Creating Links in the Blockchain

Cooperation Leads to Leaps in Technology Innovation

Adoption of the WWW increased dramatically after forming of the W3C

Blockchain technology is designed for collaboration. Exchange of data in decentralized networks is monetized, but the exchange of ideas is invaluable. Innovators and users collaborating together to solve a problems of new technology started large adoption movements of new technologies in the past. The creation of a single-chip microprocessor allowed hobbyists to develop the tools for the mass adoption of microcomputers.  March 1975 was home to the Homebrew Computer Club which was one of the first open forums for ideas between micro-computing enthusiasts. Many of those HCC members would bridge the gap for normal consumers to own personal computers. Collaboration between CERN, MIT, and the World Wide Web Consortium, lead to the accelerated adoption of the World Wide Web. The Internet Society lead to corporations sharing ideas and began developing various internet standards that are used today.

                                                                                                                        

Growth of the internet services lead to specific groups with refined objectives. The lack of TCP/IP design structure lead the IETF to develop voluntary standards that are adopted today. Blockchain and Bitcoin use will continue to grow before mass consumer adoption of the technology. Many developers collaborating between blockchain services will accelerate adoption, development, and improve reliability of decentralized networks.

Various Blockchain Associations

The Bitcoin/Blockchain community quickly understood that collaboration between developers was important. Participate in a community that encourages sharing information and talk about how you see blockchain technology being used. The next areas of blockchain innovation could come from a business sector that no one has envisioned yet. No one group knows what is best for the future of crypto-currencies. Each has their own vision and goals to how they see altcoin being used. Below are various sites that offer collaboration between its members and the virtual currency community. Research the history and news articles of each company. The Bitcoin news cycle happens quickly, and services are changing from even six months ago. Participate in different blockchain communities, if you are already apart of one, and learn new ways to connect with people worldwide.

The Bitcoin Foundation - Website - Informative Communities

"The purposes of the Corporation include, but are not limited to, promotion, protection, and standardization of distributed-digital currency and transactions systems including the Bitcoin system as well as similar and related technologies."

- Bitcoin Foundation Mission Statement

As one of the first foundations to take a leadership role in the blockchain community, the Bitcoin Foundation is one of the most popular collaboration destinations for Bitcoin enthusiasts. The Bitcoin Foundation website features the Bitcoin Core program, developer documents, and key performance indicators. What the Bitcoin Foundation has achieved has been overall positive, but that is not without its recent share of controversy. Mark Karpelès was a founding member of the Foundation in 2012, but stepped down in February 2014 during the Mt. Gox. Scandal. A timeline of Bitcoin Foundation milestones are available on their website under 'Transparency'. Directors rotate frequently with an election currently in progress today. The mission of the foundation is foreseen to remain the same but the strategy of employment will evolve over time.

Crypto Currency Certification Consortium (C4) - Website - Certification Community

"The C4 establishes cryptocurrency standards that help ensure a balance of openness & privacy, security & usability, and trust & decentralization."

In September 2014, a non-profit from Ontario started one of the first two companies to begin offering certifying services for individuals or companies wanting accreditation of crypto-currency knowledge. The certification domain of blockchain technology is relatively small and new. Founding members of C4 and the Digital Currency Council have expansive expertise in the employment of blockchain technology and there is no reason to doubt their legitimacy. Certification services offer different price models for education services but provide information in virtual currencies.

Lighthouse - Website - Crowdfunding Community

"Using advanced features of the Bitcoin protocol it is now possible to create Kickstarter-style fund raising initiatives in an entirely decentralized way. No middlemen unless you want them, and no fees beyond the usual Bitcoin transaction fees"

Changing lives through civic engagement is a noble aspiration when participating in a community. Removing the fear of dishonesty when donating to crowdfunded projects on blockchain ledgers has led to more transparency and engagement. There have been successes in Lighthouse crowdfunding, in partnership with BitGive, after only releasing the beta phase two weeks ago. Smart contracts are at the backbone of each project which brings a new level of direct involvement and structure into campaigns.  Lighthouse isn't only for civic engagement as non-profits, such as C4, are using decentralized crowdfunding to sponsor new features for their service. Anyone can create a lighthouse project so growth is only limited to the activity of the community.

