T-Minus 1,000 Blocks Until Ethereum’s Istanbul Hard Fork

T-Minus 1,000 Blocks Until Ethereum’s Istanbul Hard Fork

Countdown to Ethereum’s Istanbul Hard Fork continues, with only 1,000 blocks remaining before the network overhaul.

As of press time, Ethereum has passed block #9068000, putting it within 1000 blocks of the scheduled Istanbul hard fork, which should take place at around 23:30 UTC.

The much-anticipated shift to Istanbul will be the Ethereum network’s first hard fork since February’s Constantinople. Both are stages of a broader phase of ongoing development that began in 2017 called Metropolis

What is changing?

Cointelegraph has covered Ethereum’s ongoing developments extensively, as have the developers. Broadly speaking, Istanbul should be streamlining the network in accordance with Metropolis’s overall goals of scaling the network.

Specifically, Istanbul will expand interoperability with privacy token Zcash. The upgrade will also make zk-SNARKs (Zero-Knowledge Succinct Non-Interactive Arguments of Knowledge) cheaper. zk-SNARKs allow users to demonstrate knowledge without exposing that knowledge — a technology critical to Ethereum’s recent privacy enhancements.

How to prepare?

Per a Nov. 20 blog post from the Ethereum Foundation, if you hold Ether (ETH) or use the network, you probably don’t need to do anything unless you receive instructions otherwise from your exchange or wallet service.

If you are a miner or node operator, however, you will need to update your client to ensure that you are not suddenly stuck running obsolete once the hard fork takes effect.

Future forks?

Ethereum’s future beyond Istanbul remains unsettled. Fears of an impending Ice Age in which block hashing slows down as the network shifts from proof-of-work (PoW) to proof-of-stake (PoS) verification have led to proposals for another Muir Glacier fork to soften the impact of the transition. 

Otherwise, the next planned upgrade to the Ethereum network is called Berlin and is tentatively slated for Q2, though details as to what changes Berlin is going to implement remain limited and largely speculative.

The Importance of Supporting a Robust Developer Ecosystem

The Importance of Supporting a Robust Developer Ecosystem

In projects which focus on high-performance blockchain technology, developer community is essential to the nascent growth.

Blockchain development communities cultivate the healthy growth of an open-source software platform.

“It takes a village to raise a child,” is a popular saying that emphasizes the role of a larger group to properly nurture and develop the youngest members of society.

The same holds true for young businesses. Without the endorsement of its 16 million-plus backers, Kickstarter projects would not come to fruition. Twitter would surely not have evolved into one of the world’s most well-known social networking platforms without adoption from 330 million monthly active users.

Community supporters are the lifeblood of emerging companies. So, it’s critical for companies to know how to respond to, and interact with, their communities. Whether made up of consumers, users or developers, brand advocates should be prioritized, engaged with, and listened to. For young businesses juggling many priorities, this can be a challenge.

A defining quality of any endeavor’s success can often be measured in terms of support. Whether it is the capital of pioneers who first forged into an industry or the consumer adoption of a new good or service in the marketplace, without support, it would often not be possible for the ecosystem to grow beyond early adopters. As this applies to open-source blockchain products, the support of developers often represents the difference between success and mass adoption, and failure and obscurity.

For the major role they play, blockchain developers are a sought-after commodity. Hired’s State of Software Engineers Report for 2019 shows a year-over-year 517% rise in global demand for blockchain engineers. The blockchain industry’s growth stems from this community’s diligence to test new releases and provide feedback. For up-and-coming enterprises, collaboration with developers has led to rapid growth for software and quick newcomer adoption. 

A chain of successive improvements

The blockchain industry owes its beginnings to a community of developers that supported  Bitcoin. As the first mover among blockchain technology platforms, Bitcoin’s proof-of-work and encryption mechanism laid the underpinnings from which many other open-source blockchain platforms would follow. A community of minds working together made this momentum possible, and the growing support of a diverse number of developers has resulted in a more thoroughly tested — and thereby robust — code base.

Developers committing to the repository of Bitcoin's open-source code

As it expanded from a handful of developers running nodes scattered across the internet, blockchain technology blossomed into a more decentralized network of validators. Although it stemmed from relatively humble beginnings, there are now at least 9,493 reachable nodes in the Bitcoin network. The growing diversity of the teams working on the network’s infrastructure enriched the community. Open-source code made it possible for anyone to branch off and develop their own solutions. From this creative sandbox, other networks emerged, giving rise to an ecosystem of blockchain applications. Some examples of this can be seen with the launch of Ethereum in 2015 as well as that of EOSIO in 2018.

How to nurture a long-lasting community

Like any other constituent, the developer community needs to be nurtured and engaged with for long-lasting benefits. These might include the establishment of a dedicated “developer relations” team that engages with the developer community through events, developer resources and training materials.

Developers thrive when they have access to the latest tools, educational frameworks and reference examples that improve the learning experience to continue building on blockchain software. In turn, developer feedback is taken into consideration by the core teams who engineer many of the open-source protocols that make blockchain applications work. This feedback becomes an outlet for community input on how platforms evolve to meet the needs of a rapidly growing user base. The results of this back-and-forth are often reflected in the open-source Github repositories behind various projects.

The Bitcoin Core Github repository offers a solid example of how community support ultimately stimulates growth. As the code base grew, a lack of formality in the coding style led to inconsistencies. To better manage input from a growing number of engineers, development guidelines were published that allowed for a more efficiently coordinated effort. This move simultaneously strengthened the community and Bitcoin Core’s code repository during a phase of growth.

When open-source development communities have access to vast libraries of tools that simplify the building process, it makes it possible to more rapidly deploy projects. For Ethereum developers, a long list of open-source tools has been published to help developers get started. With numerous resources at their disposal, engineers have an easier time making their creative visions a reality. 

One example from my company, Block.one, is the release of a Contract Development Toolkit complete with a set of utilities designed to aid EOSIO developers as they build smart contracts. The toolkit lets developers process and compile C++ code to WASM binary code to be executed on the blockchain. It also contains a more advanced set of tools to customize smart contracts to meet maximum performance and efficiency criteria.

Today’s blockchain development community spans multiple platforms. By tapping the collective community wisdom, software companies could solve some of the thorniest tech issues. When software architects offer their support, it becomes possible to harness the potential of a robust developer ecosystem. Building connections with communities at the start may yield global inputs to bring creative answers.

