. In my opinion this needs to be solved first before blockchains can get to the point where they can create and add large scale value. So I invite you to read the next section to grasp the underlying fundamentals. Because after all these premises need to be true otherwise there isn’t a fundamental case to be bullish on Zilliqa, right?
 
Down the rabbit hole
 
How have they achieved this? Let’s define the basics first: key players on Zilliqa are the users and the miners. A user is anybody who uses the blockchain to transfer funds or run smart contracts. Miners are the (shard) nodes in the network who run the consensus protocol and get rewarded for their service in Zillings (ZIL). The mining network is divided into several smaller networks called shards, which is also referred to as ‘network sharding’. Miners subsequently are randomly assigned to a shard by another set of miners called DS (Directory Service) nodes. The regular shards process transactions and the outputs of these shards are eventually combined by the DS shard as they reach consensus on the final state. More on how these DS shards reach consensus (via pBFT) will be explained later on.
 
The Zilliqa network produces two types of blocks: DS blocks and Tx blocks. One DS Block consists of 100 Tx Blocks. And as previously mentioned there are two types of nodes concerned with reaching consensus: shard nodes and DS nodes. Becoming a shard node or DS node is being defined by the result of a PoW cycle (Ethash) at the beginning of the DS Block. All candidate mining nodes compete with each other and run the PoW (Proof-of-Work) cycle for 60 seconds and the submissions achieving the highest difficulty will be allowed on the network. And to put it in perspective: the average difficulty for one DS node is ~ 2 Th/s equaling 2.000.000 Mh/s or 55 thousand+ GeForce GTX 1070 / 8 GB GPUs at 35.4 Mh/s. Each DS Block 10 new DS nodes are allowed. And a shard node needs to provide around 8.53 GH/s currently (around 240 GTX 1070s). Dual mining ETH/ETC and ZIL is possible and can be done via mining software such as Phoenix and Claymore. There are pools and if you have large amounts of hashing power (Ethash) available you could mine solo.
 
The PoW cycle of 60 seconds is a peak performance and acts as an entry ticket to the network. The entry ticket is called a sybil resistance mechanism and makes it incredibly hard for adversaries to spawn lots of identities and manipulate the network with these identities. And after every 100 Tx Blocks which corresponds to roughly 1,5 hour this PoW process repeats. In between these 1,5 hour no PoW needs to be done meaning Zilliqa’s energy consumption to keep the network secure is low. For more detailed information on how mining works click here.
Okay, hats off to you. You have made it this far. Before we go any deeper down the rabbit hole we first must understand why Zilliqa goes through all of the above technicalities and understand a bit more what a blockchain on a more fundamental level is. Because the core of Zilliqa’s consensus protocol relies on the usage of pBFT (practical Byzantine Fault Tolerance) we need to know more about state machines and their function. Navigate to Viewblock, a Zilliqa block explorer, and just come back to this article. We will use this site to navigate through a few concepts.
 
We have established that Zilliqa is a public and distributed blockchain. Meaning that everyone with an internet connection can send ZILs, trigger smart contracts etc. and there is no central authority who fully controls the network. Zilliqa and other public and distributed blockchains (like Bitcoin and Ethereum) can also be defined as state machines.
 
Taking the liberty of paraphrasing examples and definitions given by Samuel Brooks’ medium article, he describes the definition of a blockchain (like Zilliqa) as:
“A peer-to-peer, append-only datastore that uses consensus to synchronise cryptographically-secure data”.
 
Next he states that: >“blockchains are fundamentally systems for managing valid state transitions”.* For some more context, I recommend reading the whole medium article to get a better grasp of the definitions and understanding of state machines. Nevertheless, let’s try to simplify and compile it into a single paragraph. Take traffic lights as an example: all its states (red, amber and green) are predefined, all possible outcomes are known and it doesn’t matter if you encounter the traffic light today or tomorrow. It will still behave the same. Managing the states of a traffic light can be done by triggering a sensor on the road or pushing a button resulting in one traffic lights’ state going from green to red (via amber) and another light from red to green.
 
With public blockchains like Zilliqa this isn’t so straightforward and simple. It started with block #1 almost 1,5 years ago and every 45 seconds or so a new block linked to the previous block is being added. Resulting in a chain of blocks with transactions in it that everyone can verify from block #1 to the current #647.000+ block. The state is ever changing and the states it can find itself in are infinite. And while the traffic light might work together in tandem with various other traffic lights, it’s rather insignificant comparing it to a public blockchain. Because Zilliqa consists of 2400 nodes who need to work together to achieve consensus on what the latest valid state is while some of these nodes may have latency or broadcast issues, drop offline or are deliberately trying to attack the network etc.
 
Now go back to the Viewblock page take a look at the amount of transaction, addresses, block and DS height and then hit refresh. Obviously as expected you see new incremented values on one or all parameters. And how did the Zilliqa blockchain manage to transition from a previous valid state to the latest valid state? By using pBFT to reach consensus on the latest valid state.
 
After having obtained the entry ticket, miners execute pBFT to reach consensus on the ever changing state of the blockchain. pBFT requires a series of network communication between nodes, and as such there is no GPU involved (but CPU). Resulting in the total energy consumed to keep the blockchain secure, decentralised and scalable being low.
 
pBFT stands for practical Byzantine Fault Tolerance and is an optimisation on the Byzantine Fault Tolerant algorithm. To quote Blockonomi: “In the context of distributed systems, Byzantine Fault Tolerance is the ability of a distributed computer network to function as desired and correctly reach a sufficient consensus despite malicious components (nodes) of the system failing or propagating incorrect information to other peers.” Zilliqa is such a distributed computer network and depends on the honesty of the nodes (shard and DS) to reach consensus and to continuously update the state with the latest block. If pBFT is a new term for you I can highly recommend the Blockonomi article.
 
The idea of pBFT was introduced in 1999 - one of the authors even won a Turing award for it - and it is well researched and applied in various blockchains and distributed systems nowadays. If you want more advanced information than the Blockonomi link provides click here. And if you’re in between Blockonomi and University of Singapore read the Zilliqa Design Story Part 2 dating from October 2017.
Quoting from the Zilliqa tech whitepaper: “pBFT relies upon a correct leader (which is randomly selected) to begin each phase and proceed when the sufficient majority exists. In case the leader is byzantine it can stall the entire consensus protocol. To address this challenge, pBFT offers a view change protocol to replace the byzantine leader with another one.”
 
pBFT can tolerate ⅓ of the nodes being dishonest (offline counts as Byzantine = dishonest) and the consensus protocol will function without stalling or hiccups. Once there are more than ⅓ of dishonest nodes but no more than ⅔ the network will be stalled and a view change will be triggered to elect a new DS leader. Only when more than ⅔ of the nodes are dishonest (>66%) double spend attacks become possible.
 
If the network stalls no transactions can be processed and one has to wait until a new honest leader has been elected. When the mainnet was just launched and in its early phases, view changes happened regularly. As of today the last stalling of the network - and view change being triggered - was at the end of October 2019.
 
Another benefit of using pBFT for consensus besides low energy is the immediate finality it provides. Once your transaction is included in a block and the block is added to the chain it’s done. Lastly, take a look at this article where three types of finality are being defined: probabilistic, absolute and economic finality. Zilliqa falls under the absolute finality (just like Tendermint for example). Although lengthy already we skipped through some of the inner workings from Zilliqa’s consensus: read the Zilliqa Design Story Part 3 and you will be close to having a complete picture on it. Enough about PoW, sybil resistance mechanism, pBFT etc. Another thing we haven’t looked at yet is the amount of decentralisation.
 
Decentralisation
 
Currently there are four shards, each one of them consisting of 600 nodes. 1 shard with 600 so called DS nodes (Directory Service - they need to achieve a higher difficulty than shard nodes) and 1800 shard nodes of which 250 are shard guards (centralised nodes controlled by the team). The amount of shard guards has been steadily declining from 1200 in January 2019 to 250 as of May 2020. On the Viewblock statistics you can see that many of the nodes are being located in the US but those are only the (CPU parts of the) shard nodes who perform pBFT. There is no data from where the PoW sources are coming. And when the Zilliqa blockchain starts reaching their transaction capacity limit, a network upgrade needs to be executed to lift the current cap of maximum 2400 nodes to allow more nodes and formation of more shards which will allow to network to keep on scaling according to demand.
Besides shard nodes there are also seed nodes. The main role of seed nodes is to serve as direct access points (for end users and clients) to the core Zilliqa network that validates transactions. Seed nodes consolidate transaction requests and forward these to the lookup nodes (another type of nodes) for distribution to the shards in the network. Seed nodes also maintain the entire transaction history and the global state of the blockchain which is needed to provide services such as block explorers. Seed nodes in the Zilliqa network are comparable to Infura on Ethereum.
 
The seed nodes were first only operated by Zilliqa themselves, exchanges and Viewblock. Operators of seed nodes like exchanges had no incentive to open them for the greater public.They were centralised at first. Decentralisation at the seed nodes level has been steadily rolled out since March 2020 ( Zilliqa Improvement Proposal 3 ). Currently the amount of seed nodes is being increased, they are public facing and at the same time PoS is applied to incentivize seed node operators and make it possible for ZIL holders to stake and earn passive yields. Important distinction: seed nodes are not involved with consensus! That is still PoW as entry ticket and pBFT for the actual consensus.
 
5% of the block rewards are being assigned to seed nodes (from the beginning in 2019) and those are being used to pay out ZIL stakers.The 5% block rewards with an annual yield of 10.03% translates to roughly 610 MM ZILs in total that can be staked. Exchanges use the custodial variant of staking and wallets like Moonlet will use the non custodial version (starting in Q3 2020). Staking is being done by sending ZILs to a smart contract created by Zilliqa and audited by Quantstamp.
 
With a high amount of DS & shard nodes and seed nodes becoming more decentralised too, Zilliqa qualifies for the label of decentralised in my opinion.
 
Smart contracts
 
Let me start by saying I’m not a developer and my programming skills are quite limited. So I‘m taking the ELI5 route (maybe 12) but if you are familiar with Javascript, Solidity or specifically OCaml please head straight to Scilla - read the docs to get a good initial grasp of how Zilliqa’s smart contract language Scilla works and if you ask yourself “why another programming language?” check this article. And if you want to play around with some sample contracts in an IDE click here. Faucet can be found here. And more information on architecture, dapp development and API can be found on the Developer Portal.
If you are more into listening and watching: check this recent webinar explaining Zilliqa and Scilla. Link is time stamped so you’ll start right away with a platform introduction, R&D roadmap 2020 and afterwards a proper Scilla introduction.
 
