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<ul><li><keyword id="265395" type="General" weightage="20" keywordseo="jack-dorsey" source="Orion">Jack Dorsey</keyword>’s Square has released the whitepaper, which highlights how its new <keyword id="12084249" type="General" weightage="20" keywordseo="decentralised-exchange" source="Orion">decentralised exchange</keyword> — <keyword id="12574622" type="General" weightage="20" keywordseo="tbdex" source="Orion">tbDEX</keyword> — will work.</li><li>Users will still be able to retain access to their wallets and won’t have to depend on a central custodian wallet.</li><li>Transaction fees on tbDEX will increase or decrease based on the amount of anonymity the parties involved want.</li></ul>Twitter founder Jack Dorsey’s second venture, Square, has finally published the <a href="https://tbdex.io/whitepaper.pdf">white paper</a> on its upcoming decentralised crypto exchange (DEX). Called the tbDEX, it follows some of the aspects of DEXs, but is less decentralised than most others. As a consequence, it’s also much less focused on anonymity than other DEXs, passing the buck onto the participants. <div type="ExtQuote" text="“The protocol [tbDEX] has no opinion on anonymity as a feature or consequence of transactions.”" auname="Excerpt from white paper titled ‘tbDEX: A Liquidity Protocol v0.1"></div> The paper argues that as long as the protocol is interacting with the fiat currency system, no interface can be truly ‘trustless’ — without trusting a third part like a bank, a person or any intermediary. All endpoints, including decentralised exchanges like tbDEX, will ‘always’ be subject to regulation. Hence, to hedge against any upcoming crypto regulation, tdDEX is putting the responsibility of ‘trust’ on wallets and participating financial institutions (PFIs) to figure it out amongst themselves. “The nature of this trust relationship will never be universal,” highlights the whitepaper. Instead, it postulates that trust can vary from jurisdiction to jurisdiction, across different regulations and laws, and between individuals and institutions depending on their risk tolerance, price and other facts. <div type="ExtQuote" text="It would violate the principle of trying to achieve the maximum amount of decentralisation if the negotiation of trust was dictated at the protocol layer, as that would necessarily involve some form of permissioned federation." auname="Excerpt from white paper titled ‘tbDEX: A Liquidity Protocol v0.1"></div> <cmsannotation type="cmsannotation" annotationid="How Dorsey’s tbDEX is looking to solve for the ‘trust’ conundrum" comment="subhead" text="How Dorsey’s tbDEX is looking to solve for the ‘trust’ conundrum">How Dorsey’s tbDEX is looking to solve for the ‘trust’ conundrum</cmsannotation> Unlike centralised exchanges, where a central crypto wallet holds all the tokens in the name of the exchange’s users, DEXs let users control their own wallets. The central wallet in traditional exchanges is called a ‘custodian wallet’, and since users have no option but to trust the holder of this wallet. Simply put, it’s not a ‘trustless’ system. <cmsannotation type="cmsannotation" annotationid="wazirx" comment="wazirx" text="wazirx">wazirx</cmsannotation> Traditionally on DEXs, trades between different wallets are done using a smart contract system called ‘atomic swaps’. Both the crypto assets being traded must be submitted to these smart contracts, which execute the trade. But, Dorsey’s tbDEX works a little differently. Rather than use atomic swaps, it will allow users to transact using a messaging protocol that lets users negotiate between themselves. “The traditional banking model achieves a level of privacy by limiting access to information to the parties involved and the trusted third party. The necessity to announce all transactions publicly precludes this method, but privacy can still be maintained by breaking the flow of information in another place: by keeping public keys anonymous,” the <a href="https://bitcoin.org/bitcoin.pdf">whitepaper</a> says. <cmsannotation type="cmsannotation" annotationid="Trust as a function of reputation" comment="subhead" text="Trust as a function of reputation">Trust as a function of reputation</cmsannotation> Wallets and other financial participants will have to negotiate trust directly between each other and may rely on mutually trusted third-parties to vouch for the counterparties. For example, a wallet company can volunteer to publish a ‘sentiment list’ about financial institutions or decentralised identifiers — which ones it believes are good, and which ones aren’t. They can also choose to exclude certain parties, which they find untrustworthy. <div type="ExtQuote" text="Any exchange of value must be fundamentally based on other means of governing trust — particularly reputation." auname="Excerpt from white paper titled ‘tbDEX: A Liquidity Protocol v0.1"></div> Further, the transaction fees on tbDEX will increase or decrease based on the amount of anonymity a user wants. The protocol will allow secure exchange of ‘the minimum necessary identity information’, provided that is acceptable to the parties involved in the transaction — “be they legal, regulatory, or related to any other consideration of risk”. And, the protocol won’t collect any personally identifiable information. <cmsannotation type="cmsannotation" annotationid="So, what’s next?" comment="subhead" text="So, what’s next?">So, what’s next?</cmsannotation> The whitepaper is essentially a proposal for how Dorsey wants the tbDEX to function, but it’s not a done deal. Currently, it has been put out into the public domain for comments and suggestions. Further revisions of the whitepaper are expected to address incomplete elements or any unforeseen challenges. Only once the final design for the protocol behind tdDEX is finalised will the project be developed and published. The company is yet to communicate when that might be. SEE ALSO: <a href="https://www.businessinsider.in/cryptocurrency/news/government-may-change-income-tax-laws-to-tax-cryptocurrency-gains-in-budget/articleshow/87802508.cms">Indian government plans to tax cryptocurrency gains in Budget 2022</a> <a href="https://www.businessinsider.in/cryptocurrency/news/what-is-bitcoin-golden-cross-and-death-cross/articleshow/87796591.cms">Bitcoin investors love the golden cross and death cross — here’s why they matter but there are other factors to keep in mind</a>

