We’ve heard it hundreds of times. Blockchain is Web 3.0 or Geekdom’s latest marvel. Entrepreneurs, or business owners, who capitalize on this technology when young make it rich. Innovators like Ripple turned a $10,000 investment into $1.5 million in five years. Binance, only a year old, has a market cap of $840.8 million, according to Coinmarketcap. So it’s understandable that you’d speculate about launching your own business blockchain. You may not want to innovate anything, but, hey, blockchain’s said to be the next Revolution. Blockchain fanatics say it’s a core differentiator and value driver, leading you, if you have a business, to quite likely think maybe you should jump on board.

Should you?

Brian Winker’s take on blockchain for business

Sometime last year, I interviewed Brian Winkers, founder of blockchain money automation company bitlov.com that won first place in the 2015 StartUp Chile! Competition.

Winkers himself is an open-source developer and Bitcoin analyst who has been playing around with crypto projects since 2012 and has helped small and medium-sized businesses get on or, rather, more often, off the blockchain.

For Winkers, blockchain for small business is a bonkers idea, largely because of Bitcoin. Bitcoin’s platform has problems with scalability: The platform is slow – around ten transactions per second compared to Visa’s 5,000 to 8,000 transactions in the same time span. The ledger became congested. The company itself struggles with internal squabbling.

Truth is Bitcoin is competing with more scalable and less problematic platforms like Ethereum and IOTA, so businesses can profit from blockchain more than was possible, say, ten years ago.

The problem is the expense.

Blockchain expense

Blockchain technology is free if you want to do all the work. The problem is recruiting a blockchain developer, and that’s where the trouble starts. As of 2018, a decent blockchain developer costs anywhere from $150,000 to $200,000 at the very least. Forget the fly-by-night freelancer from a platform like Elance, Guru or the like. Actually employing someone from such a platform would likely cost you more, since you may have to pay for errors. Any coding error or slight mishap means the ledger needs to be dismantled and rebuilt from scratch, aside from which technological changes occur so rapidly that top blockchain developers regularly familiarize themselves with updates.

Want a top developer? Expect to pay $250,000-$450,000 for a whiz, or triple that for a world-class specialist, according to Pavel Supronov on Medium. You think blockchain saves you money? According to John Levine, crypto consultant, author, and speaker, blockchain is the most expensive database ever invented.

Is your blockchain for innovation?

To get some ROI from your blockchain investment, you need some really BIG idea that’s stupendously different than competitors and that delights hordes of people. (Think of a Ripple or Binance).  Such a feat, according to Winkers, is performed by only two out of every hundred ICOs or startups.

In all my years,” Winkers told me, “I’ve only found one ICO that makes sense, and that’s the one I’m with right now. A Russian company called Visor looking to create a payment coin. I’m providing some technical guidance, more on the architecture side. I think they have a good team that understands the need to meet the underlying business needs. It’s not about them having a big payday.”

Winkers added:

I regularly tell businesses not to proceed with Bitcoin, but to focus on more conventional solutions. I try to help them customize their business, figure out what they can do.  Unfortunately, most people who approach me are dazzled by Bitcoin and the ledger. They don’t understand it… but just about everyone’s doing it so they want on the bandwagon. Now if they’d have a wonderful remarkable useful idea that may be one thing, but they often emerge with impractical, unfeasible ‘solutions’, so it’s a waste of their time and money.

At the end of the day, if your mind is on blockchain for fame or money, Winkers doubts you’ll succeed. You’ll want to have a solid idea that makes sense and that lasts for decades.

Blockchain to save you money?

How about if you don’t want to innovate but are sold by the blockchain hype and want blockchain to expedite your business? Say, you’ve read reports like that by management consulting giant Accenture and McLagan who insisted that blockchain promises cost savings of 70 percent or more in finance areas? Or you read the 2014 EY report how blockchain-based businesses outpace competitors?

Well, blockchains have certain problems that you’d want to know about…

The National Institute of Standards and Technology (NIST) – a non-regulatory agency of the U.S. Department of Commerce – recently released a report for beginners to blockchain and business owners often tempted by new technology.

