The Blockchain – Part 1 | blockchain



The topic of blockchain has been covered many times in details. There are pros an cons to all technology. Covering another blog of what it is just doesnt make sense. What I would like to write about is why blockchain use case have not been implemented if it is indeed such a disruptive technology. Before I dive deeper into the topic I would just like to say what many others already believe “bitcoin is THE killer app for blockchain” there might be many others but currently it is the only successful implementation.

Trusting the trust-less network:

Before we get into details of how powerful a distributed, decentralised network aka blockchain is, we must understand and start trusting a network that runs without trust. This is easier set than done. Pitching the concept is not very easy to an institution. Blockchain is not really a trust-less network per say as you must trust miners (however these miners really cant overwrite or edit your transactions), the origins of who these miners doesnt really matter, in addition to this we must also trust the blockchain node operators which can be thought of as record keepers. Then there are concepts of a private blockchains which I wont touch here as I think its pretty much useless. However we must also talk about private, and permission-ed blockchains over public chains. This is a concept which is a bit harder to understand, and most likely the one that institutions want to implement. And for this we must understand how coins such as ethereum, omni, waves, nem and hyper-ledgers (supported by IBM and Linux One Foundation) really work. In essence we must understand the true power of blockchain lies in the number of nodes if we are talking hyper ledger, nem(Proof of Importance or POI) or POS (Proof of Stake), or miners in Proof of Work (POW). I think we should understand these concepts in details as most of the problem arises when we dont see how a distributed network truly operates. The problem here is that institutions agree that its a great technology but they still dont truly trust it. At the same time they want to centrally control it to make a profit off it.

Blockchain is designed to change the backend design/structure of current systems, and enable them for future AI controlled setups. In an environment where there maybe no need for such a setup. But when you need trusted machine readable contracts and transactions there is no other way other then blockchain.

…. To Be Continued



The Surge | bitcoin

Recent events have caused me to remain inactive and unable to keep my blog posts coming. Pakistan has recently seen good interest in bitcoin and blockchain. So much so that urdubit Pakistans First and only bitcoin trading platform was awarded UBL Innovation Award in Fintech Category at P@sha Annual 2016 awards. Followed by this announcement the company Blockchain Tech(parent company of urdubit) sold 40% of shares to Planet N who plan to collaboratively lead the blockchain development in Pakistan.

As recently as 2 months ago. Blockchain Tech (pvt) Ltd signed a MOU with IBM to collaborate on POC over blockchain based products. The idea is to bring use cases to Pakistan which will improve security in current setups and at the same time bring transparency to the systems.

With people now realizing the potential that bitcoin brings, the demand has grown tremendously. This can be seen by the growing trading volumes of bitcoin in Pakistan on localbitcoins and urdubit . We seen the avg increase to about 60% over a period of just 2 months. This has also increased as new investors now want to take part in trading bitcoin as a commodity. The price increase of btc over recent months from $900 to $1136 (as of this writing), while touching $1295 has also sparked interest in the general populations.

At this stage I would like to re emphasize the fact that bitcoin is still a high volatile market, while the potential as a technology remains limitless it is still a risky investment with a high rate of return. We have recently seen forbes, Washington post, bbc all cover bitcoin as it had reached price parity with gold where 1 oz of gold was equal to 1 bitcoin. The upcoming Winklewoss twins ETF fund is also playing an important factor in price increase. This fund named COIN will be regulated under SEC. If the offering is accepted we should see a heavy injection from new users into crypto currency. The expected date is March 13th, if the fund is not rejected by then then it will most likely go through.


Bitcoin Mining – Centralization | mining

So often we are contacted regarding mining. The concept of mining is something that interests many. Bitcoin was envisioned as a decentralised peer to peer protocol that would allow transfer of value over the internet. A fair way to pay people was to devise a method to reward those that helped support and secure the network. The idea was to allow anyone with a pc to mine btc by simply providing hashing power to the bitcoin network.

Over time we have seen the race to mine the bitcoins get harder and harder. While the network continues to become strong, the idea of mining for a common man is long gone. The current pools and centralized mining centers have drifted the power of mining in favor of countries with cheap power. The fact that even the bitcoin blockchain now sits at 74GB with roughly 15gb of data transferred within 24 hour has made it very difficult for your everyday Joe to run a bitcoin node.

