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What is a Smart Contract?

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What is a Smart Contract

The concept of smart contracts was first introduced by cryptographer and scholar Nick Szabo in 1996. In a paper, he stated:

“A smart contract a set of promises, specified in digital form, including protocols within which the parties perform on these promises.”

“The basic idea of smart contracts is that many kinds of contractual clauses (such as liens, bonding, delineation of property rights, etc.) can be embedded in the hardware and software we deal with, in such a way as to make breach of contract expensive […] for the breacher,” he added.

How Do Smart Contracts Work?

According to Ethereum founder, Vitalik Buterin, money or an asset is transferred into a program “and the program runs this code and at some point it automatically validates a condition and it automatically determines whether the asset should go to one person or back to the other person, or whether it should be immediately refunded to the person who sent it or some combination thereof.”

To understand a smart contract better, consider this example:

A landowner wants to sell a piece of land via the blockchain. To get started, he looks for a decentralised marketplace, pays via the acceptable currency on the platform, creates a trustless smart contract, and then lists his piece of land. When a buyer comes across the listing and decides to buy, he accepts the smart contract.

For the transaction to go through without any case of fraud, certain pre-conditions must apply. For instance, both parties could be required to deposit a certain amount of money, which they will both lose if one person cheats the other. Once the deposits are made, the land transfer process can now begin.

The process will involve signing physical documents by both parties unless the relevant public offices have embedded land records on the blockchain. When all documents and fees are paid and the title deed reads the name of the buyer, the seller will receive payment to his wallet address from the buyer and they will both get back their deposits. This will mark the end of the transaction.

Therefore, a smart contract eliminates the role of a middleman while saving costs incurred when hiring someone to carry out a given task. Additionally, a smart contract can increase trust, boost accuracy, and promote transparency.

The Future of Smart Contracts

Smart contracts have many use cases in sectors such as healthcare, automobile, government, accounting, land registration, and real estate. In addition, smart contracts have the potential to disrupt the law by changing how lawyers do business. In fact, smart contracts could even eliminate the role lawyers play in most transactions. For instance, from the above example, a lawyer is not required because there is no room for distrust.

The future of smart contracts will also entail addressing issues on how governments should tax and regulate smart contracts. This could also mean regulating the cryptocurrencies used to execute these contracts and making smart contracts legally binding.

Furthermore, the growth of this technology could see more developers creating blockchains that can process digital contracts while existing blockchains such as Bitcoin could be improved to handle such transactions.

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Best Cryptocurrencies to Mine on Your Home Computer

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Best Cryptocurrencies to Mine

Cryptocurrency mining entails using computer processing power to verify transactions and securing the blockchain network by solving specific and complex mathematical equations. For this, a set amount of digital tokens or coins is awarded to miners.

When mining on the Bitcoin network first started, users were able to mine bitcoin using their laptops and home computers. However, as the Bitcoin network grew and its mining difficulty increased, mining using simply a PC was no longer profitable as specialised bitcoin mining hardware was developed. These machines are called Application Specific Integrated Circuits (ASICs) and came to be used by large-scale mining operations, which ended up dominating the bitcoin mining market and, in turn, pushed out the individual home miner.

Fortunately, for cryptocurrency users who still want to get involved in mining, there are still cryptocurrencies out there that can be mined on a PC. In this guide, you will discover the best cryptocurrencies to mine using your home computer.

Monero (XMR)

MoneroMonero (XMR) is considered to be the top among anonymous digital currencies, designed to provide financial privacy and transactional anonymity to its users. Moreover, Monero is relatively easy to mine on your PC. All you need to do is download a Monero mining software application, such as MultiMiner and Guiminer, join a Monero mining pool, and you are ready to start mining.

Monero is based on the CryptoNight proof-of-work algorithm. The CryptoNight protocol is specifically designed to resist the development of Monero-specific ASICs. Additionally, the team behind the altcoin is committed to ensuring the network stays up to date with ASIC development to prevent its coin from being “hijacked” and subsequently centralised by large-scale mining operations. For example, in April 2017, the Monero developer team initiated a hard fork in response to Bitmain’s Monero-specific ASIC to keep the anonymous digital currency ASIC-resistant. These factors mean that large mining operations cannot take over the ecosystem as it has been the case with bitcoin.

If you wish to increase your Monero mining earnings, you will need to purchase and install graphics cards to boost your processing power. For Monero GPU mining, AMD graphics cards are considered most suitable.

Vertcoin (VTC)

VertcoinVertcoin (VTC) is well suited for small home mining operations. Like Monero, Vertcoin is also resistant to the development of ASICs, which is one of its key features as “the people’s coin”.

