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So as you’ve probably heard  because the media can’t shut up about it  in 2017, the Ripple currency  otherwise known as XRP shot up in value  across the year by 30,000%.  A lot of that just being in the last couple of weeks.  A lot of this was being driven by a rumor  that was going around the space  about Ripple potentially being added to the Coinbase app.  I actually heard about this rumor a couple of months ago  and there was some fake screenshots and videos going around  which easily could have been put together  in Photoshop or something like that.

But you can never discount the power of a rumor  and the speculative money people  are willing to gamble on something.  So what we’ve seen over the last couple of weeks  is the price shoot through the roof.  As with all things in cryptocurrency though  speculative price increases do not equal utility  and that’s why I wanted to talk a little bit today  about what Ripple is and why  it’s not really decentralized at all.

What is Ripple?

Ripple was created many, many years ago  and I’m not gonna tell the full history story  but it was created by somebody called Jed McCaleb  who is actually the person who created Mt. Gox.  But he then sold it to Mark Karpeles  before all that bad stuff happened.  Then after Ripple, he went on to create something called  Stellar which is another cryptocurrency.  Ripple has been around for a long time  and it’s always kind of hovered  in the top 10 cryptocurrencies  but people haven’t really known what to make of it.  That’s because Ripple mostly targets its marketing  towards banks and big financial institutions  rather than the small guys.

So historically, the people who were against the banks  and against financial institutions  I.e. the people that created BitCoin  they didn’t want any part in Ripple  because they didn’t want to side with these people  who created the economic crash.  But speculation from uneducated investors strikes again.  So the reason you’ll hear some people screaming  Ripple isn’t decentralized  is the fact that Ripple actually only relies  on around 55 validator nodes  and these validator notes, a lot of them  belong to Ripple themselves  they just service somewhere  but a lot of them belong to banks and exchanges  which Ripple, the company, has partnered with.  Most of these people are gateways in the Ripple network  and it’s important to know that XRP  which is the currency that is traded on Ripple  it’s the base currency  is just one of the things you can trade on Ripple.

Ripple is actually supposed to be rails  for these financial institutions  and what that means in a nutshell  is that Ripple is designed to be a new technology stack  for banks and financial institutions  to trade assets, whatever they may be.  They may be USD or Euros  just faster between one another.  So basically these 55-ish validator nodes  they tell each other about all the transactions  that are happening on their independent gateways  and then if they all agree with one another  they keep moving the ledger forward and forward and forward.  As long as they agree on everything, it’s all peachy  but this is really easy to pull off  when there’s only 55 validator nodes in the world  especially if like half of them are owned by one company.

Just to put it in contrast, Ethereum has over 29,000  full nodes validating and BitCoin has around 12,000.  On top of that, Ethereum and BitCoin  also have the proof of work mining  which secures the ledger.  To further compound things, the Stellar protocol  which I mentioned earlier.  they actually started out as a fork of Ripple  they just forked the code base  and changed everything a little bit  but shortly after releasing, they actually discovered  that there were problems in the Ripple protocol  which amounted to them saying Ripple isn’t secure  as a consensus protocol above one node.  So there’s actually a chance that these 55 validator nodes  the banks and the exchanges out there  are all just playing by the rules  and the protocol actually hasn’t been tested at scale  when a bad actor comes into the scene.

The thing is, it’s only these big companies  that are invited to run these validator nodes  so we’ll never really know if there was 1,000  nodes tomorrow by just regular people running them  whether the network protocol and consensus  would actually work.  Stellar actually had to completely re-architect  and redo their consensus protocol  which is now called the Stellar consensus protocol.  I might cover that in the future  but basically, it’s a practical byzantine fault tolerant  consensus protocol and it’s a lot more resilient  against consensus attacks.  But let’s say we forget the consensus protocol stuff  which we shouldn’t, but let’s say we do.

Even if you look at the Ripple money supply  that XRP token, the Ripple company themselves  and their partners own over 50% of the money supply.  That means that they essentially control the market  and I don’t think you have to be an economist  to know it’s bad when a single company  owns 50% of the money supply.  Because there was never any mining in Ripple  it was essentially all pre-mined  and sent to the company themselves  and they were then able to sell it  and distribute it to people as they saw fit.  But on top of this, and this is kind of the real kicker.  The Ripple protocol actually has something in it  called a freeze function and what this essentially does  is it allows gateways to freeze your account  just like a regular bank can freeze your account.  So if one of these gateways doesn’t like what you’re doing  they can then freeze all your funds  which doesn’t really sound that decentralized  or trustless to me.

I think it’s really important to understand these essentials  about what Ripple is.  I’m not necessarily down on Ripple  its just not what I would deem as a cryptocurrency  or something that extends the original vision of  Satoshi and BitCoin.  That original vision was about doing away with the banks  and making sure that people had  control over their own money.  They wanted to get away from centralization  they wanted to decentralize  and make it so that one big company couldn’t  freeze your account or control the whole money supply.

Like I said, I’m not necessarily down on Ripple  it’s a company and software and they can do what they want  but I think a lot of the people that are  pouring their money into the thing right now  are just simply uneducated about what the thing is.  It’s either that or it is the cryptocurrency  people have just said, you know what?  We don’t care about decentralization  or trustless consensus any more.  We’re all in on this centralized thing.  In a way, putting your money into XRP  is like just putting your money into a Venmo account  because there’s a lot of trust  in the people running the network involved.

The only difference is people go and tell  their friends and family, buy this XRP thing  and you’re gonna get rich  and it artificially drives the price up.  It’s literally the definition of a speculative bubble.  If you remember, I said that this whole  kind of sparked off because of a rumor  that Coinbase were gonna add Ripple to their app.  In the last couple of days, Coinbase have come out  and said, we’re not adding any new assets  that was just a rumor.

So the price of Ripple quickly crashed 20%  who knows what it’s doing now, I haven’t really checked.  Ultimately, I hope this is just a case  of people not being educated and they’re gonna go out there  and endeavor to become more educated about this stuff.  People just throwing their money at things  without really knowing what they are  and I just think it’s a sad state of affairs  if that’s what cryptocurrency has become.  People just putting their money into something  regardless of the technical background of the thing.

Why is Ethereum so slow?

So moving on, Ethereum, we’ve seen its price  also go up with the market over the last couple of weeks  I think it’s hovering at around $1,000 right now.  But this increase in price coupled with the fact  that there’s severe scaling issues  with the Ethereum protocol  has meant that the network is really suffering  and it costs a lot of money to  send Ethereum to anybody right now.  Just sending Ethereum to somebody right now  will cost around $2 or $3  and if you’re trying to interact with ERC-20 tokens  those tokens that ICO’s use, it’s gonna cost more than that.

And then you’ve got to wait for the backlog  of these transactions to get picked up by miners  which is taking even longer  and what it ultimately results in  is that token exchanges can take hours  if not days to process.  This is a really big problem  especially for exchanges who have to deal  with people withdrawing their money  and the exchanges have to set the fees accordingly.  In addition, when people are trying  to deposit into exchanges  they’re obviously getting a lot of support emails  saying hey I sent this token two days ago, where is it?  And it’s not really the exchanges fault at all  it’s the Ethereum network itself.  As a result, we’ve actually seen some exchanges  such as Bittrex holt the creation of  new deposit addresses on their exchange.

So if you’re a new user, you basically can’t use Bittrex  for anything Ethereum or ERC related.  Ethereum scaling is a really big challenge  and I’m not sure that something like payment channels  is really a silver bullet that’s gonna solve all of this.  As per our previous cryptocurrency weekly video  I was talking about how fees are another  big problem that we need to address.  With payment channels, you have to open and close them  so those fees aren’t gonna go away.  As the price hikes up and up and up  these fees are gonna go up as well  because the fiat price that people  are exchanging for goes up.

So what might have been a 20 cent fee a couple of weeks ago  might now be $1 fee.  I don’t have a good solutio to this problem  but I’m sure somebody out there is working on it.  On the topic of exchanges  we’ve seen in the last couple of weeks  exchanges picking up the pace  at which they’re delisting certain  ERC-20 tokens on their platforms.  They have a variety of reasons  they deem for delisting a token.  It used to be just about transaction volume  and if enough people weren’t really trading the thing  they would de-list it.  But these days, there’s a whole bunch of other fears  that the exchange’s have about whether the thing  might be deemed as a security in the future  which could put the exchange in hot water.

Just yesterday, several tokens were announced  to be de-listed from Bittrex including some pretty big ones  that people have been excited about  and people are starting to freak out about  whether the tokens that they hold  could just be de-listed tomorrow.  The general rule of thumb here  and this is not legal financial advice at all.  I think if the token can be redeemed  for a tangible good or service  then it’s kind of safe because just like  you were sold an Amazon gift voucher  which you can then redeem for something.  If there isn’t a working platform  or good or service you can redeem that for  and the token’s only use is to send between one another  with no real purpose then that’s a little worrying.

ICO tokens being delisted?

I actually think we’re gonna see a lot more  of this behavior over the next couple of months  with exchanges de-listing tokens  they’re just not sure about  and their lawyers might be freaking out about.  I think we’ll start seeing regulatory bodies  start coming down on these ICO’s that have launched  over the past 12 months and kind of setting a case  and a precedent that they’ll then use moving forward.

This puts exchanges in a really hard spot  because they don’t want to be doing anything illegal  so I think their lawyers are probably  going to tell them to take the safest bet  which is de-listing anything that isn’t 100% legit.  I called this out a while ago on a previous video  but I think the first half of this year, 2018  is gonna be really interesting  when we start seeing the cookie kind of crumble  because we’re at a point where a lot of these ICO‘s  from last year are failing to deliver on their roadmaps  and also, the regulatory bodies had time  to do their homework and kind of take stock  of everything that’s happened.  It’s really just a watch this space for now  but it’s gonna be interesting  and I’ll keep you all up to date  with it through these videos.

Now I know you’re probably thinking  Jackson, do another technical video  I want to promise there are more coming.  I’m probably gonna be doing a video around  just byzantine fault tolerant protocols such as Stellar  and also videos around things like Iota, Cardano  things that these new cutting-edge technologies  which people seem interested in.  I also want to do a Mimblewimble video  because it sounds cool but  it’s also very cool technology.  So that’s it for today.  I hope you found this video helpful.  If you did, please subscribe  and you’ll get weekly updates just like this.  If you learnt something from this video  or just brought you up to date  please click that like button, it really helps.  Until next time, thanks for watching.  See you later.

As many of you may have heard by now, Ethereum is moving away from mining and towards a Proof of Stake model. What does this mean, other than a lot less electricity use? What are the implications for investors? We have done some research into this development and we think it could mean big things for Ethereum.

Proof of Work (PoW)

As of now, Ethereum’s token “Ether” is generated through a PoW (Proof of Work) method. That means that random miners are responsible for the creation of Ether. This uses a lot of resources- a very high amount of computational power and electricity. The brains behind Ethereum, Vitalik Buterin, has himself stated that the electricity which is consumed by only Bitcoin and Ethereum is excessive.

To take Ethereum to the next step, the 24 year old inventor has decided to change the fundamental workings of the open source project. The plan is simply to shift the network to a PoS (Proof of Stake) model.

Proof of Stake

Proof of Stake in simple terms is the process of using “validators” in order to check the transactions. Processing under PoS is much simpler and easier i.e. the user just has to prove that he owns a certain amount of the coins which are in circulation. Also, PoS makes the system more secure and robust than PoW.

Vitalik Buterin has announced a roadmap for this transition. The initial step will be in making a “hybrid system” which the system will be running between PoS and PoW starting from August or September. The full transition is estimated to be completed by the end of this year. He has already released the PoS repository on GitHub. To make the transition happen there needs to be a  PoS protocol in place. Vitalik has decided to go with a smart contract PoS protocol known as “Casper”.

What is Casper?

Casper has been around since 2014 and simply put, it is going to be the work protocol for Ethereum’s PoS method. It lets the users of Ethereum vote for which block should be added to the chain. The final result will be taken on a consensus basis. If the user votes in favor of the eventual consensus then he will receive benefits. If his vote was against the consensus then his stake may be lost or reduced as a punishment for incorrect voting (assuming the majority of voters are not malicious). Casper regulates the mechanisms of processing the results, determining the consensus, granting benefits and nullifying or reducing the stakes of bad voters.

Three important applications of Casper

Less Censorship – in Bitcoin, if a miner loses a block/gets censored, remaining miners will benefit from this. In the case of Ethereum with Casper, everyone will benefit more if more correct blocks are added to the chain.
Costs – The validator method will have fewer costs than mining because of less electricity and less computing power usage.
Scalability – some of the scalability problems can be finally solved, as transactions should be sped up under PoS.

What will be the benefits for existing stakeholders?

There will be no requirement for generating new Ether which means that the existing stakeholders will be benefit on a large scale when compared to the new stakeholders in the future. However, the hard number of Ether which will be required to stake has not yet been released. Based on the working mechanism the amount required to stake during the start will be high and will eventually be reduced.

The problem and the solution

One of the long-discussed problems was the uncertainty of success in the PoS system. Many developers were worried that smart contacts might not work properly if PoS was implemented due to the “finality” problem. However, the ingenious Ethereum inventor has explained it briefly in this post. Casper will offer stronger finality guarantees than any proof of work method.

Downside of PoS

It is interesting to note that the biggest advantage of PoS system of Ether is also its biggest disadvantage. The major shareholders will be granted the access to more authority and control in both economic and technical areas. This may them to have undue influence versus the average stakeholder.

Summary

Cryptocurrencies sprang up based on a number of novel concepts, however Ethereum is one of the very few cryptocurrencies which is on a continued path towards innovation. One of the advantages for Ethereum is that under its Enterprise Ethereum Alliance program it gets help from various Fortune 500 companies. It also has an incredible developer base that is dedicated to its success. As stated earlier, users can look forward to the switch from the current system (PoW) to the hybrid system by the August or September. The complete transition is expected to happen before the end of this year.

After the Casper update, the price may experience a positive shock, not only because of the new features but because there will limited availability of Ether in the chain. This may be a catalyst for Ethereum to overtake Bitcoin in 2018.

– Let’s talk about Stellar.  I’ve got a lot of requests recently for a video on Stellar,  more specifically the Stellar Consensus Protocol.  What powers the whole network known as Stellar?  I think a lot of these interests has come from the fact  that the Stellar price has actually been going up  to the right recently.  But also, that a bunch of ICO are starting  to run their ICOs on Stellar instead of Ethereum.

The obvious question is, why would they make that decision?  So let’s try to break that down in this video.  I do warn you this gets a little bit technical  because we are talking about a consensus protocol,  so if you’re having trouble following along,  something I recommend to a lot of viewers  is if you go down to the YouTube settings  in that little cog icon, you can change the speed to 0.75,  and changing it to 0.75 speed  would make me sound all weird,  but it will make things a little bit slower  and easy to follow along with.  It’s hard to go at just the right speed for everybody.  Some people say I’m too fast;  some people say I’m too slow.  So I’m just trying to pack everything  in a nice condensed video,  and hopefully, you can adjust the speed  to suit your viewing preference.

The history of Stellar

Stellar has been around for a while, since 2014 actually.  And it was started through the Stellar Foundation,  which was created by Jed McCaleb and Joyce Kim.  Originally, Stellar was simply  a fork of the Ripple protocol,  and that’s because Jed McCaleb, the creator of Stellar,  also created Ripple back in the day.  But there’s a common misconception  that that’s still the way it is, and that’s not true.  Stellar actually completely re-architected their code based  in a way that protocol works,  so let’s cover that in this video.

So to start with, we need to talk about  what Byzantine Fault Tolerance means,  and I have a previous video on this,  which I recommend you go back and watch  just around how consensus works.  But in a nutshell, you have a set of validators,  say 12 validators who need to all agree on one thing.  When they agree on this thing,  they achieve something called quorum or consensus,  and then that gets written back into history  in the form of a Blockchain  or some sort of other ledger data structure.

Most implementations to date in the cryptocurrency space  have implemented something called  Practical Byzantine Fault Tolerance,  which was actually outlined in a Whitepaper  all the way back in 1999.  And these networks typically have  a predefined set of validators who achieve consensus.  By predefined, I mean that there’s usually  a central authority, usually the software developers  of the protocol, who define who those validators are.  In Practical Byzantine Fault Tolerance,  everything’s peachy if you can keep 66% of the validators  agreeing on the one thing,  so just like in proof of work systems  where you have a 51% attack,  if someone gets 51% of the hashing power,  in practical byzantine fault tolerance systems,  you have to make sure that you don’t have  more that 33% of the nodes in the network being malicious.

Some examples of this PBFT systems  include systems like Ripple, which I’ve already mentioned,  Hyperledger, which is another private blockchain solution,  and also Tendermint,  which I’ve covered in the previous video.  So as I said earlier, Stellar was originally forked  from the PBFT implementation of Ripple,  which is originally created by Jed McCaleb as well.  But after the initial release of the Stellar network  as it began to gain traction,  the network suffered a pretty bad fall,  which means consensus wasn’t being achieved on the network.

Stellar did a lot of research in this,  and they actually brought somebody in  called Professor David Mazières.  And in this research, they found  that the existing Ripple system wasn’t really fault tolerant  beyond one or a couple of nodes.  So they had to go back to the drawing board,  and Professor David Mazières wrote to Whitepaper  outlining something called the Stellar Consensus Protocol.  Rather than using that traditional  practical byzantine fault tolerance,  it uses something called a Federated Byzantine Agreement.  And in this model, instead of having  that predefined set of validators  that a company like Ripple sets up  or when you set up a Hyperledger  you have to define their validators.

In a Federated Byzantine Agreement system like Stellar,  the nodes can openly choose who they trust,  and when the node in a Stellar network  decides who to trust, this is called a “quorum slice.”  based on all the nodes that are talking to one another,  they combine these quorum slices  to form quorums within the network.  Ultimately, the market that exists within the network  defines who is trustworthy,  rather than the software developer’s own company  predefining any set of validators.  Because of nodes being able to choose who they trust,  you’ll sometimes hear this system called “open membership,”  because it’s not a closed system.

Anyone can spin up a node and become a validator  in the network of their own accord.  Now because of this open motto  where people were choosing who they trust,  you can end up having two quorums  completely separate and not talking to one another,  which obviously would be a problem.  And this is addressed through something  called quorum intersection,  which essentially states that two quorums  always have to be linked by one node.  It will essentially make sure that transactions  that are happening in one side of the quorum  are also happening on the other.

The Stellar consensus protocol 

The Stellar consensus protocol  outlines a lot of cool ways to deal with this,  but it’s important to outline that this isn’t bulletproof.  If you do have a network full of malicious nodes  who are doing things to mess up the network,  or you have just nodes going down for no reason,  then obviously this system is gonna fall apart.  But because of the open membership system,  it’s ultimately more decentralized  and, in my opinion, better  than practical byzantine fault tolerance protocols.

So the core of this Stellar consensus protocol  is that in order to achieve  this federated byzantine agreement,  nodes were essentially filling out a ballot  all the time and voting on consensus.  And during this federated voting process,  the nodes are sending messages between one another  with a statement of something  that they believe should be written into history.

In addition to that, when they’re sending these messages,  essentially, the transactions that are being written  into the state of the blockchain,  these nodes are also broadcasting  what the quorum slice looks like, who they trust.  And through this, they’re essentially getting  a gossip protocol that helps spread node discovery.  These people are saying, hey, I trust these people,  and as another node, you can look  at who everybody trusts and build a quorum based on that.  If everybody’s telling you who they trust,  you can essentially build a map of the whole network  and see how consensus is being reached.

Now, I’m not going to go too deep into the voting process  ’cause it is quite complex,  and I recommend you read the Whitepaper  if you wanna go that deep into the protocol.  But essentially, all these participating nodes  do continuous rounds of voting  until they can come to an agreement  about what should be written into history.  Eventually, assuming you don’t have malicious nodes  or nodes just going offline,  the net group of nodes will establish a quorum.

After everything it’s prepared and voted on,  then there’s another round of voting  to get that actually committed into the network.  At this point, the nodes can vote to do one of two things.  They can either commit or they can abort.  And through this and repeated cycles of voting,  they eventually come to consensus.  So it’s really important to know  what we’ve just discussed is simply a consensus network.  It’s a way to get a group of decentralized entities  to agree on something.  It means it doesn’t take care of things  such as minting new coins.  It doesn’t take care of incentivising nodes,  like why would I spin up a node  if it’s only gonna cost me money  and there’s no block rewards?  And it also doesn’t predefine trust,  which, in a way, is a good thing,  but also means that discovery has to happen  on the node itself.

To solve the minting problem, Stellar had an initial period  where you could sign up and verify  with something like Facebook and social media profile,  and they would essentially airdrop you a bunch of tokens.  They’ve also done things like Bitcoin airdrops  based on how much Bitcoin you have as well.  So the Stellar consensus protocol and Stellar in general,  they do still require some trust in the system  and who you’ve defined that you trust in your quorum slice.  It does provide a much better order trail  of what those nodes and participants are doing.  So if all of a sudden, a bunch of nodes become malicious,  you can easily update your quorum slice  to point at other nodes which you find trustworthy.  In that way, it’s resilient to a lot  of different attack factors.

Through all of this, Stellar able to offer a protocol  that has very fast transaction times,  low fees, and high skill ability ultimately.  They’ve done away with proof of work mining,  which means you don’t have a bunch of people  wasting computing power just in order to secure the network.  One thing I do wanna call out,  because it gets a lot of comments though  is that Stellar does have a limited number of nodes  powering the network at this point in time.  I can only find around 20 or 30 nodes  that is securing the network.  I think this is mostly because  there’s no real incentive for an average Joe  to spin up a server and run a validating node.  It’s an expensive thing to do,  and there’s no block rewards  that give you payment for doing so.

So this does introduce some incentive  toward centralization.  But again, remember back to the fact  that this is an open membership system,  so essentially, anybody can spin up a node if they want to.  That means that it’s not that technically different  from something like Bitcoin.  Or technically, anybody can point  hashing power at it and participate.  Even in a system like Bitcoin,  we’ve seen that centralization develop over time  as it’s so costly to run the hardware  and pay for the electricity.  Ultimately though, I think that Stellar  is a far better improvement upon other  practical byzantine fault tolerant protocols like Ripple,  ’cause it has that open membership system.  It’s not closing it off.

How currency and assets work on the Stellar protocol?

Anybody can participate.  So that’s consensus, but let’s talk a little bit  about how currency and assets work on the Stellar protocol.  Stellar has a native currency called XLM or lumens.  And this is use simply to pay fees  which are relatively low,  but offer a form of spam protection.  So on top of the Stellar network and that XLM currency,  you can also issue assets or tokens  just like you could with an ERC20 token on Ethereum.  But I’d say it’s actually a little bit more secure  that something like an ERC20  because there’s no scripting,  there’s no smart contract required.  It’s simply using built in functions  to issue an asset on the Stellar protocol.

Assets can be anything,  from something that’s created like a token,  or it can be a real world asset like USD or Euros.  When you hold an asset on the Stellar protocol,  you’re actually holding a credit  from an issuer that you trust  to have that asset somewhere.  This all takes place through something called a trustline.  To set up this relationship, you set up a trustline  between your account i.e. your wallet  and the issuer of the asset.

So for instance, if you setup a trustline with company X,  and they gave you token Y,  what they’re actually issuing you  is a credit for that token Y.  And the trustline is simply a relationship that says,  I trust that these people are good for token Y  and they can repay that  or I can redeem that token Y in the future.  This matters less with token systems  that are new tokens that a company is issuing,  but for something like USD,  you’re saying that you trusted that company  has a reserve somewhere  that you can redeem that USD credit you’ve been issued  for that USD at some point in the future.

Participants that issue assets like this  are called “anchors” in the Stellar network.  And any account can issue assets in this way.  So the ability to create and transfer assets  on top of the Stellar protocol,  Stellar needed to offer a way  for people to trade between these assets freely.  And so there’s actually a distributed exchange  built into the protocol itself.  When you have trustlines set up  and you have assets on a particular issuer,  you can actually put orders on the distributed order book  and then trade just like you would on a regular exchange.  This is baked in at the actual protocol level,  but there are some interfaces  and websites that go into this  that make it look more like a regular exchange.

The most popular one is called stellarterm.com.  I’ll link to it below.  And you can actually go there and have a look  at the order books that are trading right now.  Due to the nature of easily being able to issue assets  and then allow users to transfer them  and trade them on a distributed exchange,  a lot of these ICO companies  are investigating whether they should  issue their tokens on Stellar  instead of something like Ethereum  which has high transaction cost.  When you want to transfer an ERC20 token  to somebody right now, it can cost a lot.  It can cost upwards of $2.  On Stellar, you’d be paying a fraction of a penny  for that transaction.

Users also get excited about this as well,  ’cause they don’t have to worry for the asset  to then get listed on some secondary market or big exchange.  It’s instantly tradable on the distributed exchange  which Stellar offers out of the box.  If you wanna play around with this,  you can simply go over to the stellarterm.com website,  and once you’ve signed up for,  well, it’s a pretty simple process.  You can go to the “Accept Assets” tab.  Under there, you can see all the assets  which you can start accepting,  and you just click a button  and it creates a trustline between them.

Hot tip when you’re doing this,  this has confused me before as well,  you have to mintain a minimum balance of XLM of lumens  in the account before you can setup these trustlines.  So you wanna have a few lumens in the account  before you go ahead and do that.  Support for Stellar seems to be growing  with the Ledger Nano S, the hardware wallet  that everybody loves, adding support for Stellar recently.  And you can actually set it up to support tokens and assets  listed on Stellar as well.

If you wanna check out an asset  that was recently issued on Stellar,  you should check out Mobius.  I did an interview with them previously,  and they recently did their whole ICO on Stellar.  It’s a Stellar native asset rather than ERC20 token.  I’ll link to all these stuff in the description below  so you can go and check it out.  So Stellar is a really novel approach  to byzantine fault tolerant consensus.  I think more people should look into the Whitepaper  ’cause it’s actually really well written.  That’s rather unique in the way it approaches the problem.

I also really appreciate the fact  that Stellar Foundation is a non-profit organization,  and they’re focusing on trying to bank the unbanked  in economies where people don’t have access  to the infrastructure we have in the U.S.  It’s always nice when you see projects  try to give back to society,  rather than just creating something that the rich can use.  I think, ultimately, for all the reasons I’ve listed,  there’s gonna be a lot more ICOs  and people who will try and “tokenize” things,  putting those tokens in assets on the Stellar protocol  rather than something like Ethereum,  something to avoid the congestion and transaction fees  that Ethereum has right now.  As it gains adoption, it’s gonna be really interesting  to monitor how the Stellar protocol scales,  because I don’t thing we’ve really seen the protocol,  the current set of validators  really battle tested to the scale  that Ethereum is running at right now.

I do just wanna reiterate  that the Stellar consensus protocol  isn’t a magical bulletproof solution to consensus.  There are a lot of issues  which I have tried to point out in this video.  It does do rely on a bulk of the network being honest  and not trying to submit malicious transactions  for the quorum to be reached  and consensus to write into history.  But I do think it is a step  above other protocols like Ripple  and other people who have tried to implement  practical byzantine fault tolerance.

We have a preselect set of validators  that you have to adhere to.  There’s some other technologies  which I have been asked to cover  and I will in the future.  One of them that comes to mind is Hashgraph,  but I’ve yet to see if they can implement  an open membership system.  All the implementations I’ve seen so far  have been closed membership systems by private blockchains.  And they haven’t had an open membership system  when anybody can spin up a node and become a validator.

So that’s Stellar and an overview of its consensus protocol  and how it handles byzantine fault tolerant consensus.  I think it’s pretty novel approach.  I’d love to hear your thoughts in the comments  and if you have any questions about it,  just drop them below.  Thanks for watching this video.  If you found it helpful, click that like button.  It really helps out.  And if you wanna get weekly updates,  click the subscribe button.  If you click the bell icon next to the subscribe button,  we’ll go on better and actually notify you  when I post a new video.  As always, thanks for watching.  Until next time.  See you later.

I don’t normally post but in this age of new investors I see a lot of enthusiasm and questions as to what to invest in. This question is a potentially deep one and one that I find captivating, with its answer burried in the quickly developing cryptocurrency landscape.

It is true that nothing is certain in this future. Bitcoin could reach one million, maintaining it’s hold as the main trading pair; it could stagnate in the transaction scaling issues which grow more prominent, necessitating in the diversification of trading pairs and commercially accepted cryptocurrencies; or one of the infinite combinations between.

One thing that is certain about our future is as the total market cap grows, governments and institutions in positions of power are going to want to put their hands into the game in order to control or regulate so that they can get a piece of what they believe is theirs.

Now rules and regulations are not something I claim to be an expert in so I won’t attempt to speak to them but I know one thing, governments love their money and they will not stand idly by watching this market make tremendous profits for many involved and not want a piece. They fear not having control over something so powerful and lucrative.

We see this already with the IRS requesting Coinbase to hand over information on users ([link](https://www.theverge.com/platform/amp/2017/11/29/16717416/us-coinbase-irs-records)), and the Department of Defense sending memos requesting assistance in the research of stealth addresses, ring signatures and Cryptonote (Monero, Aeon) code in general ([link](https://i.warosu.org/data/biz/img/0033/62/1504671158465.jpg)). These are the whispers in the wind of what is coming. They want to be able to see and monitor what people have and where it is going. Private and fungible cryptocurrency makes the surveillance obsessed state sweat.

So what does this mean? Large scale blockchain analysis to link address ownership to you, tracking not only wealth but where that money goes? Mandatory reporting of trade history if Coinbase reports your purchasing (which would also reveal your addresses if you send directly to it)? I am not sure what the form this increased scrutiny will bring. The important part is that public blockchains (Bitcoin, Ethereum, Litecoin and many more) make these things possible.

Now public blockchains aren’t going anywhere because many people don’t care about their freedom and privacy as we have seen with the whole net neutrality fiasco and the many government leaks concerning surveillance. But what happens as cryptocurrencies continue to grow, regulations are passed, the wealth of many of you grow to the point that governments become interested you? These are a few (but very important) reasons there will be a massive growth in anonymous and private cryptocurrencies in the coming years of mass adoption.

There are several coins touted as private and anonymous, but every one has some compromise or vulnerability, except one ([link](https://moneroforcash.com/monero-vs-dash-vs-zcash-vs-bitcoinmixers.php)). That one is also the only one that the DoD is sending memos about and the FBI has been unable to crack (AlphaBay take down. [Excerpt](https://ip.bitcointalk.org/?u=http%3A%2F%2Fi.imgur.com%2FSietBhv.png&t=584&c=iXlxRu0fsSk3uA) [Link](https://assets.documentcloud.org/documents/3898109/AlphaBay-Cazes-Forfeiture-Complaint.pdf)), Cryptonote cryptocurrencies. This really only pertained to Monero as the sole holder of the privacy throne.

How much growth can we expect to see? Is it reasonable to assume that in the next years monero could get to the market cap of Ethereum, $60 billion, or 1/4 of Bitcoin’s current market cap? If that becomes reality we would see $4,000 monero, a 11x increase from today’s standing. This may be conservative and even happen by year end 2018.

Now I said “pertained” earlier because there used to be only one viable Cryptonote currency. There have been others but nothing ever truly got off the ground. But there is currently life being breathed into [Aeon](https://www.reddit.com/r/Aeon/), a Cryptonote currency touting all the benefits of Monero (now and future) with more of a focus on easy of use and mobility with a lighter version of the same ASIC resistant Cryptonote algorithm. This is a risky investment now as work is still being done but if this is successful in what they have set out to accomplish, Aeon will be the Litecoin to Monero.

They may also have a more symbiotic dynamic than the bitcoin-litecoin relationship. Aeon can serve as a test bed for new ideas for use in Monero and the similarity between the two may someday lead to atomic swap-like technology to help solve scaling issues that will undoubtedly arise in the growing usage of Monero like we currently see in Bitcoin.

Again, it’s still early but keep an eye on this one. It’s hanging out around $50 million market cap which is like getting into Monero in mid 2016. And if Monero gets to the Ethereum levels mentioned above, Aeon would likely maintain a 1/10 value relationship and be around where Monero is today, $350 – $400, a 100x gain. So in my opinion, very cheap for a coin that no one can see how much you have or where it goes, not even the government.

Just two cents that were getting a little heavy on my chest.