Devices

Proof of Work Alternatives (and irrelevance to the future of cryptocurrencies)

Hashing

Proof of work

Most cryptocurrencies today employ proof-of-work mechanisms; that evolved from Bitcoin’s original mechanism, solving complex hashing problems and consuming a lot of energy.  The current Bitcoin implementation uses SHA-256 . This approach to confirming transactions, after validation (on the nodes) is extremely wasteful for many reasons. Crypto-currency designers and blockchain designers such as Dash have created incentive mechanisms, wherein “node” maintainers who validate transactions also get rewarded, in addition to the miners.  Some economists and a few bitcoin champions have argued that this conversion of energy to “bits and bytes” through hashing is what provides the fungible value to Bitcoin as an asset.

The Bitcoin core-dev team led by luke-jr (one of the highest contributors) to the Bitcoin core code, have proposed algorithms to update the current Proof of work system. This system hasn’t as yet gained approval of the core – team, miners, etc. however, at some time in the critical future, this might take shape.

Issues with Hashing

a) Firstly, solving the hashing problem consumes significant energy, and this consumption increases as the difficulty of the solution increase at regular intervals. By some estimates, the largest miners combinedly surpass power consumption in some of the world’s nation states.

b) Despite spending the energy there is a possibility that all transactions included in the newly mined block can be abandoned for many reasons, one of which includes the race to include only the longest block with the most number of transactions for reward. In Bitcoin this leads to orphaned blocks. In Ethereum, this leads to blocks called uncle-blocks that are not entirely abandoned but are connected with the main blockchain.

c) Thirdly, the rewards for mining reduces over a period of time, and halves every few months. The next day for halving rewards for the bitcoin blockchain. The assumption of most miners is that this reduction in rewards will be offset by the positive growth in USD valuation of the cryptocurrency.

d) Lastly, as the difficulty levels increase, and the rewards from mining reduce,  equipment used for mining would become obsolete.  This creates a marketplace for mining wherein a few specialists with the ability to keep up with the technology changes needed to mine would dominate.

e) To top it all, there are incentive alignment challenges in these markets, wherein the few miners who dominate the mining market would wield enough controlling power (as in network hash rate) to block any new development initiatives by the core development team. These handfuls of miners can pretty much block or allow any change to the protocol layer.

Lastly, this process of earning disproportionate rewards has led to significant investment in the ASIC technology, and the over-demand for GPUs that are used for mining. Almost the entire of GPU inventory sometimes get bought out by miners, leaving very few of them for the gamers.

To solve this problem of extreme wastefulness, and making crypto-currencies more efficient, there is this massive initiative of the ethereum network towards proof of stake. More on this approach later.

 

Dilineating the Blockchain from Cryptocurrencies

Blockchain

Congressional Hearing

Anyone working in the blockchain sector has to listen to the congressional hearing about cryptocurrencies, that conclude a couple of weeks back.  In addition to the debate about the legalities of Cryptocurrencies, and, ICOs, there were presented; many interesting industry applications were presented too.  The interesting piece about the benefits of the blockchain starts at 1 hr: 25 minutes about here.. and ends 2 minutes later.

Walmart-IBM-Blockchain application

Recently, Walmart and IBM demonstrated how the blockchain reduces shipment tracking time to about 2.2 seconds from 2 weeks. In providing traceability of transactions through a chain of records, and, almost instantaneous validations, the blockchain reduces the query times across data stores.  Industries that traditionally have relied on record keeping and verification benefit the most from the Blockchain.

Improvements in tracking transactions

An article here cites that the blockchain can tremendously improve efficiencies in the food chain; right from the farmer till the end consumer. In addition, due to the persistence of identity and records on the Blockchain, the data can be queried, validated and fetched almost instantaneously. This creates immense possibilities, for firms, moving large commodities across geographic boundaries and locations.  Such tracking capabilities that are dependent on multiple players integrating and updating their logistic management systems are now vastly simplified through the implementation of smart contracts.

Takeaways

One of the important takeaways from any regulatory hearing (including this one) was the proposal to legally dileneate Cryptocurrency and the Blockchain. What this means is that regulation (when it arrives) will treat blockchain applications differently than cryptocurrency. Many blockchain applications do not need tradeable tokens. Though creating a token of value is beneficial for many things such as
a)  setting up contracts between different economic actors,
b) making network effects fungible for all users by tangibly rewarding stakeholders,
c) providing a viable funding mechanism for the business,
d) Locking-in customers by increasing switching costs.
Overall, the blockchain applications can influence the entire supply chain industry. This delineation when regulation hits this nascent sector will hopefully allow innovation to continue un-hindered.

Bitcoin’s Quadratic Hashing Problem

There have been many debates around why Bitcoin needs to scale, and, why transaction lags happen. One of the most common reasons attributed to transaction lags is the size limit of 1MB  per block of data, that has been hard coded into the Bitcoin core source code.