The highly user-friendly Vertcoin mining software, One-Click Miner, is available for download from Vertcoin’s website, and supports both CPU and GPU mining.

The process to mine Vertcoin using the One-Click Miner is uncomplicated and easy to start. After downloading the software, you simply need to choose a mining pool that suits your computer’s processing power and you are ready to start mining Vertcoin from home.

It is important to note you can only use AMD and Nvidia graphics cards to mine Vertcoin. The team also publishes additional information to help you calculate the profitability of your mining operation based on the metrics relevant to you.

Dogecoin (DOGE)

DogecoinThe meme culture has expanded significantly in the last few years, so much so that a digital currency that was based on a meme was launched. That digital currency is Dogecoin (DOGE). While initially considered somewhat of a joke, the altcoin has managed to establish itself with a significant and committed community and boasts one of the highest transaction volumes in the crypto asset market.

Dogecoin employs the Scrypt proof-of-work algorithm, which enables the Dogecoin network to use less energy in its mining process than, for example, bitcoin, and its block time is only one minute to miners gain new coins as rewards faster than in other networks.

To start mining DOGE from home, you will first need to download a Dogecoin wallet in which you can store your mined coins.

Then, you will need to decide between the two possible ways to mine Dogecoin at home, via CPU or GPU. While using your CPU, the mining software, CPU miner, runs in the background. It is designed such that when you are not using your PC, it will not slow down your device.

Using AMD or Nvidia graphics cards can increase the speed at which your computer engages in the mining process. For GPU mining, you will need to use either cgminer or cudaminer as they are compatible with the graphics cards. However, to maximise the chances of acquiring a block reward, it is advisable to join a mining pool, such as CoinEx and MultiPool. This allows you to leverage the greater collective processing power and speed for higher returns from mining Dogecoin.

Things to Consider When Mining Cryptocurrencies

Best Cryptocurrencies to mine at homeWhichever coin you choose to mine, it is advisable that you research the pros and cons of each digital currency’s ecosystem before you launch your home mining operation. For example, you do not want to get involved in mining a coin that is easily susceptible to a 51 percent attack or one that shows little potential to increase in value in the future.

In addition, you need to bear in mind that you will need to protect your computer from overheating while you are mining, ideally by purchasing extra fans for cooling. It is also vital to keep up to date with the latest software updates as not being on the latest version could mean an interruption to your mining operation, which will affect profitability. Moreover, updating your ledger means that you are able to reap the benefits of any security patches included in the new versions of the software. This is an especially important consideration.

Furthermore, you need to keep an eye on local regulation covering cryptocurrency mining and on any potential new taxes that may require you to pay income tax on your mining profits. Lastly, consider the costs of electricity in your area. If energy is expensive then your mining operation may not be as profitable as you had originally estimated it to be.

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7 Tips for a Startup Broker: “Starting a Brokerage is easy, running one is not!”

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tips for a startup broker

Like any other business, Online Brokerage has particularities which are not obvious at the beginning of the journey. In this article, I will draw your attention to some common pitfalls and save those intending to start a brokerage some money, time and nerves by shedding light on the challenges ahead of you.

0. Test Your Assumptions.

I marked this point as ‘Zero’ on purpose to highlight it’s importance as a foundation.

When we decide to start a business we are driven by our intuition and past experiences. What we are reluctant to acknowledge is just how much we are driven by emotions instead of calculations. I’m not here to discredit Intuition or ‘Gut Feeling’ as we call it. As a matter of fact, most of the successful entrepreneurs are known for being visionaries i.e. people with extraordinary intuition.

As Albert Einstein once said ‘The intuitive mind is a sacred gift and the rational mind is a faithful servant. We have created a society that honours the servant and has forgotten the gift.’ My interpretation of this genius thought is simple – trust your gut, yet verify assumptions with data. In practice, this means if you truly believe in your business idea, don’t let critics crash it because they are just as subjective as you are, instead find a way to test and validate it.

Test your MVP (Minimal Viable Product). You can test your idea without incurring large expenses e.g. build a prototype of your business and test it on the group of people you know and also strangers. Many providers will be willing to give you a functional demo platform for you to run tests.

1. Legal setup

When approaching legal setup of your brokerage firm the main question is whether or not your country has relevant regulations for Online CFD Brokerage firms. If so, you must obtain the right type of license to run the business. Be prepared for a lengthy process and long hours billed by the lawyers. My recommendation here would be to go along with advisors with good track record.

On the other hand, not many jurisdictions have legislation in place to govern CFD Brokerage industry. In those jurisdictions, you might be treated as any other online business/merchant. This saves you expenses on lawyers and consultants, and also removes statutory obligation to maintain minimal level of capital requirements. This obviously frees up a lot of cash to be utilised for the growth of your business. Nonetheless, even if you are not obliged to maintain minimal capital levels, I strongly recommend implementing similar rule as an internal policy.