I would like to suggest people who do often call inquiring about mining to understand the concept first. Mining is not free money. You are basically securing the network mining. Hence it requires enormousness amount of electricity. The AISC miners specifically designed to mine bitcoin are now running at speeds of 14ths with 1.3 kwh electricity consumption and yet you will hardly make 0.5 btc at the time of this writing and it will decrease over time. Remember there are only 21 million bitcoins out of which about 12 million have already been mined. So basically you are entering into a race to mine the balance bitcoins while the blocks become harder to mine. The rewards on AISC’s have also decreased over time due this same reason. I would strongly suggest everyone who is still interested in this to first google bitcoin calculator and see if it will even be feasible for him over a period of 1 year before trying to get into mining.

Alternately people are now looking into GPU mining and mining altcoins such as ethereum and etherum classic. In either case the problem still persists of having cheaper power to run GPU’s. If you look back through this blog I have written a tutorial on how to mine with cpu, the same concept can be used to mine with GPU, however instead of using the cpu miner software you have to look for gpu miners such as cgminer etc.

The DAO Hack — The Fall In Ethereum | DAO Hacked

The recent hack, which I wouldnt even call a hack in DAO has led to draining of users ether into a child DAO. Yea its quite weird when you hear it. The idea that this is a hack is quite weird as the user didnt really hack but used a recursive function in which the programmer split the DAO into the child DAO which in turn will be converted to ethereum to cash out after 27 days. I think Vatalik has explained this a bit better.

This has seen the price of Ethereum to drop from $20 to $10 almost half its value. The DAO since seeing record funding has dropped value dramatically.  This is not the end of ethereum or dao in my opinion but its a definite blow never the less.

The purpose of this post is to discuses what I realised with the aftermath of all this chaos. Smart contracts were presented as decentralised way of doing things on the blockchain. I had argued before that by design DAO was not that decentralised as it rested power in its developer or creator to change lots of aspects of the token itself. Hence putting power of centralisation in a decentralised blockchain. What shocked me even more was that we supporters of a uncontrolled and decentralized economy dont realize how centrailized ethereum has become. On request of Vatalik all exchanges stopped eth trading, deposits and withdrawals. If you can rest that kind of control under one person and we still call it decentralised then we have to go back and really understand the definition of that word. I dont know what is right and what is wrong. I guess this is why Satoshi Nakamoto remains anonymous, as he wants the community to decide. Same may argue that ethereums faith will be decided by the community, yes agreed but who has control over it was shown by 1 person or entity.

A Reply — Bitcoin For The Common Man | bitcoin

With the rise of popularity of bitcoin, new questions new debates and some of the old debates come to forth light. While those who follow me and read my blog, I am sure you already understand the aspects of bitcoin in the current economy. The purpose of this blog post is targeted to those that question bitcoin and how it can benefit them. There is no one way to answer this question. Bitcoin is a software with so many different aspects that covering what it stands for is hard in one blog.  The one thing I however urge everyone to do is watch the Documentary Bitcoin: End of money as we know it. I know many will think that well the title starts with bitcoin so it will be from bitcoins prospective. However what it covers mostly is how money was created what was the vision of money and promissory notes before the rise of what we today know as currency. In addition to this there is tons of information available on creation of paper money, fiat or money if you just google the history of money.

The problem is that most people when they first hear about bitcoin start to question it naturally as I did. The reason for this is very simple we have been bought up in an ecosystem where this is the current norm and we take alot for granted. We dont really understand how things work but put trust in the “system” and just agree that it works.

The history of bitcoin is very close to the history of money. I recently had an interesting session at a company, later he wrote a very informative blog with questions that I believe are necessary to answer, as I believe they dont just belong to him but will be on the mind of everyone in the world. The reason I had to blog about this is because it was just not possible to answer to his queries just in his comments. The original questions will be taken from Mr. Muhammad Faizan blog.

The questions raised:

These are very interesting points and I answered the quite best possible short manner as I could in the comment on his blog. But will post the same answers here:

