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RAM It All: Rising Costs Are Turning EOS Into a Crypto Coder's Nightmare

Compared to ethereum, EOS seems to have scalable dapps figured out.

Users of decentralized applications (dapps) on ethereum frequently chafe at the fact that any action – sending a tweet, playing a card, breeding a cat – costs money in the form of “gas” and takes time, as miners hash out the new state of the chain.

At first glance, EOS suffers from neither of these issues. There is no fee to send tokens or call a dapp smart contract. And in contrast to ethereum, even when the EOS blockchain is processing millions of transactions a day, it runs smoothly.

According to the EOS white paper, these perks are likely to make the system “gain more widespread adoption,” and some dapp developers apparently spot an opportunity.

For instance, Kevin Rose, the co-founder of EOS New York, a block producer, an entity that performs a similar function to miners in other blockchain networks, told CoinDesk:

“I’m having conversations with at least one group a week about, ‘These are the challenges we’re having on so-and-so platform, we want to come onto EOS.'”

Rose mentioned Tixico, which announced that it would transition from ethereum due to EOS’ “better performance and scalability to serve high demand.”

Yet, the grass may not be as green as some dapp developers hope.

That’s because, whereas ethereum dapps can be costly for the ones using them, EOS dapps can be costly for the teams deploying them.

In order to onboard users to an EOS dapp, developers generally have to make sure they’ve secured sufficient amounts of three separate resources: RAM, which amounts to state storage on the blockchain; CPU, which measures average consumption of computing resources in microseconds; and network bandwidth, or NET, which measures average consumption in bytes.

And getting these resources has proved costly.

Yutin Chen, CEO of PandaFun, a game that recently launched on EOS, said the team bought 10,000 EOS worth of RAM or around $65,000 at current EOS prices. The company also staked 10,000 EOS for CPU and 1,000 EOS for NET. Although, Chen made it clear that most of the RAM would go toward an upcoming token sale, saying, “The game doesn’t cost that much.”

By contrast, deploying a smart contract to ethereum only costs a bit of gas, whether it houses functionality for a dapp or a token contract. The cost of deploying the ethereum smart contracts could be $1 or $100, but it’s a far cry from what it would cost on EOS.

Ultimately, that’s not only a problem for the developers, but also EOS users.

For instance, some dapps might begin shifting expenses back onto users, to the extent that’s possible. And others might do what would-be dapps on ethereum are doing, and decide to launch elsewhere.

RAM: Speculators and hackers

Arguably the biggest headache for developers right now is RAM, as the resource has to be bought at a changing market price using EOS, with trades taking place on the Bancor algorithm.

Each dapp user takes 4 kilobytes of RAM to onboard for developers. According to the current RAM price, that’s around $3.12 per user. RAM is necessary for other actions as well, besides just creating an account.

And as such, Rose told CoinDesk:

“We do not understand the total costs of onboarding a dapp user yet. I don’t think that that data […] could give us confidence in an average of sorts.”

Even before the EOS mainnet launched in June, an open issue of GitHub (which has received 60 replies since it was created) argues that the RAM model “simply can’t work if your target is to create tens or hundreds of million user accounts for your dapp!”

And at the time that was written, RAM prices were far cheaper.

Following the launch, however, speculators jumped on the limited available RAM in hopes of selling it later at a profit. This drove prices as high as 0.94 EOS per KB – eight times higher than the current level.

In response to the spiking price, block producers decided to double the total supply of RAM, adding 64 GB over the following year at the rate of 1 KB per block. This move has so far helped to calm the market.

The issue around RAM, though, isn’t just how expensive it is.

It is also vulnerable. In August it emerged that attackers could eat up an account’s RAM, using a notification feature to stuff the target’s available RAM with useless data. Developers can avoid this attack by sending tokens through proxy smart contracts that contain no RAM, but that adds another step developers must take into account.

The issue was serious enough for EOS’ chief architect to weigh in. Dan Larimer, CTO of Block.One, the company that developed the protocol and held the $4 billion EOS ICO, wrote that block producers could free up maliciously consumed RAM by enforcing the principle that “intent of code is law.”

While that rule is contained in Larimer’s proposed revision to the EOS “constitution,” a set of bylaws that network participants are in theory held to, the problem is that the constitution has not been adopted, because the voting system necessary to do so hasn’t been implemented yet.


EOS’ other two network resources, CPU and NET, haven’t received as much attention, but CPU in particular could squeeze both developers and users.

These resources work differently from RAM. Rather than being bought and sold, they’re obtained through staking, in which a network participant delegates EOS tokens to a particular kind of smart contract.

When the network is not being fully utilized, participants can get an outsized amount of CPU time for a relatively modest stake. In theory, that should mean early adopters don’t need very large stakes for the time being.

After all, according to Dapp Radar, just a handful of EOS dapps have more than 100 daily users, so how strapped for CPU could the network be?