Jack Dorsey’s new decentralised crypto exchange doesn’t want to define ‘trust’ amid regulatory uncertainty

<ul class="summary-list"><li>Cryptocurrencies and <keyword id="8067293" type="UNKNOWN" weightage="60" keywordseo="Stablecoins">stablecoins</keyword> have boomed in 2021, sucking in investors.</li><li>The world's central banks are increasingly looking to create their own digital currencies. </li><li>Insider cuts out the jargon and explains the key differences and what they're used for. </li></ul>Cryptocurrencies and stablecoins have boomed in 2021. And central banks around the world are increasingly keen on their own digital currencies. But how do they all work and what are they used for?<h2>Cryptocurrencies</h2>Cryptocurrencies are basically digital currencies that aren't controlled or issued by a centralized authority, such as commercial or central banks.These coins are sent back and forth on enormous peer-to-peer networks - essentially groups of computers that share data.The innovation of cryptocurrencies is that the "ledger" that keeps track of transactions - known as the <keyword id="6355684" type="PERSON" weightage="60" keywordseo="Blockchain">blockchain</keyword> - is overseen and verified by network users known as "miners." Miners collectively do the work of a central authority, checking people aren't trying to spend coins twice, and earning newly created <keyword id="6354947" type="UNKNOWN" weightage="60" keywordseo="bitcoin">bitcoin</keyword> in return. "What we aim to do with the blockchain is to make this 'trustless' so that nobody has overall control of it," says Ben Edgington, a software developer for the <keyword id="2810876" type="PERSON" weightage="60" keywordseo="ethereum">ethereum</keyword> network. "It's fully democratic [and] it's fully accessible."Bitcoiners say it's 'digital gold'When bitcoin was launched by the anonymous person or group <a href="https://www.businessinsider.com/bitcoin-history-cryptocurrency-satoshi-nakamoto-2017-12">Satoshi Nakamoto</a> in 2008, many thought it could be used for payments. In reality, it's way too volatile.Now, many bitcoiners say its scarcity - only 21 million coins can be mined - means it will hold its value and protect investors against inflation. Others say it's purely speculative.Other cryptocurrencies have different uses. The ethereum network, for example, can be used to build applications like collectible "<a href="https://www.businessinsider.com/non-fungible-tokens-nfts-have-taken-over-heres-why-theyre-important-2021-4">non-fungible tokens.</a>"Cryptocurrencies are highly riskyIn bitcoin and other networks that follow its model, miners verify transactions by using large amounts of computing power to solve complex math problems. Bitcoin's <keyword id="6355267" type="UNKNOWN" weightage="60" keywordseo="mining">mining</keyword> system uses as much electricity annually as <a href="https://cbeci.org/cbeci/comparisons">medium-sized countries</a>. Other cryptocurrencies are <a href="https://markets.businessinsider.com/news/stocks/ethereum-upgrades-crypto-staing-industry-boom-jpmorgan-ether-2021-7">less energy intensive</a>.Cryptocurrencies are largely unregulated and are some of the <a href="https://markets.businessinsider.com/currencies/news/cryptocurrency-volatility-andrew-bailey-bank-england-governor-bitcoin-boe-2021-6">riskiest investments out there</a>. Bitcoin has plunged around 50% since its April record high of close to $65,000.<h2>Stablecoins</h2>Wild volatility has been a huge deterrent for some investors as it can make crypto harder to use. That's where stablecoins come in. Stablecoins maintain a "stable" value with a peg to other assets, like the dollar.For example <a href="https://markets.businessinsider.com/currencies/usdt-usd">Tether</a>, the <a href="https://coinmarketcap.com/">third-biggest cryptocurrency</a> by market cap, is designed to be pegged to the US dollar. It is backed by assets such as dollars and Treasury bills.Traders love stablecoinsInterest in stablecoins has shot up too. They're central to <keyword id="6357017" type="DEFINITION" weightage="60" keywordseo="cryptocurrency">cryptocurrency</keyword> trading, by allowing investors to easily move in and out of more volatile assets like bitcoin.Stablecoins are also commonly used in the world of <a href="https://www.businessinsider.com/defi-decentralized-finance-disruptive-bitcoin-benefits-challenges-bofa-crypto-finance-2021-3">decentralized finance</a> - a booming ecosystem that lets people create financial products without the need for central authorities.Regulators are worriedBut they're <a href="https://www.businessinsider.com/regulators-stablecoins-tether-crypto-lael-brainard-cbdc-letitia-james-2021-6?r=US&amp;IR=TIR=T">facing heavy scrutiny</a>. In May, the Federal Reserve's Lael Brainard <a href="https://www.federalreserve.gov/newsevents/speech/brainard20210524a.htm">raised concerns</a> stablecoins could default and destabilize the financial system. New York also <a href="https://ag.ny.gov/press-release/2021/attorney-general-james-ends-virtual-currency-trading-platform-bitfinexs-illegal">banned Tether trading</a> after an investigation found it had overstated its US dollar backing. As with the rest of the cryptocurrency world, a lack of regulation means investors have almost no protection if their stablecoin suddenly collapses.