Until one understands the basics of this tech, they won’t be able to grasp or appreciate the impact it has on our digital bank, Genesis Block.submitted by mickhagen to genesisblockhq [link] [comments]
This is the second post of Crypto-Powered — a new series that examines what it means for Genesis Block to be a digital bank that’s powered by crypto, blockchain, and decentralized protocols.
Our previous post set the stage for this series. We discussed the state of consumer finance and how the success of today’s high-flying fintech unicorns will be short-lived as long as they’re building on legacy finance — a weak foundation that is ripe for massive disruption.
Instead, the future of consumer finance belongs to those who are deeply familiar with blockchain tech & decentralized protocols, build on it as the foundation, and know how to take it to the world. Like Genesis Block.
Today we begin our journey down the crypto rabbit hole. This post will be an important introduction for those still learning about Bitcoin, Ethereum, or DeFi (Decentralized Finance). This post (and the next few) will go into greater detail about how this technology gives Genesis Block an edge, a superpower, and an unfair advantage. Let’s dive in…
Bitcoin: The First CryptocurrencyThere are plenty of online resources to learn about Bitcoin (Coinbase, Binance, Gemini, Naval, Alex Gladstein, Marc Andreessen, Chris Dixon). I don’t wanna spend a lot of time on that here, but let’s do a quick overview for those still getting ramped up.
Cryptocurrency is the most popular use-case of blockchain technology today. And Bitcoin was the first cryptocurrency to be invented.
Bitcoin is the most decentralized of all crypto assets today — no government, company, or third party can control or censor it.Bitcoin has two primary features (as do most other cryptocurrencies):
The fact that there are so few things one can do with Bitcoin is one of its greatest strengths.Its design is simple, elegant, and focused. It has been 10+ years since Satoshi’s white paper and no one has been able to crack or hack the Bitcoin network. With a market cap of $170B, there is plenty of incentive to try.
Public AwarenessA few negative moments in Bitcoin’s history include the collapse of Mt. Gox — which resulted in hundreds of millions of customer funds being stolen — as well as Bitcoin’s role in dark markets like Silk Road — where Bitcoin arguably found its initial userbase.
However, like most breakthrough technology, Bitcoin is neither good nor bad. It’s neutral. People can use it for good or they can use it for evil. Thankfully, it’s being used less and less for illicit activity. Criminals are starting to understand that transactions on a blockchain are public and traceable — it’s exactly the type of system they usually try to avoid. And it’s true, at this point “a lot more” crimes are actually committed with fiat than crypto.
As a result, the perception of bitcoin and cryptocurrency has been changing over the years to a more positive light.
Bitcoin has even started to enter the world of media & entertainment. It’s been mentioned in Hollywood films like Spiderman: Into the Spider-Verse and in songs from major artists like Eminem. It’s been mentioned in countless TV shows like Billions, The Simpsons, Big Bang Theory, Gray’s Anatomy, Family Guy, and more.
As covid19 has ravaged economies and central banks have been printing money, Bitcoin has caught the attention of many legendary Wall Street investors like Paul Tudor Jones, saying that Bitcoin is a great bet against inflation (reminding him of Gold in the 1970s).
Cash App already lets their 25M users buy Bitcoin. It’s rumored that PayPal and Venmo will soon let their 325M users start buying Bitcoin. Bitcoin is by far the most dominant cryptocurrency and is showing no signs of slowing down. For more than a decade it has delivered on its core use-cases — being able to send or store value.
At this point, Bitcoin has very much entered the zeitgeist of modern pop culture — at least in the West.https://preview.redd.it/dnuwbw8mfu951.png?width=800&format=png&auto=webp&s=6f1f135e3effee4574b5167901b80ced2c972bda
Ethereum: Programmable MoneyWhen Ethereum launched in 2015, it opened up a world of new possibilities and use-cases for crypto. With Ethereum Smart Contracts (i.e. applications), this exciting new digital money (cryptocurrency) became a lot less dumb. Developers could now build applications that go beyond the simple use-cases of “send value” & “store value.” They could program cryptocurrency to have rules, behavior, and logic to respond to different inputs. And always enforced by code. Additional reading on Ethereum from Linda Xie or Vitalik Buterin.
Because these applications are built on blockchain technology (Ethereum), they preserve many of the same characteristics as Bitcoin: no one can stop, censor or shut down these apps because they are decentralized.One of the first major use-cases on Ethereum was the ability to mint and create your own token, your own cryptocurrency. Many companies used this as a way to fundraise from the public. This led to the 2017 ICO bubble (Initial Coin Offerings). Some tokens — and the apps/networks they powered — were fascinating and innovative. Most tokens were pointless. And many tokens were outright scams. Additional token reading from Fred Ehrsam, Balaji, and Naval.
Digital Gold RushJust as tokens grew in popularity in 2017–2018, so did online marketplaces where these tokens could be bought, sold, and traded. This was a fledgling asset class — the merchants selling picks, axes, and shovels were finally starting to emerge.
I had a front-row seat — both as an investor and token creator. This was the Wild West with all the frontier drama & scandal that you’d expect.Binance — now the world’s largest crypto exchange —was launched during this time. They along with many others (especially from Asia) made it really easy for speculators, traders, and degenerate gamblers to participate in these markets. Similar to other financial markets, the goal was straightforward: buy low and sell high.
That period left an embarrassing stain on our industry that we’ve still been trying to recover from. It was a period rampant with market manipulation, pump-and-dumps, and scams. To some extent, the crypto industry still suffers from that today, but it’s nothing compared to what it was then.
While the potential of getting filthy rich brought a lot of fly-by-nighters and charlatans into the industry, it also brought a lot of innovators, entrepreneurs, and builders.The launch and growth of Ethereum has been an incredible technological breakthrough. As with past tech breakthroughs, it has led to a wave of innovation, experimentation, and development. The creativity around tokens, smart contracts, and decentralized applications has been fascinating to witness. Now a few years later, the fruits of those labors are starting to be realized.
DeFi: Decentralized FinanceSo as a reminder, tokens are cryptocurrencies. Cryptocurrencies can carry value. And value is a lot like money. Because tokens are natively integrated with Ethereum, it’s been natural for developers to build applications related to financial services — things like lending, borrowing, saving, investing, payments, and insurance. In the last few years, there has been a groundswell of developer momentum building in this area of financial protocols. This segment of the industry is known as DeFi (Decentralized Finance).
In Q2 of 2020, 97% of all Ethereum activity was DeFi-related. Total DeFi transaction volume has reached $11.5B. The current value locked inside DeFi protocols is approaching $2 Billion (double from a month ago). DeFi’s meteoric growth cannot be ignored.
Most of that growth can be attributed to exciting protocols like Compound, Maker, Synthetix, Balancer, Aave, dYdX, and Uniswap. These DeFi protocols and the financial services they offer are quickly becoming some of the most popular use-cases for blockchain technology today.
This impressive growth in DeFi certainly hasn’t come without growing pains. Unlike with Bitcoin, there are near-infinite applications one can develop on Ethereum. Sometimes bugs (or typos) can slip through code reviews, testing, and audits — resulting in loss of funds.
Our next post will go much deeper on DeFi.
Wrap UpI know that for the hardcore crypto people, what we covered today is nothing new. But for those who are still getting up to speed, welcome! I hope this was helpful and that it fuels your interest to learn more.
Until you understand the basics of this technology, you won’t be able to fully appreciate the impact that it has on our new digital bank, Genesis Block. You won’t be able to understand the implications, how it relates, or how it helps.
After today’s post, some of you probably have a lot more questions. What are specific examples or use-cases of DeFi? Why does it need to be on a blockchain? What benefits does it bring to Genesis Block and our users?
In upcoming posts, we answer these questions. Today’s post was just Level 1. It set the foundation for where we’re headed next: even deeper down the crypto rabbit hole.
Other Ways to Consume Today's Episode:
Have you already downloaded the app? We're Genesis Block, a new digital bank that's powered by crypto & decentralized protocols. The app is live in the App Store (iOS & Android). Get the link to download at https://genesisblock.com/download
https://preview.redd.it/5mmdhj1cuih31.png?width=700&format=png&auto=webp&s=a1183e07a7e2489d4feb0eef739269ee14ddd363submitted by GTE_IO to u/GTE_IO [link] [comments]
Article by Coindesk: Roham Gharegozlou , Brian Flynn
Introducing as many people as possible to the benefits of decentralization is a cause almost everyone in this industry shares. The issue is that, in making the technology more accessible, many developers are sacrificing the benefits of decentralization for the sake of convenience.
A decentralized product should keep three key promises to its customers:
The value of censorship resistance and customers owning their own data is relatively well understood. Less attention is being paid to the other big benefit of crypto that centralized approaches compromise: open ecosystems.
Open ecosystems are the cornerstoneOpen ecosystems enable anyone to contribute to a platform or someone else’s work on the platform and receive rewards for their work. On ethereum, we’re seeing open ecosystems appear in the realm of decentralized finance (DeFi).
MakerDAO’s DAI, an algorithmic stablecoin, is used by dapps like Dharma, Compound Finance, and many others. These decentralized lending applications provide competitive rates using Dai to attract borrowers while enabling lenders to earn from assets they already own.
Compound Finance and Uniswap make MakerDAO stronger when combined together as opposed to existing individually. These open ecosystems are even multi-layered, using smart contracts from multiple primitives to create infinite possibilities. For example, Opyn is a non-custodial trading platform built on top of Ethereum, Compound, Uniswap, and MakerDAO’s DAI.
Without Compound or Uniswap, Opyn wouldn’t be able to exist.
“The combination of Primitives will enable the creation of protocols and systems that weren’t possible prior to their existence. These emergent systems will be greater than any of the individual primitives on their own.” — The Emergence of Cryptoeconomic Primitives by Jacob Horne
Turning creators, users and developers into stakeholdersIn an open ecosystem, users, developers, and the original creators can all capture value.
Users get more choice (because anyone can add features on anything), and users ultimately decide what’s important. The speed of software innovation increases because developers can use each others code like lego blocks.
Developers who build on existing code are, in many ways, marketing the original creator’s product for them, further increasing the reach of the brand. In return, developers tap into an existing and qualified user base.
As a result, trust is built through a cyclical relationship between all participating parties.
“I feel like we’re in a unique position where the users of the platform have an incentive to work hard to see the platform succeed, and if given the opportunity, we would move mountains.” – kabciane, a KittyVerse developer creating numerous utility contractsIn the context of MakerDAO’s DAI, every developer using DAI in their dapp is preaching what MakerDAO has done for the decentralized finance ecosystem.
Why aren’t there more blockchain games?Open ecosystems have significant long-term benefits, but as CoinDesk’s Brady Dale recently pointed out, they’re difficult to create in games. By using sidechains or centralizing the data that matters most to third-party creators, dapp developers are inhibiting potential open ecosystems tied to their experiences.
Developers are building full-stack games, with most of the data existing off-chain, resulting in less composability, less shared data, and effectively closed ecosystems.
One of the major design decisions for CryptoKitties was to compute and store the genes on the ethereum blockchain. It would have been far easier not to do so, and the resulting experience would have been more accessible — but many of the things that make CryptoKitties interesting or valuable to this day would have been possible.
Developers need access to these genes to make third-party games like KotoWars and Mythereum, both of which create more utility and value for specific genes (i.e. certain cats are more valuable because these experiences exist).
If CryptoKitties had decided to reduce the decentralized value of the game for the sake of accessibility, The KittyVerse wouldn’t exist, the game wouldn’t be as trustworthy, and the tokens wouldn’t have nearly as much value or utility to players as a result.
Open ecosystems are important outside of DeFiCheeze Wizards, Dapper Labs’ newest game, attempts to leverage as many lessons as possible from CryptoKitties.
It’s specifically designed as an open ecosystem: third-party developers can utilize the Cheeze Wizards API and art assets before the game launches its first official tournament later this summer. Cheeze Wizards is further encouraging developers to play in the open ecosystem via a month-long hackathon, with $15,000 in cash prizes and a whole host of other rewards as incentives.
Cheeze Wizards itself is composed of “tournaments” hosted by either Dapper Labs or third-party developers. The contract and logic for these tournaments are entirely on-chain, which means any developer can create their own tournament and take a percentage from the amount raised.
The tournament contract is a built-in business model for developers to build on top of existing IP, something that has never been possible before with second-layer experiences.
Acknowledging the reality that ethereum doesn’t scale today, CheezeWizards is really by and for the crypto community.
Blockchains and dapps can be designed so developers can earn their fair share in contributing to an ecosystem. Rewarding developers for maintaining or improving a network is the hidden treasure that’s yearning to be discovered by open ecosystems.
“In the same way that the vibrant ecosystem of exchanges and consumer experiences around bitcoin, ether, and ERC20 drove liquidity for the assets, the ecosystem created by [third party] experiences will be what drives consumer excitement and confidence in digitally scarce assets.” – Blockchain Gaming, Separating the signal from the noise by Devin Finzer
Choices we make now will shape the futureMany developers are turning to so-called “Layer 2” scaling solutions (e.g. sidechains, Lightning network) to reduce the load on the base blockchain and provide a better user experience. Major corporations are also beginning to build on blockchain technology, compromising decentralization in favor of performance.
The pendulum for blockchain games in particular seems to be swinging towards more centralized solutions in a bid to attract mainstream users.
Unfortunately, while this means that while developers will have users interact cheaply and easily with their application, the major benefit of building software in an open ecosystem — like the network effects of other developers — will be impossible to realize.
Apps on sidechains and sharded blockchains will have a difficult time communicating with each other because of the friction and lack of standards to transport digital assets across networks.
On the other hand, applications on networks that support open ecosystems can build on each other freely and transparently, creating more choice for consumers and compounding network effects for the system as a whole.
“Decentralized systems start out half-baked but, under the right conditions, grow exponentially as they attract new contributors.” – “Why Decentralization Matters” by Chris DixonWe want to push the pendulum back in the other direction, toward open ecosystems and permissionless composability. Open ecosystems empower customers as well as developers, ultimately creating more value for everyone involved.
Swings image via Shutterstock
Chris Dixon, a general partner at venture firm Andreessen Horowitz, shared in an interview with Medium his position on blockchain technology and its impact upon companies such as Facebook, Google, and Apple. To Dixon, the internet, “is much more like Disneyland. . . . After raising $8 million in a funding round in January, the company attracted new investments from Marc Andreessen and Chris Dixon. The new investments bring Scalar’s total assets to more than $20 million. Andreessen and Dixon are just two of the high-profile names attached to the company. Bitcoin investors yesterday cheered the bitcoin price soaring over $10,000 per bitcoin (again)—though their celebrations were short lived. The bitcoin price, after a number of recent runs at the psychological $10,000 level, surged to highs of $10,430 on the Luxembourg-based Bitstamp exchange on Monday evening only to crash back less than 24 hours later. However,... Tech Entrepreneur & Investor Chris Dixon Explains Why You Should Give a Damn About Bitcoin. Chris Dixon, general partner at venture capital firm Andreessen Horowitz, thinks you should reconsider Bitcoin has been struggling to break over the $10,000 per bitcoin level since its highly-anticipated supply squeeze—but that could be about to change.. The bitcoin price, up around 30% since the
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