Despite the Venezuelan government embracing cryptocurrency with open arms – even launching their own oil-backed Petro cryptocurrency in an effort to solve the country’s economic crisis – according to a new report from local Venezuelan media, the country has taken a stand against cryptocurrency mining, outright banning related computer equipment from entering the country.

The report states that the Venezuelan government made a policy change at the end of April that restricts computer equipment such as GPUs or ASIC miners. Customs authorities have been seizing related devices received by air and sea since the change went into effect.

Shipping companies such as Liberty Express and DHL, who ship these mining devices to Venezuela on behalf of their customers, have either updated their pages on restricted products entering Venezuela to include mining equipment or have sent out notices to their customers notifying them of the changes to avoid any inconveniences they may experience as a result of the policy change.

The policy change has already gone into effect, but only on a temporary basis until officials from the National Association of Cryptocurrencies meet with the Superintendence of Cryptoactives and Related Venezuelan Activities to address the issue next week.

Weeks ago, Superintendent Carlos Vargas indicated that the country was evaluating authorizing companies to import digital mining equipment to sell in Venezuela:

“We are in an evaluation process to select and authorize companies that are qualified to import and market digital mining equipment and be responsible for the respective guarantees in our country.”

Vargas warned individuals mining cryptocurrency to be “prudent at the moment of acquiring the equipment since until now no company has been endorsed or certified,” by Venezuelan regulators.

Considering Vargas’ statement, the ban appears to be temporary until the government finalizes authorizing company’s to begin importing mining equipment for resale in Venezuela.

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

Ethereum Overview

Ethereum has maintained its position as the second largest cryptocurrency for long enough that it appears firmly established as a stable entity in the cryptocurrency space. In addition to its popularity and significant market capitalization, it is also targeting a slightly different use-case than Bitcoin, meaning it has the potential to forge its own identity, separate from Bitcoin and other contenders.

Purpose

Ethereum was designed from the start as a platform to develop “smart contracts”. Essentially, a smart contract is a way for two people to record any kind of exchange, and with a blockchain being an immutable record, that record can be referenced and verified by anyone. Currency is merely one form of contract, and the main currency on the Ethereum blockchain is their native token, called Ether. While other forms of contract besides currency are theoretically possible, by far the most popular use of this blockchain has been to create new alternate currencies. These additional currencies on the blockchain are referred to as ERC20 tokens. ERC stands for “Ethereum Request for Comments”, and 20 is a number designation for when the standard was created that allowed for new token creation. By using this blockchain, new coins are able to leverage the established trust of Ethereum, which could be seen as an advantage over other coins that start from scratch.

Ethereum is currently the go-to standard for smart contracts and token creation. However, since its creation, there are many new blockchains which aspire to capture the smart contract market, in whole or by focusing on niche applications. Ethereum has a considerable head start, but things can change surprisingly fast in the world of cryptocurrencies.

Technical

Ethereum can be mined on Graphics Processing Units, or GPUs, which are a type of computer chip that has long been available for people to purchase for their computers to improve the visual experience of games, media, and other uses. By making Ethereum available to mine on widely available hardware, it takes advantage of an existing broad base of computing power. However, one disadvantage to using GPUs instead of a dedicated computer chip is that computations are slower and energy consumption is higher, and subsequently it is relatively a more expensive process.

Ethereum encrypts all transactions with a hashing algorithm called Kekkak-256, which provides a similar level of security to the SHA-256 algorithm favored by Bitcoin. Also, like Bitcoin, all transactions are pseudo-anonymous, meaning that users of the system are not named in any way on the system, but the numbered transactions themselves can be viewed publicly on a blockchain explorer. (https://etherscan.io/ for example)

Market

As of May 2018, Ethereum has a market capitalization of roughly 79 billion US, which is less than half of Bitcoin, but more than double the next coin down the list — Ripple, at roughly 3.5 billion. As one goes down the list of coins, the volatility increases exponentially, but Ethereum, near the top, has so far mostly been on the rise for over a year and a half. It is, however, notable that the initial surge in investment in Ethereum coincides with the beginning of the highly fractious scaling debate within the Bitcoin community. While this may simply turn out to be the catalyst that helped launch Ethereum into its own future, it may also indicate that its success may still be contingent on the fortunes of its predecessor, Bitcoin.

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