Find a Bitcoin Community

There is no lack of Bitcoin meetups around the world. By the end of February 2015, 589 bitcoin related events were registered on Meetup with 81,000 members in 71 countries. Starting a meetup can begin offline as well. Organizing is difficult work and not meant for everyone. Reach out to other people interested in blockchains and Bitcoin. All of these functions are encouraging to new members with no level of knowledge required. Some meetups or conferences offer seminars, round tables, and encourage socialization. Find a Community in your area and start increasing the discussion. There will always be more to learn as the technology is evolving. Staying involved in crypto-currency communities will keep you up-to-date about news and decentralized applications on the horizon.

GetGems – Website - Social Community

"Bringing Bitcoin to the masses. This is the most important challenge the crypto-currency community is facing today. We've designed GetGems from the ground up with this goal in mind." -Daniel Peled, GetGems Team 

GetGems is a new platform that offers a solution to ads and spam for users that prefer an ad controlled social network environment. GetGems is an example of innovative spins that have potential for success on a difficult market to enter. Messaging services that demonstrate a decentralized network on a a mobile app, is a unique way to promote blockchain technology. If you prefer a larger social community, the Reddit Bitcoin community has over 150,000 subscribers, and offers many resources for new and seasoned users of blockchain technology. Additional crypto-currency subreddits include; /r/bitcoinbeginners for introductory topics, /r/bitcoinmarkets for trading topics, and /r/Jobs4Bitcoins for freelance opportunities paid through Bitcoins.

Emission Trading with Blockchain Technology

Innovative blockchain services can solve rising Emission Trading Problems

Growth of Blockchain technology requires an increased usage of services, and the public trusting the reliability of those services. Blockchain technology can improve markets that are struggling with responsiveness, collaboration and consumer trust in their product. Credibility of decentralized ledgers can be established with re-imagined services that any global citizen can participate in. Combining smart contracts on custom blockchain networks can create new versions of old markets with increased transparency. One example of a service that could be remodeled with a new token economy is the Cap and Trade system.

"Cap and trade provides the private sector with flexibility required to reduce emissions while stimulating technological innovation and economic growth" - EPA

Combining Emission Trading with Blockchain ledgers eliminates the need for a central authority to oversee the trading of Emission Allowances. Emissions Trading is an environmental policy tool that regulates the amount of emissions allowed and providing flexibility in for compliance. Companies provide emissions monitoring systems to ensure compliance with regulations. If a company pollutes less then their permitted amount, they may sell their extra allowances or bank them to cover future emissions.         

The Clean Development Mechanism (CDM) is a component of the Kyoto Protocol as a program for global emission reduction. Certified Emission Reduction (CER's) is the representation of a carbon credit. A carbon credit is equal to one metric ton of carbon emissions. CER's are traded on primary and secondary markets and distributed by the executive board of the CDM. CER's allow first world countries to trade with developing countries that were under their emission limits, and have extra carbon credits. The result has reduced climate change mitigation by $3.6 Billion and raised $215 Billion in green investments in developing countries. The CDM is, unfortunately, failing as time goes on.

From CER Index 2/23/15 Source

Issuance of CER's is increasing as the demand is decreasing, which is causing the price of one carbon credit to plummet today. 2014-2020 are projected to create 4.78 Billion more CER's. A decentralized system could be developed to solve the problem of over-saturation of the carbon credits markets, to an agreed limit. Participating companies in this 'Carbon Emission Reduction Network' can be in agreement of carbon emission token transactions. A Program of Activities can be paired with smart contracts that allow smaller countries to participate in reducing emissions and allowing outside investors, with no risk of a conflict of interest. Pressure from outside investors and the risk of losing investments deters the public sector from engaging in these markets. Smart Contracts create an agreed upon set of variables that must met in order to validate the transaction.

            

"If [the CDM] is not resurrected, we will lose the only true mechanism for reducing greenhouse gas emissions, along with a decade of experience and lessons learned."

