Interest around cryptocurrencies is at an all time high. Bitcoin passed 5k. Ethereum is on the rise. More and more companies (big and small) are investing time and resources in developing on the blockchain.
But like any nascent space, the crypto world is bound to go through a period of volatility before reaching any point of stability. FOMO is not validation. So be sure to think for yourself, and invest at your own discretion and risk.
Regardless of your interest in owning any coins or building with the technology, it is likely worth your time to familiarize and educate yourself with the science behind crypto, blockchains, and decentralization.
Here are my favorite articles from the past few months:
The most important takehome is that tokens are not equity, but are more similar to paid API keys. Nevertheless, they may represent a >1000X improvement in the time-to-liquidity and a >100X improvement in the size of the buyer base relative to traditional means for US technology financing — like a Kickstarter on steroids. This in turn opens up the space for funding new kinds of projects previously off-limits to venture capital, including open source protocols and projects with fast 2X return potential.
by Fred Ehrsam, Co Founder of Coinbase
Forking is a second critical evolutionary mechanism for blockchains. Just like mutations to DNA in biological organisms allow for evolution through natural selection, forking lets us run multiple experiments in parallel where the strongest versions survive. Unlike Web 2.0 companies, forking a blockchain is possible because the current code and state of a blockchain can be freely copied. It is the equivalent of any developer being able to make a copy of Facebook’s code and spin up a competing version at any time — something a Web 2.0 company would never allow.
However, there is a key issue with the economic incentives with the forks we have seen so far: the groups pushing forward new forks have very little economic incentive to make their fork succeed. This is because forking behavior to date replicates the token ownership of the prior chain instead of modifying it to incentivize its new core community.
by Dillon Chen and Niraj Pant, Source
If you posit that bitcoin has a network effect (the more people that use the currency to transact), the more valuable the coin becomes. The more valuable the coin becomes, the more users you get and the higher the network effects. Additionally, if longer chain history means better security and more miners mean better security, in the long run, is there a way to increase the network effect by merging chains?
by Rob Marvin, PCMag
On August 1st, a new cryptocurrency called Bitcoin Cash appeared online. For the first time in Bitcoin’s eight-year history, the original blockchain network underwent what’s called a “hard fork.” A small faction of Bitcoin (BTC) miners split off onto their own blockchain network, spawning Bitcoin Cash (BCH).
Why the split? The technical answer lies in the long-standing Bitcoin community debate over block capacity, the nuances of which we’ll get into shortly. More broadly, the Bitcoin fork speaks to a fundamental ideological rift over what’s more important: preserving the decentralized nature and independent control of the Bitcoin network, or accelerating transaction speeds to make the cryptocurrency more viable for mainstream e-commerce and payments.
by Geoffrey McCabe, Divi Project
Cryptocurrency won’t go mainstream until people have something to buy with it. The promise of cryptos is to cut out the middleman, so that people can buy directly with each other like we did in the old days before banks, Visa, and PayPal, got between people. Now, thanks to blockchains and peer-to-peer technologies, we no longer need them.
by Preethi Kasireddy, Blockchain Engineer
IPOs and ICOs are both used by companies to raise capital. The main (and really important) difference is regulation. IPOs are regulated by the SEC and have a set of legal requirements and a formal process for how they’re carried out. ICOs are currently unregulated and more of a “wild west” practice.
by Sean Han
It matters because it keeps the blockchain immutable.
If we have the following blockchain A → B → C, and someone wants to change data on Block A. This is what happens:
Data changes on Block A.
Block A’s hash changes because data is used to calculate the hash.
Block A becomes invalid because its hash no longer has four leading 0’s.
Block B’s hash changes because Block A’s hash was used to calculate Block B’s hash.
Block B becomes invalid because its hash no longer has four leading 0's.
Block C’s hash changes because Block B’s hash was used to calculate Block C’s hash.
Block C becomes invalid because its hash no longer has four leading 0's.
by Cameron McLain, Hummingbird Ventures
In 2008, Satoshi Nakamoto (the pseudonym for an as-of-yet unidentified individual) published a white-paper called Bitcoin: A Peer to Peer Electronic Cash System. In this paper, he argued that he had solved the issue of double-spend for digital currency via a distributed database that combined cryptography, game theory, and computer science. Double spend is simply the idea that digital currency can be spent in two places. Satoshi’s creation was a huge innovation because it enabled one entity to confidently transact value directly with another entity without relying on a trusted third party to stand between them.
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