The report pointed out that blockchain can’t control users’ conduct.  The NIST also highlighted the misconception that blockchain is “trustless” – you need a great deal of trust in the technology, developers, and user cooperation for the blockchain to function. Further, users must manage their own private keys that, once lost, are harder to recover than usernames or passwords on centralized platforms.

Additionally, blockchains are massively inefficient. Set up a blockchain and you’ll need each and every user to archive, and constantly update, a complete history of all that’s happened on that blockchain. 

Finally, but not conclusively, blockchains also require a computational challenge to restrict the creation of new blocks. If it’s too easy, hackers could temporarily mobilize enough computing power to rewrite history; if it’s too hard, each new block will consume megawatts of electricity. And electricity for blockchain costs hundreds, if not thousands, of dollars.

On the other hand…

As we speak, blockchain improves all the time. More modern technologies produce decentralized platforms that have more bandwidth, are faster, more convenient, easier to program. IOTA, for example,  uses a “blockchain” that isn’t the traditional format but a new one called Tangle that knocks out the expense and time of mining. IOTA transactions are super-fast and process several transactions simultaneously.  Its structure perfectly suits the Internet of Things (IoT), where products and appliances like cars, home appliances and machinery “tangle”. Businesses on  “next generation” blockchains like IOTA report a smooth, fast and cheap experience that almost resembles that of the Web.

So to blockchain or not to blockchain?

A unanimous decision tree floating the Web may resolve your problem.

Ask yourself the following:

  1. If you need a database, are all the writers or participants on your team known and trusted? Is there anything you need to hide? Do you need to hire, or involve, trusted third parties? Do you need to control functionality? Are your transactions private? If your answers are a flat “no” to each of these questions, either stick to a standard database or use a public blockchain.
  2. Does more than one participant need to be able to update the data? Do you need to hire third-parties whom you’re unsure whether you can trust? Do you have any confidential data? Do you and all the updates on your team barely know one another or have some qualms of one or more users? If you answered “yes” to one or more of these questions, use a permissioned or hybrid blockchain.
  3. Does the data need to be kept private? Do you need to control who can make changes to the blockchain software? Do you have the money for blockchain programming and continuous maintenance and upgrades? Consider a private blockchain.
Do you even need Blockchain?

Even then Winkers would tell you to mull your decisions carefully. 

“I’ve always worked to make sure that small businesses aren’t taken advantage of by others in the technical fields,” he told me, “And that includes blockchain. For some it’s the right path, for others, it’s a costly diversion.”

“ICO companies that invest in blockchain have a 98% failure rate. That’s not the route,” Brian insisted, ”that I’d want to take.”

 

Coin-Spotlight-Icon-ICX

Overview

ICON is a platform on which one can build new tokens, with their own rules of governance and features. In this way, it is much like Ethereum and the ERC20 standard that allows for new tokens to be created on the Ethereum blockchain. Where ICON differs from ERC20 tokens is that all coins within the ICON ecosystem, called the “ICON Republic”, share an ability to be traded with each other without the need for going through an exchange, a form of a built-in atomic swap.

The republic is supported by what they refer to as a “loopchain”, which is the underlying ICON blockchain that interconnects all individual tokens. The loopchain consists of ICX tokens which are used as the intermediary currency between all other tokens. However, since exchanging between different tokens within the ICON Republic is all handled by smart contracts, transactions should effectively be instantaneous and seamless, giving the impression of direct conversion.

Purpose

The goal of ICON is to create an overall environment in which companies can create tokens that suit their individual needs, and yet still be compatible with all other tokens within the ICON system, allowing for greater liquidity of assets. At the same time, the ICX coin will be a currency that people can use for purchasing goods and services.

One example they offer is of a person going to a hospital that is part of the ICON network. When the person’s visit is registered with the hospital, it alerts an insurance company that uses its own token. The insurance company may be using its own token for smart contracts to handle claims in particular way that is of no concern to anyone outside of that company. However, the insurance company, seeing that the hospital visitor is a member of their services, can issue its own tokens to the hospital or to the hospital visitor, and the hospital or visitor can receive them as a different token they find useful. For example, if the insurance company reimburses the hospital visitor, that visitor might choose to receive the tokens in the form of ICX, which they can then use to go to a coffee shop and buy a drink. Or they might opt to move the tokens into their university’s blockchain, where they also have their own token, using smart contracts or other token features to track students or course credits.