Source - Yolanda Kakabadse President of WWF

A highly qualified panel, including Yolanda Kakabadse, held a round table discussion at the UNFCCC (United Nation Framework Climate Change Conference) in 2012. Research was collected from stockholder meetings, research programs, deliberations around the world, and public input. The report highlighted problem areas of the CDM that a decentralized system could resolve if blockchain service was created. The recommendations in bold are areas that can be impacted by Blockchain technological innovation.

Full Report: Climate Change, Carbon Markets and the CDM: A Call to Action 2012:

1)       Urgently address the immediate crisis of demand (Page 23)

i)        Ensure access to CDM and cancel overhang and don’t expand supply

2)       Develop new approaches to enhance mitigation impact (Page 27)

i)        Develop and test sector approaches to CDM

3)       Set Robust Standards to enable linking and harmonization (Page 32)

i)        Establish a common registry that tracks outcomes and avoids double counting

4)       Support Green Climate Fund (Page 36)

i)        Facilitate activities supported by GCF (provided by allowing inputs from GCF in smart contracts)

5)       Implement Standardized Methods of accessesing additionality (Page 38)

i)        Focus of incentives to new technologies and technological change

6)       Ensure CDM projects achieve sustainable development (Page 41)

i)        Report, monitor and verify sustainable development thought the project

7)       Strengthen co-benefits and enhance scope of energy technology (Page 45)

i)        Stimulate collaborative technology development and technology innovation

8)       Encourage greater access to the CDM by under-represented regions (Page 49)

i)        Introduce new grant scheme and expand loan scheme

9)       Rethink existing governance arrangements (Page 52)

i)        Develop and Implement robust codes of conduct for all members of the CDM governance structure

10)   Improve stakeholder interactions and public engagement (Page 56)

i)        Adopt Strategic communications policy and insure community stakeholders are consulted on project activities

11)   Establish mechanisms for appeals and grievances (Page 59)

i)        Implement an appeal mechanism for registration and issuance decisions

12)   Promote Regulatory certainty and streamlining (Page 62)

i)      Digitize and automate workflows to facilitate transparency and consistency 

Creating a Smart Contract on an 'Emission Exchange Network'

Complexity of a CDM project can be automated with smart contracts and multi-sig authorization. For example: A Sri Lanka company is estimated to produce 10 metric tons of carbon emissions for a CDM Project. Any group of users can pool together 10 Emission Tokens and create a smart contract on the 'Emission Exchange Blockchain'. The 10 Emission Tokens are worth far more capital then the small company could have collected on it's own. When the financial goal of 10 tokens is met, all donations are set to deposit once the smart contract is completed. The final transaction that was signed by all parties will signify immediate compliance and the funds can be distributed directly to the Sri Lanka company.

Sri Lanka CDM Project Model

Developing countries find it difficult to comply with CDM regulations while conducting projects. Communication varies internationally; the approval process is slow, language barriers, international monetary institutions, instructions can be misinterpreted. This is the barrier for emerging markets to participate in global emission compliance. 

Smart contracts provide clarity recording data inside of transactions on blocks on that network's blockchain. Various encryption techniques have been developed already to contain sensitive information within a transaction. All of the inputs (Documents, Financial Information, Records) must be signed by the Public and Private Keys of all parties before gaining access to the information in that transaction. That creates clear objectives and trust all parties agree on. A public key exchange gives both parties access to the transaction to be verified. Both parties exchange private keys to send the transaction for approval. All parties have agreed that all documentation is correct once private keys are exchanged and require an entirely new transaction to ever change. Work can begin immediately once the transaction is verified on the ledger and how each token is spent, can be traced from that wallet to its next destination.

An incentive for participation can be created in the verification process of the 'Emission Exchange Network' blockchain peaking at a predictable rate. Any user can effectively 'mine' transactions on this hypothetical service and earn Emission Tokens to sell if they are the miner to validate the block. The exact value rewarded for solving a hash would be agreed upon at the development of the blockchain, but emission token creation would then be controlled. A limit placed on the maximum number of tokens that can ever be created will reduce supply overhang, and increase the value of a carbon credit higher than 3 Cents today. A mainstream blockchain, such as the Bitcoin blockchain, would be highly volatile and unfavorable for carbon emissions regulation. 