As it turns out, a spammer has stepped in to fill the void. A single account, Blocktwitter, has been “sharing messages comprising of 192 million actions, which is  about 95 percent of all EOS transactions to date,” said Tom Fu, a partner at standby block producer GenerEOS.

Nearly all of them say simply “WE LOVE BM,” a reference to Larimer’s nom-de-net, bytemaster. As Fu put it, the messages are “not important.”

But they’re still having an impact, due to Blocktwittter’s high CPU stake. Users, as well as developers, are seeing their allotted CPU times get squeezed due to all the spamming.

Fu told CoinDesk:

“RAM can be pushed onto users, however, CPU cannot. In this sense whoever executes the action needs to have the CPU staked in their account.”

A recent Reddit post by an EOS Knights player underscores this point. The user wrote that they delegated 10 EOS – $59 worth – to play the game, thinking that would be enough, but actually it wasn’t even close. EOS Knights suggests staking at least 15 EOS ($88) on CPU to play the game, but the Reddit user claimed that even a $500 stake would not meet the recommended required CPU time.

As such, Larimer has proposed a model for renting CPU and NET, which he writes “will lower the cost of using the EOS network.”

Worth it?

Yet, it may be overly simplistic to say that ethereum pushes costs onto users, while EOS pushes costs onto developers.

“There are use cases where a developer can write a dapp where the user has to bring their own CPU and/or [NET] and/or RAM to the interaction,” former Block.One VP of product Thomas Cox said, adding: “that’s one way to write an early version of your dapp that won’t bankrupt you if it suddenly gets popular.”

One thing that is clear is that EOS dapp developers will have to think hard about their business models, perhaps more so than their counterparts on ethereum.

In the final analysis, though, EOS might have its advantages, according to Cox.

For one, whereas a popular dapp like CryptoKitties can clog the entire ethereum network, EOS staking does guarantee a certain minimum access to CPU.

Another potential advantage is that unlike ethereum’s gas, investments in EOS resources can be recouped. Tokens staked on CPU can be unstaked, and RAM can be sold – perhaps at a lower price, though.

Finally, Cox said, ethereum dapp developers are “one bug away from bankruptcy.”

EOS’ arbitration system has been the subject of considerable controversy, but it does provide some recourse and the potential to avoid a DAO- or Parity-type fiasco.

As such, Cox posed, but didn’t answer, the question:

“What’s that worth?”

EOS with skeleton via Shutterstock

The leader in blockchain news, CoinDesk is a media outlet that strives for the highest journalistic standards and abides by a strict set of editorial policies. CoinDesk is an independent operating subsidiary of Digital Currency Group, which invests in cryptocurrencies and blockchain startups.

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Before the 'Bomb' Hits: Why the Race Is on to Alter Ethereum's Economics

The proposals just keep piling in.

At press time, a total of six ethereum improvement proposals (EIPs) have emerged, each hoping to alter the project’s code ahead of an upcoming software update (scheduled for October).

Driving the debate is ethereum’s so-called “difficulty bomb,” a piece of code locked into the $45 billion platform that makes it so a steadily increasing amount of computing power is needed to mine its blocks and unlock its rewards. As designed, the code would eventually push the blockchain into an “ice age,” where no further blocks can be formed – that is, if left untouched.

Originally added to ease a transition in which ethereum would change how participants on its blockchain come to agreement – migrating from bitcoin’s pioneering proof-of-work algorithm to an alternative called proof-of-stake – the difficulty bomb is set to reactivate in early 2019.

With no proof-of-stake migration in sight, steps must now be taken to delay the bomb — as well as reconfigure how ether rewards are released so as to ensure incentives are aligned to properly secure the blockchain.

But delaying the bomb brings its own problems.

For one, it will make blocks easier for miners to find, meaning ether rewards (currently at 3 ETH) must be decreased along with the delay to ensure that the cryptocurrency is produced at the same rate.

However, because ethereum lacks a formal agreement on its rewards model — unlike bitcoin, whose code caps its creation at 21 million units — there are differing perspectives on how much supply should be reduced, with many calling for a further reduction (and some for an increase) of the quantity of ether that is distributed to miners.

Further, having such a debate in a decentralized network brings added obstacles.

Users, for example, could vote according to how many coins they own — a popular signaling method, but one that has been criticized as too informal a metric. But miners (the individuals dedicating computing power to the software) aren’t guaranteed to support a vote.

It’s worth noting that debates concerning ethereum’s undefined issuance model, as well as the difficulty bomb, have emerged several times throughout ethereum’s three-year history.

As detailed by CoinDesk, it’s a difficult topic because when it comes to monetary policy, miners and investors are pitted against each other, each calling for the opposite outcome in many cases.

As Lane Rettig, an ethereum developer, told CoinDesk:

“The postponement of the bomb isn’t particularly controversial, but the issuance is controversial. But for that reason the whole thing is controversial, you can’t have one without the other.”