<h2>Central bank digital currencies</h2>Countries are trying to find ways to make it easier to spend and send money - and keep control of payment systems that are increasingly private (think PayPal or Visa). A <a href="https://markets.businessinsider.com/currencies/news/jerome-powell-cryptocurrencies-cbdc-stablecoins-digital-currency-testimony-2021-7">digital currency</a> issued by central banks directly to consumers could be the answer. Right now, private banks and payment companies are the most important players in the everyday use of money. But a <keyword id="6472011" type="UNKNOWN" weightage="60" keywordseo="Central-Bank-Digital-Currency">central bank digital currency</keyword> (or CBDC) would be a digital version of banknotes and coins, letting people hold and make payments in central bank money. China is currently leading the pack out of the world's big economies. But the <a href="https://www.ecb.europa.eu/paym/digital_euro/html/index.en.html">European Central Bank</a> and the <a href="https://www.bankofengland.co.uk/research/digital-currencies">Bank of England</a> are seriously looking into it.CBDCs could make payments saferCBDCs could speed up transactions for individuals and big institutions, Chris Giancarlo, founder of non-profit <a href="https://digitaldollarproject.org/">Digital Dollar Project</a>, told Insider. The DDP plans to test CBDCs in real-world situations."If you can send a photograph to Japan in a second, why can't you send money in a second?" he said.Central bankers also think CBDCs can make the financial system safer. Although unlikely, even a big global payment system could feasibly collapse. Some bankers are concernedOne concern is privacy. Some governments may design CBDCs so transactions are anonymized, like cash, but others won't. Privacy questions have arisen over China's <a href="https://markets.businessinsider.com/news/stocks/china-cbdc-trial-digital-yuan-beijing-lottery-2021-6">trial</a> <keyword id="8641649" type="UNKNOWN" weightage="60" keywordseo="digital-yuan">digital yuan</keyword>."With a CBDC, the government would have direct access to all your spending patterns," Bobby Ong, co-founder of data firm CoinGecko, says.Some bankers are worried CBDCs could remove them from key parts of the financial system. CBDCs could reduce the demand for commercial bank accounts and cut banks out of the business of verifying transactions, although central banks are working on the details.

Cryptocurrencies, stablecoins and central-bank digital currencies are all the rage. We break down what they are and what you need to know about them

<ul class="summary-list"><li>Altcoin is short for "alternative coin" and - as the name suggests - is an alternative <keyword id="11892695" type="UNKNOWN" weightage="60" keywordseo="cryptocurrency" source="Orion">cryptocurrency</keyword> to Bitcoin.</li><li>Altcoins have become a major segment of the cryptocurrency markets, with projects like Ethereum (ETH), Stellar Lumens (XLM), and Uniswap (UNI) distinguishing themselves as platforms with innovative capabilities.</li><li>The altcoin markets are characterized for their volatility and are highly speculative investments subject to speculation.</li></ul>Since the emergence of Bitcoin, the concept of a decentralized, trustless peer-to-peer (P2P) payment network has inspired an entire class of digital assets. The crypto markets are a product of Bitcoin's success, and the fast-growing space consists of more than 9,000 altcoins.Now we have altcoins, which began to emerge in 2011 in an attempt to reinvent Bitcoin, with their own rules and improvements on different features.<h2>What is an altcoin? </h2>Altcoin is a <a href="https://www.businessinsider.com/what-is-cryptocurrency" target="_blank" rel="noopener">cryptocurrency</a> alternative to <a href="https://www.businessinsider.com/what-is-bitcoin" target="_blank" rel="noopener">Bitcoin</a> - its name is a portmanteau of "alternative" and "coin." Since Bitcoin is widely regarded as the first of its kind, new cryptocurrencies developed after are viewed as alternative coins - or altcoins. The emergence of altcoins began around 2011, with the first generation formed using the same blockchain engine as Bitcoin.The first altcoin was Namecoin, which is based on Bitcoin's code and was released in April 2011. Namecoin is integral to the history of altcoins in that it showed that there's enough room in the crypto markets for more than one kind of coin.Blockchains today can run several hundreds of "altcoins," fueling similar currency projects with unique rules and mechanisms. Altcoins like <a href="https://www.businessinsider.com/what-is-ethereum" target="_blank" rel="noopener">Ethereum</a> can provide developers with a toolkit and programming language to build decentralized applications into the blockchain.