Lastly on legal setup, if you are considering onshore vs offshore setups (run a business from a local company or use an offshore one e.g. Vanuatu, St. Vincent and Grenadines, BVI etc.) you need to thoroughly investigate if you would be able to find a reliable banking partner to service your offshore company. Nine times out of ten I would advise doing business onshore, as it inspires trust and eases transactional friction.

2. Human Resources

We regularly fall into a pitfall of doing business with people we already know well, friends and even relatives. Even though we might have an advantage of an established trust, this doesn’t mean these people are right for the business and will be able to drive it to success.

PARTNERS. At the primary stage when you are thinking about starting up with a partner make sure your skillsets complement each other. Also, understand whether or not your goals match e.g. if you are building your dream project and your partner is only after a ‘quick buck’, such partnership might collapse bringing more damage than good.

EMPLOYEES. My conviction is that the first person hired in the company should be a professional HR manager (even if part-time). By doing so you will eventually save yourself a lot of time and money by getting the right people from the very beginning. The right people will identify issues and find solutions before they even become a problem.

MENTORS. Finding a few aspirational mentors can be very powerful to stimulate your vision. While experts within an industry can give an in-depth insight on specific matters, I’d also recommend ‘getting outside the box’ and reaching out to people from other domains. My personal example is Buroka’s Freemium pricing model inspired by Spotify. The idea is that the basic service should be available to clients without high thresholds like a Setup Fee.

INVESTORS. Lastly, I am counting investors in HR section because at a startup stage you will most likely deal with an individual ‘angel’ investor who will support you. It’s crucially important that your ‘angel’ fully understands your plans and shares the vision. The 3 most important aspects here are:

(1.) Share the same long-term vision for the project and ensure understanding that patience is part of the process;

(2.) Create effective control and reporting mechanisms for your ‘angel’;

(3.) Be very clear and upfront about the total budget for the project and have funds locked down and available to you at all times.

Lack of either one of the above will hurt your business at some point, be it ‘angel’ wanting to see ROI (return on investment) prematurely or failing to deliver investment on time.

3. Banks and Payment Processors

Banks are notoriously bureaucratic institutions and the best guide to navigating you throughout layers and layers of red tape is your bank account manager. Make sure your business has a human face – meet and introduce yourself to your bank. Do not try to conceal or ‘sugarcoat’ your true business activity, the bank will find out eventually (after the very first transaction most likely) and then if you were not honest there’s no way to restore the relationship.

Apply certain amount of rigour to your accounts’ structure. I do recommend to operate a system of Segregated Accounts for clients’ funds even if you are not required to do so by your supervision authority.

On this, just a couple of basic rules which apply by definition to STP brokers and I strongly recommend all Market Makers (B-Book Brokers) should apply too:

(1.) Have a designated Client Funds Account.

(2.) Reconcile Weekly. This means to calculate the P&L and transfer profits into your Company Account.

(3.) Just like with personal savings – Save Up for tough times. In a B-Book model specifically, a broker has to maintain certain minimal capital to satisfy potential P&L drawdowns.

In case with a PSP (Payment Solution Provider) just like with banks I’d recommend using local licensed payment processors. They would normally have lesser fees than large international processors and you’d find them more responsive to your needs especially at the start of the business when you cannot boast large turnover on your accounts.

4. Technology

Using IT world jargon ‘Define your MVP’, where MVP stands for Minimal Viable Product. This presupposes construction of a logical framework of your technology at the most basic level that would allow you to start doing business ASAP. Of course our natural instinct is to ‘roll out’ the best version of our product/service to the market, however, the reality is counter-intuitive. You wouldn’t know exactly what your customers truly want unless you start testing and getting feedback from them. The core idea here is to start with a basic offering and once you have few clients on-board to start iterating and improving your business avoiding huge upfront costs and time wastes.

Once your MVP is defined you need to carefully scan the market and find the best Technolgy partners for your business model. There are countless great solutions but the reality is that you wouldn’t be able to afford them and most importantly you might not even need them upfront. Compare offers from providers with in-depth expertise and good customer support.

Own your domain and hosting. These are important assets which must be strictly in your possession. Do backups for everything. In internet business loss of data equals loss of business.

5. Managerial accounting

Know your budget. Whether you finance your project with your own means or attract investor capital, it is critically important to understand your present and future budgets to set up and sustain the project. I would strongly recommend avoiding the situation where you will be relying on a promise of financial commitment instead of funds being available upfront. Absolutely the last thing you’d want to happen is your investor to pull out of the project halfway leaving you with prospects of failure and potential liabilities.