Together or separate?

Speaking in a core developer meeting Friday, the communication officer for ethereum, Hudson Jameson suggested a solution could come from separating the two mechanisms.

In a sense, he wants to settle each debate in isolation, tackling one problem before the other.

“I think decoupling them would help us create priorities, where we have one thing which is an economic and technical change and the other which is a pure technical change that isn’t as controversial a thing,” Jameson said.

Several developers pushed back against this, though, stating that the two issues are intrinsically bound together and necessitate a combined solution.

Still, several EIPs target the question separately — impacting either the bomb or the reward schedule – while others bind them together.

Currently set to activate in 2019, two proposals seek to remove the difficulty bomb completely: EIP 1240, which simply removes the bomb, and EIP 1276, which seeks to remove bomb and alter ethereum’s reward structure, lowering the current issuance of 3 ETH per block to 2 ETH.

Two proposals want to delay the bomb: EIP 1234 and EIP 1227, though each takes a different approach to raising and lowering the issuance total.

A further two proposals simply target the issuance rate: EIP 858 does not impact the difficulty bomb but reduces the reward to 1 ETH, and EIP 1276 wants to change the reward to 2 ETH.

Paying for security

Complicating the discussion is the differing views on how much ethereum users should pay for security (in effect that’s how developers see blockchain rewards to begin with).

That’s because, while the inflation rate of ether ensures its resistance against attacks — preventing the ability of malicious hash power to overwhelm the network — it’s essentially a tax that comes from ETH holders directly, as inflation slowly decreases the value of their ETH over time.

Plans to limit the overall issuance with the upcoming consensus switch to proof-of-stake, an upgrade called Casper, have been under discussion for several years, however, that plan is now in question given the consensus switch is still several years away.

“If you rewind way back two or three years ago when this difficulty bomb was first installed, the plan was we will be on Casper by now, by 2018. If that had happened then the bomb would never have been an issue,” Rettig told CoinDesk.

Similarly, the supply schedule has yet to be formalized.

Retting said: “Even with Casper, the issuance schedule, the rewards, the inflation, all that has never been worked out. It has never been finalized, this is called the parameterization of Casper and it’s still very much a work in progress.”

Concerns from everywhere

To complicate matters further, there are developers on complete opposite sides of the difficulty bomb debate.

For instance, several developers argue that the difficulty bomb should remain permanently – even though it was only originally planned to last until Casper took effect.

“It lessens the default effect of inaction being the most attractive option,” ethereum core developer Nick Johnson said in the meeting.

Yet, Augur developer Mical Zoltu’s proposal (EIP 1240) suggests the complete opposite – the removal of the difficulty bomb altogether. Discussing the proposal on a related forum, Zoltu argued that developers should fight against so-called “planned obsolescence”  – or when software is programmed to become obsolete after a certain time – of the ethereum chain.

“As a consumer, I have been bitten many times by planned obsolescence and now it is a business strategy that I actively try to avoid,” Zoltu wrote.

The contention surrounding the difficulty bomb and ETH issuance has also led a group of miners to also speak up about their concerns.

Miners using GPUs, a class of mining hardware that risks being made obsolete due to the emergence of ASICs, are calling for developers to use this opportunity to change ethereum’s underlying mining algorithm. According to GPU miners, in the absence of Casper, such a change would restore the blockchain to a more decentralized state.

As Casper developer Danny Ryan said in the developer meeting Friday:

“They need to be talked about at the same time. A lot of people in the community want them to be talked about at the same time.”

Burnt gears via Shutterstock

The leader in blockchain news, CoinDesk is a media outlet that strives for the highest journalistic standards and abides by a strict set of editorial policies. CoinDesk is an independent operating subsidiary of Digital Currency Group, which invests in cryptocurrencies and blockchain startups.

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Horizontally Scalable Blockchain System Launches ‘Flagship’ Membership Portal

A horizontally scalable Directed Acyclic Graph (DAG) blockchain system that aims to cater to consumer-grade applications has launched the Orion membership portal where members of its ecosystem can communicate and contribute to the network, with the company announcing its DAG token has listed on KuCoin.

Constellation Labs says the capacity of its network is proportional to user adoption – with a partitioned consensus allowing the network to scale the number of transactions per second on an infinite  basis. Reputation-based incentives are going to be used to eliminate transaction fees for the blockchain’s users.

Its membership portal, Orion, is described as Constellation’s “flagship product.” A free tier of membership is available for those who want to view the portal’s message boards and various channels, and developers can stake DAG tokens in order to access Orion’s premium features.

Constellation is currently preparing to launch its permissioned testnet at the beginning of August – and the start-up is accepting applications to run testnet nodes. Participants have the potential to earn DAG tokens based on how many transactions they validate during the testing period.

The company says there are other ways for developers and community members to earn tokens, too. For example, rewards are going to be offered to those who report bugs in the ecosystem – as well as those who correct mistranslations in its white paper.