<h2>Understanding how altcoins work </h2>To understand how altcoins work, it's good to first understand how blockchain technology works - which is where all cryptocurrencies operate. The blockchain network is a distributed ledger that stores data like cryptocurrency transactions, NFT ownership, and decentralized <keyword id="11895316" type="UNKNOWN" weightage="100" keywordseo="finance" source="Orion">finance</keyword> (DeFi) smart contracts. This ledger is often referred to as a "chain" comprising "blocks" of data, which are used to verify new data before additional blocks can be added to the ledger.This network, on which Bitcoin operates, is groundbreaking because it's a decentralized, trustless, P2P payment network that functions without a central authority or entity facilitating transactions. And altcoins function on the exact same premise as Bitcoin: to operate using this blockchain technology. However, there have been some altcoins that have emerged to instead improve on the flaws of Bitcoin or to achieve some other goal. For example, Litecoin was designed by former Google engineer Charlie Lee as a "lite version of Bitcoin."<h2>Understanding forks</h2>A fork refers to an update in network protocol (the open source software blockchains run on). There are two kinds of forks: a hard fork and soft fork. A soft fork is a minor upgrade to the software, and typically means nothing for users. A hard fork is a major change to the network, and requires users/miners to update to the latest software in order to continue mining. If developers decide they do not like the direction a blockchain network is going in, they can do a hard fork and create a new coin. Since 2009, Bitcoin has seen over <a href="https://mapofcoins.com/bitcoin" target="_blank" rel="noopener">400 hard forks</a>. In the news: In the past year, crypto and celebrity influencers have come under fire for promoting cryptocurrencies. Even social media platforms like TikTok have <a href="https://markets.businessinsider.com/news/currencies/tiktok-crypto-bitcoin-investing-trading-ban-sponsored-ad-content-branded-2021-7" target="_blank" rel="noopener">banned crypto promoters</a> from the platform. Here are the two key things to know about altcoins.Altcoins are a highly speculative and volatile investment. <a href="https://www.businessinsider.com/what-is-speculation" target="_blank" rel="noopener">Speculation</a> is a powerful driver of the crypto markets so it's important to do your research before investing in any altcoin. Half-baked whims and trading based on rumors are exactly what the experts advise against."An emerging technology like crypto is going to attract people of ill-repute who are looking to make a quick buck off of the new investor," says Ben Armstrong, founder of <a href="https://bitboycrypto.com/" target="_blank" rel="noopener">BitBoy Crypto</a>. "So it's important to be cautious and not fall for the hype of a slick new project, or get FOMO when you see a crypto asset making new all-time highs." The decentralized, intangible, and often misunderstood nature of cryptocurrencies in general makes predicting the long-term, steady success of an altcoin project difficult to predict. Some altcoins, like Ethereum, have maintained their position in the market through constant innovation and the strength of their community. Speculation has a more dramatic effect on newer altcoins. External factors like public perception, Bitcoin price fluctuation, or a meme on Reddit can oftentimes cause drastic price fluctuations.While the crypto community stands united on its long-term bullish outlook for Bitcoin, the temptation of selling coins for short-term profits is built into the crypto zeitgeist. The crypto community created the term "hodl" in an effort to encourage people to hold on to their crypto assets for the long-term. "Hodl" means "hold on for dear life," and to resist the impulse of selling when the value of their crypto drops or rises.Quick tip: Smart contracts are programs that are stored on blockchain that execute when certain conditions are met.Cryptocurrency takes a toll on the environment. Bitcoin's energy consumption is a well-known flaw. As of August 2021, Bitcoin's energy consumption is 151.57 TWh according to Digiconomist's Bitcoin Energy Consumption Index - that's comparable to what the entirety of Malaysia uses in energy. The culprit for the tremendous costs of energy lies with the "proof of work" (PoW) consensus algorithm, which is how transactions are verified. And as Bitcoin mining has become more competitive, the computing power required to profitably mine new bitcoins is represented in factories loaded with servers all working toward solving the network's algorithms.The PoW consensus mechanism is responsible for driving the competition for faster and more powerful computational processing power. The faster a miner's computer can complete the formula, the higher their odds of winning a block reward. Over time, miners have developed computer hardware with the sole function of processing the PoW consensus algorithm. This has evolved from a miner running a program in the background of their PC to entire mining farms. Miners (or a pool of miners) will buy factories in countries where electricity is cheap and fill them with thousands of mining rigs. The energy required to keep the rigs running 24/7, combined with the fans and coolant systems to prevent overheating and fires, has made crypto mining an environmental disaster.