1. Bitcoin is not anonymous, its decentralized and peer to peer. You can easily trace it with IP and block explorers. How can something be anonymous be tracked on a public ledger?
2. For your particular case and why you would prefer to be paid in bitcoin. You and all the people who currently believe in the current interest based economy is advised to look at this link and for Pakistan so by this standard even your unborn child owes roughly Rs30000 if you consider just the money you owe to international lenders, not to mention you owe roughly 3 times more if you just add the money you owe the local bank.
3. Concept of money which was based on promissory note is no more hence your money does not have value.
4. For a tax abiding law citizen such as yourself and such as myself I am not allowed to spend my money internationally unless its done through expensive means such as credit cards that too at limits placed your current system.
5. Who uses them. I would like to invite you to a freelancer session we plan to do at The Nest I/O which will discus case scenarios where people of Pakistan have had to suffer not having access to international access at the same pay scale as the world. Another case is remittance cheap ones also. Currently banks charge hefty amount for micro transactions, which brings out the beauty of bitcoin. Even eCommerce sites can greatly benefit form this as currently the other options are slow expensive to use in Pakistan and worldwide.
6. Why would you want to get a wallet and why would you need to protect your bitcoins? Well why do you need to protect your cash by depositing in the bank? That is the same reason you would want to protect your bitcoins.

These were later again questioned which I was sure they would be as the common person just dosent understand why bitcoin was created.  I will answer them to the best of my knowledge under each question. But first a bit of history:

Cyprus: Timeline:
The crash of an economy presented by the system we trust as honest tax payers. Causing banks to close for months.

Pakistan: Timeline:
Sanctions causing hardships to Pakistanis after nuclear tests. I think we all remember this when dollar accounts were freezed and trade was made impossible.

Greece: Timeline:
This is the most recent one where banks closed down because the debit repayment wasent available and people had to lineup everyday to just withdraw 50 euro a day from atm. This was all presented to people who worked an honest living.

#1. I agree that Bitcoin or Bitcoin transaction is certainly not anonymous in its entirety but the owner is! The transaction is only traceable to a private address that the owners can change for every transaction to maintain their privacy. What good it is? No one can tell how much Mr. Satoshi owns but can only guess.
That is exactly the point. If I use my credit card and the servers of the company are hacked (Ashley Madison comes to my mind because it made media headlines ;)) Then everyone can use my credit card and commit frauds putting me under great risk. The transactions are traceable by IP. Infact as I mentioned there are block explorers that let you trace them to the exchange or address they originate from. But it still hides customer data where the anonymity comes in. Each exchange including urdubit does standard KYC so all transactions can be traced. If I ask someone to tell me how much you have in your bank would you want your bank telling me? Satoshi created a peer to peer system he should be rewarded more then he owns. FED created money no one is allowed to even ask how they back it. VISA created virtual money have you ever questioned them how much money they actually own?

To add to that bitcoin network is bigger then Worlds top 500 super computers combined +20% so who would you trust more a company server which has been know to be compromised time and again? or the unbreakable network?

#3. Regarding value, Bitcoin is highly fluctuating currency itself. What value it will have tomorrow? No one can be sure.

Yes you are right. That is why bitcoin is put in line with digital asset and with gold itself and not considered as much as a currency. The price is tied to supply and demand. A current example bitcoin out preformed all assets classes(fiat, physical commodities in 2015). The idea that bitcoin will be worth 0 or alot of money is always there. But it will always be yours no matter what value it has. In case of current financial system you are in debit no matter how much you save up(See above Cyprus, Pakistan and Greece).

#4. The benefits of no-fee or that the payments are cheap right now, I think, is temporary. As per law of diminishing returns, the miners will continue to lose economies of scale and would need to apply fee to offset the cost of verification of the transaction blocks. Who will eventually bear that cost?
Further, the limits currently applied on cards are there to protect interests of all parties. We should not ignore the good side of an established system.

Again right on the money. I love how you answer your points yourself. Bitcoin as we know it is based on supply and demand. If the demand remains and supply diminishes what will happen? If the demand increases and supply still decreases what will happen? Bitcoin is a global phenomenon so its not a company or government supporting it. Its the millions of bitcoinsers no matter if they are enthusiasts or  not, If they use it they become custodians of it and hence saying saying that these millions will one day wakeup and say we dont care about bitcoin and its useless is less likely then a bank or a company or government to go bankrupt. Again see trust in exisiting systems brought to life by the above mentioned crises (Crypus, Pakistan, Greece). Eventually if there are less bitcoins to be mined the cost of bitcoin will go up high causing better returns to miners on lesser network fee. Also bitcoin goes upto 8 decimal places for this very reason to allow micro transaction with near free transfers.

#6. There are serious risks with Bitcoins like there are for paper currencies – even some risks are still unknown and will be visible when there will be wider acceptance of the Bitcoins. We should not consider Bitcoins entirely safe and secure alternative. For a common person Bitcoins is relatively difficult to manage as compared to a bank account or a debit card.