Generalised: programming languages can be divided into being ‘object oriented’ or ‘functional’. Here is an ELI5 given by software development academy: > “all programmes have two basic components, data – what the programme knows – and behaviour – what the programme can do with that data. So object-oriented programming states that combining data and related behaviours in one place, is called “object”, which makes it easier to understand how a particular program works. On the other hand, functional programming argues that data and behaviour are different things and should be separated to ensure their clarity.”
 
Scilla is on the functional side and shares similarities with OCaml: > OCaml is a general purpose programming language with an emphasis on expressiveness and safety. It has an advanced type system that helps catch your mistakes without getting in your way. It's used in environments where a single mistake can cost millions and speed matters, is supported by an active community, and has a rich set of libraries and development tools. For all its power, OCaml is also pretty simple, which is one reason it's often used as a teaching language.
 
Scilla is blockchain agnostic, can be implemented onto other blockchains as well, is recognised by academics and won a so called Distinguished Artifact Award award at the end of last year.
 
One of the reasons why the Zilliqa team decided to create their own programming language focused on preventing smart contract vulnerabilities safety is that adding logic on a blockchain, programming, means that you cannot afford to make mistakes. Otherwise it could cost you. It’s all great and fun blockchains being immutable but updating your code because you found a bug isn’t the same as with a regular web application for example. And with smart contracts it inherently involves cryptocurrencies in some form thus value.
 
Another difference with programming languages on a blockchain is gas. Every transaction you do on a smart contract platform like Zilliqa for Ethereum costs gas. With gas you basically pay for computational costs. Sending a ZIL from address A to address B costs 0.001 ZIL currently. Smart contracts are more complex, often involve various functions and require more gas (if gas is a new concept click here ).
 
So with Scilla, similar to Solidity, you need to make sure that “every function in your smart contract will run as expected without hitting gas limits. An improper resource analysis may lead to situations where funds may get stuck simply because a part of the smart contract code cannot be executed due to gas limits. Such constraints are not present in traditional software systems”. Scilla design story part 1
 
Some examples of smart contract issues you’d want to avoid are: leaking funds, ‘unexpected changes to critical state variables’ (example: someone other than you setting his or her address as the owner of the smart contract after creation) or simply killing a contract.
 
Scilla also allows for formal verification. Wikipedia to the rescue:
In the context of hardware and software systems, formal verification is the act of proving or disproving the correctness of intended algorithms underlying a system with respect to a certain formal specification or property, using formal methods of mathematics.
 
Formal verification can be helpful in proving the correctness of systems such as: cryptographic protocols, combinational circuits, digital circuits with internal memory, and software expressed as source code.
 
Scilla is being developed hand-in-hand with formalization of its semantics and its embedding into the Coq proof assistant — a state-of-the art tool for mechanized proofs about properties of programs.”
 
Simply put, with Scilla and accompanying tooling developers can be mathematically sure and proof that the smart contract they’ve written does what he or she intends it to do.
 
Smart contract on a sharded environment and state sharding
 
There is one more topic I’d like to touch on: smart contract execution in a sharded environment (and what is the effect of state sharding). This is a complex topic. I’m not able to explain it any easier than what is posted here. But I will try to compress the post into something easy to digest.
 
Earlier on we have established that Zilliqa can process transactions in parallel due to network sharding. This is where the linear scalability comes from. We can define simple transactions: a transaction from address A to B (Category 1), a transaction where a user interacts with one smart contract (Category 2) and the most complex ones where triggering a transaction results in multiple smart contracts being involved (Category 3). The shards are able to process transactions on their own without interference of the other shards. With Category 1 transactions that is doable, with Category 2 transactions sometimes if that address is in the same shard as the smart contract but with Category 3 you definitely need communication between the shards. Solving that requires to make a set of communication rules the protocol needs to follow in order to process all transactions in a generalised fashion.
 
And this is where the downsides of state sharding comes in currently. All shards in Zilliqa have access to the complete state. Yes the state size (0.1 GB at the moment) grows and all of the nodes need to store it but it also means that they don’t need to shop around for information available on other shards. Requiring more communication and adding more complexity. Computer science knowledge and/or developer knowledge required links if you want to dig further: Scilla - language grammar Scilla - Foundations for Verifiable Decentralised Computations on a Blockchain Gas Accounting NUS x Zilliqa: Smart contract language workshop
 
Easier to follow links on programming Scilla https://learnscilla.com/home Ivan on Tech
 
Roadmap / Zilliqa 2.0
 
There is no strict defined roadmap but here are topics being worked on. And via the Zilliqa website there is also more information on the projects they are working on.
 
Business & Partnerships  
It’s not only technology in which Zilliqa seems to be excelling as their ecosystem has been expanding and starting to grow rapidly. The project is on a mission to provide OpenFinance (OpFi) to the world and Singapore is the right place to be due to its progressive regulations and futuristic thinking. Singapore has taken a proactive approach towards cryptocurrencies by introducing the Payment Services Act 2019 (PS Act). Among other things, the PS Act will regulate intermediaries dealing with certain cryptocurrencies, with a particular focus on consumer protection and anti-money laundering. It will also provide a stable regulatory licensing and operating framework for cryptocurrency entities, effectively covering all crypto businesses and exchanges based in Singapore. According to PWC 82% of the surveyed executives in Singapore reported blockchain initiatives underway and 13% of them have already brought the initiatives live to the market. There is also an increasing list of organisations that are starting to provide digital payment services. Moreover, Singaporean blockchain developers Building Cities Beyond has recently created an innovation $15 million grant to encourage development on its ecosystem. This all suggest that Singapore tries to position itself as (one of) the leading blockchain hubs in the world.
 
Zilliqa seems to already taking advantage of this and recently helped launch Hg Exchange on their platform, together with financial institutions PhillipCapital, PrimePartners and Fundnel. Hg Exchange, which is now approved by the Monetary Authority of Singapore (MAS), uses smart contracts to represent digital assets. Through Hg Exchange financial institutions worldwide can use Zilliqa's safe-by-design smart contracts to enable the trading of private equities. For example, think of companies such as Grab, AirBnB, SpaceX that are not available for public trading right now. Hg Exchange will allow investors to buy shares of private companies & unicorns and capture their value before an IPO. Anquan, the main company behind Zilliqa, has also recently announced that they became a partner and shareholder in TEN31 Bank, which is a fully regulated bank allowing for tokenization of assets and is aiming to bridge the gap between conventional banking and the blockchain world. If STOs, the tokenization of assets, and equity trading will continue to increase, then Zilliqa’s public blockchain would be the ideal candidate due to its strategic positioning, partnerships, regulatory compliance and the technology that is being built on top of it.
 
What is also very encouraging is their focus on banking the un(der)banked. They are launching a stablecoin basket starting with XSGD. As many of you know, stablecoins are currently mostly used for trading. However, Zilliqa is actively trying to broaden the use case of stablecoins. I recommend everybody to read this text that Amrit Kumar wrote (one of the co-founders). These stablecoins will be integrated in the traditional markets and bridge the gap between the crypto world and the traditional world. This could potentially revolutionize and legitimise the crypto space if retailers and companies will for example start to use stablecoins for payments or remittances, instead of it solely being used for trading.
 
Zilliqa also released their DeFi strategic roadmap (dating November 2019) which seems to be aligning well with their OpFi strategy. A non-custodial DEX is coming to Zilliqa made by Switcheo which allows cross-chain trading (atomic swaps) between ETH, EOS and ZIL based tokens. They also signed a Memorandum of Understanding for a (soon to be announced) USD stablecoin. And as Zilliqa is all about regulations and being compliant, I’m speculating on it to be a regulated USD stablecoin. Furthermore, XSGD is already created and visible on block explorer and XIDR (Indonesian Stablecoin) is also coming soon via StraitsX. Here also an overview of the Tech Stack for Financial Applications from September 2019. Further quoting Amrit Kumar on this:
 
There are two basic building blocks in DeFi/OpFi though: 1) stablecoins as you need a non-volatile currency to get access to this market and 2) a dex to be able to trade all these financial assets. The rest are build on top of these blocks.
 
So far, together with our partners and community, we have worked on developing these building blocks with XSGD as a stablecoin. We are working on bringing a USD-backed stablecoin as well. We will soon have a decentralised exchange developed by Switcheo. And with HGX going live, we are also venturing into the tokenization space. More to come in the future.”*
 
Additionally, they also have this ZILHive initiative that injects capital into projects. There have been already 6 waves of various teams working on infrastructure, innovation and research, and they are not from ASEAN or Singapore only but global: see Grantees breakdown by country. Over 60 project teams from over 20 countries have contributed to Zilliqa's ecosystem. This includes individuals and teams developing wallets, explorers, developer toolkits, smart contract testing frameworks, dapps, etc. As some of you may know, Unstoppable Domains (UD) blew up when they launched on Zilliqa. UD aims to replace cryptocurrency addresses with a human readable name and allows for uncensorable websites. Zilliqa will probably be the only one able to handle all these transactions onchain due to ability to scale and its resulting low fees which is why the UD team launched this on Zilliqa in the first place. Furthermore, Zilliqa also has a strong emphasis on security, compliance, and privacy, which is why they partnered with companies like Elliptic, ChainSecurity (part of PwC Switzerland), and Incognito. Their sister company Aqilliz (Zilliqa spelled backwards) focuses on revolutionizing the digital advertising space and is doing interesting things like using Zilliqa to track outdoor digital ads with companies like Foodpanda.
 
Zilliqa is listed on nearly all major exchanges, having several different fiat-gateways and recently have been added to Binance’s margin trading and futures trading with really good volume. They also have a very impressive team with good credentials and experience. They dont just have “tech people”. They have a mix of tech people, business people, marketeers, scientists, and more. Naturally, it's good to have a mix of people with different skill sets if you work in the crypto space.
 
Marketing & Community
 
Zilliqa has a very strong community. If you just follow their Twitter their engagement is much higher for a coin that has approximately 80k followers. They also have been ‘coin of the day’ by LunarCrush many times. LunarCrush tracks real-time cryptocurrency value and social data. According to their data it seems Zilliqa has a more fundamental and deeper understanding of marketing and community engagement than almost all other coins. While almost all coins have been a bit frozen in the last months, Zilliqa seems to be on its own bull run. It was somewhere in the 100s a few months ago and is currently ranked #46 on CoinGecko. Their official Telegram also has over 20k people and is very active, and their community channel which is over 7k now is more active and larger than many other official channels. Their local communities) also seem to be growing.
 