In the end, the ultimate goal is to create for everyone the benefits of custom smart contract solutions, while preserving the advantages that come with a common currency.

Technical

ICON is built much like Bancor, which uses a “delegated proof of stake” model. In ICON’s implementation, blocks are validated by people, called delegates, who vie for that status by committing tokens to what amounts to putting them in escrow. However, just committing tokens is not enough, that is essentially just nominating oneself for the role. One must also submit a proposal and exhibit skills necessary to running a node, and then one is voted into the position.

ICON also follows Bancor’s model of reserve backed tokens. Essentially, when creating tokens, one deposits a certain amount of money to ensure that no matter what, there were always be a value to the coin. If other people start buying the newly created token, driving up its price, a smart contract works to balance the price of the token with the amount in reserve.

Market

ICON has a system in place where it can issue up to 20% of its current number of tokens within the space of one year. The amount of increase it is voted on by people called C-Reps who are delegates that act as representatives for individual tokens. In some years the growth could be zero, or 20%, or anything in between. This means its effectively an inflationary currency. If in any given year a number of new tokens equal to 20% of the existing supply, it means all current token holders have their holdings reduced by 20%.

ICON is backed by DAYLI Financial Group, a large Korean conglomerate, and has a robust network within Korea of banks, insurance companies, and government institutions. As such, they’re well funded and networked, so they have the resources to see themselves through market dips and other hardships that might be too much to bear for smaller startups.

Their promotional material often emphasizes hospitals and insurance companies, which in itself is a large market. Even if they stay within Korea, and within that one business sector, they could stand to increase in value a great deal. If they can break out of that niche and find wider adoption, then their growth could be very substantial.

What is Litecoin

Litecoin was created in 2011 as a fork off of the Bitcoin chain, in an attempt to solve a perceived problem of mining centralization. The inventor of Litecoin, Charlie Lee, is an ex-Google employee who has been a vocal member of the cryptocurrency community, and his persona has been tightly bound with the coin since its inception. With over 750,000 followers on his Twitter account, Lee’s statements, whether praised or condemned, have resounding effects.

Overview

Litecoin is known as the silver to Bitcoin’s gold. Litecoin’s faster block processing time of two and a half minutes was intended as a benefit to merchants who would see their transactions confirmed much more quickly.

The faster block time was also seen as an advantage to miners who would essentially have four times as many chances to successfully mine a block than they would with Bitcoin’s ten minute block times.

Purpose

Litecoin, like Bitcoin Cash and others, is intended to be a currency. It could be said that Litecoin was an early sign of a change in perception of Bitcoin as a store of value, in that Litecoin was intended to be an alternative to Bitcoin by offering more consumer and merchant friendly features.

With a long presence in the cryptocurrency market, Litecoin is one of the tokens that will be more commonly included in services that accept cryptocurrency. However, it tends to be rolled in with Bitcoin and does not show any intention of trying to go its own way, meaning its fortunes are very much tied to Bitcoin.

Technical

Using a block mining algorithm called Scrypt, miners are forced to do serialized processing, which places more of the calculations in memory. This creates a need for hardware memory that quickly becomes too expensive to be practical to amass on a large scale, thus making it ASIC resistant. The intention was to try and prevent groups from coalescing mining power and allow regular people with fewer resources to enter the arena with non-specialized hardware.

However, as of 2017,  companies have started making Scrypt ASIC mining hardware that would work on  Litecoin, which may make mining pools for Litecoin possible.

Market

Litecoin is older than most other cryptocurrencies, and in earlier years, with fewer competitors, it was closer to the top of the list of currencies ranked by market capitalization. With the recent boom of currencies, Litecoin has fallen to the number six position, just under relative newcomer EOS.