<h3>The emergence of "green coins"</h3>Bitcoin's carbon footprint has provided an opportunity for altcoins with greener consensus mechanisms to market themselves as "green coins." While proof of work is the main culprit for the Bitcoin energy crisis, blockchains like Ethereum and <a href="https://cardano.org/" target="_blank" rel="noopener">Cardano</a> (ADA) operate on proof of stake consensus mechanisms. Compared to the energy-hungry PoW, staking requires no mining in order to participate and earn coins. The success of Ethereum and Cardano prove that people can participate in crypto while being environmentally friendly.Quick tip: Proof of work is the consensus mechanism used by Bitcoin and many other altcoins to audit transactions on the blockchain and "mine" new crypto. Crypto mining is solving computational formulas to audit transactions on the blockchain. Completing the formula means a chance at receiving a newly minted BTC reward. <h3>Types of altcoins</h3>Over time, there have been many altcoins that have come along. And now, there are the main types:<ul><li>Mining-based: Altcoins that are mining-based are created through the process of mining, like Bitcoin. One example of a mining-based coin is Litecoin.</li><li>Stable coins: These types of altcoins are a new subset to the crypto market that's meant to reduce volatility. By design, they're digital assets with their value pegged to fiat and physical assets (off-chain) and crypto collateral (on-chain). Algorithmic stablecoins are not backed by on-chain or off-chain assets, but governed by a smart contract at its core.</li><li>Security tokens: These types of altcoins are a digital or liquid asset that represents an ownership stake in a tangible asset. Stored on a distributed ledger, security tokens are the blockchain-equivalent to shares, but can represent a stake in IP, a car, or property, etc.</li><li>Utility tokens: Once very popular in the 2017 initial coin offering (ICO) boom, utility tokens are not pegged to any currency or tangible value. In exchange for capital in the early stages of an ICO, investors would receive a quantity of utility tokens in exchange for their investment determined by the company or project owner. The utility tokens will serve as a coupon or voucher after funding to purchase goods and services from the issuer.</li></ul>Quick tip: One of the main benefits of blockchain technology is transparency. If something is on the blockchain, it means it is visible, permanent, and accessible to the public. On-chain typically refers to a transaction that is performed and recorded on the blockchain. Off-chain is a transaction not directly recorded on the blockchain.<h2>Staking an altcoin</h2>Staking is the <a href="https://www.businessinsider.com/passive-investing" target="_blank" rel="noopener">passive-investing strategy</a> where an investor holds funds in a cryptocurrency wallet in order to earn rewards over time. When an investor chooses to stake their holdings, the network can use it to forge new blocks on the blockchain. The process of staking supports the process of PoS work because it requires participants to support it. And so stakers are essentially helping to make this happen.Also, staking is incredibly energy-efficient - unlike mining. According to the Ethereum Foundation, the latest switch to a PoS system <a href="https://blog.ethereum.org/2021/05/18/country-power-no-more/" target="_blank" rel="noopener">will reduce energy costs by 99.95%</a>.<h2>7 notable altcoins 2021</h2>While no altcoin has managed to "dethrone" Bitcoin in value, many projects have proved themselves worthy enough to a global community of investors and developers:<h3>1. Ethereum (ETH)</h3><div type="image" title="Ethereum altcoin on green background 2x1" height="835" width="1668" msid="85848268" hostid="261"></div>The second-largest blockchain in crypto, <a href="https://www.businessinsider.com/what-is-ethereum" target="_blank" rel="noopener">Ethereum's</a> evolution has taken it from an asset to an application. Founded by Vitalik Buterin in 2013, Ethereum is a distributed blockchain platform for smart contracts and dApps (decentralized applications). With its native token, ether (ETH), users can interact with the Ethereum platform. Ether can be traded on most crypto exchanges, used to pay transaction fees, or as collateral for ERC-20 tokens, which have DeFi utility. Ethereum's integration with smart contracts via the Solidity programming language has distinguished the project from Bitcoin. A smart contract is a self-executing code that can run on the blockchain.<h3>2. Chainlink (LINK)</h3><div type="image" title="Chainlink altcoin on green background 2x1" height="835" width="1668" msid="85848271" hostid="261"></div>Launched officially in 2019 on the Ethereum blockchain, Chainlink is a decentralized oracle network that's meant to expand on smart contracts. In a nutshell, it connects smart contracts with "off-chain" data and services. The network is built around the LINK network and token and has two parts: on-chain and off-chain.The on-chain component comprises oracle contracts on the Ethereum blockchain, which oversee and process data requests that come in from users. The off-chain component is made up of off-chain oracle nodes that connect to the Ethereum network, which are responsible for processing external requests that are later converted to contracts.<h3>3. Aave (AAVE)</h3><div type="image" title="AAVE altcoin on green background 2x1" height="835" width="1668" msid="85848274" hostid="261"></div>The AAVE is an open-source DeFi lending protocol that allows anyone to loan or borrow crypto without an intermediary. As a lender, you can deposit funds - which are allocated into a smart contract - where you can earn interest based on how Aave is performing in the market. Making a deposit means you can also borrow by using your deposit as collateral.Rebranded from ETHLend following a successful ICO in 2017, Aave switched from a decentralized P2P lending platform into a liquidity pool model. This means loans are acquired from a pool instead of an individual lender. Since 2020, the Aave Protocol has been an open-source and non-custodial liquidity DeFi protocol for earning interest on deposits and borrowing assets. Holders of AAVE can decide on the direction of the project by voting on and discussing proposals.