Brendan Playford, the chief executive of Constellation, told Cointelegraph: “We want to empower our community to help shape, build, and grow the ecosystem efficiently, while encouraging our developers and community members to stake their tokens.”

A different kind of protocol

Constellation says it stands out from the crowd thanks to its unique “Proof-of-Meme” protocol, which is used to achieve consensus.

It ensures members of the ecosystem can help improve and monitor the platform by harnessing the computing power of their laptops, smartphones and tablets – rewarding behavior that improves a node’s reputation in the system.

“The Constellation protocol aims to solve the primary challenge of scalability in blockchain, providing a solution that is highly resource-efficient and exponentially scalable, added Wyatt Meldman-Floch, the company’s chief technology officer.

Constellation says it successfully raised $35.2 million during its private presale back in January. In total, the company sold more than 730 million tokens to accredited investors, funds and institutional investors. Now, the start-up is preparing to perform six token airdrops this year – the first of which will open on July 7.

“We are a meritocratic system which means that so long as you’re providing value to the network, validating true transactions, not causing Byzantine behavior, you will improve your reputation school and therefore increase your likelihood of being selected for consensus and then getting a reward,” the CEO said.

Another way the company’s ecosystem takes a different approach is through smart contracts, which are deployed as “microservices.” Constellation describes them as off-chain applications executing smart contract logic – processes that can run concurrently. It estimates that its hylochain is capable of processing 4,000 to 4,800 transactions per second for every 1,200 nodes – and says that, for a million people, this would equate to almost 4.5 million transactions per second.


Disclaimer. Cointelegraph does not endorse any content or product on this page. While we aim at providing you all important information that we could obtain, readers should do their own research before taking any actions related to the company and carry full responsibility for their decisions, nor this article can be considered as an investment advice.

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Zcash Pays Off Disgruntled Developer to Avoid Blockchain Split

Despite the best efforts of zcash developers to keep the cryptocurrency’s coming upgrade, Overwinter, as seamless as possible, the $8 billion network was faced with a plot-twist this week.

Mere days before the update (a hard fork of the code) was set to execute – a developer decided to effectively threaten to split the network – if he wasn’t paid in return that is. In a forum post published Tuesday, the sole maintainer of the Windows zcash wallet software, D. Jane Mercer, said he was going to cease development of the clients and release a zcash competitor “rebranded as another coin,” if he didn’t get further funding for his work.

See, last year Mercer was living off developer fees and donations for his work on the clients, but according to the post, the money had run out and he had been working for free for some time.

As such, Mercer decided to use the idea he might split the cryptocurrency as a way to air his frustrations.

On the forum, Mercer said:

“Altcoin drama rage quit hard fork, as it were. Pull a bitcoin cash, as it were.”

And this message sent some in the zcash community into a frenzy.

That’s because the Overwinter upgrade is scheduled to activate on June 25, but more importantly, that upgrade only adds limited features to zcash’s protocol in an effort to prepare it for the Sapling hard fork upgrade, which looks to make zcash more scalable and private, in October.

If Mercer stopped development on the Windows wallet software, the most popular zcash wallet software, “tens to hundreds of thousands of users” would have been left without a workable wallet after the Sapling upgrade.

So, even though, blockchain splits have become, according to some, a healthy mechanism for asserting opposition of any decentralized cryptocurrency development, others do fear that these competing coins have the potential to split the community into fighting factions that confuse users.

“It might be as simple as pay the man,” zcash engineer Ariel Gabizon said.

And payment came. The zcash community quickly stepped to financially support the developer after the threat – at least for a little while. The amount donated to Mercer by several anonymous zcash addresses is currently at 80 ZEC, around $15,360, according to current metrics.

“People have thrown enough in the kitty for a few months living expenses, so that’s all well and good,” Mercer told CoinDesk.

No more coexisting

Stepping back, though, it’s notable in how the features packaged in the Overwinter hard fork made the theoretical hostage situation more dire.

One reason is that most developers support forks. While potentially disruptive to crypto economies, the guiding ethos is they allow a novel form of financial freedom. If users don’t like what is going on with zcash, they have the ability to create another instance of the software.

This is different, proponents say, than traditional money systems. (Try as some might, you can’t exactly fork the U.S. dollar and the elaborate banking system that enables it.)

In this way, Overwinter prepares the network for further upgrades and the potential for future hard forks. Not only does Overwinter add so-called “replay protection,” but it also eliminated some code called “auto-senescence,” which causes nodes running older versions of the software to shutdown after a period of 16 weeks.

As such, zcash isn’t able to support multiple iterations of the protocol, even if, after Overwinter, it will.

Mercer had prepared for this removal of auto-senescence, and instead kept that feature into the newest version of his wallet software, so that the software would eventually expire. But if the users stayed on the old version of the client, it would cause a chain split, Mercer continued.