Serg Metelin is the head of developer relations at Block.one. Originally from Ukraine, he was one of the early pioneers of social media applications for Eastern European social network VK.com. After moving to Australia in 2009, Serg worked with digital and marketing agencies and consultancies, delivering solutions for large Australian and international brands such as Disney, Electronic Arts, Woolworths and others. In 2015, he won a Westpac-sponsored Australian national competition, “[email protected],” securing seed funding for his food delivery startup HowAboutEat, which he co-founded and served as the company’s chief technology officer.

Stellar Burns Over 55 Billion Tokens Worth $4.7 Billion USD

Stellar Burns Over 55 Billion Tokens Worth $4.7 Billion USD

The Stellar Development Foundation has announced that it burned over 55 billion tokens and is focusing on other development goals for the currency.

The Stellar Development Foundation (SDF) announced a new mandate today for its network’s development, stating that it has burned over 55 billion Stellar Lumens (XLM) tokens. 

According to a Medium post on Nov. 4, the development foundation drastically reduced the number of tokens in existence as part of an effort to become more efficient as it moves forward. 

Of the over 85 billion tokens that were earmarked for SDF operations, giveaway programs and partnership programs, the SDF burned over 55 billion. 

At a current price of $0.085 per token, the value of the burned tokens is nearly $4.7 billion. The coin has reacted positively to the news, seeing a price increase of nearly 25% on the day at press time.   

Adding the surviving tokens in the aforementioned programs to the XLM that are already out in the world, there are exactly 50 billion XLM in existence, according to the blog post. 

Breakdown of XLM burn and remaining token disbursement. Source: Stellar Development Foundation

SDF focuses on development in the ecosystem 

The SDF states that the burn was geared to making the system more efficient as it moves forward. It wrote:

“SDF can be leaner and do the work it was created to do using fewer lumens. Over the years we’ve also seen that giveaways and airdrops have diminishing effects, especially in the outsized amounts our original plan was designed to support. So a smaller public-facing program would have just as much impact.”

The development organization said that it will pour 12 billion of the remaining tokens ($1.02 billion) into “an aggressive program of direct development and advocacy for Stellar.” SDF said that it expects to double its current staff of nearly 60 by the end of the year. 

Two billion XLM ($170 million) will go into ecosystem support, while 1 billion XLM ($85 million) will go into Stellar’s infrastructure grant program. 

Additional sums of tokens will be distributed to use-case investment, currency support, new products, the Stellar Enterprise Fund and other applications. 

Stellar removes inflation feature

In September, Stellar announced that it intended to remove its inflation feature in an upcoming upgrade. The Stellar Development Foundation said that developers wanted to get rid of the tool, which they said is no longer useful for network participants.

Ethereum Is No Longer a Monopoly Platform for Stablecoins

Ethereum Is No Longer a Monopoly Platform for Stablecoins

Ethereum-based stablecoins are declining as teams increasingly use other blockchains to facilitate price-stable currencies.

Just a few years ago, it was hard to imagine that a stablecoin would come to represent a significant portion of the cryptocurrency industry. Market players tended to base their money-making strategies on a cryptocurrency’s volatility rather than its stability. There were only 11 stablecoins on the market in 2016, and another 10 were added in 2017. Nowadays, there are 66 stablecoins, and over 134 others still in development. The overwhelming majority of these stablecoins were running on Ethereum before 2018, without any indication suggesting that this might change.

But the script has flipped, according to Blockchain.com’s “2019 State of Stablecoins” report: Only 50% of all stablecoins are now built on Ethereum, and the latest Blockdata report also highlights this decrease. The ground for the stablecoin market is shifting beneath our feet.

Today’s market

We have recently seen an increased number of entrants into the blockchain market that depend on a sort of asset-backing mechanism. Decentralized finance (DeFi) frameworks such as Compound, MakerDAO and Equilibrium are not only responsible for new mechanisms that generate stablecoin assets, but are also liberating developers to build advanced DeFi applications on top of them. We are witnessing the emergence of new types of blockchains — the so-called “generation 3.0” — that have begun to roll out. It includes names like Telegram’s TON, Polkadot, Hedera’s HashGraph and Dfinity, which not only promise new opportunities for stablecoins but also offer interoperability out of the box.

Related: Stablecoins, Explained

Against this background, Ethereum is still a viable choice for teams developing price-stable currencies, but there may be two fatal flaws worth considering: product differentiation and scalability. For widespread adoption, a stablecoin should be as intuitive and easy-to-use as possible. It would need to support a high volume of transactions, as well as maintain various on-chain mechanisms. With generation 3.0 of blockchain technology just ahead, a stablecoin should also be cross-chain compatible.

Picture 1

Why Ethereum?

Despite the number of blockchain 3.0 projects hitting the market, Ethereum continues to take up a significant portion of the stablecoin market. There are a number of reasons for this.

On-chain logic and regulation is built-in: These capabilities are why Ethereum-based stablecoins became the standard early on and have even provided a proven business model. Ethereum is simultaneously the biggest and most accessible blockchain ecosystem with on-chain logic support. Most current assets are based on Ethereum, and the emerging DeFi industry has a strong need for stablecoins designed to work within the same chain. Furthermore, Ethereum smart contracts pass multiple audits and are kept under close observation by security watchdogs, which sometimes even affects the Ethereum price.

Picture 2

A total 93% of today’s stablecoin market revolves around the popular Ethereum-based stablecoin Tether (USDT), but others have quickly risen in size and scope — such as Paxos Standard (PAX), USD Coin (USDC) and Gemini Dollar (GUSD). Each one of these stablecoins are compelling proof of the stablecoin concept, and they all happen to be built on the Ethereum blockchain.

Picture 3

A highly secure consensus mechanism: Ethereum uses proof-of-work (PoW), which is acknowledged as strong and tamper-proof when compared against delegated proof-of-stake (DPoS) models. More importantly, this level of security comes at the expense of computation efficiency and speed.

An Ethereum-based framework is more compatible with existing infrastructure: Ethereum uses a token standard called ERC-20, allowing for easy interoperability with other Ethereum-compatible software and hardware wallets. Ethereum-based projects enjoy access to a rich and thriving ecosystem from day one.

New stablecoin models

There are 33 Ethereum-based stablecoins out there, as well as eight stablecoins based on Bitshares and six on Stellar.