Be pessimistic in your revenues calculation. It never goes smoothly in the beginning, you’ll be making mistakes and winning the first clients will be a mission. Pace yourself for a marathon, not the sprint and try to be as lean as possible financially. Build a cash flow which would be tailored to reinvest most of the profits back in the business development, marketing, and customer support.

6. Marketing

A cliche saying ‘Think outside the box’ fits perfectly here. A startup project has no chance of competing for online clicks with the giants of the industry with deep pockets. My strongest advice here would be – think locally, be the best for a specific audience of clients in your target region to start with. Don’t worry about the rest of the world – become the best where it matters.

Part of thinking differently will push you to consider unorthodox marketing channels. Whilst building my first online business in Africa I discovered that the traditional Google and Facebook campaigns were not nearly as effective as communicating with the target audience via radio.

Get personally involved and build your business around your personal brand. Clients always want to know who is behind the business. A founder practicing transparency and integrity in his or her business will boost the customer confidence. Strong business oriented Social Media profiles are an absolute must for a founder.

Start off by carefully crafting your LinkedIn and Facebook profiles and move forward to building a solid online reputation in general. Hypothetically, if Elon Musk were to set up a brokerage firm, it would not struggle with customer acquisition simply because of the solid reputation of the founder. As the old saying goes ‘people buy from people’.

7. Customer Care

Focus on speed of deposits and withdrawals. This tip is worth an ‘ounce of gold’. Customers will judge you primarily by the way you handle their money. Make sure these two operations are pitch-perfect beyond all else.

Without an understanding of financial markets, online trading may be akin to gambling. This is bad because it doesn’t create a bond of continuous interest and engagement. To be successful a broker must educate their customers and navigate their journey – teach them about risk management and market patterns, show opportunities and warn about the pitfalls. Most of our successful startup clients are educators and trainers who have customers’ best interest in mind.

The End

I have covered a few essentials in this article. Obviously, there’s plenty more you will discover along the way. I am happy to become a mentor to a serious and passionate entrepreneur and share my knowledge and experiences.

This article was contributed by Artem Trofymenko, Founder of Buroka Group

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6 Things You Need to Consider Before Starting or Investing in an ICO

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qiibee

1. Build a good team

Surround yourself with an awesome team!

Think technology experts, marketers and investors. Having experienced and relevant industry professionals working behind the scenes will add credibility to your ICO and product.

A lot of startups make the mistake of not hiring the right people in the first place. It’s so important to have a team who understands your goals and knows how to leverage your varying skill sets to build and offer a value-added product to your target market.

2. Have a clear vision and product roadmap

Developing a clear vision and product roadmap to sustain and achieve that vision is one of the most important things you should do before starting an ICO or investing in one. Ask yourself, what am I trying to achieve here? How am I developing a blueprint for the future?

To answer those questions properly, there are two things you should do:

  1. Create a watertight whitepaper introducing your product, and explaining your approach, the problems it’s going to solve, how it’s going to do it and your business development plan in as concise a manner as possible. Go beyond the typical whitepaper and be able to show something more to people. That in itself brings a lot of value to startups.
  2. Develop a product roadmap with clearly defined and realistic goals and timeframes. 

3. Adopt the right technology

Once you know what your vision is, the next step is to think which technology are you going to use to actually fulfill the problems that you are making with your product. Ask yourself, which blockchain should you use? Should you use more than one blockchain? Or should you build your own?

Next, decide on the token design and economics you want to use. This is important because it is part of your product. You have to think, what does my product do? Who is the user of my product? This is one of the core parts of the product so it’s important to really think about the token economics and design.

4. Decide on your distribution strategy  

A good distribution strategy cannot be underestimated, so begin with the end in mind. Ask yourself, how will you acquire new customers and keep existing ones? On the blockchain, distribution has taken on a new dynamism and become extremely competitive, so how will you market your products or services effectively?

5. Conduct due diligence

Dot the i’s, cross the t’s and develop a due diligence process. Like any business venture, before starting an ICO you must meet certain requirements. Find out what taxes you have to pay, when you must pay them and what regulations exist in the country you are based in. Plan your ICO along with the local tax authorities to provide legal certainty and enable more reliable planning.

Deciding on your ICO’s terms and conditions is also worth doing early on.

6. Look at your investors

Be selective with who your investors are. Every single person who is investing in your company should genuinely believe in what it is that you do and have values that align with yours. Leverage the community that are investing in you and learn as much as possible from them. Remember, it’s important that your ICOs obtain smart as well as connected capital and not just any capital.

This article was contributed by Gabriele Giancola, co-founder and CEO of blockchain-powered loyalty ecosystem qiibee

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