Yes there are risks. But the risks as you can check above where I pointed to the crisis in Cyprus, Pakistan, Greece, also Venenzula and Vietnam (The list it quite long but even USA is in a trillion+dollars in debt.) Whereas you dont even own paper money again see debit cloaks. So having negative balance as opposed to some balance? I think the argument answers for itself.

Now talking about the ease of use. First of all credit cards are the worst way you can buy bitcoins. And the common question for a guy is why should I even buy bitcoin to begin with. Well they are cheaper to transact with when doing cross boarder payments(credit cards charge market USD rates plus 3% in Pakistan as we are talking with Pakistans prospective). You dont always have to buy bitcoins. You can render your services and ask for bitcoin payments or a salary based in bitcoin. You can hold it instead of gold, remember its a commodity also. Imagine what you could buy with Rs20000 in 2014 and what you could buy today with bitcoin if you had 1 btc instead of Rs20000 (which was roughly $200 and today is valued over $400). Freelancers and White hat security experts can get paid internationally. The local eCommerce websites can tap international markets by accepting bitcoin as its not prone to charge backs and fraudulent use of credit cards etc. Right now remittance is costing Pakistan around 3% to 5%(if you didnt use bitcoin) extra and the lower the amount sent the more in fees incurred to senders in international banking fees.

As for talking about managing bitcoins as compared to banks or debit cards makes me think you have never actually used bitcoin. A simple app is all thats required to use bitcoin.

A case for micro donations. Imagine anyone sending donation to anyone. This of the current corrupt NGOs(not of all of them are bad) but think of the donor money that is spent in maintaining an NGO to help the poor as opposed to getting the funds directly to poor at ground level.

Lastly I would like to close out this by saying, “Yes” bitcoin is still difficult to use and secure if you are looking to run it as a decentralized setup but isn’t that where yours and our services should make it easier for the user to use? Isn’t that what banking did with fiat system? If there was no Commercial banking and only central banking then you would have to take your funds directly abroad and pay someone right? Fiat has been around for ages and bitcoin is only as old as 2009 and already challenging the age old system currently in place.

Lastly I would just like to add 2 points that I think everyone should understand and question himself.

  1. If its your money shouldnt you be able to use it like you want? boarderless instant and without barriers?
  2. Panama papers is a prime example which proves that it wasent bitcoin that was used but our current trusted systems.

The Success Of Bitcoin Is You | bitcoin success

Bitcoin has been rising from USA to China to Pakistan. People are now beginning to realize its potential. Bitcoin is predicted to become a reserve currency(7th) by 2030 if the current trends continue. However I view bitcoin as the one and only true reserve currency. We have to understand that bitcoin is the only one of its kind from the other list of fiat dominated currencies that can truly be accepted anywhere and by anyone for anything. These options are further developed with the advent of OpenBaazar type services also.

Realization of the potential of a free economy has seen price of bitcoin rise steadily. in addition to this we now see the companies like steam even starting to accept bitcoin. For 3rd world countries its an even better opportunity as capital controls and strict banking requirements make it difficult to have access to proper credit card or debit card services. It makes it easier for people to use bitcoin as a sort of a prepaid system of making payments.

Today Japan is debating on accepting bitcoin as a proper currency which can be a huge step and a leg up on the competition. Bitcoin has caused a rise in the fintech revolution and no country wants to really ban it. They realize that the potential is there and they see that is bound to happen. How long will it take for true realizing is only a matter of time.

Bitcoin Gone Wrong | Bitcoin Bank

Enthusiasts in the field of bitcoin and blockchain technology often site the reason that current fiat system is on the path of self destruction because its based on virtual reality rather then actuality. The sudden rise of bitcoin and the gain of mass acceptance has not been because its able to move with relative ease in the virtual world. But also because it brings accountability, banking, decentralization and peer to peer model packaged in an opensource software.

It is often sited that banks work on creating money out of thin air. Where central banks control total money supply, the banks are able to receive deposits then give them out for loan to 3rd party to profit. This problem was highlighted in a recent crash of markets when liquidity was shorted and had to be filled with extra printing of fiat money, as early as 2008. This also resulted in a crash of many banks as they were unable to sustain the withdrawal pressures.