But the industry is shifting in 2019, as stablecoin developers have begun looking to more diversified options. Some live and prelaunch stablecoins have even combined platforms: Carbon was initially released on Ethereum, then added EOS support a few months later — and even plans to eventually move to Hashgraph’s distributed ledger.

Others have chosen well-known forks (such as Kowala, Nos or Xank), their own blockchain platform or another proprietary one (such as Terra, Mile or Celo), or they’ve chosen to master the market’s current blockchains — with White Standard and Stronghold USD running on Stellar, Phi on Dfinity, and Cryptopeg on Bitcoin.

At the same time, 2019 has become a banner year for EOS-based stablecoins. We have seen a number of EOS stablecoin projects like EOSDT, Carbon (CUSD), EUSD and Tether go live on EOS, and more are joining their ranks on the market. The question of whether EOS is an Ethereum-killer has generated spirited discussion in ETH and EOS communities alike, but it looks like there is no clear leader for now.

Why didn’t they choose Ethereum? A variety of choice indicates a maturing market. This doesn’t signal the end of Ethereum’s stablecoin dominance, but rather that Ethereum’s days of being a monopoly are over. With other blockchain platforms offering more options for stablecoin projects, there is no reason for these projects to suffer from Ethereum’s well-understood shortcomings. 

An Ethereum-based stablecoin framework comes with limited transaction bandwidth: Ethereum can handle around 25 transactions per second at maximum, and users pay higher fees to see their transactions processed with urgency. Any platform aspiring to make a difference in how people use cryptocurrency will require a far greater transaction bandwidth. Credit card companies like Visa and MasterCard handle several thousand transactions per second (Visa claims to have clocked 47,000 per second in 2013), so a new mass-market product would require similar performance.

Indeed, Ethereum co-founder Vitalik Buterin demonstrated some changes to Ethereum that could significantly increase its transaction processing capability through first-layer optimizations like “sharding” or secondary processes like Plasma. These tweaks would make it possible for the Ethereum blockchain to handle some 100,000 transactions per second. But there is no timeline for when users will see this functionality released. We will probably have to wait quite a while for its implementation, as the team still hasn’t assembled a working prototype after trying many different versions.

An underlying part of Ethereum has fundamental scalability issues: Ethereum’s main selling point is its smart contract functionality, which is written in a programming language called Solidity. Developers can use Solidity to turn agreements between a buyer and seller into self-executing computer code, but when it tries to serve too many users at once, things start to slow down.

Solidity is radically different from the popular mainstream languages in many aspects, which makes it difficult for people in the space to learn it and work with it. The language requires so many legacy and internal specifics to know that it leads to an overkill in system architecture. Its optimizer is weak and it generates slow code, so even simple operations can be dependent on a large number of inefficient instructions.

Moreover, Solidity doesn’t support an integrated development environment — a niche software that helps programmers write quality code in a shorter period of time. You can’t even manipulate a string with built-in functionality.

A lack of interoperability on Ethereum blockchains: This wasn’t such an issue three years ago, when there was only one blockchain for everyone’s smart contracts and decentralized application (DApp) development. Nowadays, several Ethereum blockchains exist: Tron, Waves, Tezos, Quarkchain — and yes, even EOSIO. There are even more to come, so it’s important that a cross-chain solution appears sooner rather than later for the sake of exchanging of data and value.

Related: Blockchain Interoperability, Explained

So what’s next? The next stage of the stablecoin market’s evolution is about competition between Ethereum, EOS and other blockchain platforms and stablecoin projects within one network. The crypto market is recognizing the value that stablecoins have, as the global stablecoin trading volume grew from $12.5 billion in 2017 to $82 billion in 2018. Tether is the second-most actively traded cryptocurrency (about 60% of Bitcoin daily trading volume), entering the top-10 crypto asset rankings by market value earlier this year. According to coin360, USDT’s 24-hour trading volume exceeds Bitcoin’s with unfailing regularity.

Even higher demand is expected in 2020 as stablecoin adoption increases, driven by its multiple use cases in DApps, DeFi-platforms, traders and other user audiences. Both platforms and projects will have to fight for these customers, offering opportunities that larger players lack. One of these advantages is surely cross-chain functionality, compared to Ethereum’s proposed on-chain solution.

As the stablecoin market begins to see some maturation within a cryptocurrency industry just 10 years old or so, it’s clear that there are options beyond Ethereum. This blockchain was a de facto choice for offering a wide range of functionalities right out of the box, but needs to change as time advances and improved solutions present new ways of solving old problems.

While the stablecoin market charges forward at large, Ethereum is standing still by comparison. There is not only a trend toward building on EOSIO, but toward picking alternative blockchains beyond Ethereum as well.

We only need to understand it as a new reality of a dynamic market. Stablecoin-thinking has evolved significantly over the last year or two — it will be interesting to see what changes next.

The views, thoughts and opinions expressed here are the author’s alone and do not necessarily reflect or represent the views and opinions of Cointelegraph.

Alex Melikhov is the CEO and co-founder of Equilibrium, a framework for asset-backed stablecoins and DeFi products.

TON’s Value to Surpass $20B Over 5 Years, Says New Research

TON’s Value to Surpass $20B Over 5 Years, Says New Research

Telegram Open Network’s value is expected to surpass $20 billion over a five-year horizon, according to Decentral Park Capital’s research.

Telegram Open Network’s (TON) value is expected to surpass $20 billion over five years, according to new research by New York-based blockchain venture and digital assets fund Decentral Park Capital.

“A sleeping giant awakens”

The 59-page document — entitled The Current State of Telegram Open Network: A Sleeping Giant Awakens — claims TON’s native cryptocurrency Gram (GRM) has the potential to become one of the top 10 protocol assets in five years.

The research points out TON’s high potential, stressing that it can serve as a gateway for crypto assets and related apps to “bank the unbanked” as well as become the first discovery platform for Web 3.0 applications — “akin to the App Store for Web 2.0.”

Three major challenges

However, TON is yet to address a number of internal and external issues in order to introduce its highly promising technologies, the report notes.

As such, Decentral Park outlined three major challenges for TON, including lack of openness to developers, the unfriendly attitude of local governments, as well as an expected imbalance between demand and selling pressure.

According to the research, TON appears to be less open to developers than its competitors, which is considered to be a disadvantage “in a world where talent is scarce.” Skepticism from governments can dampen adoption of tokens by slowing the value flow from fiat to Grams, the research explains.

