14 Apr 2020, 07:34

Everything you need to know about XRP and Ripple

The Problem

To better understand Ripple it’s important to understand the current problems that exist within todays banking infrastructure. The current global payment system is painfully slow. It can take anywhere from three to five business days for a transaction to be posted. The global payment system also fails to be cost effective. An international transfer could cost up to fifty dollars depending on the bank and the amount of money being sent. According to Ripple as many as four percent of global transactions actually fail as well. So currently you have an incohesive global payment system that is disparate, inefficient, unreliable and not to mention costly. Ripple aims to solve these problems with a decentralized solution.

What is XRP?

XRP by market capitalization is the third largest cryptocurrency following Bitcoin and Ethereum. XRP is the digital token or cryptocurrency that many refer to as Ripple, that can be traded through the Ripple network. It was designed as a payment system for financial institutions all over the world. This is beneficial for a few reasons.

  • Individuals and financial institutions can send each other payments in real time, we’re talking seconds.
  • Replaces the need for systems like Swift or Western Union, which are not cost effective.
  • Removes fees and delays that occur between different types of currency exchanges.

Does it use the Blockchain like Bitcoin?

Ripple does take advantage of Blockchain technologies but not in the way the Bitcoin does. It uses a distributed consensus ledger verified by Ripple servers rather than utilizing mining techniques. So basically all these nodes (servers) end up validating each others order of transactions to prevent the double spending of funds. This is what’s called a consensus.

So apparently Ripple has a Validator Registry available for our viewing pleasure, which looks to be a list of all the nodes in the consensus and their corresponding domain names. You’ll see various columns denoting things such as the name of the server, the agreement score and the total number of validations that the node is aware of. You can even click on the domain name of each of those servers, whereas the server is likely to be a financial institution that can send and receive payments. Depending on what the server does or who the financial institution is, you’ll most likely be presented with a web page of some sort.

Ripple Validator Registry

What is RippleNet?

The Ripple Network or RippleNet for short is kind of what we described above. It’s basically a network of financial institutions that wish to send and receive payments to each other across borders and in real time. RippleNet is awesome because customers are able to transact in new market territory and international payments are made seamless. Ripple says that these transactions occur in mere seconds and are more secure and reliable as opposed to traditional payment methods.

Customers also have around 40 currencies that they can receive payment in. According to Ripple they offer what’s called on demand liquidity. Which basically boils down to the idea that two currencies can be bridged utilizing XRP tokens. Different countries use different currency and currencies are valued differently. One example that comes to mind is the US dollars versus the Euro. At the time of writing one Euro is worth $!.09 in US dollars. XRP bridges these two currencies so that customers receive the correct amount in local currency. Interestingly enough there is a small charge of $0.00001 for the transaction commission cost over RippleNet. This ensures that DDos attacks don’t occur against the network.

What is Ripple?

Ripple is the software solutions company behind the Ripple network and XRP. They aim to use Blockchain technology to help government and financial institutions send global payments quickly, seamlessly and in a secure fashion. Many people use Ripple to describe the XRP token but its important to know the difference.

How it works

Ripple provides a descriptive video on how everything works in the RippleNet. Check it out!

10 Apr 2020, 16:28

What is Cryptomining? Is it Profitable in 2020?
an image of cryptomining

Cryptomining

Cryptomining is the process by which a computer runs a program that does complex mathematical computations in order to verify transactions on the Blockchain. In a Blockchain network, miners compete with each other to verify these transactions. When a transaction is verified, a miner can essentially earn small amounts of cryptocurrency. In this article we will primarily focus on mining Bitcoin to try to keep things simple

Some cryptocurrencies like Bitcoin for example offer a large amount as a reward when a block of transactions is verified. This reward is the only way new Bitcoin can be minted and circulated. This keeps the network in check, allows the crypto to have value, and helps protect it from inflation. Cryptomining also prevents the users from trying to spend cryptocurrency that has already been spent somewhere else. This is because the original transaction is publicly available on the ledger and verified with a cryptographic hash..

Is It Profitable?

TLDR: Maybe, if you have a few thousand dollars to purchase specialized mining hardware and your electricity is cheap.

For the average home miner, it probably isn’t that profitable. It is virtually impossible to profit from mining Bitcoin with a basic computer these days. You would need specialized hardware which can be quite costly. Since you are competing with other miners who have more advanced hardware it really isn’t worth all the trouble. There are more profitable cryptocurrencies to mine and if you really want a Bitcoin in your portfolio you’d be better off buying one on a crypto exchange platform.

In the early days of Bitcoin the computational puzzles that your computer had to solve were probably less complex and the reward for it was much greater. Miners could potentially earn thousands of Bitcoin but due to the rising hardware and electricity costs for a mining rig setup, it simply isn’t worth it for the average person. The Bitcoin network also has a protocol called the halving which is a rule designed to cut the reward in half every four years. Currently the block reward is at 12.5 BTC. Next month another halving will occur and the new block reward will be significantly less at 6.25 BTC.

