May 19, 2020

Cryptocurrency – A vortex of power

Money has been dominating our society for almost every daily activities, but have you ever wondered why, and when there is something called “money” exists? The premise of the question actually started even before the beginning of the written history.

Back in the days of thousands years ago, there was no distinction between different classes in the society of original human kind. People live mainly on hunting, gathering, ... and when the society began to develop cultivation and husbandry, the social demand was gradually increased, people gradually become aware of the exchange of goods for the variety in sources. At first it was in the form of the barter of commodity, such as livestock and grain, – things directly useful in themselves – but also merely attractive items such as cowrie shells or beads. Authority was evenly distributed among in the society.

Society developed and conflicts arose between the parties, leading to a struggle for power and interest to form a class and a form of slavery. Through the period of historical warfare, the form of possession of slaves evolved into a feudal form with clear division of class in society. At that time, power were in the hands of a group of people, they had the right to create the constitution, laws, thus the right to issue currencies. With the development of copper casting technology, the coins were considered as an invaluable asset to store and exchange goods at that time. Eventually, with the existence of the gold casting and the gold mining industry, coins gradually turned to gold bars in trading activities.

According to the flow of time in history, coins and gold coins have gradually revealed many inadequacies such as incompatibilities exchange for large quantities, easily stolen, etc. The form of capitalist socialism then came along with the promoted the introduction of paper money, polymer money . However, at the beginning of the dawn, it was not easy for people to accept when they were holding valuable gold in their hands. At that time, the government devised a very clever solution, the gold standard, meaning that each issued currency was corresponding to a certain amount of gold and when needed, people could bring the government to exchange for gold. This gradually formed a habit in society after hundreds and thousands of years of using paper money and they forgot that their money was equivalent to an amount of gold. In the end, on June 5, 1933, the United States stopped applying the gold standard, but the government kept the price of $ 35 an ounce until August 15, 1971, when the General President Richard Nixon announced that the United States would no longer convert dollars to gold at a fixed rate, and thus completely abandon the gold standard, which ended more than 250 years of which dating back to the 19th century.

The explosion of science and technology in the early 80s of the 20th century, especially the technology era of the early 2000s of the 21st century with the advent of computers, internet, electronics, ... led to the development of currency with the advent of internet banking, electronic cards, cross-border money transfer services such as western union, ... and electronic wallets such as Paypal, Perfect Money, Advcash, ... to solve complicated problems in the process of transportation, trade, money transfer everywhere, difficult storage, ... of paper money, polymer money. Thus the civilization of money has advanced to a higher level.

But with the power in the hands of governments to print money uncontrollably, alongside with the financial mismanagement that caused inflation and culminated in the 2008 global economic crisis that lasted until 2011, which banking and financial systems such as New Century Financial Group, Lehman Brothers Bank, two real estate groups Fannie Mae and Freddie Mac ... and left many consequences forever after. People began to be suspicious of the currency they were using, about the administration of the government. And as an indispensable law of creation, the old must be replaced with the new and modern. It was at this time that bitcoin was born. That seems to be the fate of 15 years ago with the algorithms of cryptography, the proof-of-processing algorithm of generations of David Chaum, Adam Black, Wei Dai, ... as the prerequisite basis for Bitcoin today.

The time of the recession was also the time when bitcoin was born by a group of people named Satoshi Nakamoto. For many purposes such as:
- It is to reserve money, transfer finance into a safe new technology and keep its value from being inflated by volatility like the old financial system.
- With the limited transaction amount and high cost of paper money, bitcoin will overcome this drawback.
- Avoid inflation and print money blatantly, bitcoin has a limit of 21 million. Not only that, but the limited and necessary supply for investors should lead to continuous added value.
- There is no duplication or fraud in transactions because it is controlled by miners everywhere, ensuring transparency because all transactions will be recorded in blockchain history without being deleted or manipulation.
- Avoid hack into the bitcoin network because of the decentralized system and must have more than 50% consensus to be approved.
- The freedom in each transaction is limitless in time and space with the condition of strong internet, this is different from the old monetary system.

Thus, power was once again handed over to the mass society after thousands of years centralized in a hand of a group. However, it is not easy to develop and be recognized. In the beginning, there were few people who knew bitcoin or the concept of blokchain, people saw it as a gift to give, give and only few people used to buy cards in the game world, ... then there were deliveries translating in life and maybe everyone knows the story of 10000 bitcoin in exchange for 2 pizzas and then more widely accepted in life such as paying for coffee, buying goods, ... big companies like Microsoft, Expedia, Beepi, Florida Coast University Golf, Dell, etc. are the stepping stone to bring bitcoin closer to the public. With many advancements on the Cryptocurrency platform, especially two historical breaths in 2012 ($ 1200) and 2017 ($ 20,000), bitcoin is more famous than ever.