Finally, low interest from crypto-native investors, few avenues for Telegram users to buy Grams, delays in delivery and other issues will allegedly lead to selling pressure to outweigh the demand for the asset in the short-to-medium term.

As Cointelegraph reported recently, TON is scheduled to launch in late October.

On Oct. 10, major American crypto exchange and wallet provider Coinbase announced that it will provide custodial support for Grams, while previously another American firm claimed to be the first entity to enable institutional investors to hold Grams.

ETC Labs Launches Studio Program to Support Developing ETC Projects

ETC Labs Launches Studio Program to Support Developing ETC Projects

Ethereum Classic Labs’s Studio, a new program to support the development of new projects on the ETC blockchain, is now live.

Ethereum Classic (ETC) Labs incubator today officially announced Studio, its new program to support the launch of new projects on Ethereum Classic.

ETC Labs Studio to support firms seeking to launch projects and crowdsales on ETC

According to an official blog post from Aug. 8, the ETC Labs Studio will now support companies that seek technical and marketing expertise for new projects and crowdsales.

The new program intends to share technical expertise to promote building and implementation of decentralized applications and crowdsales, as well as provide guidance on project launch and marketing tools for businesses and startups that want to build on ETC blockchain.

According to the post, the ETC Labs Studio program is already available for blockchain and crypto-related companies to enroll in.

Terry Culver, CEO of Ethereum Classic Labs, said that Studio will bring together the expertise of dedicated developers from their Core group alongside with funding and mentorship programs from Accelerate group to continue to mature the whole Ethereum Classic ecosystem.

ETC Accelerate program supports the development of apps on ETC

The ETC Labs Studio program comes just over a week after ETC Labs announced its accelerator program to promote the development of products and applications based on the Ethereum Classic network on July 28. The duration of each Accelerate program amounts to a total of three months, focusing on both hard and soft skills shared by the Ethereum Classic Labs Core team, which was launched in January 2019.

Earlier in July, Cointelegraph reported on Fidelity, Deloitte and Amazon supporting a new blockchain accelerator program called Startup Studio. Alongside 20 other firms such as the Ethereum Foundation and ETH Global, the companies teamed up forces to enable workshops to blockchain startups and help them expand their expertise.

Future for State-Backed Brazilian Token Issuance Unclear as Bank Sees Leadership Reshuffle

Future for State-Backed Brazilian Token Issuance Unclear as Bank Sees Leadership Reshuffle

Turmoil over the leadership of the Brazilian Development Bank may pose challenges to cryptocurrency trials.

On June 18, Brazil’s National Bank for Economic and Social Development (BNDES) announced the election of Finance Director José Flavio Ferreira Ramos as its interim president. 

Ramos will serve as the BNDES head until the inauguration of 38-year-old Gustavo Henrique Moreira Montezano, a former economist and the current deputy secretary of privatization and disinvestment. 

Montezano’s appointment followed two meetings on June 17 between Brazilian President Jair Bolsonaro and the country’s minister of the economy and former economic advisor to Bolsonaro’s presidential campaign, Paulo Guedes. The meetings were held in response to the sudden departure of the bank’s now-former president, Joaquim Levy. 

Levy submitted his letter of resignation on June 16 amid perceived tension between himself and President Bolsonaro. 

Montezano closely tied to Bolsonaro government

Montezano embarked on a 17-year career in the finance industry prior to joining the Ministry of Economy. He is a former partner of BTG Pactual and the former chief operating officer at Engelhart Commodities Trading Partners.

Montezano is the son of the economist Roberto Montezano, who worked as a professor at the Instituto Brasileiro de Mercado de Capitais (IBMEC) for more than 30 years. Notably, during his tenure at IBMEC, Roberto Montezano had worked alongside Guedes.

Moreira Montezano has also known both President Bolsnaro and his family personally since childhood, having grown up in the same condominium as the president in Tijuca, Rio.

Tension between Levy and Bolsonaro

Levy’s resignation was prompted by Bolsonaro’s anger with the former president’s appointment of Marcos Barbosa Pinto to the position of director of BNDES Capital Markets — an entity that is responsible for managing a portfolio valued at more than 100 billion Brazilian real (roughly $26 billion). 

Both Levy and Pinto had worked for the BNDES during the governments of Brazil’s former ruling party, the Workers’ Party (PT), which drew ire from the president. Pinto previously served as the chief of staff to Demian Fiocca during Luiz Inácio Lula da Silva’s government, while Levy served as finance minister during the second term of Dilma Rousseff’s presidency.

Brazilian media reported that Bolsonaro stated, “I’m already here with Levy. I told him, ‘Quit this guy on Monday or I’ll fire you without going through Paulo Guedes,’” adding that “suspicious people” could not hold office in his administration. Barbosa Pinto also delivered his letter of resignation on June 16. 

Upon resignation, Levy offered praise to his former BNDES colleagues, commending those “who have collaborated with energy and seriousness to transform the bank, allowing it to respond fully to the new challenges of financing development, meeting the many needs of our population and confirming their vocation and long tradition of excellence and responsibility.” Levy added his thanks to Guedes for his “invitation to serve the country” and wished him “success” in the government’s reforms.

The sudden resignations drew the criticism of the president of the Chamber of Deputies of Brazil, Rodrigo Maia. Maia described the government as coming to comprise a “crisis plant,” adding:

“This lawyer who was dismissed from the BNDES is one of the most understood cadres of social policy in Brazil. It is a shame that Brazil lost two quality paintings of Joaquim Levy and Marcos Pinto in the way they were removed.”

BNDES to finance documentary using crypto

On June 3, Brazilian publication State of Sao Paulo reported that film producer Elo Company had participated in a proof of concept for the BNDESToken initiative. Elo Company is known for its involvement in the production of Alê Abreu’s Oscar-nominated “Boy and the World.”

BNDESToken is slated to comprise an ether-based stablecoin backed by the Brazilian real that the BNDES plans to use to finance the production of a documentary produced alongside Elo Company. 

The project will see the development bank issue the tokens to fund purchases necessitated by the film, with the BNDES also facilitating the exchange of said tokens for fiat currency. The token will not be promoted and can only be issued or exchanged by the bank. The BNDES has been developing its cryptocurrency since 2018. Gladstone Arantes Jr., an IT manager who is working on the token’s development, recently stated:

“Instead of releasing the money to the client, the proposal is that we will release the token that can be used for all purchases provided for in the financing agreement.”