Founder Charlie Lee created some controversy at the end of 2017 when he announced he had sold all of his holdings in Litecoin. Lee claimed that at least part of the reason he sold all his Litecoin was that he was constantly being accused of trying to manipulate its price, as traders would watch his tweets for indications of how Litecoin’s price might move. It is not known how much Litecoin he held, and he has stated that he will remain active in development. He also remains active as a key influencer in the cryptocurrency market. While he does have his detractors, even those who find fault with him nonetheless pay attention to what he says.

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Use our news to inform cryptocurrency trading decisions, stay up-to-date on happenings in the industry, and more!

Wells Fargo Is The Latest Bank To Block Cryptocurrency Purchases On Credit
You can’t buy bitcoin with Wells Fargo credit cards anymore. Engadget reports, “Wells Fargo is pumping the brakes on customers using their credit cards to buy bitcoin — the bank has banned credit card cryptocurrency purchases. However, this isn’t a permanent measure, as Wells Fargo will monitor the crypto market and reassess the issue as needed”.

SEC Launches ICO Portal: Highlights Risks, Rewards, and Responsibilities
According to Tony Spilotro of BlockExplorer, “The United States Securities and Exchange Commission (SEC) is vehemently opposed to a common crowdfunding practice in the cryptocurrency industry called the initial coin offering (ICO). An ICO is similar to an initial public offering where a company or corporation raises investment capital by offering its stock to the public for the first time. Only in an ICO, a digital currency or token is distributed instead of a stock, and the token can have a variety of uses that blur the line of what defines a traditional security.”

Hackers Steal $20 Million Of Ethereum From Ethereum-based Apps and Mining Rigs
The Chinese cyber-security firm Qihoo 360 Netlab reported hackers stole over $20 million of Ethereum. BleepingComputer tells us, “The cause of these thefts is Ethereum software applications that have been configured to expose an RPC [Remote Procedure Call] interface on port 8545. The purpose of this interface is to provide access to a programmatic API that an approved third-party service or app can query and interact or retrieve data from the original Ethereum-based service —such as a mineror wallet application that users or companies have set up for mining or managing funds.”

Argo Blockchain to List on London Stock Exchange, Launches Subscription Crypto-mining
Argo Blockchain, a business that seeks to offer cryptocurrency-mining to the masses, announced its plans to list its shares on the London Stock Exchange. BlockExplorer’s Julia Travers shares with us that “the announcement coincided with the launch of Argo’s Mining as a Service, or MaaS, program, which will allow users to participate in mining through the Argo site with their home computers or smartphones.”

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Use our news to inform cryptocurrency trading decisions, stay up-to-date on happenings in the industry, and more!

Gemini To Become First BitLicensed Exchange To Offer Trading in Zcash
The New York State Department of Financial Services has authorized Gemini Trust Company to offer trading of Zcash, Litecoin and Bitcoin Cash. Tyler Winklevoss, Chief Executive Officer of Gemini Trust Company, LCC said, “We are proud be the first licensed exchange in the world to offer Zcash trading and custody services and look forward to providing customers with a safe, secure, and regulated place to buy, sell, and store Zcash, an incredible new form of digital cash.”

Crypto Mining Company Coinmint Moving To Revamp 1,300 Acre Alcoa Plot
Once used for aluminum smelting, an Alcoa plant in Upstate New York is going to be converted into one of the world’s largest bitcoin mining centers. CNBC reports Coinmint said Tuesday it “would invest up to $700 million in the upstate New York location, which it expects to be the biggest bitcoin mining center in the world. The project will create an estimated 150 jobs over the next 18 months.”

Cryptocurrency Theft Malware Now An Economy Worth Millions
According to a new research report titled “Cryptocurrency Gold Rush on the Dark Web” by Carbon Black, the market for malware and tools designed for the theft of cryptocurrency is growing swiftly. ZDNet states, “The researchers estimate that over the past six months alone, a total of $1.1 billion has been stolen in cryptocurrency-related thefts, and approximately 12,000 marketplaces in the underbelly of the Internet are fueling this trend.”

Image courtesy of Carty Sewill, http://cartyisme.com/.