Moreover, their community started ‘Zillacracy’ together with the Zilliqa core team ( see www.zillacracy.com ). It’s a community run initiative where people from all over the world are now helping with marketing and development on Zilliqa. Since its launch in February 2020 they have been doing a lot and will also run their own non custodial seed node for staking. This seed node will also allow them to start generating revenue for them to become a self sustaining entity that could potentially scale up to become a decentralized company working in parallel with the Zilliqa core team. Comparing it to all the other smart contract platforms (e.g. Cardano, EOS, Tezos etc.) they don't seem to have started a similar initiatives (correct me if I’m wrong though). This suggest in my opinion that these other smart contract platforms do not fully understand how to utilize the ‘power of the community’. This is something you cannot ‘buy with money’ and gives many projects in the space a disadvantage.
 
Zilliqa also released two social products called SocialPay and Zeeves. SocialPay allows users to earn ZILs while tweeting with a specific hashtag. They have recently used it in partnership with the Singapore Red Cross for a marketing campaign after their initial pilot program. It seems like a very valuable social product with a good use case. I can see a lot of traditional companies entering the space through this product, which they seem to suggest will happen. Tokenizing hashtags with smart contracts to get network effect is a very smart and innovative idea.
 
Regarding Zeeves, this is a tipping bot for Telegram. They already have 1000s of signups and they plan to keep upgrading it for more and more people to use it (e.g. they recently have added a quiz features). They also use it during AMAs to reward people in real time. It’s a very smart approach to grow their communities and get familiar with ZIL. I can see this becoming very big on Telegram. This tool suggests, again, that the Zilliqa team has a deeper understanding what the crypto space and community needs and is good at finding the right innovative tools to grow and scale.
 
To be honest, I haven’t covered everything (i’m also reaching the character limited haha). So many updates happening lately that it's hard to keep up, such as the International Monetary Fund mentioning Zilliqa in their report, custodial and non-custodial Staking, Binance Margin, Futures & Widget, entering the Indian market, and more. The Head of Marketing Colin Miles has also released this as an overview of what is coming next. And last but not least, Vitalik Buterin has been mentioning Zilliqa lately acknowledging Zilliqa and mentioning that both projects have a lot of room to grow. There is much more info of course and a good part of it has been served to you on a silver platter. I invite you to continue researching by yourself :-) And if you have any comments or questions please post here!
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The Need for Financial Technology Literacy

The Need for Financial Technology Literacy

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At these present times, everything and everyone is adapting to modern technology. From devices, diagnostic equipment, transportation, communication, research, and now to financial transactions — the convenience that the technology has brought us is indeed immeasurable.
We’ve written this article with the intention of letting people realize the importance of adapting to modern technology to alleviate the current financial system, not just in the cryptocurrency field.
The term “Fintech” or financial technology has been gaining more attention, and we believe that it is very important to discuss the need to educate the public on what this really means before we dive into more technical details. By understanding what fintech means, we hope that more people will realize its importance and adopt it in their everyday lives.
What is Financial Technology?
Fintech, a term coined for Financial Technology, is used to define the industries behind the expansion of the financial technology system across the globe. Whether in banking, insurance, mobile payments, and cryptocurrency, the term is widely used to describe the rapidly growing financial system. A lot of fintech businesses or products are created in such a way that they will connect and simplify financial transactions through the use of modern technology.
There is an increase in financial access, and freedom thanks to fintech. It has helped the world change the financial system in numerous ways. Before discovering the possibility of mobile or online banking, people used to line-up in banks just to open an account. Also, e-commerce flourished thanks to fintech. The availability of mobile apps and the internet catering to various services helped not just the consumers but also the businesses to expand their options and business goals.
Fintech and Cryptocurrency
Fintech upgraded the traditional financial transactions. Long gone are the days when people have to keep their money physically or have to visit banks to make transactions. Everything is almost digital. Everything is also almost convenient.
In this age where everything is fast-paced, people always look for “convenience” and “efficiency” in a product and service. This is where cryptocurrency has the most advantage.
The technology that cryptocurrency introduced through Bitcoin showed a profound effect on the Fintech industry. Thanks to the launch of Bitcoin in 2008, it was realized that a decentralized blockchain system is possible, and it can help solve the difficulties people encounter in the traditional financial system. As a form of digital or virtual money that runs in a blockchain, cryptocurrencies help users to manage their own money easily, quickly and securely. Users can make a transaction without the need for any central authority involved. People just need to have a cryptocurrency wallet where they can make crypto transactions.
The Importance of Fintech Literacy
The fintech industry has made a drastic growth in the financial sector over the years. As the world keeps on innovating, people will continuously adapt to changes. The more convenience fintech brings, the more people are inclined to use it. This is why Swipe believes that it is very important for users to understand how to have the right financial behavior in this high-tech world.
People find it easier to store, but at the same time, they also spend money easily with the use of the internet or mobile applications. However, products and services that can easily be bought online make it easier for consumers to develop a habit of impulsive buying. People need to realize that even though fintech helps brings more convenience, the need to control and manage their transactions is extremely important.
As a multi-asset digital wallet, Swipe believes that understanding the ropes of fintech and also cryptocurrencies will lead to better asset management and spending. Having a good grasp of fintech literacy helps the users’ ability to make informed decisions about their financial behaviors. Cryptocurrency rates are very volatile. Though it can be easily bought and spend any time, a crypto user must be knowledgeable enough on when or how to invest or spend his assets.
Fintech will surely dominate the financial sector in the years to come. A user needs to have an open mind to adapt to these changes and learn how to use it properly. Having adequate fintech literacy will surely help a user to have the right attitude and behavior in making financial decisions in a world that is slowly becoming more digital.
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This blog article is also posted at: https://sw.pe/blogfintechliteracy
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Bitcoin (BTC)A Peer-to-Peer Electronic Cash System.

Bitcoin (BTC)A Peer-to-Peer Electronic Cash System.
  • Bitcoin (BTC) is a peer-to-peer cryptocurrency that aims to function as a means of exchange that is independent of any central authority. BTC can be transferred electronically in a secure, verifiable, and immutable way.
  • Launched in 2009, BTC is the first virtual currency to solve the double-spending issue by timestamping transactions before broadcasting them to all of the nodes in the Bitcoin network. The Bitcoin Protocol offered a solution to the Byzantine Generals’ Problem with a blockchain network structure, a notion first created by Stuart Haber and W. Scott Stornetta in 1991.
  • Bitcoin’s whitepaper was published pseudonymously in 2008 by an individual, or a group, with the pseudonym “Satoshi Nakamoto”, whose underlying identity has still not been verified.
  • The Bitcoin protocol uses an SHA-256d-based Proof-of-Work (PoW) algorithm to reach network consensus. Its network has a target block time of 10 minutes and a maximum supply of 21 million tokens, with a decaying token emission rate. To prevent fluctuation of the block time, the network’s block difficulty is re-adjusted through an algorithm based on the past 2016 block times.
  • With a block size limit capped at 1 megabyte, the Bitcoin Protocol has supported both the Lightning Network, a second-layer infrastructure for payment channels, and Segregated Witness, a soft-fork to increase the number of transactions on a block, as solutions to network scalability.

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1. What is Bitcoin (BTC)?

  • Bitcoin is a peer-to-peer cryptocurrency that aims to function as a means of exchange and is independent of any central authority. Bitcoins are transferred electronically in a secure, verifiable, and immutable way.
  • Network validators, whom are often referred to as miners, participate in the SHA-256d-based Proof-of-Work consensus mechanism to determine the next global state of the blockchain.
  • The Bitcoin protocol has a target block time of 10 minutes, and a maximum supply of 21 million tokens. The only way new bitcoins can be produced is when a block producer generates a new valid block.
  • The protocol has a token emission rate that halves every 210,000 blocks, or approximately every 4 years.
  • Unlike public blockchain infrastructures supporting the development of decentralized applications (Ethereum), the Bitcoin protocol is primarily used only for payments, and has only very limited support for smart contract-like functionalities (Bitcoin “Script” is mostly used to create certain conditions before bitcoins are used to be spent).

2. Bitcoin’s core features

For a more beginner’s introduction to Bitcoin, please visit Binance Academy’s guide to Bitcoin.

Unspent Transaction Output (UTXO) model

A UTXO transaction works like cash payment between two parties: Alice gives money to Bob and receives change (i.e., unspent amount). In comparison, blockchains like Ethereum rely on the account model.
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Nakamoto consensus

In the Bitcoin network, anyone can join the network and become a bookkeeping service provider i.e., a validator. All validators are allowed in the race to become the block producer for the next block, yet only the first to complete a computationally heavy task will win. This feature is called Proof of Work (PoW).
The probability of any single validator to finish the task first is equal to the percentage of the total network computation power, or hash power, the validator has. For instance, a validator with 5% of the total network computation power will have a 5% chance of completing the task first, and therefore becoming the next block producer.
Since anyone can join the race, competition is prone to increase. In the early days, Bitcoin mining was mostly done by personal computer CPUs.
As of today, Bitcoin validators, or miners, have opted for dedicated and more powerful devices such as machines based on Application-Specific Integrated Circuit (“ASIC”).
Proof of Work secures the network as block producers must have spent resources external to the network (i.e., money to pay electricity), and can provide proof to other participants that they did so.
With various miners competing for block rewards, it becomes difficult for one single malicious party to gain network majority (defined as more than 51% of the network’s hash power in the Nakamoto consensus mechanism). The ability to rearrange transactions via 51% attacks indicates another feature of the Nakamoto consensus: the finality of transactions is only probabilistic.
Once a block is produced, it is then propagated by the block producer to all other validators to check on the validity of all transactions in that block. The block producer will receive rewards in the network’s native currency (i.e., bitcoin) as all validators approve the block and update their ledgers.

The blockchain

Block production

The Bitcoin protocol utilizes the Merkle tree data structure in order to organize hashes of numerous individual transactions into each block. This concept is named after Ralph Merkle, who patented it in 1979.
With the use of a Merkle tree, though each block might contain thousands of transactions, it will have the ability to combine all of their hashes and condense them into one, allowing efficient and secure verification of this group of transactions. This single hash called is a Merkle root, which is stored in the Block Header of a block. The Block Header also stores other meta information of a block, such as a hash of the previous Block Header, which enables blocks to be associated in a chain-like structure (hence the name “blockchain”).
An illustration of block production in the Bitcoin Protocol is demonstrated below.

