Decoded Blockchain #2 — Blockchain 101, SegWit2X & Tezos
By: Daniel Benarroch
Tags: Cryptocurrency, Tech, Blockchain, Ethereum, Bitcoin

*Originally sent on October 22nd, 2017*

Dear Blockchain Enthusiasts,

Yes, it is still me, you are not receiving spam . I have simply decided to change the name of the newsletter from “Weekly Blockchain News” to “Decoded Blockchain”, something a bit more original. As you can see I have also improved the format of the newsletter, hopefully making it more readable and enjoyable. In most newsletters I will write a short opening paragraph with important announcements or a blockchain joke, maybe.

As usual, feel free to write back with comments, questions or suggestions so I can improve the quality of the articles.

Educational

Last week we explored (for some, in depth) the concept of the Blockchain, we introduced Bitcoin and how we can unlock the potential of the blockchain through smart contracts in Ethereum. At the bottom of the newsletter you will find the most relevant links from last week.

Since the whole point of this initiative is to understand better the technology and its applications, I will start presenting more in depth material for you to dive in. Today, blockchain.

Here is a different article for understanding the concept of the Blockchain, this time by OZY Magazine, as a comic book! In short, a blockchain is a decentralized and distributed ledger, such that every person who connects to a given blockchain has the same copy of it and can “send” data to the ledger. Since it is decentralized, there must be consensus rules to determine what can be appended to the ledger, as there is no central authority to do it. In reality, blockchains are thought to be so disruptive because they can replace the middleman in business processes, changing the world’s trust models. There are a few types of blockchains, as described in BlockchainHub, yet as of now there are no private blockchains in production. For the technologically curious person, this is one of the best in depth blockchain explainers out there, and it is interactive!

As you may have heard, blockchains have yet to realize the potential in them, for several reasons. The main debate is around scalability, where current blockchains are limited to a few hundred/thousand transactions per second (compared to Visa who can process 50,000 transactions per second. In the coming weeks, there will be a split in the Bitcoin blockchain, called a fork, exactly for those reasons. Check out the Segwit2x debate arguments here.

Another main issue with current implementations of the blockchain is the lack of privacy and anonymity, since everything that goes on the blockchain can be seen by all parties. Because of this, there are several projects that aim to tackle this issue, most of them by using advanced cryptographic tools (just like QED-it). This is a very nice intro to the cryptocurrencies that are implementing privacy tools.

My friend Katherine Wu has a great blog, Talk Blockchain To Me, with short videos and posts about blockchain, Bitcoin and related topics.

Also, here is a nice TED talk about the potential of blockchain technology, highly recommended for amateurs.

What’s the Buzzzz?

You guessed it, ICO’s are still buzzing. People are very hyped about making millions in a short time and without putting too much effort (at least initially). Earlier this year, a project called Tezos, which proposed a project for formally verifying the execution of smart contracts on the blockchain, raised $232 million through an ICO. This week, a major dispute about the control of the money and the company erupted, causing some major chaos among regulators and ICO investors, which may cause people to lose a lot of money. This is an example of why, even if an ICO project is legitimate, the lack of ICO regulation can be problematic.

I also wanted to share with you an important piece of news, even if not directly related to blockchain. Last week two scientist from KU Leuven, a very prestigious university in Belgium, discovered a vulnerability in the Wifi protocol (WPA2) that is used as a standard all around the world (yes, most likely in your house and office too). The interesting part of this attack, KRACK, is that the protocol had been cryptographically proven to be secure. The problem was in the way the security was defined, which had a small loopwhole. This sheds a light onto one important aspect of all cryptographic systems: no system can ever be 100% secure. This applies to blockchain systems as well as encryption of financial data at your bank, etc. It is important to keep it in mind, specially with the development of Quantum Computers, which will allow malicious parties to break many cryptosystems. In terms of the Blockchain, I need to clear up that using the blockchain is not a way to gain security of your data or your system, simply a way to decentralize a business process.

Some Use-Cases

Every industry is talking about adopting blockchain technology. But it is not always clear how it can contribute to a meaningful change outside of the financial industry. Here are some very interesting cases for applying the technology.

One application is the “smart grid”, where energy consumption could be written off onto the blockchain, cutting many intermediaries from the byzantine (agreement) process.

Intellectual Property was seriously disturbed by the advent of the internet, since anyone could download music and videos, as well as copy ideas and text. This is something that can be done to ensure creators are properly rewarded.

A more well known use-case is cross border payments, where we can see big player making moves, trying to be the first to deploy such a solution. IBM is amongst them.

Oracle, the computer technology multinational, is making a move in the blockchain industry, by providing “blockchain-as-a-service” to companies and consumers.

Last Week’s Highlights

A more extensive explanation of blockchains, a four article series.

Satoshi Nakamoto’s original white paper on Bitcoin.

A great guide for understanding Ethereum.

If you enjoyed the newsletter, you found it informative and/or you feel it helps you discussing this topic with others, do not forget to recommend it to other people! Just send them the following link and tell them to subscribe. Thank you!

https://groups.google.com/d/forum/decoded-blockchain

Disclaimer: Curated by Daniel Benarroch Guenun, the Lead Cryptographer at QED-it. Follow me on twitter @BenarrochDaniel. The opinions expressed in this newsEd are solely mine, and do not represent those of QED-it.