Quadratic Hashing

Each block in the Blockchain contains a hash of all transactions since the previous block was created.  This artificial size of 1MB limits the number of transactions that can get into each new block. If a transaction cannot be mined in a particular block, then it will have to wait till the next block is created to be mined. Many exchanges, and, service providers such as ATMs or money exchangers wait for up to 6 blocks after the initial validation to make sure that the transaction was indeed validated.

For the crypto-enthusiasts – and those interested in the details, the following link gives you a technical description of what happens when users have multiple signatures and when 1 MB is insufficient in size for miners to incorporate all new transactions since the previous block. This problem otherwise known as quadratic hashing – indicates that the time complexity to validate new transactions increases quadratically (i.e. by the power off) with respect to the number of signatures needed to hash each transaction.

Solutions to Quadratic Hashing

Bitcoin Cash

Many solutions have been suggested including in the link above. Bitcoin cash also proposes a solution wherein they increase the block size significantly (8 times, from 1 MB to 8 MB), which they claim is sufficient to prevent transaction delays in mining new blocks.

Current Block Mining Time and Segwit2X

Source: http://data.bitcoinity.org

The following link provides a list of the average time taken to mine a new block. on the main blockchain. As of this writing, the average time to mine a new block is about 15 minutes (Meaning every hour 4 blocks are mined on the network.). Imagine the delay if you were to either sell or buy anything on the internet using Bitcoin. Segwit2X is the solution that most ecosystem participants have agreed to roll out soon. Once the rollout of Segwit2X  happens, we will see a significant reduction in transaction time across the bitcoin network. The countdown to Segwit2X is listed here.

 

Low cost (sub-70$ programmable computer) for kids

Spider girl – wanted to play with a computer, seeing both me (dad) and mom working. In fact, when she used an old laptop – she dropped  it.

Laptops and computers  (iphones and ipads ) induce ADHD via screen fixation in kids according to this study.

1. So, I decided not to give her a laptop- she’s all of 5 years old. Similarly, I could not give her the other desktop computer (or an ipad or an old iphone) since she quickly learned to use youtube or other entertainment apps like Netflix or games. These led to screen fixation…

So, I had to find a system that didn’t play video fast enough and was usable for other purposes like learning to read, play music or (possibly) program.. Of course,  as a bonus, one should be able to do other stuff, like add numbers using LEDs  or play colors based on tunes…using LEDs

2. So I got this Raspberry pi with case  I used an old Television (LCD one) and hooked up a HDMI interface with the Raspi.  The HDMI cable costed me 7$.  One can buy a recyclables monitor from your nearest store.

3. Then I connected an old keyboard and an old mouse (total cost about 10$). After that I installed the standard Raspian operating system, which comes inbuilt with several programming languages: Scratch, Python, Mathematica etc.. I showed her how to fix it and run.

4. I showed her how to hook up the raspi to power and it runs just as is.

Scratch was designed by someone at MIT for kids. I showed her how to hook up the Raspi, move the mouse, and type something on the keyboard and Scratch. She figured out the rest, ie. creating loops, motion, adding sounds, making the computer ask questions like  “Whats your name, etc…?” with an input window…

Brain Computer Interface

Today I read this amazing post on avc about brain computer interface.

The WSf Reported that Elon Musk is developing yet another company, this one based on neural lace technology, to create a brain computer interface.

Neural lace technology involves implanting electrodes into the brain so that the brain can control machines directly without the need for an IO devices.

what this technology tries to accomplish is this one thing- quicken man/machine interface to something much faster than touch, thus extending the brains capacity.

 

imagine what the character of NEO could accomplish in the matrix.. download entire training programs for JUJITSU from a computer.

Mankind is already becoming a cyborg-kind. With neural lace and its kinds we’ll leapfrog into smarter cyborgs. May be this is neceassary for humans being “relevant”

Neuro-information systems is into a brand new phase here, if neural lace and such are indeed productized and mass adopted.

 

 

The Bitcoin Hard Fork – PART 1.

Right now, Bitcoin is trying to do an Ethereum – style hard fork. There have been many discussions around this. Here in this part 1 article I discuss why Bitcoin needs a Hard Fork.

 

  1. Bitcoin needs to scale because of problems related to block validation times and block size. Each new transaction (and there are several thousands every second) needs to be entered into a ledger after validating it, in a process known as mining – wherein a new block is created.
  2. With the many new transactions being created – the time it takes a series of transactions to enter the ledger has been increasing. This has caused third party players – such as short term creditors – validators – etc. to earn rents to fill the gap, making bitcoin’s whole value proposition of low transaction costs to be questioned.
  3. What this means is that – if someone were to immediately consummate a transaction such as paying someone else, or buying something at a store, if it takes 10 – 20 minutes for the bitcoin network to validate that transaction  -as in say – the payer has the requisite amount of money that can be paid to the payee – then a third party can lend the payee the money for 10-20 minutes at an insanely high rate of interest say 2.5% for those 10-20 minutes to consummate the transaction immediately. The third party does other forms of validations while the actual technology i.e. bitcoin mining network takes longer to validate the transaction.
  4. Another problem is with the number of transactions that can actually be put into each subsequent block to be validated. This upper limit is set to a particular number by the current bitcoin implementation. If someone were to revise this upper limit then all nodes on the bitcoin network – including the miners and the wallets will have to update their source code.