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Block time and mining difficulty

Block time is the period required to create the next block in a network. As mentioned above, the node who solves the computationally intensive task will be allowed to produce the next block. Therefore, block time is directly correlated to the amount of time it takes for a node to find a solution to the task. The Bitcoin protocol sets a target block time of 10 minutes, and attempts to achieve this by introducing a variable named mining difficulty.
Mining difficulty refers to how difficult it is for the node to solve the computationally intensive task. If the network sets a high difficulty for the task, while miners have low computational power, which is often referred to as “hashrate”, it would statistically take longer for the nodes to get an answer for the task. If the difficulty is low, but miners have rather strong computational power, statistically, some nodes will be able to solve the task quickly.
Therefore, the 10 minute target block time is achieved by constantly and automatically adjusting the mining difficulty according to how much computational power there is amongst the nodes. The average block time of the network is evaluated after a certain number of blocks, and if it is greater than the expected block time, the difficulty level will decrease; if it is less than the expected block time, the difficulty level will increase.

What are orphan blocks?

In a PoW blockchain network, if the block time is too low, it would increase the likelihood of nodes producingorphan blocks, for which they would receive no reward. Orphan blocks are produced by nodes who solved the task but did not broadcast their results to the whole network the quickest due to network latency.
It takes time for a message to travel through a network, and it is entirely possible for 2 nodes to complete the task and start to broadcast their results to the network at roughly the same time, while one’s messages are received by all other nodes earlier as the node has low latency.
Imagine there is a network latency of 1 minute and a target block time of 2 minutes. A node could solve the task in around 1 minute but his message would take 1 minute to reach the rest of the nodes that are still working on the solution. While his message travels through the network, all the work done by all other nodes during that 1 minute, even if these nodes also complete the task, would go to waste. In this case, 50% of the computational power contributed to the network is wasted.
The percentage of wasted computational power would proportionally decrease if the mining difficulty were higher, as it would statistically take longer for miners to complete the task. In other words, if the mining difficulty, and therefore targeted block time is low, miners with powerful and often centralized mining facilities would get a higher chance of becoming the block producer, while the participation of weaker miners would become in vain. This introduces possible centralization and weakens the overall security of the network.
However, given a limited amount of transactions that can be stored in a block, making the block time too longwould decrease the number of transactions the network can process per second, negatively affecting network scalability.

3. Bitcoin’s additional features

Segregated Witness (SegWit)

Segregated Witness, often abbreviated as SegWit, is a protocol upgrade proposal that went live in August 2017.
SegWit separates witness signatures from transaction-related data. Witness signatures in legacy Bitcoin blocks often take more than 50% of the block size. By removing witness signatures from the transaction block, this protocol upgrade effectively increases the number of transactions that can be stored in a single block, enabling the network to handle more transactions per second. As a result, SegWit increases the scalability of Nakamoto consensus-based blockchain networks like Bitcoin and Litecoin.
SegWit also makes transactions cheaper. Since transaction fees are derived from how much data is being processed by the block producer, the more transactions that can be stored in a 1MB block, the cheaper individual transactions become.
https://preview.redd.it/depya70mf3151.png?width=1601&format=png&auto=webp&s=a6499aa2131fbf347f8ffd812930b2f7d66be48e
The legacy Bitcoin block has a block size limit of 1 megabyte, and any change on the block size would require a network hard-fork. On August 1st 2017, the first hard-fork occurred, leading to the creation of Bitcoin Cash (“BCH”), which introduced an 8 megabyte block size limit.
Conversely, Segregated Witness was a soft-fork: it never changed the transaction block size limit of the network. Instead, it added an extended block with an upper limit of 3 megabytes, which contains solely witness signatures, to the 1 megabyte block that contains only transaction data. This new block type can be processed even by nodes that have not completed the SegWit protocol upgrade.
Furthermore, the separation of witness signatures from transaction data solves the malleability issue with the original Bitcoin protocol. Without Segregated Witness, these signatures could be altered before the block is validated by miners. Indeed, alterations can be done in such a way that if the system does a mathematical check, the signature would still be valid. However, since the values in the signature are changed, the two signatures would create vastly different hash values.
For instance, if a witness signature states “6,” it has a mathematical value of 6, and would create a hash value of 12345. However, if the witness signature were changed to “06”, it would maintain a mathematical value of 6 while creating a (faulty) hash value of 67890.
Since the mathematical values are the same, the altered signature remains a valid signature. This would create a bookkeeping issue, as transactions in Nakamoto consensus-based blockchain networks are documented with these hash values, or transaction IDs. Effectively, one can alter a transaction ID to a new one, and the new ID can still be valid.
This can create many issues, as illustrated in the below example:
  1. Alice sends Bob 1 BTC, and Bob sends Merchant Carol this 1 BTC for some goods.
  2. Bob sends Carols this 1 BTC, while the transaction from Alice to Bob is not yet validated. Carol sees this incoming transaction of 1 BTC to him, and immediately ships goods to B.
  3. At the moment, the transaction from Alice to Bob is still not confirmed by the network, and Bob can change the witness signature, therefore changing this transaction ID from 12345 to 67890.
  4. Now Carol will not receive his 1 BTC, as the network looks for transaction 12345 to ensure that Bob’s wallet balance is valid.
  5. As this particular transaction ID changed from 12345 to 67890, the transaction from Bob to Carol will fail, and Bob will get his goods while still holding his BTC.
With the Segregated Witness upgrade, such instances can not happen again. This is because the witness signatures are moved outside of the transaction block into an extended block, and altering the witness signature won’t affect the transaction ID.
Since the transaction malleability issue is fixed, Segregated Witness also enables the proper functioning of second-layer scalability solutions on the Bitcoin protocol, such as the Lightning Network.

Lightning Network

Lightning Network is a second-layer micropayment solution for scalability.
Specifically, Lightning Network aims to enable near-instant and low-cost payments between merchants and customers that wish to use bitcoins.
Lightning Network was conceptualized in a whitepaper by Joseph Poon and Thaddeus Dryja in 2015. Since then, it has been implemented by multiple companies. The most prominent of them include Blockstream, Lightning Labs, and ACINQ.
A list of curated resources relevant to Lightning Network can be found here.
In the Lightning Network, if a customer wishes to transact with a merchant, both of them need to open a payment channel, which operates off the Bitcoin blockchain (i.e., off-chain vs. on-chain). None of the transaction details from this payment channel are recorded on the blockchain, and only when the channel is closed will the end result of both party’s wallet balances be updated to the blockchain. The blockchain only serves as a settlement layer for Lightning transactions.
Since all transactions done via the payment channel are conducted independently of the Nakamoto consensus, both parties involved in transactions do not need to wait for network confirmation on transactions. Instead, transacting parties would pay transaction fees to Bitcoin miners only when they decide to close the channel.
https://preview.redd.it/cy56icarf3151.png?width=1601&format=png&auto=webp&s=b239a63c6a87ec6cc1b18ce2cbd0355f8831c3a8
One limitation to the Lightning Network is that it requires a person to be online to receive transactions attributing towards him. Another limitation in user experience could be that one needs to lock up some funds every time he wishes to open a payment channel, and is only able to use that fund within the channel.
However, this does not mean he needs to create new channels every time he wishes to transact with a different person on the Lightning Network. If Alice wants to send money to Carol, but they do not have a payment channel open, they can ask Bob, who has payment channels open to both Alice and Carol, to help make that transaction. Alice will be able to send funds to Bob, and Bob to Carol. Hence, the number of “payment hubs” (i.e., Bob in the previous example) correlates with both the convenience and the usability of the Lightning Network for real-world applications.

Schnorr Signature upgrade proposal

Elliptic Curve Digital Signature Algorithm (“ECDSA”) signatures are used to sign transactions on the Bitcoin blockchain.
https://preview.redd.it/hjeqe4l7g3151.png?width=1601&format=png&auto=webp&s=8014fb08fe62ac4d91645499bc0c7e1c04c5d7c4
However, many developers now advocate for replacing ECDSA with Schnorr Signature. Once Schnorr Signatures are implemented, multiple parties can collaborate in producing a signature that is valid for the sum of their public keys.
This would primarily be beneficial for network scalability. When multiple addresses were to conduct transactions to a single address, each transaction would require their own signature. With Schnorr Signature, all these signatures would be combined into one. As a result, the network would be able to store more transactions in a single block.
https://preview.redd.it/axg3wayag3151.png?width=1601&format=png&auto=webp&s=93d958fa6b0e623caa82ca71fe457b4daa88c71e
The reduced size in signatures implies a reduced cost on transaction fees. The group of senders can split the transaction fees for that one group signature, instead of paying for one personal signature individually.
Schnorr Signature also improves network privacy and token fungibility. A third-party observer will not be able to detect if a user is sending a multi-signature transaction, since the signature will be in the same format as a single-signature transaction.

4. Economics and supply distribution

The Bitcoin protocol utilizes the Nakamoto consensus, and nodes validate blocks via Proof-of-Work mining. The bitcoin token was not pre-mined, and has a maximum supply of 21 million. The initial reward for a block was 50 BTC per block. Block mining rewards halve every 210,000 blocks. Since the average time for block production on the blockchain is 10 minutes, it implies that the block reward halving events will approximately take place every 4 years.
As of May 12th 2020, the block mining rewards are 6.25 BTC per block. Transaction fees also represent a minor revenue stream for miners.
submitted by D-platform to u/D-platform [link] [comments]

Use of Blockchain Technologies in the Field of Labor

Use of Blockchain Technologies in the Field of Labor

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The issues of using blockchain technologies, conducting ICOs and the use of cryptocurrencies are relevant not only for the field of law, but also for political, economic, other sciences, and are also of interest to ordinary citizens.
Labor law does not remain aloof from the development of technology, as well as globalization processes, which necessitates the conduct of relevant scientific research.
For a short time, judicial practice is changing, the approaches of state bodies in matters of cryptocurrency transactions, their theft, seizure, etc. At the same time, electronic technologies are acquiring special significance in the field of labor law. Workflow experiments, discussions about the need to introduce workbooks, electronic sick-lists, and the work of remote workers — information technologies have already found application in all these areas.
In addition, at the present time, given the globalization processes, there is a need to increase pay opportunities. It is no accident that in some countries the possibilities of a monetary form of remuneration have expanded by assuming, under certain conditions, remuneration in the currency of other states. Based on this provision, the question arises about the practical feasibility of using cryptocurrency workers as wages, as well as the use of blockchain technologies in the world of work.
Blockchain is a technology of distributed databases (registries) based on a constantly renewed chain of records. The name Cryptocurrency, meaning “cryptocurrency”, appeared in Forbes magazine in 2011. However, cryptocurrencies themselves would not have been so widespread without a blockchain system that provides all the necessary elements for circulation. Cryptocurrency is a special kind of electronic means of payment. Strictly speaking, this is a mathematical code. It is called so because of the use of cryptographic elements in the circulation of this digital money, namely, an electronic signature.
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The popularity of cryptocurrencies is due to a number of factors that directly affect labor law.