Vanessa da Rocha Santos Almeida, another developer working on BNDESToken, has described the project as allowing “society to look at the transactions” made by the national development bank.

BNDES trials token issuance

The proof of concept saw Elo Company simulate the payment of four screenwriters, with Brazil’s National Cinema Agency (ANCINE) also participating in the project. 

Sabrina Nudeliman, the president of Elo Company, stated that “when the accounts are questioned and more transparency is requested, the blockchain responds to this demand.” Nudeliman added, “With the blockchain platform, my vendor provides real-time accountability.” 

Daniel Tonacci, an adviser to the board of ANCINE, also emphasized the efficiency savings made possible through the adoption of distributed ledger technology, stating:

“It’s the Waze of public money, where we can track where it goes, where it fits, how fast it is.”

Brazilian institutions explore blockchain

On May 30, BNDES systems analyst Fabiano Mattos published an opinion piece praising the BNDES’ adoption of distributed ledger technology (DLT). Matto emphasized the security and transparency benefits of digital currencies, asserting that “blockchain would be the ideal solution to support BNDES disbursement.” He continued:

 “This system would allow the whole operational track to be followed — including the financial details — from disbursement of the financing, to the client’s suppliers and other counterparties. Finally, those suppliers could exchange the token for fiat currency at BNDES. It is thus publicly and irrefutably possible for a citizen, and society as a whole, to monitor the disbursements of public money made by the BNDES — and also to see the impact of this action on the various actors of the Brazilian economy. BNDESToken would vastly improve the way we can measure effectiveness of BNDES funding.”

Mattos also noted that a number of Brazilian institutions are actively collaborating to explore potential applications for DLT, including the Institute of Technology and Society and the Government Blockchain Association. The BNDES analyst indicated that the management of land registries, intellectual property rights and centralized identity are among the governance processes for which blockchain technology is being explored.

Brazil reconsiders regulations

The increasing penetration of cryptocurrency into Brazilian society has prompted moves to develop a clear regulatory apparatus governing the country’s crypto sectors.

On May 30, Maia requested that a special commission be created to consider the current legislative framework pertaining to digital currencies in Brazil. Several weeks beforehand, the Brazilian Internal Revenue Service also published new tax guidance mandating that cryptocurrency transactions valued in excess of BRL$30,000 (approximately $7,600) be reported each month.

In March, the BNDES chose five blockchain startups to participate in its BNDES Garagem incubator program alongside 74 other emerging companies.

Related: As Brazil’s Economy Risks Recession, Regulators and Banks Implement Blockchain

Microsoft and Ethereum Foundation Swell the Hyperledger Ranks Amid Growing Cross-Industry Blockchain Collaboration

Microsoft and Ethereum Foundation Swell the Hyperledger Ranks Amid Growing Cross-Industry Blockchain Collaboration

Microsoft, the Ethereum Foundation and Salesforce join Hyperledger as new members, seeking to create open-source enterprise blockchain solutions.

United States tech giant Microsoft and the Ethereum Foundation are among the latest companies to join the ranks of the Hyperledger greenhouse hosted by the Linux Foundation. Many notable names in the tech and wider business fields today are developing enterprise-grade solutions based on the expanding set of tools built on Hyperledger.

These institutional blockchain projects cut across both financial and nonfinancial distributed ledger technology (DLT) utilization. Presently, there are pilot projects geared toward identification systems, supply chain management (SCM) and provenance, to mention a few.

On the whole, members of Hyperledger appear to be at the forefront of a renaissance in open-source project development, facilitating a more decentralized approach to project building. Such a trend evinces a return to a more decentralized internet with blockchain technology living up to the hype of being a disruptor of the global business process.

There are, however, some drawbacks to the emerging open-source project building trend, especially for startups that have yet to earn significant pedigree within the industry. Also, while DLT constitutes a technological breakthrough, kinks such as scaling need to be worked out before DLT-based systems can realistically upstage their mainstream centralized counterparts.

New members join Hyperledger

Microsoft, Salesforce and the Ethereum Foundation are among eight new members of Hyperledger, as announced on June 18. These companies already have a history of blockchain adoption, with several DLT-based projects across diverse business processes.

There are now more than 270 members of Hyperledger developing their own enterprise-grade blockchain solutions. Commenting on the collaboration with Hyperledger, Marley Gray, Microsoft’s principal blockchain engineering architect, declared:

“Our journey in the blockchain ecosystem has brought us a long way, and now is the time for us to join the Hyperledger community. We are proud of our contributions to such a diverse blockchain ecosystem, from our Azure service offerings and developer toolkits to our leadership in driving open specifications.”

Microsoft is by no means a new entrant to the blockchain arena, with the company already developing an ecosystem for blockchain as a service (BaaS) on the Azure cloud computing service.

In the BaaS arena, Azure competes with other offerings by the likes of Oracle and AWS. These platforms allow businesses to create bespoke DLT-frameworks to fit their operating purposes without having to navigate the skill, knowledge and cost barriers associated with building decentralized apps (DApps) from scratch.

Related: Decentralized Identity: How Microsoft (and Others) Plan to Empower Users to Own and Control Personal Data

Teams working on the Azure BaaS infrastructure get access to preconfigured modular networks that simplify the process from conception to deployment of their DLT-based solutions. By joining Hyperledger, Microsoft Azure now offers three different enterprise blockchain development environments, with the other two being Corda and Ethereum.

The Ethereum Foundation joins the Ethereum Enterprise Alliance (EEA) as a partner of Hyperledger. For Hyperledger CEO Brian Behlendorf, the decision of the Ethereum Foundation to join the expanding Hyperledger enterprise blockchain greenhouse will be a positive one for blockchain developers in the industry.

Data from StateOfTheDApps — a platform that tracks decentralized apps — shows that Ethereum hosts the highest number of DApps. Of the total 2,667 DApps tracked by the platform, 2,505 run on the Ethereum blockchain.

Apart from the newly announced members, others include notable tech giants like IBM and Oracle. IBM, Walmart and Alibaba are among the companies with a significantly high number of blockchain-based patents, which is indicative of their activity in research and development (R&D) efforts in DLT-related enterprises.