BITCOIN UNLIMITED is the proposed Bitcoin hard fork which supposedly handles this upward revision in block size. It is supposed to remove all scalability restrictions of bitcoin while making it seamless. In the next article I discuss the debate around whether to fork or not to fork and Bitcoin’s development model.

Disruption at Scale of a Billion across the length and breadth

This past week I travelled to (almost) the four corners of India. To Bangalore, Calcutta, Ahmedabad and Mumbai. One thing that I couldn’t fathom was the scale of  disruption in the telecom sector. Reliance Jio – a free 4G connection –  with (almost) unlimited data for its subscribers was accessible across the length and breadth of the country.  This caused most of the population to leapfrog – 1G, 2G, 3G and other forms of data connectivity.

People who had never used data on their phones were now extremely conversant with mobile communication apps -mostly Whatsapp in this part of the world. Every service/every hotel I stayed in, including government services listed their whatsapp numbers to their customers. Reliance Jio made this happen. First generation mobile users – who had so far never even used anything other than a landline – were extremely conversant in flipping out their phones and starting a video call with their whatsapp counterparts.

This scale of disruption of a billion users across the length and breadth of a vast country such as India is unheard off. The effects are multifold – consumer awareness is at its highest, consumer serviceability is at its best, and overall the masses are happier because they are not at the mercy of expensive (unknown) hidden costs if they have to call someone – anywhere…

Delivery drones of a different type

Imagine getting all delivery free – no matter where you buy it from.

Starship drones deliver stuff by driving around  instead of flying.

https://www.starship.xyz/

A cool cross between autnomous driving and delivery functionality.

Drone Photography of our beautiful campus @AracenaSky

Drone photography and amateur photography has become such an amazing passtime/hobby/additional employment creator. It’s almost taking the business form of rideSharing. Drone pilots can upload their work on sites such as Dronebase, that recently captured 100000 hours of business. You can now share a project  and invite bids from amateur/professional drone pilots to compete (bid) for the same. This is semi-technical work, but has a lot of potential in the market.

My Friend @AracenaSky  used the Phantom Drone IV to create these two movies of FIU’s campus. The buildings you see – that is sort of a pyramid is where I work. It looks so much more beautiful from the sky…. The visuals are stunning as is the beautiful campus.What is more interesting is how @AracenaSky used the footage to tell a story, with the right music and very little acting.

Dreaming of FIU- Part 1

Dreaming of FIU-Part 2

 

 

Re-blogging Expert Systems and Smart Contracts powered by Cryptocurrencies

When Expert systems i.e. actual use of AI, in solving problems in Engineering, Science and Social science reach that point in society where firms can create them; then we would see a dramatic increase in usage of contracting systems like ethereum. How can a program (or a system) set up a transaction with another machine or human, on behalf of its creator through a contract?

The best use of programmable contracts is when systems can charge for services they provide on the fly, based on the complexity of the problem they solve. For example, consider a scientist working in a biotechnology lab who needs to identify a particular type of organism ( a fungi, a virus , or a bacteria). in today’s world the process of isolation, DNA sequencing, PCR and other such processes such as thermocycling need prior knowledge or experience. A very small fraction of professionals will be able to know the entire set of processes needed to actually accomplish this task. More so considering the number of combinations of tasks such as usage of media, temperatures of media to be set in order to enable growth of these organisms, etc.

Search engines such as Google or even scientific search engines like “wolfram search” provide some hope – but the search space is large, and data dependent. The process of converting the large volumes of data (aka. in the previous examples) scientific papers in a particular domain, to information can sometimes be laborious and inaccurate. For example, the scientist who might have identified the microorganism during her research may not entirely state the full process. The search costs are large for the professional trying to increase his/her productivity. This is where expert systems will play a large role , in assisting knowledge workers with the right skills, based on the problem at hand.

If someone were to create such an expert system that is super generic, it would be very difficult to earn rents (or monetize) such systems, because both the complexity and the time needed to arrive at the right solution would be unknown. With “smart contracts” or programmable contracts such complexities can be handled on the fly and on a case to case basis. This is where we’ll see , in my opinion the largest growth for a protocol like Ethereum. We’re already seeing some of this work in online Prediction Markets, specifically the ethereum based prediction markets. Right now, the events and participation are small for these prediction markets since the events pertain to a small problem space.

When expert systems start participating in these markets, we’ll see a lot more accurate predictions. This is where we will start seeing massive adoption of such forms of contracting and payments.