Such electronic money is universal regardless of the place of work, the legal form of the employer or the citizenship of the employee. Cryptocurrencies are not tied to a particular state or bank. This decentralization is one of their main advantages, which encourages many countries to start using cryptographic currencies for international payments and as reserve currencies. Bitcoin operations are increasingly being conducted on global financial markets. In the future, this factor allows creating a single world labor market, where remuneration for labor will be paid in a single form and currency, without linking this money to specific countries and existing systems. This will significantly simplify emerging issues and difficulties in relations associated with employees located abroad. This eliminates the need for multiple transfers of funds and the exchange of one currency for another.
From this point of view, I would like to draw attention to the main problems associated with the use of cryptocurrencies in remuneration.
One of the most acute problems is associated with tax legislation. Incomes of employees are taxed, while the employer, as a tax agent, performs this function for the employee. A distinctive feature of all operations with cryptocurrencies is their anonymity and lack of control. All operations occur instantly since they are not controlled by anyone and are not delayed for checks. Accordingly, the tax authorities do not know the number of funds received by the employee for the performance of his labor function, cannot personify the taxpayer and his tax burden. Similarly, the employer and employee are able to evade the payment of taxes, which is a violation of the law.
It is also important for the legislator to determine which form of labor remuneration should include cryptocurrencies. When assigned to cash, there are fewer problems with the payment and regulation of these funds, since in accordance with the above article, payments, in this case, can be made in full and the employer is not threatened with sanctions for violation of labor legislation. If you equate cryptocurrency payments to a non-monetary form of payment, then the employer has the right to pay in this way no more than 20% of the employee’s total salary per month. However, there is currently a variety of cryptocurrencies, some of which are notable for the instability and difficulty of selling by ordinary users. A wide range of cryptocurrencies at the same time can be both a plus and a minus in the issue of their use as a form of salary. The employer and employee can choose the most convenient currency for them to transfer funds. But such a variety can and can significantly interfere with the development of the institution of cryptocurrency payroll.

It should be noted that in many countries, judicial practice recognizes cryptocurrencies as property.

The largest online resources specializing in the purchase and sale of electronic means of payment, there are about 1,500 types of various cryptocurrencies. And this number will only increase over time, as large companies of completely different industries, often not even related to technology and innovation, create their own cryptocurrencies.
Also, the difficulty in paying wages will be the instability of the cryptocurrency rate. Since one of the constituent parts of wages is salary, which means a fixed wage for an employee for performing labor (official) duties of a certain complexity for a calendar month without taking into account compensation, incentive, and social benefits. Accordingly, this component of wages cannot be changed according to the norms of labor legislation. And the cryptocurrency exchange rate for a given period of time is notable for its instability.
In this case, it is necessary to specify in the employment contract with the employee the method of calculating his salary. The first way is to fix the number of wages in a specific number of cryptocurrency units, regardless of their value. This method is unlikely and quite complicated for both employers and workers themselves, and for control and tax authorities.
A simpler way is to pay a salary in cryptocurrency with reference to a specific amount.
It is important to take into account the fact that, regardless of the concept chosen by the employer, the employee can suffer the most, since jumps in the cryptocurrency rate are possible in both cases, and it is the employee’s turnover, sale or personal use of electronic funds that will fall. The position in which the employee will be paid in electronic currency only part of the salary, and the remaining funds will be in the format of the usual money for everyone, will not be completely clear. Therefore, a potential user of cryptocurrency funds and a potential participant in their turnover can, unexpectedly for themselves and all those around them, suffer enormous losses and get rich quite unexpectedly.
The issue of using electronic money is of interest to employers in many countries. The development of regulations governing the circulation of cryptocurrency funds between an employer and an employee has begun almost around the world since the rise in the value of popular currencies.
Since April 1, 2017, the concept of “virtual currencies” has been introduced into the legislation of Japan, and cryptocurrencies have become a fully legalized means of payment. This event could not but affect the employment relationship. So, at the end of 2018, GMO Corporation planned to transfer about 5 thousand of its employees to the cryptocurrency form of payment. (Bitcoin.com “Japanese Internet Giant GMO Offers to Pay 4 700+ Employees in Bitcoin”).
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The United States of America, as the state with the largest number of cryptocurrency users, is also actively developing relevant legislation. US authorities have created a favorable atmosphere for the use of cryptocurrencies. This is also confirmed by studies in the field of labor relations and the labor market. According to a recent release from Bitwage, it was revealed that 10.5% of the companies surveyed currently pay employees, at least in part, in bitcoins. Across the country, about 20 thousand employees are registered in this program, who, accordingly, receive wages in cryptocurrency funds (Legal Ramifications of Paying Employees with Cryptocurrency).
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In order to ensure that the employee and the employer do not hide from taxation when paying wages with cryptocurrencies, some states create entire committees within financial ministries whose main function is to control cash flows and record the tax base of a particular subject of labor relations. One of these countries is Singapore, which in recent years has become the economic center of the world since most projects designed for worldwide use are tested here. Already in 2014, the Monetary Authority of Singapore announced the beginning of the process of legislative regulation of all operations with cryptocurrencies, including those related to labor relations. This body will regulate the process of payment of wages to the employee in this format all stages of the currency movement: from entering the employer company to paying the employee for his own purchases and services, thereby ensuring the security of cryptocurrency transactions and in every possible way helping employees quickly and safely enter the new payment system (Putting Singapore’s Dollar On Blockchain May Prove It’s The Most Crypto-Friendly Place On Earth).
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In order for cryptocurrencies to become one of the forms of remuneration, it is necessary first of all to solve the main problems that impede the full use of electronic means in labor relations.

The paramount task is the normative consolidation of all aspects related to the circulation of such financial resources. The assignment of electronic means of payment to cash will greatly simplify the mechanism for regulating these relations, as this will avoid introducing a large number of changes to existing legislation.
It is logical to solve the problem of taxation after legislative determination and consolidation, using Singaporean experience, creating a specially authorized committee in the Federal Tax Services. This will significantly save energy and money while deciding the whole layer in the use of cryptocurrency funds.
The existing mechanisms for accounting for taxable items and calculating the amount of legally established taxes and fees will not differ much from the existing ones. Therefore, from this side, the introduction of cryptocurrencies will not greatly complicate or change the current system.
The problem of a large number of different cryptocurrencies and their changing value can be solved in several ways. This may be the choice of one cryptocurrency, not necessarily Bitcoin, from among the existing ones. This decision will not create potential difficulties since a well-chosen currency by specialists at the time of consolidation will already be functioning for a long time, showing the real rate without sharp jumps, which will protect workers from depreciation situations and the inability to use their funds.
As for other blockchain technologies, it seems that the principles of smart contracts can be applied to the work of remote workers.
There is currently no established definition of smart contracts. In the most general form, you can define a smart contract as a contract with the automatic fulfillment of certain conditions. This automatic system will simplify the control of the employer over the employee.
In the case of a remote employee, it is the control by the employer that will be, on the one hand, a motivating factor in compliance with labor discipline, and on the other hand, a way to minimize the risks of the employer when bringing the remote employee to disciplinary liability. The remoteness of the employee from the employer should not become an insurmountable obstacle to the implementation of the above control.
Smart contracts will facilitate the interaction of the employee and the employer, simplify the control mechanism.
Thus, competent legislative consolidation and integration of blockchain technologies into the existing financial system are not an insoluble issue. If you take this seriously, the problem can be solved in a fairly short time, since examples of successful incorporation of electronic currencies into the economic scheme in some countries are very common.

Therefore, the question of the cryptocurrency form of remuneration is becoming very real and having good prospects in the near future, as well as the use of other blockchain technologies in the world of work.

Material developed by IMBA-Exchange
submitted by IMBA-Exchange to u/IMBA-Exchange [link] [comments]