“There is going to be a chain fork in one case, and then client death in another,” he wrote.

While zcash developers were quick to counter that, saying that after Overwinter, older versions of the software will just be pushed into “safety mode,” which causes those versions to deprecate at some point without causing a chain split, Mercer still had the community in a tight spot.

“Rock and a hard place you know,” Mercer said, explaining the pressure he put on the community. “Overwinter is coming, and you got an Overwinter wallet but it’s gonna deprecate sometime between Overwinter and Sapling, so how am I going to get to Sapling.”

Mercer’s orneriness was on full display at that time, but since he received the donations, he said, that he’s dedicated to preparing the wallet software for the Sapling upgrade to come in about three months.

“Overwinter broke crap in a bunch of places which we’re only figuring out now how to fix that with Windows, but it’s like, bootin’ hell knows what Sapling’s going to be,” the developer said, adding:

“Well now I’m funded by the community to find out and bring it forward.”

A timely lesson

Above and beyond the donations Mercer received, though, he also got on the phone with the Zcash Foundation as well.

“I finally got one of the Zcash Foundation board members on the phone, and he managed to talk me back from the ledge from chain fork threats and fun things like that,” he told CoinDesk, adding:

“I’m all calmed down, everything is happy now, I hate altcoin drama and it’s the only time I have stirred it up deliberately in my life.”

Still the episode has sparked an important conversation between Mercer and the Zcash Foundation – one that other cryptocurrency communities should be clued into as well – about how crucial independent developers are to these protocols and how to best compensate them for their work.

The Zcash Foundation, which hard-coded in a so-called “founder’s fee” that contributes a small percentage of each transaction to the founders fund, has a recurring grant program.

For independent developers like Mercer, though, relying on crypto and its volatile markets to continue contributing code can be crushing. Zcash in particular was hit hard this year, down from $876 per coin in January to $192 at the time of writing.

“The bear market really killed me,” Mercer said. “You know … when the blood spilling happened, I woke up and 25 percent of my money was gone.”

And if the Zcash Foundation holds their reserves in ZEC, then the same rules would apply, whereby the grant program would be a little less healthy. As such, on a forum, executive director of the Zcash Foundation Josh Cincinnati said the organization is open to researching other funding methods as well.

Speaking broadly about the whole incident, it’s has been a timely lesson on the importance of good developer relations, Mercer said, adding:

“Developers, developers, developers! There needs to be someone to talk to third-party wallet providers and exchanges, directly.”

Crumpled paper image via Shutterstock

The leader in blockchain news, CoinDesk is a media outlet that strives for the highest journalistic standards and abides by a strict set of editorial policies. CoinDesk is an independent operating subsidiary of Digital Currency Group, which invests in cryptocurrencies and blockchain startups.

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Huobi to Offer $166 Million In Funding to Fuel New Blockchain Creation

Cryptocurrency exchange Huobi announced Wednesday plans to allocate 30 million of its Huobi Tokens (HT) to fund the creation of the company’s own open-sourced blockchain protocol.

The fund, currently worth around $166 million based on CoinMarketCap data, will be used to launch the Huobi Chain Project, which is also aimed to establish a decentralized autonomous organization (DAO) on top of the proprietary blockchain, the company said at a press conference in Singapore.

The blockchain would serve as a platform for users to participate in token fundraising events (ICOs), as well as to vote for which tokens should be listed on Huobi, said Chen Guang, a director at the company’s ecosystem development arm.

While the firm also envisions ultimately migrating its exchange to the blockchain system to evolve it into a decentralized exchange, such a move is still uncertain as the move would require higher levels of efficiency and security.

Even so, Chen believes the future of the blockchain ecosystem should be a combination of centralization and decentralization.

He told CoinDesk:

“We want this to be a social experiment. The future is not likely to be entirely decentralized. As such it’s important to find the equilibrium that balances the two polars, which is the ultimate goal of this exploration.”

As such, Houbi is seeking external assistance in developing the new system by providing the 30 million tokens as incentives over a number of stages. Further, Chen said, the exchange will allocate a fraction of its yearly revenue to the pool, though it is yet to disclose the exact percentage.

The development process is anticipated to be completed in the next 18 months, and will be divided into eight phases – with each being, in effect, a contest for developers to participate in and to compete for the tokens.

To guide the process, the company will first establish a committee in the next two to three weeks that will craft a policy and self-regulatory framework for the competition.

Chen indicated that the company is currently talking to up to 10 well-known leaders from open-source blockchain projects who might help form the committee, but declined to reveal the names on the list.

The committee will further nominate a list of candidates for Huobi Chain Project’s potential global lead. After nomination, users will jointly vote for the preferred candidate using their Huobi Tokens. The winner will lead the project’s development and fund allocation at each phase.

While the exact amount of funding to be provided for each stage remains unknown, Chen said it is expected to increase as the project progresses.