<h3>4. Stellar Lumens (XLM)</h3><div type="image" title="Stellar Lumens altcoin on green background 2x1" height="835" width="1668" msid="85848277" hostid="261"></div>Stellar is an open-source payment network that doubles as a distributed intermediary blockchain for global financial systems, designed so all the world's financial systems can work together on a single network. Stellar began in 2014 when Ripple co-founder Jed McCaleb disagreed with the direction of the Ripple project. The ethos behind Stellar's development is to make international money transfers possible for the everyday person. While Stellar is an open-source network for currencies and payments, Stellar Lumens (XLM) is the circulating native asset on the network. Stellar keeps its ledger in sync using its <a href="https://www.stellar.org/papers/stellar-consensus-protocol" target="_blank" rel="noopener">Stellar Consensus Protocol (SCP)</a>. Instead of relying on a miner network, SCP uses the Federated Byzantine Agreement algorithm, enabling faster transactions.<h3>5. Uniswap (UNI)</h3><div type="image" title="Uniswap altcoin on green background 2x1" height="835" width="1668" msid="85848283" hostid="261"></div>Uniswap is a decentralized exchange ecosystem built on the Ethereum blockchain. Launched in 2018, Uniswap uses an on-chain automated market maker. One of Uniswap's unique features is that anyone can be a market maker by depositing their assets into a pool and earning fees based on trading activity.Uniswap uses an automated market maker protocol that executes trades according to a series of smart contracts. The smart contracts automate price discovery, allowing users to swap one token for another without an intermediary. In traditional finance, market makers are usually brokerage houses with incentives that can cause a conflict of interest.<h3>6. PotCoin ($POT)</h3><div type="image" title="Potcoin altcoin on green background 2x1" height="835" width="1668" msid="85848284" hostid="261"></div>PotCoin is a Canadian-based digital currency that was launched in 2014 to allow consumers to buy and sell legal cannabis products. PotCoin was introduced as a solution for cannabis enthusiasts and the industry looking to legally transact at a time where banks were unable to do so.PotCoin is an open source cryptocurrency forked from the Litecoin core. There are subtle changes to the PotCoin protocol including a shorter block generation time and the increased 420 million max supply of PotCoins. Potcoin switched from a Proof of Work mechanism to Proof of Stake in 2016 to make supporting the network more accessible and less harmful to the environment.<h3>7. Litecoin (LTC)</h3><div type="image" title="Litecoin altcoin on green background 2x1" height="835" width="1668" msid="85848288" hostid="261"></div>One of the first-generation of altcoins made in 2011, Litecoin is a cryptocurrency based off of Bitcoin. Key things that distinguish Litecoin from Bitcoin include blocktime (four times faster block times than Bitcoin), supply (Litecoin has a max supply of 84 million while Bitcoin max supply of 21 million), its hashing algorithm, and distribution.Dubbed the "digital silver" to Bitcoin's "digital gold," Litecoin's goal was to optimize the Litecoin asset while preserving the best parts of Bitcoin.Quick tip: <a href="https://ethereum.org/en/developers/docs/standards/tokens/erc-20/" target="_blank" rel="noopener">The ERC-20 standard</a> is a set of rules applied to smart-contract tokens on the Ethereum blockchain. The flexibility and fungibility of the ERC-20 token allows dApp developers to create utility tokens, security tokens, or stablecoins.<h2>The financial takeaway</h2>Altcoins have come a long way since 2011, and continue to prove themselves as more than just an "alternative to Bitcoin." The crypto space is a fast-moving and increasingly popular point of interest for investors. Thanks to the innovation and integration of crypto into mainstream business, people can safely and legally buy altcoins on their phone or computer.Easy access to the crypto markets doesn't mean it isn't risky. Before investing in an altcoin, ask yourself: have you researched and performed enough due diligence? Would you be able to explain the project to your family or friends at the dinner table? Whether you want to trade altcoins full-time or just "hodl" onto your Bitcoin, the choice is yours. Listening to the experts, evaluating the risks, and assessing your financial goals are keys to investing responsibly.<a data-type="600f72e1fdb68e08982d5365">A bitcoin IRA lets you profit from the cryptocurrency's potential gains in a tax-advantaged way</a><a data-type="5fac1720bf96b9125f748159">How to diversify your portfolio to limit losses and guard against risk</a><a data-type="5fdc12cc3617355d27686ece">How to invest in bitcoin: The major ways to buy, their pros and cons, and the strategies to consider</a><a data-type="5fd1032bbca41b06e2352e87">Bitcoin taxes: Understanding the rules and how to report cryptocurrency on your return</a>

Altcoins are the alternative digital currencies to bitcoin - here's what they are and how they work

<div class="KonaFilter image-container display-table float_right"><div><div class="image"><a href="http://www.coinometrics.com/bitcoin/btix">Coinometrics</a></div></div></div>Editor's note: Below is a list from Tim Swanson, a Bitcoin consultant based in San Francisco who blogs at the site <a href="http://www.ofnumbers.com/">Of Numbers</a>, on the top 10 firms built on or incorporating a blockchain. 