Crypto-Currency: A Guide to Common Tax Situations

STATUS: Majority of questions have been answered. If yours got missed, please feel free to post it again.
Introduction
All,
Based on the rapid increase in popularity and price of bitcoin and other crypto currencies (particularly over the past year), I expect that lots of people have questions about how crypto currency will impact their taxes. This thread attempts to address several common issues. I'm posting similar versions of it here, in several major crypto subs, and eventually in the weekly "tax help" threads personalfinance runs.
I'd like to thank the /personalfinance mod team and the /tax community for their help with this thread and especially for reading earlier versions and offering several valuable suggestions/corrections.
This thread is NOT an endorsement of crypto currency as an investing strategy. There is a time and a place to debate the appropriateness of crypto as part of a diversified portfolio - but that time is not now and that place is not here. If you are interested in the general consensus of this sub on investing, I would urge you to consult the wiki while keeping in mind the general flowchart outlining basic steps to get your finances in order.
Finally, please note that this thread attempts to provide information about your tax obligations as defined by United States law (and interpreted by the IRS under the direction of the Treasury Department). I understand that a certain portion of the crypto community tends to view crypto as "tax free" due to the (actual and perceived) difficulty for the IRS to "know" about the transactions involved. I will not discuss unlawfully concealing crypto gains here nor will I suggest illegal tax avoidance activities.
The Basics
This section is best for people that don't understand much about taxes. It covers some very basic tax principles. It also assumes that all you did during the year was buy/sell a single crypto currency.
Fundamentally, the IRS treats crypto not as money, but as an asset (investment). While there are a few specific "twists" when it comes to crypto, when in doubt replace the word "crypto" with the word "stock" and you will get a pretty good idea how you should report and pay tax on crypto.
The first thing you should know is that the majority of this discussion applies to the taxes you are currently working on (2017 taxes). The tax bill that just passed applies to 2018 taxes (with a few very tiny exceptions), which most people will file in early 2019.
In general, you don't have to report or pay taxes on crypto currency holdings until you "cash out" all or part of your holdings. For now, I'm going to assume that you cash out by selling them for USD; however, other forms of cashing out will be covered later.
When you sell crypto, you report the difference between your basis (purchase price) and proceeds (sale price) on Schedule D. Your purchase price is commonly referred to as your basis; while the two terms don't mean exactly the same thing, they are pretty close to one another (in particular, there are three two ways to calculate your basis - your average cost, a first-in, first-out method, and a "specific identification" method. See more about these here and here). EDIT - you may not use average cost method with crypto - see here. If you sell at a gain, this gain increases your tax liability; if you sell at a loss, this loss decreases your tax liability (in most cases). If you sell multiple times during the year, you report each transaction separately (bad news if you trade often) but get to lump all your gains/losses together when determining how the trades impact your income.
One important thing to remember is that there are two different types of gains/losses from investments - short term gains (if you held an asset for one year or less) and long term gains (over one year; i.e. one year and one day). Short term gains are taxed at your marginal income rate (basically, just like if you had earned that money at a job) while long term gains are taxed at lower rates.
For most people, long term capital gains are taxed at 15%. However, if you are in the 10% or 15% tax bracket, congrats - your gains (up to the maximum amount of "unused space" in your bracket) are tax free! If you are in the 25%, 28%, 33%, or 35% bracket, long term gains are taxed at 15%. If you are in the 39.6% bracket, long term gains are taxed at 20%. Additionally, there is an "extra" 3.8% tax that applies to gains for those above $200,000/$250,000 (single/married). The exact computation of this tax is a little complicated, but if you are close to the $200,000 level, just know that it exists.
Finally, you should know that I'm assuming that you should treat your crypto gains/losses as investment gains/losses. I'm sure some people will try and argue that they are really "day traders" of crypto and trade as a full time job. While this is possible, the vast majority of people don't qualify for this status and you should really think several times before deciding you want to try that approach on the IRS.
"Cashing Out" - Trading Crypto for Goods/Services
I realize that not everyone that "cashes out" of crypto does so by selling it for USD. In fact, I understand that some in the crypto community view the necessity of cashing out itself as a type of myth. In this section, I discuss what happens if you trade your crypto for basically anything that isn't cash (minor sidenote - see next section for a special discussion on trading crypto for crypto; i.e. buying altcoins with crypto).
The IRS views trading crypto for something of value as a type of bartering that must be included in income. From the IRS's perspective, it doesn't matter if you sold crypto for cash and bought a car with that cash or if you just traded crypto directly for the car - in both cases, the IRS views you as having sold your crypto. This approach isn't unique to crypto - it works the same way if you trade stock for something.
This means that if you do trade your crypto for "stuff", you have to report every exchange as a sale of your crypto and calculate the gain/loss on that sale, just as if you had sold the crypto for cash.
Finally, there is one important exception to this rule. If you give your crypto away to charity (one recognized by the IRS; like a 501(c)(3) organization), the IRS doesn't make you report/pay any capital gains on the transaction. Additionally, you still get to deduct the value of your donation on the date it was made. Now, from a "selfish" point of view, you will always end up with more money if you sell the crypto, pay the tax, and keep the rest. But, if you are going to make a donation anyway, especially a large one, giving crypto where you have a big unrealized/untaxed gain is a very efficient way of doing so.
"Alt Coins" - Buying Crypto with Crypto
The previous section discusses what happens when you trade crypto for stuff. However, one thing that surprises many people is that trading crypto for crypto is also a taxable event, just like trading crypto for a car. Whether you agree with this position or not, it makes a lot of sense once you realize that the IRS doesn't view crypto as money, but instead as an asset. So to the IRS, trading bitcoin for ripple isn't like trading dollars for euros, but it is instead like trading shares of Apple stock for shares of Tesla stock.
Practically, what this means is that if you trade one crypto for another crypto (say BTC for XRP just to illustrate the point), the IRS views you as doing the following:
  • Selling for cash the amount of BTC you actually traded for XRP.
  • Owing capital gains/losses on the BTC based on its selling price (the fair market value at the moment of the exchange) and your purchase price (basis).
  • Buying a new investment (XRP) with a cost basis equal to the amount the BTC was worth when you exchanged them.
This means that if you "time" your trade wrong and the value of XRP goes down after you make the exchange, you still owe tax on your BTC gain even though you subsequently lost money. The one good piece of news in this is that when/if you sell your XRP (or change it back to BTC), you will get a capital loss for the value that XRP dropped.
There is one final point worth discussing in this section - the so called "like kind exchange" rules (aka section 1031 exchange). At a high level, these rules say that you can "swap" property with someone else without having to pay taxes on the exchange as long as you get property in return that is "like kind". Typically, these rules are used in real estate transactions. However, they can also apply to other types of transactions as well.
While the idea is simple (and makes it sound like crypto for crypto should qualify), the exact rules/details of this exception are very fact specific. Most experts (including myself, but certainly not calling myself an expert) believe that a crypto for crypto swap is not a like kind exchange. The recently passed tax bill also explicitly clarifies this issue - starting in 2018, only real estate qualifies for like kind exchange treatment. So, basically, the vast majority of evidence suggests that you can't use this "loophole" for 2017; however, there is a small minority view/some small amount of belief that this treatment would work for 2017 taxes and it is worth noting that I'm unaware of any court cases directly testing this approach.
Dealing with "Forks"
Perhaps another unpleasant surprise for crypto holders is that "forks" to create a new crypto also very likely generate a taxable event. The IRS has long (since at least the 1960s) held that "found" money is a taxable event. This approach has been litigated in court and courts have consistently upheld this position; it even has its own cool nerdy tax name - the "treasure trove" doctrine.
Practically, what this means is that if you owned BTC and it "forked" to create BCH, then the fair market value of the BCH you received is considered a "treasure trove" that must be reported as income (ordinary income - no capital gain rates). This is true whether or not you sold your BCH; if you got BCH from a fork, that is a taxable event (note - I'll continue using BTC forking to BCH in this section as an example, but the logic applies to all forks).
While everything I've discussed up to this point is pretty clearly established tax law, forks are really where things get messy with taxes. Thus, the remainder of this section contains more speculation than elsewhere in this post - the truth is that while the idea is simple (fork = free money = taxable), the details are messy and other kinds of tax treatment might apply to forks.
One basic practical problem with forks is that the new currency doesn't necessarily start trading immediately. Thus, you may have received BCH before there was a clear price or market for it. Basically, you owe tax on the value of BCH when you received it, but it isn't completely clear what that value was. There are several ways you can handle this; I'll list them in order from most accurate to least accurate (but note that this is just my personal view and there is ongoing disagreement on this issue with little/no authoritative guidance).
  • Use a futures market to determine the value of the BCH - if reliable sources published realistic estimates of what BCH will trade for in the future once trading begins, use this estimate as the value of your BCH. Pros/cons - futures markets are, in theory, pretty accurate. However, if they are volatile/subject to manipulation, they may provide an incorrect estimate of the true value of BCH. It would suck to use the first futures value published only to have that value plummet shortly thereafter, leaving you to pay ordinary income tax but only have an unrealized capital loss.
  • Wait until an exchange starts trading BCH; use the actual ("spot" price) as the value. Pros/cons - spot prices certainly reflect what you could have sold BCH for; however, it is possible that the true value of the coin was highelower when you received it as compared to when it started trading on the exchange. Thus this method seems less accurate to me than a futures based approach, but it is still certainly fairly reasonable.
  • Assume that the value is $0. This is my least preferred option, but there is still a case to be made for it. If you receive something that you didn't want, can't access, can't sell, and might fail, does it have any value? I believe the answer is yes (maybe not value it perfectly, but value it somewhat accurately), but if you honestly think the answer is no, then the correct tax answer would be to report $0 in income from the fork. The IRS would be most likely to disagree with this approach, especially since it results in the least amount of income reported for the current year (and the most favorable rates going forward). Accordingly, if you go this route, make extra sure you understand what it entails.
Note, once you've decided what to report as taxable income, this amount also becomes your cost basis in the new crypto (BCH). Thus, when you ultimately sell your BCH (or trade it for something else as described above), you calculate your gain/loss based on what you included in taxable income from the fork.
Finally, there is one more approach to dealing with forks worth mentioning. A fork "feels" a lot like a dividend - because you held BTC, you get BCH. In a stock world, if I get a cash dividend because I own the stock, that money is not treated as a "treasure trove" and subject to ordinary income rates - in most cases, it is a qualified dividend and subject to capital gain rates; in some cases, some types of stock dividends are completely non taxable. This article discusses this idea in slightly more detail and generally concludes that forks should not be treated as a dividend. Still, I would note that I'm unaware of any court cases directly testing this theory.
Ultimately, this post is supposed to be practical, so let me make sure to leave you with two key thoughts about the taxation of forks. First, I believe that the majority of evidence suggests that forks should be treated as a "treasure trove" and reported as ordinary income based on their value at creation and that this is certainly the "safest" option. Second, out of everything discussed in this post, I also believe that the correct taxation of forks is the murkiest and most "up for debate" area. If you are interested in a more detailed discussion of forks, see this thread for a previous version of this post discussing it at even more length and the comments for a discussion of this with the tax community.
Mining Crypto
Successfully mining crypto coins is a taxable event. Depending on the amount of effort you put into mining, it is either considered a hobby or a self-employment (business) activity. The IRS provides the following list of questions to help decide the correct classification:
  • The manner in which the taxpayer carries on the activity.
  • The expertise of the taxpayer or his advisors.
  • The time and effort expended by the taxpayer in carrying on the activity.
  • Expectation that assets used in activity may appreciate in value.
  • The success of the taxpayer in carrying on other similar or dissimilar activities.
  • The taxpayer’s history of income or losses with respect to the activity.
  • The amount of occasional profits, if any, which are earned.
If this still sounds complicated, that's because the distinction is subject to some amount of interpretation. As a rule of thumb, randomly mining crypto on an old computer is probably a hobby; mining full time on a custom rig is probably a business.
In either event, you must include in income the fair market value of any coins you successfully mine. These are ordinary income and your basis in these coins is their fair market value on the date they were mined. If your mining is a hobby, they go on line 21 (other income) and any expenses directly associated with mining go on schedule A (miscellaneous subject to 2% of AGI limitation). If your mining is a business, income and expenses go on schedule C.
Both approaches have pros and cons - hobby income isn't subject to the 15.3% self-employment tax, only normal income tax, but you get fewer deductions against your income and the deductions you get are less valuable. Business income has more deductions available, but you have to pay payroll (self-employment) tax of about 15.3% in addition to normal income tax.
What if I didn't keep good records? Do I really have to report every transaction?
One nice thing about the IRS treating crypto as an asset is that we can look at how the IRS treats people that "day trade" stock and often don't keep great records/have lots of transactions. While you need to be as accurate as possible, it is ok to estimate a little bit if you don't have exact records (especially concerning your cost basis). You need to put in some effort (research historical prices, etc...) and be reasonable, but the IRS would much rather you do a little bit of reasonable estimation as opposed to just not reporting anything. Sure, they might decide to audit you/disagree with some specifics, but you earn yourself a lot of credit if you can show that you honestly did the best you reasonably could and are making efforts to improve going forward.
However, concerning reporting every transaction - yes, sorry, it is clear that you have to do this, even if you made hundreds or thousands of them. Stock traders have had to go through this for many decades, and there is absolutely no reason to believe that the IRS would accept anything less from the crypto community. If you have the records or have any reasonable way of obtaining records/estimating them, you must report every transaction.
What if I don't trust you?
Well, first let me say that I can't believe you made it all the way down here to this section. Thanks for giving me an honest hearing. I would strongly encourage you to go read other well-written, honest guides. I'll link to some I like (both more technical IRS type guides and more crypto community driven guides). While a certain portion of the crypto community seems to view one of the benefits of crypto as avoiding all government regulation (including taxes), I've been pleasantly surprised to find that many crypto forums contain well reasoned, accurate tax guides. While I may not agree with 100% of their conclusions, that likely reflects true uncertainty around tax law that is fundamentally complex rather than an attempt on either end to help individuals unlawfully avoid taxes.
IRS guides
Non-IRS guides
submitted by Mrme487 to personalfinance [link] [comments]

Bitcoin Hits Its Hash Rate All-Time High Amid Volatile Weekend

Bitcoin Hits Its Hash Rate All-Time High Amid Volatile Weekend
The leader of cryptocurrencies, Bitcoin (BTC), saw a massive spike on Sunday, breaching over $9,000 to record a January-high of $9,184. However, the price of Bitcoin fell rapidly below the $8,750 support zone and settled around the $8,600 mark. The volatile weekend, according to some experts, is mainly due to Bitcoin registering a new all-time high in computing power, or hash rate.