Also in today’s press conference, Cai Kailong, chief strategy officer of Huobi Group, announced that the company is launching a new exchange in Australia with expectations of a launch by the end of June.

Chen image courtesy of Huobi

The leader in blockchain news, CoinDesk is a media outlet that strives for the highest journalistic standards and abides by a strict set of editorial policies. CoinDesk is an independent operating subsidiary of Digital Currency Group, which invests in cryptocurrencies and blockchain startups.

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IBM, Global Citizen Seek Blockchain Solutions for Humanitarian Aid

IBM and Global Citizen are issuing a challenge to the world’s developers: use blockchain to revolutionize how donations are made to humanitarian causes.

The tech giant and the anti-poverty campaign movement are partnering on “Challenge Accepted,” inspired by the United Nations’ Envision 2030 initiative, which aims to improve the lives of impoverished and at-risk people.

Developers taking part in Challenge Accepted will use IBM’s Blockchain Platform Starter Plan to build a network that encompasses all aspects of the donation process.

There’s a gamification aspect as well – along the way, developers who perform certain actions can earn “points” that they can then redeem for access to IBM experts, for example.

Stepping back, the UN and other assistance groups have previously explored using blockchain to track aid to impoverished areas. Cryptocurrencies, too, have served as a platform for facilitating donations to a range of causes, from clean water access to the provision of electricity for a school in South Africa.

And in what is perhaps the most notable trial of its kind to date, the World Food Programme (WFP), the food assistance arm of the United Nations, tapped the ethereum blockchain to authenticate and record disbursement transactions.

More than money

Simon Moss, a co-founder of Global Citizen, argued in a blog post published Friday that the technology has the potential to change the face of humanitarian aid.

And it’s not just the money that would be better accounted for, he said – organizations can use a blockchain to improve transparency in the flow of goods being delivered as well.

“Blockchain can provide clarity on not only who is donating, but how money and supplies flow through organizations that provide aid – such as tracking a gallon of water purchased by an organization to the location where it was delivered,” he wrote.

Kathryn Harrison, who leads product management for the IBM Blockchain platform, told CoinDesk that the initiative grew out of internal conversations earlier this year about the “opportunities to use this technology in areas that we can do some pretty substantial social good.”

“I think it’s a really exciting opportunity to help engaged citizens see how they can build something that’s going to drive accountability and improvement in the [non-governmental organization] sector,” Harrison said.

A link in the chain

Harrison also framed the challenge – which runs from May 15 to July 14 – as part of the wider work being done at IBM on the blockchain front.

“We’re focused on so many different types of use cases. We look at food safety, we look at microfinance, we look things like the environment and carbon credits and energy savings,” she explained. “And this just seems like another opportunity to empower developers to put their skills to use for good.”

At the end of the challenge, five winners will be chosen from the pool of contestants. Harrison said some of the projects may be listed in the IBM Blockchain Platform, opening up those templates to other users – and winners could potentially take their projects further through IBM’s Garage workspaces. The winners will also receive tickets to Global Citizen’s Global Citizen Music Festival in September.

The challenge is an opportunity for developers looking at aid-focused uses of blockchain to advance their ideas – but as Moss contended in his blog post, there’s a bit more at stake here.

He concluded:

“This is a bold reinvention of how philanthropy and donors interact.”

Humanitarian aid image via Shutterstock

The leader in blockchain news, CoinDesk is a media outlet that strives for the highest journalistic standards and abides by a strict set of editorial policies. CoinDesk is an independent operating subsidiary of Digital Currency Group, which invests in cryptocurrencies and blockchain startups.

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'Programming Blockchain' Will Change How You See Bitcoin

Ariel Deschapell is a full-stack web developer, author, and cryptocurrency veteran.

“All models are wrong, some are useful.”

This phrase was coined by the statistician George E. P. Box to describe probabilistic models, but it also perfectly encapsulates all the mental models we use to make sense of the world around us.

Human time and attention are scarce, and the universe is extraordinarily complex. As a result, we are forced to operate under imperfect mental models, also known in psychology as “heuristics.” Regardless of our level of understanding of any given subject, these models and ideas are necessarily erroneous or incomplete. The deeper one dives into any one subject, the more obvious George Box’s aphorism becomes.

Perhaps nowhere is this more readily evident than programming, where one of the most foundational principles is that of abstraction. To the visitor of a website, no knowledge of code is required to click links and input information, just as one doesn’t need to understand combustion engines to drive a car. We might have an approximate mental model of how they work but not an accurate one.

Similarly, web developers themselves need not understand the intimate workings of TCP/IP and the other core protocols on which the internet is built in order to build applications on them. We regularly use and incorporate software written by others in our own applications without ever knowing how they actually work. Software development, and technological advancement more generally, can thus be thought of as building on top of a series of these nested “black boxes,” with each box containing an even more abstracted-away mystery.

