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CoinPoker Explained

CoinPoker Explained

CoinPoker is a blockchain technology-based poker platform that uses USD pegged stablecoin USDT as the in-game currency and the CHP token is the currency of the CoinPoker economy.

Everyone knows that gambling is of course, well… a gamble and that the odds are rarely in the player’s favour. 

This doesn’t ever stop people from gambling of course. 

Real-life gambling in a casino, not a roulette table or slot machine but a card game like poker presents less of a risk when it comes to the cards that are dealt. 

The player can see the cards being shuffled and dealt in front of their eyes and it is purely down to chance what cards the player and dealer get and then a mixture of chance and skill when the poker hand is played.

When it comes to online poker this is not the case, it’s software that handles the dealing of cards and software is of course programmed and programmers can make the software perform however they want it to perform. 

This makes things way less certain for players, add to this the fact that online poker is big business and operated by large organisations whose aim is to make money it may understandably create some doubts amongst the player community.

In online poker players watch a shuffling animation on screen and have to believe in the poker room’s integrity.

In an industry where cheating on both sides is accepted as part of the cost of doing business any form of transparency surely has to be welcome, for players at least. 

 

Could crypto and blockchain technology bring more integrity to the online poker game?

Crypto and blockchain technology is able to provide the kind of secure underpinning required for such an endeavour. 

With this in mind, CoinPoker is out to level the playing field so to speak using crypto blockchain technology. 

CoinPoker recently released their decentralised random number generating (RNG) software to combat one of the most prevalent issues in gambling, a lack of transparency in in-game mechanics.

Over 60,000 users have played on CoinPoker since their launch in November 2017 and over 56 million hands have been played. 

While ultimately growth is a key driver for CoinPoker as with most businesses, the community is at the heart of CoinPoker’s key strategic decisions, very much in line with many of today’s top crypto projects where the community at large is actively involved. 

This is a far cry from the centralised online gaming platforms where there is the provider (the business) and the customers (the players). 

By investing in innovative blockchain and cryptographic technology CoinPoker can offer a potentially more transparent and perhaps fairer platform on which players from all over the world can participate and the platform can be held accountable at least to a certain degree.

 

Coinpoker uses the same cryptographic hash function as used on the Ethereum network, KECCAK-256

The technology behind CoinPokers’ decentralised random number generator (RNG) uses the same cryptographic hash function used on the Ethereum network, KECCAK-256 to securely transmit card shuffling information to players which can thereafter be verified via a validation tool.

Applying the KECCAK-256 cryptographic hash function to their random number-generating algorithm makes CoinPoker’s new RNG module virtually impossible to reverse engineer.

In addition, it includes the involvement of all the players at the table in the shuffling process as opposed to solely the poker room behind the scenes. 

In essence, the players can choose whether to participate or not at the start of each hand, as soon as they choose to participate, a secret seed value is generated and sent to all the players and also CoinPoker behind the scenes. 

CoinPoker then uses the values to generate a final seed value which acts as the input for the random number generator (RNG) and this results in the final order of the card deck. 

After a hand is played, the players can verify the randomness of the deck and also see the undealt cards that would have been in play.

 

Currently, CoinPokers CHP tokens are listed and available on KuCoin, HitBTC, ForkDelta and Yobit net. 

CoinPoker users can deposit their tokens on the CoinPoker platform or in their private wallets. As CHP is an ERC-20 token it makes it compatible with most Ethereum wallets

Coinpoker uses USD pegged stablecoin USDT as the in-game currency. Transactions can be made using USDT, ETH, BTC or CHP tokens.

 

Conclusion

Crypto and blockchain technology is disrupting many industries and online gaming is no exception! The underlying technology and genuine community-driven approach so common in the crypto world looks to be a refreshing change in the world of online gaming.

 

Disclaimer: This article is in no way an endorsement of Coinpoker or online gaming. It’s simply information about what Coinpoker is and the technology and business model behind it.

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TXID - Transaction ID Explained

TXID Explained

A TXID also known as a transaction ID or transaction hash is a unique string of characters given to every single transaction that is verified and added to a crypto blockchain such as Bitcoin or Ethereum.

 

A TXID or transaction ID is a vital piece of information on a blockchain. 

Every single transaction that is verified and added to a blockchain like Bitcoin or Ethereum is allocated a transaction ID or TXID. 

Think of it as something similar to a booking reference number when you book a flight or a hotel room. 

Every booking reference number is unique and allows the airline or hotel to identify your booking and proves that you have paid for the flight or hotel room.