As a project is completed, the total emissions produced are recorded on the Emission Market Ledger. Lets continue the Sri Lanka example; 8 tons of carbon emissions were created at the end of the CDM sponsored project. Once the requirements for the smart contract are met, the output of 10 tokens to the company is verified on the ledger. This leaves 2 additional Emission Tokens that can be traded on any exchange that holds value in the emission token that are now owned by the company.

The CDM currently struggles to assist developing countries reduce carbon emissions and maximize it's own impact. By eliminating the need for strict issuance of credits, an Emission Token can be created, which allows the CDM to focus on education and policy enforcement. This restructuring of the current emissions market allows strict smart contracts to be created with Emission Tokens on a public ledger. The public keys participating in this future carbon credit market can be registered publicly to create transparency with participating parties. Emission goals can be enforced and data can be collected automatically during the entire project. This automation is great news for participants in Cap and Trade markets who want to guarantee compliance during the emission trading year.

The emergence of future decentralized markets depends on market demand and fine-tuning of blockchain services to reduce risk. Knowledge and implementation will continue to expand as more services are introduced and data is collected. For individuals monitoring the growth of this technical sector, innovation of decentralized ledgers can lead to get progress in more business sectors than just finance

Securing Information on a Blockchain

Visualizing Blockchain Data Handling

Being able to visualize how to use a blockchain service aids in seeing aplications for the technology. A current service that exchanges data in a similar system to blockchain technology are Torrents. Torrent users are seeding and leeching data by participating in a barter system. Several participants exchange data, in exchange for other data, to access the complete file in the specific Torrent network such as BitTorrent.  Decentralized apps (Dapps) are developed with electronic token systems, on a virtual network, that exchange tokens for information to be recorded and validated on a ledger. Dapps are modeled to trade tokens for data rather than trading data for data. The value of each token is based on the value of information that can be unlocked with that token. In the case of Bitcoin, the value of having a decentralized token is worth enough to exchange government issued currency. Not all blockchain services will want to trade their tokens on an open market.

Mastering Bitcoin by Andreas M. Antonopoulos

Napster is one of the biggest modern day examples how a dApp model can impact an industry with resource distribution. Napster provided the first resource distribution application platform for music. Human participants interacted with music data, connected in a communal fashion, and Napster had a transparent business model. A current dApp that offers computing services is Filecoin. Filecoin model networks a portion of a user's hard disk space for tokens that they can exchange on their network for their own file storage or exchange for outside currency. Not all dApps are based on a dynamic membership though. Some models will encourage any user to interact with their specific blockchain. Other blockchain companies will offer Smart Contracts via resource redistribution that will appeal to businesses/consumers that want predictable decision outputs.

DApps that offer smart contracts offer a trustworthy intermediary compared to traditional service. Legal documents, credit history, user information, and other data are secured in each transaction. This security is proved via a cryptographic method known as Hashcash, to create a Proof-of-Work. The Secure Hash Algorithm (SHA256 for bitcoin) creates a string of characters that the sender computes before sending a transaction request.

Example of data input / cryptographic output 

Bitcoin is the incentive for correctly verifying the Proof-of-Work in each block in the blockchain. The verification in a Bitcoin transaction is by the calculation of an algorithm that can adjust it's difficulty.  The reward for solving a Proof-of-Work calculation, or Mining, rewards 25 BTC on the bitcoin network. Individual blockchain ledgers can reward their own token, or altcoins, for solving these algorithms other than Bitcoin. These tokens, importantly, do not need to carry value outside of their own network.

Blockchained companies use Proof-of-Work or Proof-of-Existence in proving validity when providing smart contract services. The market for services that provide digital asset validation could expand in the next few years. Caution is still advised as scammers will take advantage of user ignorance while the blockchain tech space is still expanding. Having an understanding of protecting your private key will decrease the likelihood of information being mishandled and tokens lost. Legitimacy of blockchain offerings will increase as more people understand the gears moving in other successful dApp services. Where these services emerge will drive innovation in this new field of technology.