To those who haven’t invested the time to truly master the innerworkings of a particular technology, it might as well work by magic. The deeper you dive, however, the more the magic falls away.

This is what Jimmy Song did for me and the various other students of his workshop, Programming Blockchain: strip away the magic.

Crypto globetrotter

As a contributor to the Bitcoin Core repository and former vice president of engineering for the early bitcoin wallet software Armory, Jimmy Song is well known in the cryptocurrency space.

Through his regular written and video content, he’s established himself as a vocal figure in crypto, one who is passionate about improving bitcoin.

He also isn’t shy about sharing his opinions on what’s needed to do that:

“Training more developers is the biggest bottleneck in the ecosystem.”

Enter Programming Blockchain, Song’s flagship effort to give interested developers a deep crash course into the fundamentals of how the magic behind bitcoin and the blockchain actually work. Finite fields, elliptic curve cryptography, transaction parsing and validating proof of work are just some of the topics covered.

“It’s like a water hose of information for two straight days,” explained Song.

As a web developer fascinated with the wider implications of cryptocurrency for the last several years, I couldn’t resist.

Since blockchain is a global technology and phenomenon, it’s fitting that such an ambitious endeavor to demystify it is itself global in scope. The locations for Programming Blockchain vary widely, having been held and scheduled for areas as disparate as China, California, North Carolina and Israel.

“If the idea is to make more developers, I want to do this in as many jurisdictions as possible.” explained Song. “By doing this in different areas of the world, I am hoping developers in different areas of the world create more things. Having more businesses start in different jurisdictions reduces risk for bitcoin.”

The latest iteration of the workshop took place in Tampa, Florida. While not the most internationally recognized city, Tampa is home to a vibrant cryptocurrency community and the newly opened BlockSpaces, a co-working space dedicated to blockchain projects which played host to Programming Blockchain.

Choosing Tampa as a location paid off. This latest iteration of Song’s in-person instruction was his largest yet with 30 students. While some of these developers naturally hailed from the Sunshine State like myself, others had flown in from various locations including Washington D.C., California, and Brazil.

Demystifying blockchain

Blockchain is the hottest buzzword in tech, one that’s being thrown at everything. Surveying the ICO and blockchain landscape, you can find a project or startup for every use case from health data to banana tracking. No matter your problem, blockchain is the solution to your ills.

But what actually is it, how does it work, and what makes it so special?

It’s common to hear that blockchain is “the technology behind bitcoin,” a distributed and tamper-proof database which could be leveraged in many other applications. It’s also common to hear that like AOL or MySpace, bitcoin could quickly be overtaken by competitors who better leverage this technology.

But blockchain is so new and inherently different that all analogies aimed at simplifying it or the crypto ecosystem quickly fall apart in their usefulness.

Blockchain’s uniqueness makes it exceptionally difficult to understand because try as we might, we possess no preexisting conceptual pigeonhole to fit it into. By extension, it is exceptionally easy and tempting to project upon it a panacea for every problem without any clear idea of how it will help.

We take descriptions of the blockchain’s emergent properties such as “immutability” and “decentralization,” and often seem to conclude these are magical passive properties of blockchain which can be dragged and dropped onto any application. But there is no such thing as magic, and even the most seemingly benign assumptions made when thinking about cryptocurrencies and blockchain can be surprisingly off.

Take even the very concept of a bitcoin, which is itself nothing more than an abstraction. The bitcoin protocol tracks units of value only in satoshis, not in bitcoins. What many know as the “smallest” unit is actually the only unit in the protocol.

It was simply an arbitrary decision on the part of Satoshi to make a “bitcoin” equivalent to 100 million of these units, which subsequently became standard notation for all wallet software built on top of the protocol. But even the concept of some kind of “coin” or “token” itself is a total abstraction. The structure of bitcoin transactions has a surprising detail brought to our attention by Song that showed this to be the case.

When it comes to monetary transfers one thinks of X unit of value being sent to the address or account of a recipient. In a raw bitcoin transaction, however, nowhere is the amount of satoshis being “transferred” specified. There is simply a reference to the unspent transaction output, or UTXO, with which the transaction is being funded. A UTXO can be thought of as debit entry on the blockchain ledger. The total amount of bitcoin displayed on a wallet is the aggregate of all the UTXO it controls rather than a single account which holds funds.

Additionally, if the value represented by a single UTXO is less than that which a user attempts to spend, multiple UTXOs must be included in the transaction to provide the liquidity. However, a UTXO must also be spent completely, meaning that by spending an amount smaller than that represented by a single UTXO, your wallet software must actually generate a “change” address to send itself the difference.

As Jimmy Song demonstrated to us, there are no tokens being sent back and forth, even digitally. Rather it’s a conceptual metaphor. All there is is simply a quirky accounting ledger, the particulars of which are of course abstracted away completely by basic wallet software.