Hyperledger projects supporting enterprise blockchain development

Hyperledger, for its part, is a collaboration between enterprises and the open-source community facilitated by the Linux Foundation. The Hyperledger greenhouse acts as a bridge that connects developers, nonprofit organizations, academia and all other stakeholders interested in developing and implementing enterprise-grade blockchain technology solutions.

Cointelegraph spoke with Marta Piekarska, director of the Hyperledger ecosystem at the Linux Foundation, about how the partnership works. According to Piekarska, Hyperledger doesn’t develop code or provide consulting services. Explaining further, Piekarska said:

“We support them in terms of PR and marketing for their projects. Not all of the developers creating solutions using Hyperledger tools are members of Hyperledger. You don’t have to be a Hyperledger member to use our technology, participate in our special interest groups, or to download and use the code. There is no technological barrier to using Hyperledger frameworks and tools.”

There are numerous projects around the world based on specific Hyperledger frameworks, such as Hyperledger Fabric and Hyperledger Iroha, to mention a few. Back in May 2019, Cointelegraph reported on the partnership between Iran’s central bank and Tehran-based blockchain firm Areatak to create a DLT platform for the country’s banking and finance markets using Hyperledger Fabric. According to the report, the Borna blockchain platform, when fully realized, should help revamp Iran’s outdated banking sector.

Matt Milligan of Milligan Partners — a blockchain-based startup focusing on toll interoperability and one of the newest members of Hyperledger — highlighted the benefits of joining a vast collaborative effort like Hyperledger. Milligan, the managing partner at the company, said:

“Joining Hyperledger is tremendously valuable to us as we develop blockchain solutions for Mobility as a Service. By working in this diverse open source community, we can be more creative and more innovative than we could ever be on our own.”

The fact that Hyperledger is open-source, means developers can learn from one another, trading ideas in an environment increasingly being populated by teams working on cutting-edge DLT protocols. This collaboration serves to achieve Hyperledger’s aim of fostering cross-industry blockchain development.

By so doing, stakeholders at Hyperledger are hoping that blockchain technology can move away from the realm of being a marketing buzzword to more tangible utility cases. In an interview during the Brainstorm 2019 conference organized by Fortune, Ripple CEO Brad Garlinghouse drew attention to the existence of too many economically inviable projects with the term “blockchain” slapped on them. According to Garlinghouse, “There is a lot of noise in the blockchain industry.”

Focus on nonfinancial DLT utilization

Apart from financial products, many of the blockchain protocols being built using Hyperledger tools involve nonfinancial use cases. This trend reinforces the narrative that DLT is a disruptive technology capable of affecting several facets of the global business process.

From a nonfinancial perspective, blockchain technology seems to be getting a great deal of adoption in protocols that require trust networks and provenance. Together, these two broad application cases cover much of the mainstream business arena — from SCM to health care and identity management.

Cointelegraph asked Piekarska about the major nonfinancial enterprise blockchain solutions being developed using the different Hyperledger framework tools, to which the director responded:

“There are quite a few markets that we are seeing as very big and potential markets. We are currently seeing a lot of interest in blockchain technology from stakeholders in supply chain management. We have the food trust project for IBM and Maersk. We have Everledger which is a blockchain project based on Hyperledger Fabric to track the provenance of diamonds and now also wine. There are at least 200 live networks based on Hyperledger Fabric alone. Digital identity is another space where we see a lot of interest. This is mostly as a result of Hyperledger Indy which is our framework for building digital identity solutions using zero-knowledge proofs. One of the main contributors here is Sovereign Foundation. They have the largest running network that is based on Hyperledger Indy.”

Right here for the taking

The combination of immutable data record-keeping and the ability to create trustless networks that do not require expensive third-party authenticators continues to be a pivotal aspect of the blockchain appeal. However, these projects still need to scale for them to be able to provide robust functionality on enterprise-level protocols.

Blockchain technology also seems to be having a material impact on open-source project development for both notable tech firms and smaller startups. According to Piekarska, there has been a noticeable increase in the number of projects listed on GitHub since the emergence of blockchain technology.

It isn’t inconceivable to imagine that DLT is creating easier avenues for open-source collaboration among development teams across the globe. Piekarska said:

“I think the coming of blockchain has caused a renaissance in open source project development especially for enterprise-grade software. It is changing the way enterprises see open-source project development which is reflected in the influx of notable tech giants like IBM and Microsoft into the Hyperledger environment. All projects in Hyperledger are under Apache license. It also lowers the barriers for small companies that can now take the code and build useful protocols.”

What to Expect From the Telegram Open Network: A Developer’s Perspective

What to Expect From the Telegram Open Network: A Developer’s Perspective

How TON could disrupt the blockchain landscape.

Recently, new materials surfaced about the lite client for the Telegram Open Network (TON) blockchain, powered by encrypted instant messaging service Telegram. Based on the content of these documents, it is possible to make a lot of assumptions about its future, especially in regard to comparing TON with competitors — such as the Cosmos network, Polkadot and Ethereum 2.0 — as well as the overall impact of the blockchain ecosystem.

Polkadot, Cosmos and TON will definitely compete for users and developers. Moreover, in 2019, every blockchain really needs to have a lot of use cases built on it in order to attract users and potential investors, as the era of the initial coin offering (ICO) and new blockchains may now be over. Requirements for blockchain projects are currently high and about to be even higher after the release of TON. It is important to explain to users which problems are solved by this project. It is possible to compare projects by the amount of potential users. TON is probably the leader because of existing Telegram user base (300M+).

TON lite client CLI

Neither Ethereum nor any other cryptocurrency or blockchain company currently has 300 million users — but Telegram does. One of the largest problems of current blockchain development is handling the scalability for such an amount of users, which is why Polkadot, Ethereum 2.0 and others exist in the first place. These blockchains attempt to address larger volume and faster speed. Currently, Ethereum and Bitcoin can process about 15 and 7 transactions per second (TPS) respectively — much less than Visa’s almost 45,000 TPS. Thus, TON needs to process more than Visa to facilitate its millions of users.

Scalability issues

The main challenge for modern blockchains is being able to scale enough to process such a large amount of transactions that it’s suitable for mass adoption, which would mean it could bear millions or even billions of potential users.

TON claims to be fast in terms of processing transactions between users. However, not a single blockchain project is capable of achieving the goal of processing millions of transactions per second.

Transaction Speed of Various Blockchains

There are different approaches to scaling a blockchain system while having the same security and decentralization as Bitcoin — or at least close to it.