Source: Bitinfocharts
Hash rate resembles how many operations per second the network is capable of. Bitcoin recorded its all-time high of 126 Exhash, which equals to 126 quintillions solved cryptographic equations per second. The all-time high also enhances the security of Bitcoin’s blockchain, as the higher hash rate resembles increased difficulty of hackers successfully attacking and control at least 51% of all computing machines on Bitcoin’s blockchain – the so-called “51% attack”.
Despite the increased interest in Bitcoin mining, some experts think the all-time high is a consequence of BTC miners’ expectations of an upward price swing. Indeed, the Bitcoin network is set to undergo a “halving”, scheduled for the 14th of May – the rewards for successfully mining a block would drop in half. The “halving” occurs on every 210,000 mined BTC blocks. However, some experts disagree with the all-time high being such a noticeable event, stating that if Bitcoin miners join the game now, they have a mere five months to profit off from the current mining rewards.
However, the hash rate all-time high has also split experts on the opposite sides, regarding the correlation between computing power and Bitcoin’s price. Some experts believe the recent price spike was caused mainly due to Bitcoin recording an all-time high hash rate. Max Keiser stated his confidence about the correlation between Bitcoin’s hash rate and price, claiming that “BTC price follows hash rate, which is on a continuous 9-year bullish run.”
On the other side are the experts, linking Bitcoin with global market forces like supply and demand, rather than computing power. Alex Kruger tweeted his disagreement with hash rates defining Bitcoin’s price, explaining that “hash rate follows the perceived mining profits.”
Pricewise, Bitcoin’s swing above $9,000, as well as its later correction, indicates a stiff resistance at $8,750. Indicators like the Relative Strength Index, or RSI, show that the upward momentum could stall in the near future. Bitcoin’s price most likely would drift sideways, between the strong support and resistance zones at $8,500 and $8,750, respectively. As of press time, the world’s largest cryptocurrency is trading at $8,630.51.
submitted by Crypto_Browser to u/Crypto_Browser [link] [comments]

IoT Testing !!!

IoT is a whole ecosystem that contains intelligent devices equipped with sensors (sensors) that provide remote control, storage, transmission and security of data. The Internet of Things (IoT) is an innovative solution in various areas such as healthcare, insurance, labor protection, logistics, ecology, etc. To unleash the full potential of using IoT devices, it is necessary to solve many problems related to standards, security, architecture, ecosystem construction, channels and device connection protocols. Today in the world, large organizations such as NIST, IEEE, ISO / IEC, and others make enormous efforts in addressing the issues of standardization, security, and the architecture of developed devices. Analysis of recent scientific research in the field of solving information security issues and data privacy of IoT devices showed positive results, but these methods and approaches are based on traditional methods of network security. The development and application of security mechanisms for IoT devices is a complex and heterogeneous task. In this regard, ensuring information security and the protection of sensitive data, as well as the availability of IoT devices, is the main purpose of writing this article. Given the above, many questions arise related to the security status of IoT devices, namely: What are the current standards and protocols for IoT? What are the requirements for ensuring information security of IoT devices? What security mechanisms do IoT devices have? What methods of testing IoT devices exist? Manufacturers and developers of IoT devices do not pay enough attention to security issues. With the development of cyber-attacks, attack vectors are becoming more sophisticated and aimed at several infrastructure elements at the same time. IoT infrastructure typically includes millions of connected objects and devices that store and share confidential information. Scenarios of theft and fraud, such as hacking and falsifying personal data, pose a serious threat to such IoT devices. Most IoT devices use the public Internet to exchange data, which makes them vulnerable to cyber-attacks. Modern approaches to information security often offer solutions to individual problems, when multi-level approaches offer increased resistance to cyber-attacks.
Challenges of testing IoT devices
To a request to name essential items, many would answer: food, a roof over your head, clothes … With one caveat: this was the case in the last century.
Since then, the species Homo Sapiens has accumulated needs. We need automatic sensors to control the lighting, not just switches, for smart systems to monitor health and car traffic. The list goes on … In general, we can make life easier and better.
Let’s try to figure out how all this Internet of things works before moving on to testing.
IoT testing
Content
What is the Internet of Things (IoT)? Examples of IoT devices # 1) Wearable technology: # 2) Infrastructure and development # 3) Health Technologies that are present in IoT IoT Testing # 1) Usability: # 2) IoT Security: # 3) Network features: # 4) Efficiency: # 5) Compatibility testing: # 6) Pilot testing: # 7) Check for compliance: # 8) Testing updates: IoT testing challenges # 1) Hard / soft # 2) Device Interaction Model # 3) Testing data coming in real time # 4) UI # 5) Network Availability IoT Testing Tools # 1) Software: # 2) Hard: Total What is the Internet of Things (IoT)? The Internet of things (or IoT) is a network that combines many objects: vehicles, home automation, medical equipment, microchips, etc. All these constituent elements accumulate and transmit data. Through this technology, the user controls the devices remotely.

Examples of IoT devices

# 1) Wearable technology: Fitbit Fitness Bracelets and Apple Watch smart watches sync seamlessly with other mobile devices.

IoT – watches and bracelets

Itís easier to collect health information: heart rate, body activity during sleep, etc.
# 2) Infrastructure and development The CitySense app analyzes lighting data online and turns lights on and off automatically. There are applications that control traffic lights or report on the availability of parking lots.
# 3) Health Some health monitoring systems are used in hospitals. The basis of their work is indicative data. These services control the dosage of drugs at different times of the day. For example, the UroSense application monitors the level of fluid in the body and, if necessary, increases this level. And doctors will learn about patient information wirelessly.
Technologies that are present in IoT RFID (Radio Frequency Identification), EPC (Electronic Product Code) NFC (ìNear Field Communicationî) provides two-way communication between devices. This technology is present in smartphones and is used for contactless transactions.
Bluetooth It is widely used in situations where near-field communication is sufficient. Most often present in wearable devices. Z-Wave. Low frequency RF technology. Most often used for home automation, lighting control, etc. WiFi. The most popular network for IoT (file, data and message transfer). IoT Testing Consider an example : a medical system that monitors health status, heart rate, fluid content, and sends reports to healthcare providers. Data is displayed in the system; archives available. And doctors are already deciding whether to take medication for the patient remotely.
IoT architecture
There are several approaches for testing the IoT architecture.
# 1) Usability: It is necessary to provide usability testing of each device. A medical device that monitors your health should be portable.
Sufficiently thought out equipment is needed that would send not only notifications, but also error messages, warnings, etc. The system must have an option that captures events, so that the end user understands. If this is not possible, event information is stored in the database. The ability to process data and exchange tasks between devices is carefully checked. # 2) IoT Security: Data is at the heart of all connected devices. Therefore, unauthorized access during data transfer is not ruled out. From the point of view of software testing, it is necessary to check how secure / encrypted the data is. If there is a UI, you need to check if it is password protected. # 3) Network features: Network connectivity and IoT functionality are critical. After all, we are talking about a system that is used for health purposes. Two main aspects are tested: The presence of a network , the possibility of data transfer (whether jobs are transferred from one device to another without any hitch). The scenario when there is no connection . Regardless of the level of reliability of the system, it is likely that the status of the system will be ìofflineî. If the network is unavailable, employees of the hospital or other organization need to know about it (notifications). Thus, they will be able to monitor the condition of the patient themselves, and not wait for the system to work. On the other hand, in such systems there is usually a mechanism that saves data if the system is offline. That is, data loss is eliminated. # 4) Efficiency: It is necessary to take into account the extent to which the healthcare solution is applicable in specific conditions. In testing, from 2 to 10 patients participate, data is transmitted to 10-20 devices. If the entire hospital is connected to the network, this is already 180-200 patients. That is, there will be more actual data than test data. In addition, it is necessary to test the utility for monitoring the system: current load, power consumption, temperature, etc. # 5) Compatibility testing: This item is always present in the plan for testing the IoT system. The compatibility of different versions of operating systems, browser types and their respective versions, devices of different generations, communication modes [for example, Bluetooth 2.0, 3.0] is extremely important for IoT. # 6) Pilot testing: Pilot testing is a mandatory point of the test plan. Only tests in the laboratory will allow us to conclude that the system is functional. In pilot testing, the number of users is limited. They make manipulations with the application and express their opinion. These comments turn out to be very helpful, they make a reliable application. # 7) Check for compliance: The system, which monitors the state of health, undergoes many compliance checks. It also happens that a software product passes all stages of testing, but fails the final test for compliance [testing is carried out by the regulatory body]. It is more advisable to check for compliance with norms and standards before starting the development cycle. # 8) Testing updates: IoT is a combination of many protocols, devices, operating systems, firmware, hardware, network layers, etc. When an update occurs – be it a system or something else of the above – rigorous regression testing is required. The overall strategy is being amended to avoid the difficulties associated with the upgrade.