Blockchains work like giant digital spreadsheets shared by everyone in a decentralized network, and are used to do things like confirm Bitcoin payments. <a href="http://www.businessinsider.com/the-future-of-the-blockchain-2014-4">We recently discussed</a> why many are saying the advent of blockchain technology could be as important the development of the Internet. Swanson chose companies no longer operating in "stealth mode," and which he believes already provide real value. References to "the" blockchain refer to Bitcoin's blockchain. 
He owns no equity in any of the companies.
- <a href="http://www.coinometrics.com">Coinometrics</a> is attempting to do what few people or organizations in this space have tried to do: empirically quantify and qualify the actual behavior what is happening on the blockchain. While forum-based armchair philosophers are nearly a dime a dozen, data speaks much louder than words. And in this case, co-founder Jonathan Levin has provided both clear analytics and corresponding interpretations of data sets that are valuable to both layman and industrialist alike. As the industry matures, actual data as opposed to hopes and dreams will be provide much needed metrics for outside investors, developers and entrepreneurs to focus their future endeavors toward.
- <a href="http://www.helloblock.io">Helloblock</a> is Bitcoin infrastructure built specifically for developers. After creating a number of Bitcoin projects, the team led by Sidney Zhang - based in San Francisco - found the developer infrastructure to be raw and primitive; the ecosystem in their view is still at the "TCP/IP" level. And testing is both tedious and time-consuming. Developers in general want to explore the Bitcoin protocol because it offers entirely new possibilities with money. Their API reduces these complexities into a JSON interface, so developers can simply focus on their idea, not infrastructure - and the API is just the first step.
- <a href="http://www.kraken.com">Kraken</a> is a fully compliant digital asset trading platform that goes beyond simple market or limit orders, allowing up to 9 additional advanced order types and in the future, the potential of margin trading (if pre-approved). They have positioned themselves to be a FOREX platform for digital currencies. Based in San Francisco, the team is managed by a group of talented early adopters including Jesse Powell who has stuck with the community through thick and thin.
- <a href="http://www.btcjam.com">BTCJam</a> is a San Francisco-based P2P lending platform that has provided over $5 million in bitcoin-based loans over the past year. Founded in 2013, it is led by Celso Pitta, a Brazilian with industry experience building statistical models at Citi and who had first-hand experience with living in a country with high interest rates (200% for credit cards).
- <a href="http://www.blockcypher.com">BlockCypher</a> is one of the first Platform-as-a-service (PaaS) infrastructure companies in Bitcoin. The team rebuilt the Bitcoin platform from the ground-up and optimized it for the cloud, exposing web APIs and callbacks for developers to easily build and scale applications on. This team is led by Catheryne Nicholson, who brings a different way of thinking in a largely male-dominated segment. She and her co-founder Matthieu Riou have a long history of building large-scale platforms together. Both want to grow the Bitcoin developer ecosystem and encourage more women to participate.
- <a href="http://www.digitaltangibletrust.com">DigitalTangibleTrust</a> aims to be a liquidity provider and marketing partner for hard assets that are difficult to monetize, but can be easily digitized into cryptocurrencies and then traded on any centralized or peer-to-peer exchange. Whether you are buying digital gold bullion from the United Kingdom or digital mineral rights in Texas, led by a cryptofinance and experienced marketing team in San Francisco, they are trying to push the edge of blockchain innovation building an investment portfolio that will consist of coins it has issued as ownership rights to these unique assets. Since its humble beginnings in early 2014, in a short month they have thousands of hard assets in custody and appear determined to digitize all things.
- <a href="http://www.ripple.com">Ripple Labs</a> is a San Francisco-based company that is building commercial applications and infrastructure around the Ripple protocol. Founded in September 2012, Ripple Labs has built a distributed trustless exchange system around a consensus ledger as opposed to a blockchain. While there are many similarities between the two technologies and even some of the company employees (both David Schwartz and Stefan Thomas, were early Bitcoin adopters and developers), Ripple Labs is attempting to bridge the digital world with the traditional financial sector, connecting isolated payment systems into one rail.
- <a href="http://www.bifubao.com">Bifubao</a> is not just another wallet provider. Known as Bitfoo internationally, this Beijing-based international team comprised of Americans and Chinese developers became the first commercial developer to implement proof-of-reserves. Proof-of-reserves is a Merkle tree-based technique developed by Greg Maxwell in February 2014, to enable exchanges and hosted wallet companies to cryptographically proof to the public that they have the assets they claim to have, yet not exposing the privacy of their customers.
- <a href="http://www.coinbase.com">Coinbase</a> grew from a small hosted wallet company in mid-2012 to become one of the largest companies in the ecosystem. Based in San Francisco, it began 2013 with a mere 13,000 wallets, growing to 1 million in under 14 months (3 months quicker than its competitor, Blockchain.info). Its services have since expanded to include merchant support for companies such as Overstock.com.
- <a href="http://www.bitpay.com">BitPay</a> is an Atlanta-based payment gateway, one of the first 3rd party merchant support payment systems. Their system enables merchants to accept bitcoins, locking them into fiat conversion rates that helps protect merchants from currency fluctuations and TigerDirect is one of its tens of thousands of supported companies.
- <a href="http://www.bitpagos.com">BitPagos</a> is also in the merchant solution space however instead of simply converting bitcoins into fiat, they are trying to help merchants move in the opposite direction: accumulating bitcoins. Led by Argentinian Sebastian Serrano, who experienced first-hand the rampant inflation of the early 2000s in Argentina, this San Francisco-based team is focused globally but especially with respect to emerging economies such as those in Latin America.

The 10 Most Promising Startups Building Stuff With Blockchain Technology

<div class="KonaFilter image-container display-table float_right"><div><div class="image">MaidSafeMaidSafe CEO David Irvine</div></div></div>The founders of a Scottish company called <a href="maidsafe.net">MaidSafe </a>had a wild idea.
What if you were to give the internet a makeover, changing it so that it's absolutely safe from hackers and government snooping, but is still good for app developers and for sharing information?
And the MaidSafe SAFE network was born, brainchild of David Irvine (who is CEO) and Nick Lambert (COO.) 
The plan is to use the existing internet but not store your data on servers in data centers such as done by Google, Yahoo, Facebook, and every other big internet company today.
Instead, everyone who joins this network would turn their PC into part of the network, allowing bits and pieces of encrypted data to be stored on all PCs.
This is, actually, <a href="http://info.cern.ch/hypertext/WWW/TheProject.html">somewhat similar to how the World Wide Web</a> was originally designed.
Earlier this month, after eight years work on the underlying technology, the team opened things up to developers. 
And 500 of them flocked to MaidSafe. That's how many have registered to create applications built for the SAFE network. 
They funded their new network by selling their software, something called safecoins. They accepted bitcoins in payment and something called "<a href="http://www.businessinsider.com/digital-currencies-worth-more-than-1-2013-12">mastercoin,"</a> a "programmable money layer" that lets anyone create their own cryptocurrency.
By their calculation, they sold $6 million worth of software in 5 hours, when converting the mastercoins and bitcoins into U.S. dollars.
<div class="KonaFilter image-container float_right" style="width:400px"><div class="image">MaidSafeMaidSafe cofounder Nick Lambert</div></div>
Is there really that much interest in a new kind of internet? 
We asked Irvine to explain:
Business Insider: Are you trying to change the internet or build something completely separate and different?
 David Irvine: We are providing the infrastructure that enables application developers to build all the applications and services that exist on the Internet today, but doing so in a way that removes the need for servers or data centers of any kind.
The servers and data centers are replaced by users' computers, which are contributing their unused resources to make up this new decentralized internet.
This change in architecture has many advantages including: Total anonymity (no ability for third parties to eavesdrop); Security (data is only ever stored or in transit as encrypted shards and only the users knows the passwords to decrypt data, plus no servers mean there is no central point to attack) and Better performance, (the network speed increases as more users join the network, popular data gets faster, rather than slower in today's server-centric architecture);
It also gives us a web that cannot be censored by any government or third party (the SAFE network does not use DNS [Domain Name System, the system that controls website addresses and URLs).
BI: What kinds of things can you use this new internet for?
DI: You can have every service that currently exists on the centralized internet (with servers and data centers) on the decentralized SAFE network. So you can have social networks, video sharing, file storage and sharing, websites, email, VoIP (Skype), etc., with all the advantages mentioned above.
What really excites us, though, is what can be achieved with a trust-less, server-less, autonomous global network. Services such as global federated news (where users throughout the world vote on news stories and they are read the news in their own language by an avatar) become possible. This would potentially rid the world of propaganda. Worldwide global voting systems would also be possible, enabling free elections without the possibility for corruption.
Can you explain the security part a little better? How does this work?
DI: When a user stores files on the network, for example, the network automatically splits the file into chunks, encrypts and then obfuscates them (we call this self encryption) so all that is left is encrypted data shards.
These shards are then stored at random locations through the network by the network. There is no human involvement at any time. So no person, MaidSafe included, knows where any users data resides and we don't know who our users are.
As users turn their computers off the data shards are constantly changing (the network automatically recreates these shards in order to maintain a minimum of 4 live copies of data at anytime). Once the network reaches critical mass, we would need to lose power to all 4 continents to have the potential to lose data.
BI: You said you sold "$6 million worth" of your software in 5 hours. Can you tell us more about that?
DI: Yes, that is absolutely correct - we sold 10% of safecoins, the cryptocurrency of the SAFE network. The remaining 90% will be available as the network goes into beta testing around September 2014. Participants of the crowd sale contributed in cryptocurrency only, bitcoins and mastercoins.
The Mastercoin team partnered with MaidSafe on this project and the sale of the coins.

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