The first way is to use centralized hubs controlled by smart contracts. A user can deposit funds into the smart contract and will retain the same funds on this hub. However, if something unforeseen happens, users can get their funds back from a smart contract without any interaction with the hub. An example of this is Plasma, which was proposed on Aug. 11, 2017 by Ethereum co-founder Vitalik Buterin and Joseph Poon, the creator of Lighting Network, in order to scale Ethereum. During the development, a number of issues appeared that made Plasma quite complicated to implement. The main difficulty was the exit from Plasma. To exit, the user needed to wait seven days. During this period, anybody could provide proof that the user cheated. A smart contract needs to verify that the user has the right to exit. The main challenge is to make the least possible calculations and to have the smallest possible proof size on the Ethereum side, because you need to pay for any calculation or for any data on Ethereum. During Plasma discussions 1 2 3 4 5 6 7 8 9 10 and implementations 1 2 3 4 5 6 7, an issue with the history of exit proofs caused Plasma to become unstable after a couple of months. Because of that problem, there is no fully production-ready Plasma with smart contracts on it right now.

Plasma architecture

The second way to scale blockchain is to use a proof-of-stake (PoS) consensus algorithm instead of proof-of-work (PoW). The main difference between these approaches is that PoS allows for the validation of blocks by one’s stake — the amount of coins that the validator owns. PoS is more efficient than PoW according to its creators’ (Sunny King and Scott Nadal) research. An example of proof-of-stake blockchains right now are Stellar, EOS (which uses a delegated proof-of-stake of DPoS), Binance Chain, Cosmos and Polkadot.

Proof-of-Work & Proof-of-Stake

The third approach to solving scalability problem is sharding.

What is sharding?

Sharding is a way to split the entire state of the network into a bunch of partitions (called shards) that contain their own independent piece of state and transaction history.

The main principle is to execute transactions parallelly and to separate all the data into different small blockchains that can interact with each other.

To think of it in a metaphor, imagine Ethereum was split into thousands of pieces. Each piece can function on its own and can have its own features known to each respective piece. If the pieces want to talk to one another, they will have to use some sort of protocol. Sharding creates a way for each shard to maintain individual transaction receipts that are cryptographically secure. They can be brought back together to be a larger piece at any time.

Sharding, together with PoS, is one of the best ways to scale current systems. However, there are a couple of security issues with it that are still unresolved.

TON is a PoS blockchain that actively uses sharding to scale. It has a masterchain and workchains that are also connected, with both having their own shardchains. Thus, the TON description document conclusion reads:

“To achieve the necessary scalability, we proposed the TON Blockchain, a ‘tightly-coupled’ multi-blockchain system […] with bottom-up approach to sharding (cf. 2.8.12 and 2.1.2).”

TON will be scalable because it will combine several approaches, such as sharding and PoS consensus. With sharding, the data is stored in different places so less information is being sent through the network — making it faster. The benefit of PoS is that you don’t need to do a lot of calculations to validate the block. By using both of these, they create much faster transaction validations than proof-of-work.

TON vs. Ethereum 2.0, Polkadot and Cosmos

Polkadot is a blockchain that allows for the connection to other blockchains, which was built by Gavin Wood, a co-founder of Etherium. Cosmos is similar to Polkadot — however, the Cosmos team developed a PoS consensus algorithm that is the leader in speed and security.

TON’s main advantage over its competitors is its user base of 300 million. But there are other parameters that can be compared.

Summary of some notable blockchain projects

Summary of some notable blockchain projects

Developers community:
 Without a developers community, there could be no future for any blockchain systems. Right now, there are still not a lot of use cases of blockchain in the general population. It is obvious that without developers, there would not be any apps based on a given blockchain, so there would not be any users either.

Polkadot and Ethereum are the leaders here. Ethereum has been growing its community for six years. There are many companies and enthusiasts from the best technological universities that have built and continue to build apps on the Ethereum blockchain. The main reason for this is that the Ethereum and Polkadot approach is to develop everything open-source and allow anybody to participate in it by proposing ideas through EIP (Ethereum Improvement Protocols) and getting research grants.

The main problem with TON here is that it is not public: There is no way to participate in the development process. The TON team is well known as a team of talented and smart people, but are very closed off from the public. There is no large, open developer community for TON and, therefore, there might not be many apps and protocols built on TON — at least, not until it operates more publicly. For mass adoption for any blockchain, there needs to be many developers building mass use cases — so, this is an issue for TON’s growth, at least for now.

Smart contract language:
 Right now, there is only one language on TON, which allows for smart contracts. However, TON is still under active development, and everything could be significantly different in future. We will analyze only the current situation now.

TON’s smart contract language, called Fift, is quite unusual. It was inspired by the programming language Forth that first appeared about 50 years ago. This language could be unfriendly to new developers. Most JavaScript or Python developers will maybe never understand how to code with it. However, it is somewhat similar to the language Lisp in terms of syntax.

This means that the TON team decided to have dev quality over quantity. Only well-experienced developers can work with Fift, which also means that there will be fewer mistakes in the production of smart contracts. However, that also means there will be fewer developers. It could be a good approach to use Fift, but it is still risky for TON.
TON's Fift language syntax

It is pretty much the opposite approach to Ethereum’s strategy with the Solidity language, which was designed to be similar with JavaScript to allow a lot of new developers and JavaScript developers to start working with Solidity quickly.

Both Polkadot and Ethereum 2.0 allow for developing decentralized applications (DApps) using classical languages like C#, Java, C++, JS, Go, Rust and others. The main idea is to use the WebAssembly virtual machine, which suits perfectly for blockchain systems. WebAssembly was originally designed for web applications. Thus, developers can use one language while completing different tasks with it. Cosmos also allows developers to use classical languages.

TON could potentially have a lot of problems with Fift. Polkadot, Cosmos and Ethereum use classical languages and there is no simple solution for TON now about how to compete with this. However, TON Labs is working on optimization the Fift for other coding languages, such as C++, that are more widely used. However, it is possible that other languages will have the possibility to be converted to Fift. Ton Labs is working to do that in future. With support for languages like C++ and C#, Ton will solve all the issues connected with the difficulties of understanding Fift and will have the same level of adoption of developers as Polkadot — or maybe even better. The Telegram team always has had a good API and documentation for its API, such as Telegram Bots.