IoT testing challengesIoT testing

# 1) Hard / soft IoT is an architecture in which software and hardware components are closely intertwined. Not only software is important, but also hard: sensors, gateways, etc.
Functional testing alone will not be enough to certify the system. All components are interdependent. IoT is much more complicated than simpler systems [only software or only hard].
# 2) Device Interaction Model Components of the network must interact in real time or close to real. All this becomes a single whole – hence the additional difficulties associated with IoT (security, backward compatibility and updates).
# 3) Testing data coming in real time Obtaining this data is extremely difficult. The matter is complicated by the fact that the system, as in the described case, may relate to the health sector.
# 4) UI An IoT network usually consists of different devices that are controlled by different platforms [iOS, Android, Windows, linux]. Testing is possible only on some devices, since testing on all possible devices is almost impossible.
# 5) Network Availability Network connectivity plays an important role in IoT. The data rate is increasing. IoT architecture should be tested under various connection conditions, at different speeds. Virtual network emulators in most cases are used to diversify network load, connectivity, stability, and other elements of load testing . But the evidence is always new scenarios, and the testing team does not know where the difficulties will arise in the future.

IoT Testing ToolsIoT and software

There are many tools that are used in testing IoT systems.
They are classified depending on the purpose:
# 1) Software: Wireshark : An open source tool. Used to monitor traffic in the interface, source / given host address, etc. Tcpdump : This tool does a similar job. The utility does not have a GUI, its interface is the command line. It enables the user to flash TCP / IP and other packets that are transmitted over the network. # 2) Hard: JTAG Dongle: A tool similar to debuggers in PC applications. Allows you to find defects in the code of the target platform and shows the changes step by step. Digital Storage Oscilloscope : checks various events using time stamps, power outages, signal integrity. Software Defined Radio : emulates a transmitter and receiver for various wireless gateways. IoT is an emerging market and many opportunities. In the foreseeable future, the Internet of things will become one of the main areas of work for tester teams. Network devices, smart gadget applications, communication modules – all this plays an important role in the study and evaluation of various services.
Total The approach to testing IoT may vary depending on the specific system / architecture.
Itís difficult to test IoT, but at the same time itís an interesting job, since testers have a good place to swing – there are many devices, protocols and operating systems.
PS You should try out the TAAS format (“tests from the user’s point of view”), and not just fulfill the formal requirements.
—————
Smart watches, baby-sitters, wireless gadgets and devices such as, for example, a portable radio station have long been part of everyday life.
Hackers have already proven that many of these attacks on IoT are possible.
Many people in general first learned about IoT security threats when they heard about the Mirai botnet in September 2016.
According to some estimates, Mirai infected about 2.5 million IoT devices, including printers, routers and cameras connected to the Internet.
The botnetís creators used it to launch distributed denial of service (DDoS) attacks, including an attack on the KrebsonSecurity cybersecurity blog.
In fact, the attackers used all devices infected with Mirai to try to connect to the target site at the same time, in the hope of suppressing the servers and preventing access to the site.
Since Mirai was first published on the news, attackers launched other botnet attacks on IoT, including Reaper and Hajime.
Experts say that such attacks are most likely in the future.
The Internet of Things (IoT) can bring many advantages to modern life, but it also has one huge drawback: security threats.
In its 2018 IOT forecasts, Forroter Research notes: ìSecurity threats are a major concern for companies deploying IoT solutions – in fact, this is the main task of organizations looking to deploy IoT solutions.
However, most firms do not regularly prevent IoT-specific security threats, and business pressure suppresses technical security issues. î
IoT security risks can be even more significant on the consumer side, where people are often unaware of potential threats and what they should do to avoid threats.
A 2017 IoT security survey sponsored by Gemalto Security Provider found that only 14 percent of consumers surveyed consider themselves IoT-aware.
This number is particularly noteworthy because 54 percent of the respondents owned an average of four IoT devices.
And these IoT security threats are not just theoretical.
Hackers and cybercriminals have already found ways to compromise many IoT devices and networks, and experts say that successful attacks are likely to increase.
Forrester predicted: “In 2018, we will see more attacks related to IoT … except that they will increase in scale and loss.”
What types of IoT security threats will enterprises and consumers face in 2018?
Based on historical precedent, here are ten of the most likely types of attacks.
  1. Botnets and DDoS attacks
  2. Remote recording The possibility that attackers can hack IoT devices and record owners without their knowledge is not revealed as a result of the work of hackers, but as a result of the work of the Central Intelligence Agency (CIA).
Documents released by WikiLeaks implied that the spy agency knew about dozens of zero-day exploits for IoT devices, but did not disclose errors, because they hoped to use vulnerabilities to secretly record conversations that would reveal the actions of alleged opponents of America.
Documents pointed to vulnerabilities in smart TVs, as well as on Android and iOS smartphones.
The obvious consequence is that criminals can also exploit these vulnerabilities for their vile purposes.
  1. Spam In January 2014, one of the first known attacks using IoT devices used more than 100,000 Internet-connected devices, including televisions, routers, and at least one smart refrigerator to send 300,000 spam emails per day.
The attackers sent no more than 10 messages from each device, which makes it very difficult to block or determine the location of the incident.
This first attack was not far from the last.
IoT spam attacks continued in the fall with the Linux.ProxyM IoT botnet.
  1. APTs In recent years, advanced persistent threats (APTs) have become a serious concern for security professionals.
APTs are carried out by funded and widespread attackers such as nation states or corporations that launch complex cyberattacks that are difficult to prevent or mitigate.
For example, the Stuxnet worm, which destroyed Iranian nuclear centrifuges and hacking Sony Pictures 2014, was attributed to nation states.
Because the critical infrastructure is connected to the Internet, many experts warn that APTs may launch a power-oriented IoT attack, industrial control systems, or other systems connected to the Internet.
Some even warn that terrorists could launch an attack on iOT, which could harm the global economy.
  1. Ransomware Ransomware has become too common on home PCs and corporate networks. Now experts say that it is only a matter of time before the attackers begin to block smart devices. Security researchers have already demonstrated the ability to install ransomware on smart thermostats. For example, they can raise the temperature to 95 degrees and refuse to return it to its normal state until the owner agrees to pay a ransom in Bitcoins. They can also launch similar attacks on garage doors, vehicles, or even appliances. How much would you pay to unlock your smart coffee pot first thing in the morning?
  2. Data theft Obtaining important data, such as customer names, credit card numbers, social security numbers, and other personal information, is still one of the main goals of cyber attacks.
IoT devices represent a whole new vector of attack for criminals looking for ways to invade corporate or home networks.
For example, if an improperly configured device or IoT sensor is connected to corporate networks, this can give attackers a new way to enter the network and potentially find the valuable data that they need.
  1. Home theft As smart locks and smart garage doors become more commonplace, it is also more likely that cybercriminals can become real thieves.
Home systems that are not properly protected can be vulnerable to criminals with sophisticated tools and software.
Security researchers are unlikely to have shown that itís quite easy to break into a house through smart locks from several different manufacturers, and smart garage doors do not seem to be much safer.
  1. Communication with children One of the most disturbing IoT security stories came from children.
One couple discovered that the stranger not only used his monitor for children to spy on their three-year-old son, this stranger also spoke with his child through the device.
Mother heard an unknown voice: ìWake up, boy, dad is looking for you,î and the child said that he was scared because at night someone was talking to him on an electronic device.
As more and more children’s gadgets and toys connect to the Internet, it seems likely that these frightening scenarios may become more common.
  1. Remote control of a vehicle As vehicles become smarter and more accessible on the Internet, they also become vulnerable to attack.
Hackers have shown that they can take control of a jeep, maximize air conditioning, change the radio station, start the wipers, and ultimately slow down the car.
The news led to the recall of 1.4 million cars, but whitehat researchers, following the original exploit, said they discovered additional vulnerabilities that were not fixed by the Chrysler patch applied to the recalled cars.
Although experts say the automotive industry is doing a great job of ensuring vehicle safety, it is almost certain that attackers will find new vulnerabilities in such smart cars.
  1. Personal attacks Sometimes IoT covers more than just devices – it can also include people who have connected medical devices implanted in their bodies.
An episode of the television series Homeland attempted a murder aimed at an implanted medical device, and former vice president Dick Cheney was so worried about this scenario that he turned off the wireless capabilities on his implanted defibrillator.
This kind of attack has not yet happened in real life, but it remains possible, as many medical devices become part of the IoT.
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What Does Hashrate Mean?  Hashrate Mining Explained What is the Difficulty Target? Explaining Bitcoin Target Difficulty Bitcoin Cash Hard Fork Update  BCH Booming! How to Calculate Bitcoin Difficulty Bitcoin Breakout on July 22 5 Things to Watch for BTC Price This Week

difficulty = difficulty_1_target / current_target (target is a 256 bit number) difficulty_1_target can be different for various ways to measure difficulty. Traditionally, it represents a hash where the leading 32 bits are zero and the rest are one (this is known as "pool difficulty" or "pdiff"). Since the price floor set by the difficulty adjustment ties breakeven cost and price together, the breakeven cost trend is a reasonable predictor of the future price of Bitcoin. The cryptocurrency profitability information displayed is based on a statistical calculation using the hash rate values entered and does not account for difficulty and exchange rate fluctuations, stale/reject/orphan rates, a pool's efficiency, and pool fees. Your individual profitability may vary. A 10 TH/s (10¹³ hash/s) miner at block height 57595 (H(57595) = 12.5) and current difficulty of 1590896927258, is expected produce at least 0.0015806 Bitcoins or 15860 bits today. - Hash rate, difficulty, and miner’s reward are related to each other in different ways. At the point of time, when the network of Bitcoin goes up, the hash rate will be more in order to mine blocks and miners can earn 12.5 BTC block reward and transaction fees too.

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What Does Hashrate Mean? Hashrate Mining Explained

For context, that’s double what the hash rate was at one year ago and 1,000% higher than the hash rate at Bitcoin’s $20,000 high. Bitcoin’s network difficulty, which regulates how fast ... Bitcoin difficulty ribbon - willy woo’s bitcoin difficulty ribbon suggests drop below $6,000/btc “very unlikely”. Click below and become rich today https://bit.ly/bitcoins0 Credit to Willy ... - Adjust difficulty to hash rate to target a mean block interval of 600 seconds. - Avoid sudden changes in difficulty when hash rate is fairly stable. - Adjust difficulty rapidly when hash rate ... Bitcoin Mining Difficulty: An Overview - Duration: 4:37. AMBCrypto Recommended for you. 4:37. Why there will never be more than 21 million bitcoin. - Duration: 8:18. Keifer Kif 751 views. Bitcoin difficulty 2-month average chart. Source: BlockchainDifficulty refers to the effort required to solve equations on the Bitcoin blockchain, while hash rate is a rough measure of the ...

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