However, over the years of development, bitcoin has revealed many Asin heels that cannot be overcome so far. For instance:

- Security concerns:

Hackers have hacked and stolen hundreds of thousands of bitcoins on exchanges in the past. An significant example is Mt. Gox in 2014, was hacked to 850,000 bitcoins and then terminated. By 2019, the world's largest trading platform Binance was also hacked, fortunately, the IoT team recovered shortly thereafter and compensated for the investor's losses.

Blockchain-based systems use advanced cryptography and encryption more secured than standard passwords on the Internet or access codes. However, more security can sometimes make a system less reliable. There are countless cases in the virtual currency world where users forget their private keys and thus cannot access their funds. This is similar to a bank telling you the balance but you have no way of approaching it. Or those who transfer the wrong wallet will never get back the bitcoins, it seems to float indefinitely in the Blockchain space. Over the years, there have been billions of dollars of cryptocurrency lost due to hacking, fraud or poor protection. There are an estimated 4 million BTC floating somewhere in the Blokchain space, with no way to find them.

- Centralized management does not exist:

For a decentralized Blockchain network like Bitcoin, the change must get the consent of the majority of miners, this number is usually more than 50%, but can be as high as 70% to 80% of network members. grid.

- Risk from over-control

Continuing with the management issue, if a person is able to control over 50% of the machines in the Blockchain network, they will control the transactions on Blockchain. If they take advantage of the control on this network, they can, in theory, prevent new transactions from being confirmed, reversing transactions and allowing malicious "repeat transactions" to occur. However, it is theoretical but in practice this is unlikely. It was only really threatened when quantum computer technology was born because it only took 200 seconds to solve a calculation that even the fastest supercomputer in the world takes 10,000 years to calculate. At that time, the blockchain was really threatened.

- Extensive cost:

It is convenient to transfer money in large quantities but if the transaction is small, the cost is larger than traditional.

Besides, the electricity consumption for Bitcoin mining is quite large. It is estimated that to create 4 Bitcoin requires 10,000 to 12,000 kWh.

- Lack of scalability:

Every 10 minutes a block is added to the Bitcoin Blockchain, each block currently containing about 2000 transactions, or about 3 transactions per second.

Because of the limited block size, the Bitcoin network is only capable of processing up to 7 transactions per second.

The transaction speed is slow, the fastest is 10 minutes and sometimes lasts up to several hours. This is not applicable in life because people cannot wait for you to pay for a cup of coffee, buy rice or pay for certain services ... for such a long time, not to mention the value of bitcoin is so great, this is not applicable to life.

These are the limitations that the more advanced versions like Litecoin are considered bitcoin 2.0, Dashcoin, Monero, ... only partially solved, until Blockchain 2.0 and represented by Ethereum provided a good solution. than. It is a smart contract connected inside the network, contracts written in computer code and operated on a Blockchain or distributed ledger. Smart contracts will automatically authenticate, process and enforce contracts based on terms written on code without the need for third parties to act as intermediaries such as lawyers and courts to enforce them. contract performance. When discussing the future of Blockchain, the term "Blokchain 2.0" is frequently used to describe the next development of this technology. Decentralized applications along with smart contracts hold the potential to take Blockchain technology to the next level. The future of Blockchain will revolve around smart contracts and decentralized applications. Blockchain 2.0 is very likely to have a much stronger influence than the influence of Bitcoin and the original Blockchain technology created.

According to the development of technology, Blockchain 1.0 or Blockchain 2.0 can not meet the criteria of the era because the transaction speed is too slow, every second can handle only 5-7 transactions. If it is financial industry, this is unacceptable. According to statistics, VISA (USA) using IBM's lower network has been able to do this better than any opponent in the world, 20,000 transactions / second.

Next, because the security of the old Blockchain platform is too high, these also make many users feel "annoyed". When participating in any Blockchain chain, if you accidentally forget your password and wish to be re-granted, it is difficult as "finding a needle in a haystack". Because, the structure of Blockchain is that there is no 3rd party to verify every user's behavior.

In addition, the privacy of users can also be accessed if you participate in a specific identifiable Blockchain. In addition, the cost of mining a new Blockchain to complement, the overall Blockchain network is very expensive. That is why a more modern Blockchain is needed, called Blockchain 3.0.

The structure of Blockchain 3.0 platform includes: Data + Smart Contract + Cloud Node + Open Chain Access Protocol + Blocklet + Incentive For Self-evoltion ...

In simple terms, the Blockchain 3.0 platform is a new technology that is upgraded from the old version of Blockchain (1.0 + 2.0) and 3.0 also added a series of new features.

Accordingly, the new Blockchain 3.0 technology capable of overcoming the "barriers" of the old platform is still entangled but there is no way to remove it. Moreover, the new features on Blockchain 3.0 will help users easily use and can build their own Blockchain platform according to their needs.

New features on Blockchain 3.0:

- Data: Data is encrypted on integrated block chain from Blockchain version 1.0

- Smart Contract: Integrated smart contract feature from Blockchain 2.0 version

- Cloud Node: Scripts (buttons) executing in Cloud computing platform.