In much the same way a TXID confirms that the desired transaction was correctly processed and recorded on the blockchain network.

There are some very important distinctions to be aware of when comparing the booking of a flight, hotel room, or say a purchase on Amazon to a blockchain transaction. 

In all of the other cases, there are usually customer service departments with people on the other side to talk to in the event that a transaction isn’t processed correctly. 

Usually, with crypto, there is no person on the other side, the blockchain software and logic take care of everything and if something goes wrong it can get tricky or maybe even impossible to set right. 

Secondly, a blockchain transaction could potentially represent a significant sum, maybe thousands, hundreds of thousands or even millions. 

With those values at stake, it’s essential that the mechanism behind the TXID is rock solid and reliable and that transactions are permanently and securely stored.

With this in mind, it’s reassuring to know that blockchains use something known as a double 256-SHA hash. This is a very long string of numbers and letters and are very difficult to hack.

 

What is a TXID exactly?

A TXID or Transaction ID is a string of letters and numbers that is able to identify a particular transaction on a blockchain network. The string is a double of the SHE-256 hash of a transaction.

Whenever a transaction is signed the TXID of that transaction is actually signed. 

This ensures that if any part of that transaction is changed, the transaction ID will change rendering the signature invalid. 

This provides an additional safeguard to ensure that nothing gets tampered with.

This ultra-high level of security combined with transparency makes crypto pretty unique in the world of finance at least.

 

Below are a couple of famous examples of transaction IDs (TXIDs) to see what they look like

The first-ever Bitcoin transaction

One of the most famous TXIDs is the very first Bitcoin transaction between the pseudonymous inventor of Bitcoin, Satoshi Nakamoto and Hal Finney, an early Bitcoin contributor, cryptographer, cypherpunk and developer. 

Hal Finney received 10 Bitcoin on 12 January 2009 at 3.30 am GMT, at that time literally worthless and today would be worth in excess of €2.6 million!

TXID: f4184fc596403b9d638783cf57adfe4c75c605f6356fbc91338530e9831e9e16

You can view this historic transaction on blockchain.com by visiting: https://www.blockchain.com/btc/tx/f4184fc596403b9d638783cf57adfe4c75c605f6356fbc91338530e9831e9e16

 

The world’s most expensive pizzas!

On 22nd May 2010, computer programmer Laslio Hanyecz posted Bitcoin forum, Bitcointalk

“I´ll pay 10,000 bitcoins for a couple of pizzas…Like maybe 2 large ones so I have some leftover for the next day”

Yes, 10,000 bitcoins!

In those early days, 10,000 bitcoins were worth around 41 USD. A bitcointalk user on the forum accepted the challenge and provided a very hungry Laslio with the 2 pizzas netting himself a tidy little profit. 

Today, in 2023, those 10,000 bitcoins would be worth in excess of 260 million EUR! 

Yes, you didn’t read that wrong! Those are two very expensive pizzas! Due to the historic magnitude of this transaction, 22nd May is now known in crypto circles as Bitcoin pizza day.

TXID: cca7507897abc89628f450e8b1e0c6fca4ec3f7b34cccf55f3f531c659ff4d79

You can view the pizza order transaction id here to see what it looks like:  https://www.blockchain.com/btc/tx/cca7507897abc89628f450e8b1e0c6fca4ec3f7b34cccf55f3f531c659ff4d79

 

Conclusion

A transaction ID or TXID is a highly secure identification of a transaction that has been verified on a blockchain network like Bitcoin or Ethereum. 

It is practically impossible to successfully fake transactions on a blockchain and this ultra-high level of security combined with complete transparency makes blockchains very interesting as a highly secure, global, transactional technology. 

For now, though, all you need to know is that a transaction ID or TXID is the confirmation that your transaction was recorded correctly on the blockchain and that everything went to plan. 

In addition to learning about what a TXID is, it’s also worth remembering the pizza story the next time someone offers you virtually worthless crypto for some pizza, who knows, maybe that same crypto could be worth millions in a few year’s time!

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Altcoin Explained

Altcoin Explained

An altcoin is any type of crypto that is not bitcoin. The word altcoin is made from the portmanteau of the words alternative and coin

Once upon a time not so long ago there was this one lone cryptocurrency called bitcoin. 

It was a strange new creation by a mysterious person or group of people who went by the name Satoshi Nakamoto. 

Even with the huge amount of interest in crypto and the level of information we have available to us, nobody to this date knows who Satoshi Nakamoto is, that’s pretty astounding! 