Since the average home miner doesn’t have thousands of dollars to invest in mining hardware, most of the mining happening these days is dominated by large corporations who are able to utilize countries where the cost of electricity is cheap. These corporations are also able to invest millions of dollars in specialized mining equipment that can solve these mathematical problems very quickly.

To really make a good return on your investment, your machine would have to get rewarded for completing a block. Since your machine would be competing with all the other machines in the network, your chances of solving a block on your own would be very slim. To get around this, there are mining pools that you can join. By joining a team of miners, your overall computing power increases, which increases your chance of completing a block. However earnings are split between miners in the pool which reduces your ROI. The earnings are divided based on how much computational power your rig was able to provide and then you’d have to subtract any pool fees.

Another variable to consider is the price of Bitcoin. Bitcoin tends to fluctuate throughout the year depending on various factors like supply and demand. Your return on investment will be ultimately be impacted by this as well.

Conclusion

Mining Bitcoin can be profitable under the right circumstances. You would really have to do your research and find the best mining hardware that doesn’t use a lot of electricity. I would also venture to guess that in order to break even you’d have to be running the mining rig 247 and even then you probably wouldn’t break even for the first year. Below is a good video from TechCrackHouse where they discuss the typical costs of mining hardware.

06 Apr 2020, 22:49

What Exactly Is Ethereum?
A figurative image of an ethereum coin

With a total market capitalization of 221 billion dollars, nearly three thousand cryptocurrencies exist today. Out of those three thousand, Ethereum happens to be in the top ten. You might be asking yourself what is Ethereum and why is it different than Bitcoin? How much is it trading at? Is it worth investing in? Are there miners actively mining it? In this blog post we will dive deeper into the details of Ethereum, why it exists and the problems it solves.

Before we get into Ethereum, we should have a basic understanding of what the Blockchain is. If the word Blockchain remains unclear to you, go ahead and check out our previous blog post on it here.

What is Ethereum?

To understand Ethereum it may help to examine what problems it’s trying to solve. With the advent of the internet there became a need to host websites, to store personally identifiable information, to record transaction history and just to basically keep track of things. Third party companies were created to solve the problem of storing sensitive and non sensitive data alike. Eventually cloud computing came into the mix which is essentially the ability to store information on someone else’s server. This would be things like iCloud for example where users can store pictures, back up their contacts, sync iMessages from their iPhones. While very convenient, cloud computing is vulnerable to prying eyes from the hosting company. So in other words if Apple or Google really wanted to have a look at your data, there is no doubt that they could. Even though they claim everything is encrypted, secure, tamper-proof etc. Although they probably won’t, they probably have better things to do then look at photos of you and your dog.

Ethereum’s textbook definition is that it’s an open source technology that runs on the Blockchain to create and run decentralized applications, but basically it solves the problem of having to utilize a third party to conduct business with someone. With Ethereum, users wouldn’t need a bank to conduct a transaction with one another. They wouldn’t need a lawyer to build the contract and see it through to completion. It is also totally feasible for two people to conduct business with one another even if they don’t speak the same language. This all works using something called smart contracts which are self executing under certain conditions on the Blockchain.

Smart Contracts

Smart contracts basically allow two parties to conduct a transaction together without the need for a middleman but how exactly does it work? So a smart contract is a program built by a programmer using code. Specifically on the Ethereum network, solidity which is a programming language is used to build the smart contract. Once the contract is built and agreed upon between the two parties, an asset with value is transferred into the program, this could be a cryptocurrency for example. The program then executes some code and checks various conditions. If all the conditions are met the contract is satisfied and the receiving party will receive payment, if it fails to meet the conditions then the payment simply goes back to the sending party. Easy right?

Let’s talk about a real world example. In the banking industry fees occur all the time. A typical banking fee might occur if you try to make a payment to someone and you didn’t have enough money in your checking account. The bank see’s this as an overdraft, pulls from your savings to make the payment, and then incurs a fee… which is whatever they want the fee to be. With smart contracts, you could simply add your payment to the contract. The contract would simply pass or fail depending on if the correct conditions were met and voila! No fees going back to the bank. The contract could even have agreed upon fees in the event that conditions were not met which would benefit both parties. The receiving end would get payed something regardless and the payee wouldn’t have to face such a steep fee. On top of this the fee wouldn’t end up going to the third party, it would go directly to the receiving party.

Dive Deeper

If you’d like to examine Ethereum and the Ethereum network a little further, Coindesk has a great introductory blog post. Chapter 03 talks about how Ethereum actually works on the Blockchain and is a great resource. You can check it out by clicking the link below.

Ethereum 101