Additional Infograph

One Billion Hidden Blockchain Consumers

Banking Africa Continent of Dreams Economist 2013

Over one billion hidden consumers are in need of services that blockchain technology can provide. Africa is one consumer market that lays virtually unclaimed. African markets start from the ground up rather than the top down. Infrastructure is relatively inexpensive compared to many countries. When attempting to centralize modern businesses, upgrading hardware or software of local branches is difficult to do correctly when updating outdated systems. For a larger company, to create a new branch, financial data and records dating from the 1960's must be transferred and updated to a new system. That creates the struggle, normally, when attempting to modernize entry into new markets.

Business that offer traditional banking services are now expanding into these new regions and running into hurdles. To become the market leader in these regions, businesses must build their brand from scratch, which is causing slow distribution. Retail banking must rely on organic growth. Consumers must be able to gain access to their funds, and is the reason that many new financial institutions need multiple branches to start.

Mobile banking is the primary way to transfer funds in developing markets. Very few Africans have access to international banking for that reason. This leads as a bridge for innovation of blockchain services to reach those one billion previously unobtainable consumers. The International Monetary Fund has taken note of Africa's fast growth, as well as their fast adoption rate of non-traditional financial services (IMF, March 2013). Payfast is an example of a popular nontraditional service that offers African businesses an online payment process and is the current competitor to future blockchain services. African nations are also educating themselves about digital currencies as much as western countries. Google search trends show Ghana surpassing other major countries in searches over the last few months in relation to blockchain and bitcoin services.

One group that has shown a spotlight into Africa's rising mobile banking market is the Bill and Melinda Gates Foundation. Last month, the foundation made a proclamation that mobile banking will be a part of the solution to improving the lives of about 2 billion poor individuals. CGAP is a non-profit mentioned in the Bill and Melinda 2015 annual letter and is moving to increase financial inclusion to improve the lives of the poor. A published report from CGAP states that 36 new businesses have already started to move into Africa's digital market (January 2015). I recommend taking the time to read the Bill and Melinda Gates Foundation's 2015 Annual Letter, for more information on the growing interest in mobile markets.

Blockchained services are forming to create solutions to not only growing markets, such as Kenya and Ghana, but also Western countries as well. Blockchained companies are not limited to many regulations and countries are attempting to secure this technology as best they can as it evolves. The Crypto Currency Security Standard was drafted as a benchmark for blockchained companies and is a collaborative effort from industry leaders. Similar to the W3C, the Crypto Consortium is a guideline for companies that use blockchain and bitcoin technology and provides certification of their level of knowledge of crypto-currency use. Certification and security are the biggest concerns for consumers in the early adoption phase of crypto-currencies and blockchain technologies.

As businesses begin to emerge in the technical space of blockchain technologies, educating yourself is the most effective loss prevention technique. Provided in the external links section is a non-technical video of Bitcoin and the basics of blockchain technology in use today. The CCSS certification test provides a list of reference material for the CBP certification exam that is provided on the side. Companies attempting to create appeal in these new markets would want to have this and similar certifications. The difficulty of creating these new products from blockchain technology will become smaller as more products are developed. If you were concerned about the technology at this point, you do not have to enter a decentralized market. I will highlight the mobile markets in Africa later in the week. What other services could adopt this technology? 

Blockchain Technology in Action

Companies that integrate blockchain technology all integrate decentralized ledgers. Blockchained companies use a decentralized ledger to secure information. Trust no longer needs to be a risk when a third party handles anything that holds value to the user of that service. The figure below demonstrates how a service using blockchain technology handles information flow.

The flowchart shows three services of a blockchain company can provide. The handling use of multi-sig verification via wallets to gain access to the data in individual blocks, the creation of a block that stores information on a decentralized ledger, and the ledger itself run by designers and miners for that company. These sectors are evolving as problems are discovered and solutions are applied.