Polkadot has one mainchain called the relay chain, with many sidechains connected to it called parachains. Parachains do not have their own consensus, so all the blocks are verified on the relay chain by a group of about 1,000 validators. It is more scalable than most current solutions because blocks in the parachains are executed parallelly.

Polkadot architecture visualization. All chains have shared validators

Cosmos also has one mainchain called Cosmos Hub. Other sidechains are connected to the hub and called zones. Every zone has its own validators, so blocks are executed independently. The problem here is that, with such a small amount of validators (100), zones can be hacked. In Polkadot, all chains have common validators to solve this issue. Cosmos’ approach is to have only useful zones, so there will be enough validators to stay safe. You could have your own blockchain for specific reasons, in this case.

Cosmos abstract architecture. Each zone has its own validators and blocks

TON’s architecture, as detailed in section 2.1 of the TON Description Document, is completely different. Its defining characteristic is that it has a masterchain and a large number of workchains — independent blockchains that can interact with each other and be governed by the masterchain. Every workchain consists of shardchains — small chains responsible for specific data in a blockchain stored in blocks.

Each workchain is subdivided into up to 260 sharded blockchains, having the same rules and block format as the workchain itself but responsible only for a subset of accounts, depending on several (the most significant) bits of the account address.

TON masterchain and workchains abstract visualization

Each shardchain block is a group of cells — the specific type of data in TON. A shardchain block itself can also be described by an algebraic formula and is stored as a “bag of cells,” according to the TON Description Document (section 2.5.6).

Each TON workchain consists of shardchains

The most interesting architectural approach is TON’s sharding. However, there are a lot of issues concerning the implementation and security of that solution right now. Sharding in this case can be insecure and has some exposure to hacking.

Use cases of blockchain and what’s possible now

There are a certain number of use cases that can be implemented on TON and other new generation blockchains.

Telegram bots + blockchain:
 Telegram already has bots. It is one of the best ways to build an app with a human interface directly in messenger. It is much easier to use when you don’t need to install any new app, but can just tap your favorite bot in search. With TON’s API for bots, it could be possible to build simple, user-friendly DApps for users that will be available to them in seconds. There are already some bots on Telegram now that allow you to use bitcoin and ether, and even exchange, buy or sell them. 
With TON payments, Telegram can build its own marketplace of apps directly within the messenger, which could end up being the Apple App Store killer. With the first phone banking beginning in 1983 by the Bank of Scotland, then the first online banking by Stanford Credit Union, followed by banking apps in 2007 and banking bots in 2015, now we see bots becoming commonplace. By 2020, it is estimated that 85% of banking customer service will be done bots. Businesses should find the messenger “home” of their users — Discord for gamers, Telegram for crypto enthusiasts, WeChat for China and Slack for enterprise business — to align with where their target user currently resides.

Micropayments in messenger: Micropayments in messengers are one of the most promising blockchain applications in everyday life.

For example, WeChat payments: one of the main reasons WeChat is unsuccessful in Europe and in the United States is that WeChat is too centralized and affiliated with the Chinese government. The West prefers more slightly agnostic platforms, on which people are free to select services and payments from a variety of options.

 A decentralized cryptocurrency exchange (DEX) is another possible use case of the TON blockchain that can also work for Telegram bots. With the potential of TON to process millions of transactions, it is possible to build an exchange to trade.

Bridges between other chains: A bridge is a connection between the blockchains, which is the main goal of Cosmos, Polkadot and TON. Bridges allow sending transactions to another blockchain with one point of failure, as bridges work with validators that could be attacked. When we use a bridge, we need a group of trusted validators who listen to events from one blockchain and will transfer them to another. The main problem is that validators can be attacked or malfunction on their own. To prevent such cases, validators need to stake assets on both chains. They will be punished by losing the staked amount for any malfunction or misconduct. However, that also means that amount of crypto that can be transferred through a bridge must be less than the amount staked by the validators. This is important because bridges could make exchanging more decentralized than just using current exchanges.

Influence on the blockchain landscape

The TON team’s strategy differs quite a bit from the main strategy of current leaders like Polkadot, Ethereum and Cosmos. The current way TON is being developed is much more complicated for developers than the aforementioned blockchains. However, if the TON team finds out how to attract developers, this could completely change the way developers work with all blockchains. TON could illustrate that it’s possible to release a product without any public discussions and still attract a robust community. TON could attract professional, well-experienced C++ developers instead of JavaScript developers, which can definitely change the quality of DApps. This could impact customers who hire developers in a positive way by eliminating lower-quality developers in outsourcing organizations.

TON could become a powerhouse blockchain — as upon its release, 300 million people will instantly possess gram wallets, which will make it the world’s most adopted cryptocurrency. In seconds it’s very probable that TON will move to the forefront as being the most-used blockchain within the whole ecosystem, with the best developers in the world building on it.

The team behind TON declares that it will maintain its own infrastructure, and the company will have a voting capacity twice as powerful as the rest of the community. The question is why it would advocate for such a centralized system. It claims to make a distributed blockchain system, but in fact, it is not distributed, but centralized. Other than the fact that it has a public ledger, it is no different from other processing systems. It has created some services on the blockchain, but so far it is unclear how it will work and what it needs (DHT, proxies, DNS).

If we consider the network, blockchain, services and payment — then this results in a completely centralized system that will be serviced by the organization (TON). Technically, it has a very detailed and well-implemented white paper. The understandable purpose of the services, the clear connection between them, and that there are no technological issues all make for a potentially great platform that can withstand a large load.

With all due respect to world-class technology, it could cause one to ponder: Why be agnostic and private if you’re in fact really just centralized? Perhaps it’s a message for both centralized and decentralized systems to maintain the integrity that was so meticulously built.

Related reading: Exclusive: New Report Reveals Details of Telegram’s TON Blockchain

The article is co-authored by Nick Kozlov and Dmitry Gorilovsky.

Nick Kozlov is software developer, nominated as Microsoft MVP in blockchain, winner of 10+ international hackathons, CTO of Button Wallet.

Dmitry Gorilovsky is a product creator and innovator with a proven track of record in hardware/software development, 10+ years of experience in IoT product and business development, six+ years in blockchain industry, the creator of YotaPhone, the founder and CEO of Woodenshark — the company behind multiple IoT and hardware products — and the founder and CEO of Moeco — a global connectivity platform.