“Once you understand these raw transactions, it’s like reading the Matrix,” Jimmy said.

The pitfalls of abstraction

Many abstractions, like easily understood currency denominations, are obviously useful. They are necessary for operating in a vastly complex world, yet they can still introduce intellectual pitfalls.

Take unit bias, which is when a cryptocurrency seems like a better buy relative to a more “expensive” coin, despite the fact that the unit price of a coin is irrelevant in this context.

If two cryptocurrencies possess the exact same market cap, but their supply and denomination is such that you are capable of purchasing a “whole” cryptocurrency A over a “fraction” of cryptocurrency B, we are predisposed to own a whole of something rather than a part. Yet the denominations of these cryptocurrencies are, necessarily, totally arbitrary.

Unit bias is a fairly benign mental error. When it comes to simplifying details for the sake of explanation, however, other pitfalls can be much more dangerous.

For example, bitcoin’s so-called “immutability” isn’t the result of some special line of code which can simply be copied and pasted into any application. It is the result of the ongoing interplay of incredibly intricate mathematics and economic incentives. The structure of the blockchain is rooted in a type of computation known as hashing. It is easy for a computer to verify if the answer to a hash is correct but difficult for it to find the answer itself from scratch, though far from impossible.

Miners, however, create a hashing arms race, where reproducing their total and ongoing sum of computations in order to make changes to the blockchain is exceedingly expensive, rendering it all but impractical the more that time passes. This is only possible because the miners have a powerful profit motive: the reward of bitcoins themselves.

Thus it’s not even accurate to think of the bitcoin blockchain as perfectly immutable. It most certainly could be tampered with, under certain conditions like 51% attacks. But neither is it possible for any blockchain to promise even practical immutability without a native and valued token with which to reward those who secure it.

“Bitcoin is the technology that powers blockchain, not the other way around,” summarized fellow student Nick Baldwin.

A sense of perspective

The more deeply you delve into blockchain, the more the magic falls away. You realize that like all things, there are no true mysteries. Only that which we haven’t taken sufficient time to understand.

As our simplistic and flawed models are replaced by more sophisticated ones, there are interesting ramifications. You may think your sense of wonder fades along with the magic. Sometimes it does. You become acutely aware of how little you actually know and how much there is left to solve and build. A sense of disillusionment can be the natural reaction.

But by pressing on you earn something much more valuable than naive wonder: a sense of perspective. The work left to do is immense, but the work that has already been done by those who have come before us is just as terrifyingly intimidating.

It stands testament to the fact that we already stand on the shoulders of giants, and all the challenges ahead of us can be conquered, just as those before us were.

With this knowledge and shift in perspective comes a sense of focus. All we can do is solve the next problem. Take the next step. All else is noise.

As Song imparted to us as our impactful workshop came to an end:

“Wisdom is cutting things out of your life, not adding more to it”.

Astrological image via Shutterstock

The leader in blockchain news, CoinDesk is a media outlet that strives for the highest journalistic standards and abides by a strict set of editorial policies. CoinDesk is an independent operating subsidiary of Digital Currency Group, which invests in cryptocurrencies and blockchain startups.

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Ethereum Developer Resigns as Code Editor Citing Legal Concerns

Yoichi Hirai has resigned as an ethereum editor citing concerns that a contentious proposal may be in violation of penal law.

Named EIP 867, the proposal defines a method to better facilitate the return of lost funds on the platform.

Speaking on GitHub, the developer wrote:

“Some EIP editors look nonchalant about legal consequences of this draft, but I have warned them, and I have no capacities to do anything more than warn them … I resign from the post of an EIP editor.”

Writing his comments yesterday, Hirai said that the EIP may be in violation of a Japanese law named the “Unauthorized Creation of Electromagnetic Records,” stating “I have a doubt that, if the proposal is followed in practice, the process might constitute a crime.”

The law in question deals with cases of computer-based fraud, in particular the unlawful creation of data “with the intent to bring about improper administration of the matters of another person,” a legal document states.

Last week, Hirai blocked the proposal due to its failure to align with the “ethereum philosophy,” a requirement based on the code acceptance process, as detailed in EIP-1. The developer has since retracted those statements, writing: “I was able to ignore my interpretation of ‘the ethereum philosophy’ but I cannot ignore the penal code.”

As previously detailed by CoinDesk, the proposal is led by developer Dan Philfer from Musiconomi, an ICO issuer that saw 16,475 ether lost in the Parity fund freeze last year.

Philfer’s proposal has sparked controversy among developers, with some urging the public to get involved with the debate. The proposal is also said to have accelerated efforts to improve the platform’s process for accepting code changes.

Prior to his resignation, Hirai was one of six ethereum developers with the rights to accept software changes onto the platform.

According to data on GitHub, Hirai was prolific in this role, with 5,219 contributions in the last year – a figure that tops the sum of all other editor contributions combined.

Broken pencil image via Shutterstock

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