- Open Chain Access Protocol: An internet access protocol in the form of an open chain on Blockchain.

- Blocklet: New architecture of computer network when operating without server to access. This model helps users' computers participate in Blockchain system to be able to connect with each other on a "peer" level. No computer is dependent on any computer, they can easily exchange data with each other, together exploit resources, applications and contribute data to the common Blockchain network.

And represent Blockchain 3.0 in the market such as Cardano (ADA), Arcblock (ABT), AION, ...

It is a technological journey as well as the development of cryptocurrencies over the past 10 years. Despite many ups and downs, events and volatility in the market, now Cryptocurrency has gradually found a foothold, its position and voice in the current financial flow. Although in the past when Bitcoin and Altcoin faced many barriers from the authorities with prohibitions, allegations for involvement in money laundering activities, terrorist financing, arms-drug trafficking, ... in which not to mention the famous Silk Road organization like Amazon in the deepweb world was arrested by the FBI in 2013 for trading banned goods and using Bitcoin as a tool in every transaction.

And perhaps an unforgettable milestone for Bitcoin in particular and Cryptocurrency in general is on October 23, 2015, the European Union Supreme Court issued a tax exemption decision on Bitcoin and that is the hot story on newspapers that day. Because a few years ago in 2012, the European central bank viewed Bitcoin and other digital currencies (digital assets) as virtual currencies and warned people not to participate, the concept was still obsessed for forever. until today. Then in 2014, the European central bank advised people not to buy, sell, reserve ... digital currencies. Since then, there have been positive signs in government agencies. For England and Sweden, Bitcoin is exempted from taxes while Poland still charges 2 - 3%.

However, only two years later, the world's most populous country China issued laws to ban ICOs, electronic exchanges, and prevent Bitcoin mining activities, and then across the border of Russian friends. There is the same policy. As a result, the cryptocurrency market is unpredictable because most miners are located in China and miners have to find a way to adapt to the situation at that time. However, it is different from the period of Wei Dai, David Chaum, ... now the Blockchain technology platform like a multi-headed snake is difficult to remove.

And until 2020, when the government has a view of goodwill to cryptocurrency. However, what they are interested in is that Blockchain technology is behind cryptocurrencies rather than equating them with adoption. The bills are in turn introduced by countries such as Japan, Germany, Singapore, etc. and there is a common feature that we can easily recognize is that the coins must be KYC transparent, money laundering prevention and control. Support for terrorism (AML / CFT), is really not easy to accept for anonymous, anonymous coins like Bitcoin.

With the space increasingly squeezed by harsh rules, so will Bitcoin and Altcoin survive and where will they exist?

This is a very good question, the mentioned rules and constraints have somewhat affected cryptocurrencies in general and Bitcoin in particular, but if said will affect survival, it is a bit too much. Why so?

(Konstantin was free and arrived in Sofia, Bulgaria)

As we all know in any society from ancient underdevelopment to civilization today, there are always two forces between righteousness - evil, between floating power - underground power and it seems to be the rule of all. weak in all times. The contrast always causes conflicts and proceeds to fight for development. Although there have been times that cause disturbances and affect global peace, it is inevitable to process for the better. Bitcoin is no exception when there are always hidden forces behind, fearsome tycoons because it is a place where they can hide assets, a place to manipulate and ready to "kill" deer investors. bewildered as well as hiding a huge fortune that nobody wants to know. Not to mention the criminal organizations, terrorists use Bitcoin as an intermediary tool in transaction activities. Imagine those forces as the sinking part of the iceberg, like the mysterious world in the deepweb of the internet system, they are strong enough to breathe life and soul into the world of Cryptocurrency. So, Bitcoin and Altcoin are always fluctuating with the rhythm of the price of the shark, so it is difficult to access the official system of global transactions but it may be accepted as an asset or commodity depending on the national laws. Let us wait and see if the good scripts are in the future ahead.

Looking back on the journey of cryptocurrencies in the financial flow, through all the ups and downs from strictly prohibited to accepted research, now Cryptocurrency has gradually found a foothold, found a position and found have a say in the financial pie of tens of billions of dollars across the five continents. Perhaps Satoshi Nakamoto created Bitcoin for peaceful purposes but everything in the world is a double-edged sword depending on how people use it. It was like the way Nobel created explosives to prevent war but the world turned it into a wreck, until he closed his eyes, he regretted and exclaimed: “If I knew that, I would have He didn't create explosives. ”He then decided to dedicate most of his wealth to the founding of Nobel Prizes. And no matter what angle, we can not deny its presence and existence in recent times. It is a strenuous journey but also full of fun and romance. We fully believe in the good future ahead of us. So, where is Onecoin amidst the mysterious world of cryptocurrencies? The answer will be in part II of the article. Please read it.

Written by Kim Cuong Nguyen
Translated by Doan Huu Long
Date 19 May 2020
Vietnamese Post:

No comments:

Post a Comment