Blockchain technology is still in development stages and there are issues that need to be solved before mass adoption. Early innovation in computers and internet technology were also riddled with complex problems to solve before mass adoption. Problems blockchained companies need to solve are mostly unique constraints the blockchain has designed into the system. This is creating a tech boom which some are comparing to that of the early internet days as companies are trying to find the best solution to each problem. The New Yorker published a piece a few years ago highlighting a few  concerns for bitcoin at the time.

For example, the size of a block of data on the blockchain is limited to 10MB a block. Not ideal for large files or handling a large volume of transactions. Members of the community are debating future sizes of a block on October 8th last year.  The lack of a user friendly interface also intimidates outsiders that do not have basic programming knowledge. If someone sends a bitcoin, or any token on a blockchain network, there is no way to cancel a transaction once it has been recorded.

 

Ethereum and Factom are companies that allow users to design software based on the blockchain technology. These companies advertise the ability to create contracts, gaming apps, store medical records, financial data, and other services.

The tech space for designing and creating solutions with blockchain technology will only grow in the next few years as more security is added to each network. Keep an eye here for more companies that are Blockchained and what you should educate yourself about. Next week I will talk about how Ghana and other underdeveloped nations are being affected by blockchain technology.

Blockchain Technology: The Focus of Blockchained

Technology is changing faster, and faster. Information is being exchanged in more ways that are convenient than in any other time in history. 

As submarine sailor from 2008-2013, the months that I would leave for deployment and return to port, I could never catch up with how fast technology was changing. Cellular data, computing power, cloud storage, media platforms, and devices all perform different from their previous models in only a few years time. Technology that manages information is changing even faster. 

Firsthand experience in handling sensitive information while in the Navy increased my interest in blockchain technology. There have been six large examples of how sensitive information was incorrectly secured in just the last two years. Hacking and data breaching are popular terms used for the mishandling of information by someone gaining access that should not.

Source

The Blockchain is one of the latest technological innovations that transform data management and security. With this new technology, many sectors of business are changing.

The blockchain is simply a decentralized ledger. A chain of blocks that contain a record of all transactions ever recorded on that chain. In a system of checks and balances, about every ten minutes a new block is created. Any block on that chain are viewable to anyone at any time, and verified as a new block is made. Transactions are 'signed' by both parties through coins called Bitcoins. Bitcoins in the blockchain can be used as a digital signature and proof of ownership. Users who verify transactions inside of the Blockchain and create new blocks receive a reward in Bitcoin.

The verification process and transparency in proof of ownership that the Blockchain provides, has created a digital arms race. The technology is also open source. That means, new companies are using this new technology to verify ownership of previously difficult things to prove. Various industries have been effected. Crowdfunding (Lighthouse) and land rights in undeveloped countries (Factom) are attempting to harness this new technology. Blockchain technology is in early adoption stages and evolving rapidly.

The Blockchain is not mentioned often in articles, however, because one element of blockchain technology, Bitcoin, has captured more attention.

"In non-technical language, Bitcoin is a digital currency in which transactions can be performed without the need for a credit card or central bank. It's designed to enable users to send money over the Internet in a very simple and efficient way."

- Blockchain.info [Block Explorer Service]

"[Bitcoin] is, quite simply, one of the most powerful innovations in finance in 500 years."

- Jan 23, 2015 Wall Street Journal 

Bitcoin technology has emerged as a new avenue of financial engagement. Google searches show the interest in Bitcoin has grown exponentially over the last 6 years. Investment in this technology through Bitcoin companies, like Coinbase, has increased to over $75 million in just the last few weeks. Federal governments like the US and Canada have heard expert testimony over the last few years and are writing fresh legislation about this technology today. A bill was introduced this year in New Hampshire to pay taxes in Bitcoin. This blog will showcase who is using this technology and why we should care.

Much controversy comes with a new technology in the modern age. High volatility, a large knowledge gap, and people looking to make a quick dollar, have muddied the waters quickly. Though the world of Bitcoin is a central part of the blockchain technology, this blog will focus on only the general aspects of the blockchain, recently coined Bitcoin 2.0.