Bitcoin Follows:
This creation of virtual money is not happening in bitcoin. While bitcoin cannot be forged services ontop of bitcoin are now filling what banks did wrong even without realizing what they are doing wrong. Exchanges are now giving leverage plus margin trading which essentially what banks did with loans. This is building an artificial economy. Looking into this further, most exchanges (top in trading) dont even have liquidity for 2000btc(these are not combined numbers). A simple look through the tool on bitcoinwisdom. Its important to realize that bitcoin was meant to replace all this and replace the artificial currency created by banks.

The Rise of Ethereum

Since the unleashing of the bitcoin code onto the world as an open source digital asset, many have tried to fork the code and do much more with the with the underlining technology known as blockchain. While many have simply forked and the SHA256 algorithm with competing products based on other algorithms such as scrypt nscrypt and now dagger.

Ethereum creator Vitalik Buterin envisioned a sort of a programmable blockchain. Based on smart contracts its a very powerful tool. In this Article I will try to cover the basics of ethereum so that you get clear picture of what it is and why its important. I think the best words of what ethereum is are on its website “Ethereum is a decentralized platform that runs smart contracts: applications that run exactly as programmed without any possibility of downtime, censorship, fraud or third party interference.” Similar to bitcoin blockchain the ethereum blockchain requires ether to make or setup contracts and build decentralized apps based on those contracts. It is important to note that ether or ehterium being used directly will be very costly, but using it as contract based setup makes it cheap, fast, secure and unstoppable.

Mining ether is one topic being googled alot recently since it has risen in price while bitcoin price has fallen of a bit. This is even more visible when the rates of bitcoins start to rise we see the fall of price in eth or ether the fuel of ethereum blockchain. Mining is done through a program called geth which is a communicator between ether network and your system. Block generation time is very small so mining is not that difficult since there are no ASICs available for this algorithm you can look into mining it with cpu or gpu. A full tutorial on how to mine eth the fuel of ethereum can be found here.

Is ethereum the new bitcoin, most certainly not. Its a reprogrammable blockchain which can be used with contracts based programming to improve and build decentralized apps with incentives.

The Ripple Effect – XRP | Ripple, XRP

When I got into bitcoin and started getting deeper into why its so important. I met by Partner and we would and still do have heated discussions on the importance of crypto currencies or altcoins as we would like to call them. I am more of a one currency for the world type of fan, where as my partner is more into blockchain its developments and derivatives. It brings into aspect how much we love what we do and it keeps us both on our toes to understand the eco system that is building around us. Its fun to be able to just sit daily and talk about the possibilities that come forth because we both are crypto enthusiasts in general.

We often discuses how one coin maybe better then the other or not. The pros and cons while I am looking to it from general business stand point, he looks at it more towards possible potential of the design that the coin follows. We both might be wrong but it does bring out interesting arguments. One such argument when we met early was on altcoins such as dashcoin, doge and litecoin where I pointed out (this was back in 2014) that xrp or ripple will eventually become the second largest currency and give bitcoin a run for its money. While I still believe that btc is here to stay as xrp is now becoming the poster child for closed source coins with stellar also created by the co-founder of ripple is in close for second. From finance stand point of view it was obvious back then that when the banks start realizing bitcoin and its truly remarkable concept they will opt to fight it and at the heart of that xrp or ripple will emerge, as not only will it the closed source the banks will be able to control the infrastructure while still keeping tap on whats happening.

Today we see 10 of the largest 50 banks of the world in support of xrp and recently published news that Standard Chartered is testing it, right after western union news that they were also testing ripple to bring credibility to it.

I am still of the view that bitcoin will lead the way since it was presented as a decentralized distributed ledger to the world which could only be controlled on consensus rather then an entity, xrp will be used more as a poster child to replace the old technology that is running at the hearts of the banks called “swift” and outdated systems.

How to use | urdubit

I will be covering details on how to use urdubit in video tutorials here in this blog post. Hopefully all your questions will be answered here. If you do however have any questions please register and ask in the comments section. Also share this article so that people can learn about bitcoin in Pakistan.
User Created Video (Updated)

My Video 1

Verification on urdubit is an important setup and we wont allow you to deposit or withdraw pkr unless you are verified. Like all international trading platforms we want our countrymen to be safe and secure hence we follow standard KYC/AML procedures to ensure that you are really you. So lets get this part out of the way so you can start buying or selling bitcoins.

Video Part 2

Video Part 3:
This is a detailed video of how to buy and sell bitcoin bitcoin in Pakistan. Most people have this problem as there was no trading platform before this. Rest assure this was very secure and you will have fun if you use it once or twice.

Video By User: