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Blockchain Leaders – Erik Voorhees and Peter Smith at Factory Berlin

On midsummer night 2017 the factory Berlin hosted “Blockchain Leaders” a talk and panel discussion event featuring Peter Smith from blockchain.info and Erik Voorhees from shapeshift.io.  Both speakers talked about their personal backgrounds and told some entertaining stories from the days when their companies first started out. It’s difficult to report everything that was said, so instead I want to try to summarize some of the big topics that were touched on over the course of the evening.

ICOs

Smith said that he thinks it is likely that the Initial Coin Offering model could replace  venture capital in the mid- to longterm. One hugely positive side-effect of that is that regular people can profit from the high growth of successful companies instead of only well connected VCs. Furthermore the ICO model leaves the investors with tradable assets immediately, where in the older VC model, investors have to wait until an eventual initial public offering at a stock exchange. Also the commissions companies pay for IPOs are so high, that ICOs (which are virtually free) will proof superior. Smith predicts that the ICO-model will spread from the crypto scene into the tech scene and later even into other sectors.

Voorhees added to that, that ICOs are magical because they allow projects to get funding that would not have been funded before. He stated that the ICO model in and of itself is a good example for  a development that nobody could have forseen only a few years earlier. These kinds of developments are only possible in the absence of government intervention and are a good case in point why refrain from intervening in markets.

Both speakers however cautioned that the current ICO hype might be hugely exaggerated and that big corrections are likely to come.

Prism

Of course Voorhees talked about Shapeshift’s new product: Prism which was recently announced at the Consensus 2017 conference. The product is built entirely with ethereum smart contracts and enables users to get exposure to a basket of digital currencies without having to trust a third party and without having to buy and hold all these digital currencies locally. All that is needed is an ethereum wallet. The product is currently in a private Beta, but it is possible to get an invite through the Prism website.

Futhermore the shapeshift CEO told that it took 1.5 years to build the platform. One major difficulty was to find a qualified solidity developer when they first started. The timing turned out to be very lucky: cryptocurrency-valuations are currently at their all-time-high. This manifests itself also in the exchange volume of the Shapeshift platform. While there were only about 20 million USD worth of coins traded in december 2016, barely 6 months later the monthly volume at Shapeshift will exceed 300 million.

Central banks

Smith told that he was talking with a lot of central bankers at Davos recently. He said that he has the impression that central bankers take the topic seriously. He believes that central banks understand their money as a “product” that is in competition with other forms of money – for instance cryptocurrency and that they are well aware of the areas where crypto performs better than their own product (speed of transaction and arguably store of value).

Smith however sees a role for central banks in the crypto-space. He argues that there seems to be a demand for centrally issued currency (as a token on a blockchain). One of the biggest obstacles for the whole crypto industry is that no stable coins with a fixed value relative to fiat currencies exist. Centrally issued fiat tokens could fill that hole.

The whole evening was very interesting, there were many more topics which I didn’t even touch on in this post (for instance the New York agreement as a asolution to the Bitcoin scaling problem which both support). Nicolas Brand of Lakestar moderated the evening very smoothly and the Factory Berlin provided the ideal event location. I want to thank everybody involved for organizing this great event!

Continuous Divestment

The crypto markets have been soaring recently. Many people that are invested in cryptocurrencies like bitcoin, ethereum, ripple or dash have multiplied their initial investments in a relatively short timespan. Because of these incredible gains all across the board, I think it is a sensible point in time to spare a thought on when and how to divest from cryptocurrencies into other asset classes.

But first a word on who this article is and who it isn‘t aimed at: This article is not aimed at people who are confident that they can time the market. If you can spot the highs and lows pit pat piffy wing wong wang  just do that and don‘t read any further. All the rest of us who cannot anticipate the next antics of the markets do good in thinking about a selling-strategy before the advent of a new bull market forces us into action.

When getting out of an appreciating asset, there are generally two risks: the risk of selling prematurely and missing out on large potential gains as well the risk of selling too late after the bull market has turned around – effectively becoming a bag-holder. Avoiding these risks are two conflicting goals. By reducing your risk of selling your assets prematurely you automatically increase your risk of selling too late. So our selling strategy must balance these two goals in a sensible way.

A strategy in which we sell a certain percentage of the underlying asset everytime the value of the asset doubles is such a strategy. By adjusting the percentage value we sell per duplication-period, we can adjust our exposure to both risks. A very low percentage has a low risk of prematurely selling but a high risk of ending up as a bagholder. A high percentage brings a high risk of premature sell-off and a low risk of having missed out on an abruptly ending bullrun.

I wrote a small web app that let`s you model such a strategy called Continuous Divestment. It let`s you input your start balance of the underlying asset and configure the divestment strategy by entering the sales percentage per period. It shows you the resulting portfolio worth for every period, as well as how much of the asset you have to sell per period to follow your chosen strategy.

Optionally fiat holdings can be entered into the spreadsheet as well. This let`s you view your asset/fiat ratio. Interestingly a sales percentage of 28,5715 % will let the crypto-exposure of your portfolio converge towards 50% independent of where you start from. I bet there is some cool mathematics that will result in this value, if you happen to know about it, please let me know in the comments.

Low-hanging fruit for the crypto community – Ethereum Meetup Berlin January 2017

Even though the scheduled talk about “Decentralised, Direct Democracy & Multidimensional Monetary System” didn’t take place, the January meetup at the Ethereum HQ in Berlin didn’t lack interesting topics and speakers. The night was comprised of four talks and went for almost three hours.

In my recap I want to skip the first talk about deckard.ai, because this development tool is not primarily focused on the crypto-space and therefore not really related to the topic of this blog. However you can watch a recording of the talk here: https://www.youtube.com/watch?v=Vgx56cpw-8U

Remix

Yann Levreau

The second talk was an update on the progress of the smart contract development enviroment Remix held by Ethereum’s own Yann Levreau. Remix was just last week merged with browser-solidity and focuses on giving fast feedback to developers while writing smart contracts in solidity.

The enviroment runs in the browser and lets you choose how to connect with an Ethereum node. The options are Javascript virtual machine (local and in memory), providers like Mist or Metamask and last but not least a node at localhost. A great strength of this tool is the ability to replay a contract execution and go through it step by step. Executed statements will be highlighted and state changes in the contract are displayed, which helps a lot in debugging smart contracts.

The developent enviroment doesn’t contain a testing framework and Yann Levreau recommends the use of either Embark or Truffle for this end. The speaker demoed how to use Remix when developing a frontend for dapps and hinted that project management tools might be on the roadmap for Remix in the future.

esPass

Ligi esPass

esPass stands for electronic smart pass and aims to bring the benefits of cryptographic tokens to the realm of tickets. Most tickets nowadays use QR- or barcodes. These codes just represent passwords that gains us access to concerts, conferences, airplanes, etc. They come with the big drawback that they can be copied. This constitutes a big problem when tickets need to be resold. There is no way for a potential buyer to verify that not other copies of the same ticket are in existence and that he will be the first person to try to enter with that given code. Luckily blockchains provide a solution for exactly this kind of problem. Presenter Ligi said that ticket systems therefore represent low-hanging fruit for the crypto community.

The creator of esPass put a lot of thought into the question of how to onboard users that don’t have experience in how to use public/private keypairs or digital currencies. His tenet is that the esPass tickets should gracefully degrade to the experience that users are already used to. That means that users who are not interested in the benefits of a blockchain-based ticket should just be able to print a PDF with a QR-code.

As the backend for esPass Ligi chose Ethereum. One of the reasons for this decision is ethereum’s determination to switch to POS in the not so distant future and thus become one of the most enviromentally friendly blockchains. However a problem with this is the lack of a proper light-client for ethereum, however progress on the light-client seems to be made and we can hope for a release sometime in the not too distant future.

Integrating ZCash with Ethereum

Dr. Christian Reitwiessner

As the last part of the evening Christian Reitwiessner gave a in promptu Q&A session about the effort to implement zkSnarks on the ethereum blockchain. However much better than any recap that I could write on this topic is his own blog post on the topic, which I highly recommend.

Videos of the talks are available on Adjy Leaks channel. However as of the time of writing there is no sound for the Remix and esPass talks, however Ryan indicated that he might reupload it later.

DAppHack Berlin 2016

On the last November weekend in 2016 the first DappHack Berlin took place. The event was focused on decentralized technologies. While the name suggests a hackathon, the actual event turned out to be more like an unconference. Johannes, one of the organizers, said that when the name was settled, the idea was to host a hackathon, but as more and more speakers came on board the event evolved into an unconference.

The line-up of speakers was pretty phenomenal for an admission free event. Core-devs of IPFS, the ethereum foundation and ethcore were present as well as many other very knowledgeable people. Among the recurring themes of the conference were distributed storage, distributed application (dapp) development and serverless pub/sub systems.

Fortunately there is no need to regurgitate here what has been presented, since you can watch all talks on Adjy Leak’s Youtube channel: https://www.youtube.com/channel/UCxfh-2aOR5hZUjxJLQ2CIHw, but I would like to point out some highlights:

Dapp Development Tools

David Roon @ DappHack Berlin

David Roon @ DappHack Berlin

On Saturday David Roon kicked off the event by introducing a java library for smart contracts. His talk was followed by Thomas Bertani’s presentation of Oraclize, a service that solves a very urgent problem that concerns almost all dapp developers: how to access external data from the context of a smart contract. A third talk that featured development tools was Tomasz Drwięga’s workshop about how to build an app with Parity. I

personally benefitted a lot from this session.

Distributed Storage

With IPFS and Swarm two of the big projects that promise distributed storage were present. Unfortunatly the IPFS talk was overshadowed by some technical problems. Those caused some interruptions which stretched the talk to almost 2 hours. The talk about Swarm (ethereum’s native distributed storage system) by Viktor Tron on the contrary is only snappy 16 min long. I got the impression from this event that Swarm differentiates itself from the already relatively widley deployed IPFS by it’s focus on incentivization of data storage.

A third project, that I had not heard about before is Datproject. Dat has the goal to become the “Better bittorent”. It makes it possible to not only share files but also folders and streams of data, which can make distributed live TV possible. Last but not least in this category was the presentation of the Alexandria project. It is a project that uses IPFS as backend to permanently provide content on the net. It has a well developed integration of bitcoin payments. A curious detail about this project is that they use the rather obscure blockchain Florincoin to publish metadata for the content.

David Dias IPFS @ DappHack Berlin

David Dias IPFS @ DappHack Berlin

Distributed Pub/Sub systems

There were two talks at DappHack that I would put in this category. OrbitDB, that is a sister-project to IPFS. (I have previously writte about OrbitDB here) and Secure Scuttlebutt. The demo of Secure Scuttlebutt made a deep impression on me, because they already realized several working applications including a Twitter-like social network and an app very similar to Soundcloud.

All in all this was a very interesting event. Kudos to the organizers Ksenia, Johannes and Sven (and Andreas who sponsored the beer!). Also a big thank you to the hosts of Agora Co-working, which was a wonderful venue for this event.

Openbazaar at Hackers Congress Paralelní Polis 2016

On the first October weekend 2016 the 3rd Hackers Congress Paralelní Polis was held in Prague. This year the conference which focuses on digital freedom and decentralization had two sessions dedicated to the decentralized marketplace Openbazaar. Sam Patterson, the co-founder and Operations Lead of OB1 talked about the protocol’s past, present and future and Justin Drake (founder of DuoSearch) presented ways of “Building on Openbazaar”.

Both talks took place on the third day of the conference in the big room (Slevarna) which I would guess seats 200-300 people. Most of the seats were taken when the Sam Pattersons talk started. After the introduction early on in the presentation he conducted a poll that showed that the Paralelní Polis audience was already well acquainted with the project. When he asked who had already heard about the marketplace, virtually everybody raised his hand. When he asked who in the audience had already tried it out, installed the software or conducted a trade an estimated third to half of the audience showed their hands.

Pattersons talk started with an overview of the current state of e-commerce, described Openbazaar’s mission and history. Particularily intersting to me was what the developers had learned since the launch of the first version in April 2016. The most common problems that users have with the current iteration of the marketplace software are:

  • the node must be constantly online
  • the search (or more broadly: product discovery) is not good enough
  • the software lacks common ecommerce features such as inventory management
  • it is no anonymous (since it cannot be used together with TOR)
  • bitcoin only
  • requires some technical knowledge

Patterson explained that all these criticisms will be addressed in version 2.0 of the market for which a release in early 2017 is tentatively planned. Version 2 will bring the switch to IPFS (interplanetary filesystem) and thus eliminate the need to be constantly online with one’s node. The search will integrate third party providers into the client directly to facility a better (and less gamable) search experience. More ecommerce features are planned and the long-awaited TOR integration is already working on an experimental level. He also announced an integrated bitcoin wallet and more usability and user experience improvements.

Right afterwards Justin Drake from DuoSearch took the stage. The title of his talk was “Building on Openbazaar”, which is what his company DuoSearch is doing. He stated in his presentation that he believes that many business opportunities exist around OpenBazaar. These consist of specialized services that are not addressed by the core protocol of OB itself. He gave a few examples of such opportunities that he discoverd in dialog with users of the software:

  • search / how do I find stuff on Openbazaar?
  • categorization / how do I navigate in Openbazaar?
  • trust / what vendors are trustworthy?
  • usability / how can I use Openbazaar in a normal browser without having to install separate software?
Justin Drake of DuoSearch at HCPP 2016

Justin Drake of DuoSearch at HCPP 2016

 

Drake gave a lot of tips on how to build a business around one of these specialized needs and shared his personal experience with building DuoSearch. After investing one year in trying to build DuoMoney, a service that would have allowed conducting purchases with fiat money on Openbazaar, his banking partner withdrew in April 2016. Instead of starting again from square one, Drake shelfed the DuoMoney idea and pivoted the buisness to start DuoSearch. Within 19 days he and his co-founder build the first Openbazaar discovery tool.

Drake was encouraging others to start a business around the decentralized market protocol and even to begin competing with his own company DeoSearch. That goes to show the deep community spirit that is currently present in the OpenBazaar space and Drake’s firm believe that competition will strengthen business and benefit everybody. He closed his speech with an oberservation and a recommendation: With the launch of Openbazaar 2.0 approxiamately 6 months away, this is enough time to build a product and launch it together with the next version of OB. So start building your Openbazaar company now and make use of the first-mover-advantage.

Q&A session with Fabian Barkhau of Storj.io

About 10 people met today at Ethereum’s Berlin offices to listen to Fabian Barkhau, a core developer of storj.io. Storj is a decentralized market place for disc storage that might soon allow us to lend out idle disc space in exchange for cryptocurrency. Fabian’s task at the company is to develop a publish/subscribe system which will be used to communicate offers and bids for disc space between users.

PubSub systems are typically centralized systems, where users will post their bids and offers to an intermediary broker. The challenge is to achieve the same functionality without making use of a centralized hub. Fabian reported that there is currently no good libary for a peer-to-peer pubsub system, even though lots of projects in the decentralized systems space have need for one. Even worse, there are very few research papers about this topic. The best paper Barkhau discovered and decided to base his work on is Quasar: A Probabilistic Publish-Subscribe System for Social Networks.

Barkhau has implemented the Quasar pubsub system in a concise python program. The only point in which Barkhau’s implementation deviates from the system described by the paper is that it adds a proof-of-work component. This is an effort to prevent possible network spamming attacks.

After the speaker gave the introduction to pubsub systems and Quasar, he opened the event up for questions. The audiences’ questions moved the focus away from the pubsub to storj in general.

One attendee asked about how payments are handled in storj. Barkhau explained that the payment aspect is currently still in development. The plan is to issue Storjcoin on the counterparty network (which is implemented on top of the bitcoin blockchain). Payments for disc storage will be made in Storjcoin which can be purchased on the usual exchanges for digital currencies.

Discussion after the Storj Presentation

Discussion after the Storj Presentation

The payments will move through payment channels (similar to the ones used in the lightning network). The use of payment channels means that most micropayments for disc usage can be made without having to write to the blockchain, thus saving blockspace and transaction fees.

Another question that came up is, how can it be ensured that the providers of disc space are indeed saving the files they are supposed to save. Barkhau answered that storj implements auditing of storage-providers. During audits the auditor passes a seed to the storage provider, which the provider uses to generate a cryptographic proof that he still has all the data.

In the end the discussion came back to the decentralized pubsub system. Barkhau stressed that he would welcome it, if there was one common, “standard” decentralized pubsub that would be used not only by storj but by other projects as well.

If you are interested in decentralized systems and live in Berlin make sure to subscribe to the meetup group Decentralized Hack & Learn to be notified about the next event. Thanks to Cristian for organizing this.

IPFS and orbit-db meetup at Ethereum Office Berlin

On Saturday, July 30th 2016, the fourth meetup in the Hack And Learn series was held at the Ethereum Office Berlin. Samuli Pöyhtäri presented IPFS (interplanitary filesystem) and orbit-db a database-system that runs on said filesystem. Samuli works at Protocol Labs, the company behind IPFS and the lead-developer of orbit-db. The meeting was attended by a dozen people, most of them developers who had already some experience with IPFS.

Samuli gave an overview over IPFS (see also http://www.propellah.net/2016/03/13/the-permanent-web-for-music-and-other-media-content/) and the peer-to-peer database orbit-db which runs on top of IPFS. A truly decentralized database-system is still a big gap in available decentralized systems.

Right now the options for developers of decentralized systems are either distributed hash tables (DHT) and blockchains. Examples for systems that use DHTs are Bittorrent and Openbazaar. An Example for blockchains that can be used to store data are Namecoin and Ethereum. However these systems cannot compete with conventional databases in terms of query speed and they offer less ways to query data. Typically DHTs and blockchains can only be used as key-value-stores, which means that values can only be retrieved by the value. Conventional database systems like MySQL or PostgreSQL offer many more ways to organise data, build relations between datapoints and select them. However these conventional systems require a centralized server to run and cannot be used in a decentralized context.

Orbit-DB (similarily to https://www.bigchaindb.com/)aims to bring some of the benefits of traditional database systems to the world of decentralized applications. As of yet however Orbit-DB still requires a centralized server for pubsub-communication, however the IPFS-team works on a decentralized pubsub service. According to Samuli Orbit-DB will switch to this pubsub-service as soon as it is finished. He added that this task is not trivial though.

After the very informative and interesting presentation, there was the opportunity to ask questions and chat with other IPFS users. I highly recommend the Hack And Learn meetups as a place to get to know new technology, play around with it!

MTF-Labs Blockchain workshop recap

From May 23rd to 27th the Music Tech Fest Berlin held first blockchain workshop. It was attended by approximately 25 people and took place in the beautiful buildings of the Funkhaus Berlin. The event was attended by a host of different people: representatives from streaming services, labels and collection agencies, musicians, software developers and more.

On top of that there were a bunch of presentations held remotely through Skype or Google Hangout from people like Imogen Heap, Benjie Rodgers, Daniel Harris (the founder of KendraHub), and the singer of Edward Sharp and the Magnetic Zeros. In the days of the workshop I learned about a lot of ventures and projects in the realm of music and “blockchain technology” (for instance upcoming music streaming app Jaak, which has Viktor Tron from Ethereum as one of it’s founders.)

One of the most prominent topics discussed was the question whether blockchain technology could simplify the process how creators of music can be remunerated. Several employees of the streaming service Soundcloud reported how difficult it can be to determine who to pay what, because there are so many different collection agencies sometimes even giving conflicting information. However xkcd’s famous Standards comic was brought up several times and I believe most attendees will agree that blockchain royalty schemes will more likely than not complicate things even further (at least in the short and medium term) by adding another “standard” by which rights information can be published.

Another big issue that was brought forth by artists/creators is the meager recompensation of creatives. Blockchain technology certainly has the promise to increase the share that artists receive from the money that fans pay. This could work through elimination of layers of middle-men and by making the payment flows more transparent. However I imagine that a prerequesite for this happening would be that customers embrace digital, blockchain-based currencies. Furthermore these currencies first have to solve their capacity issues. Both are still quite uncertain.

In one aspect the week didn’t meet my expectations: there was no programming workshop / hackathon and too much thought was given on how to get big stakeholders (like major labels, collection agencies etc) on board. I believe that the music industry has a major disruption coming for it in the form of a decentralised publishing process. If I let the emergence of bitcoin form my opinion, this disruption will come about by somebody starting an open source project and writing some code and not by wooing the stakeholders of the predominant system.

I want to thank the organizers Petter and Peter (founder of resonate.is) for organizing this session and Music Tech Fest Berlin for providing the location. Also there is another blog post by fellow attendee Bas Grasmayer with his recap https://medium.com/music-x-tech-x-future/the-music-industry-isnt-ready-for-the-blockchain-2df4f2cf2e0c#.x93p4srig

 

MTFLabs Blockchain Berlin

I am looking forward to attending the blockchain workshop at the Music Tech Fest Berlin next week (May 23rd-27th). One of the organizers of the event (Peter Harris who works on the music streaming service Res()nate) shared a very interesting paper about music and blockchain technology. It is called “Blockchain or the Chaingang? Challenges, opportunities and hype: the music industry and blockchain technologies” and it is written by Jeremy Silver.

The paper neatly summarizes and introduces almost all blockchain-based music initatives like Ujo, Mycelia, Peertracks and Bittunes. It is a really good starting point if you want to know what ideas are out there for innovating the music biz with crypto-tech. The only initiative I thought was missing was Tatiana Moroz’ project Tatianacoin which is based on the cryptocurrency Counterparty.

Steam content available for bitcoin

In the past much media hype was created whenever a company started to accept bitcoin. Oftentimes these news seemed to be an attention-grap by companies trying to push the awareness of a service or online-store. A few days ago however a company that doesn’t need a promotional push from the admittedly small bitcoin community began accepting bitcoin: The gaming giant Steam.

Steam is a pioneer in digital publishing of games. They did for games what iTunes did for the music market and they have currently 89 million users. According to Steams partner bitpay, the benefit for the gaming retailer is that it can more easily reach customers in markets where credit cards are not readily available.

I purchased a game to try it out. In my case there was a hiccup with the redirection and I had to try it two or three times until the bitcoin QR code was displayed in the Steam client, but other than that it worked like a charm.

I believe that this is a big step into a future where customers can expect media content of all sorts to be available for digital currency. However I don’t expect that subscrition based services like for instance the video streaming site Netflix will follow Steam’s lead anytime soon. There is simply too much money to be made from people forgetting or beeing to lazy to cancel a subscription and bitcoin is inherently incompatible with subscriptions.

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