For a while, at least, bitcoin was this strange new digital currency that few people really understood or even cared about. 

Fast forward to today and crypto is big business, there are literally thousands of crypto coins and tokens out there and it’s growing by the day.

 

What is an altcoin?

The clue is in fact in the name, altcoin stands for alternative coin. 

Going back to the early days of crypto when there was only bitcoin, the lone cryptocurrency, people began to recognise the potential of blockchain technology beyond what bitcoin was doing or offering. 

So new coins began to appear and these new coins, basically anything that wasn’t Bitcoin began to be referred to as an altcoin or alternative coin to bitcoin. 

 

A simple analogy to understand what altcoins are and how they came about

We can liken the current crypto craze to that of the birth of the internet in the 1990s. 

Let’s imagine the internet starts with a single website, it’s pretty basic compared to today’s websites but functional. 

That one initial website could be thought of as Bitcoin. 

The whole concept is new, there is a basic browser and people can access and use this one site from anywhere. 

So, some people began to see the potential of the internet and its underlying technology and began to create websites of their own, let’s call them “altsites”. 

Now there are an estimated 1.86 billion websites out there or 1.86 billion “altsites” out there.

In much the same way, bitcoin was the pioneer that created the first crypto and its underlying blockchain technology, since those days over 9000 altcoins are out there and this number is going to keep rising as it did with websites.

 

The history of altcoins

In 2009 bitcoin arrived on the scene, what happened next? Well around 2011 the first altcoins appeared running on the bitcoin blockchain.

The very first altcoin was Namecoin. Namecoin was based on Bitcoin’s code and arrived in April 2011. 

Namecoin demonstrated that there was space for more coins beyond bitcoin and from there the race to build more altcoins began.

 

An altcoin is not second best

It may seem obvious but we must also understand that the first is not necessarily the best, just like the first automobile cannot be compared to the automobiles of today. 

The first car simply paved the way for others and validated a need, utility and demand. 

In much the same way, using the internet example again, today’s websites are far superior to the very first websites. 

The first websites indeed played a huge part in the development of the internet but they are not superior. 

This is a very important thing to keep in mind as sometimes we can think of an alternative as maybe being second best. 

This is definitely not the case with altcoins. They are simply alternatives or derivatives of Bitcoin in some way.

If we look at Ethereum, it is an altcoin. 

Ethereum however serves a very different purpose to that of bitcoin. 

Whilst bitcoin is purely a digital currency, a way of holding and transferring value, Ethereum is a cryptocurrency with its own powerful ecosystem capable of a lot more applications such as decentralised finance.

 

Altcoins can be highly experimental and volatile!

If we go back once again to the Internet analogy and think about e-commerce, there are limitless possibilities to sell things online. 

Some make a lot of sense and will take off and succeed like Amazon but there are also millions of others that just won’t make it. 

Putting money into altcoins can be very risky, especially very new ones as there’s no guarantee of success, just like investing in a brand new startup that sounds promising but could eventually implode or of course, become mega-successful. The same with altcoins!

 

The technology behind all altcoins

Just like the core technology behind all websites is basically the same, we can say the same with crypto. 

All cryptos run on something known as a blockchain. Call that the “internet of crypto”. 

Blockchains are literally chains made up of blocks. 

In the case of Bitcoin these blocks are mined using something called proof of work (PoW), validated and added to the chain, each time a new block is added to the chain, the miner receives coins in payment. 

All altcoins use some form of blockchain. 

Ethereum has its own blockchain that currently also works using proof of work although that is likely to change soon but that’s a separate topic. 

For now, though, it’s important to understand that the core technology or principles that drive Bitcoin form the basis or foundation of all altcoins in some way.

 

Conclusion

In summary, the vibrant and diverse world of crypto that we see today started out with a single coin, bitcoin. 

Everything that has followed ever since is referred to as an altcoin. It’s not conceivable that at some point, perhaps even now, the term altcoin will not be very relevant and go out of use. 

For now, all you need to know is that an altcoin is any coin that is not bitcoin, easy enough!

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BUIDL in crypto

BUIDL Explained

BUIDL is a warp of the word build and is a movement of sorts that encourages the building of the entire crypto eco-system as opposed to purely investing in and holding crypto for personal gain.

The world of crypto is full of slang and strange terms like ‘HODL’ which stands for Hold On for Dear Life when a person buys crypto and holds on to it without buying more or panic selling or ‘Lambo’ when a crypto holder becomes rich enough to buy a Lamborghini or say ‘Mooning’ when the price of a crypto is skyrocketing and heading for…well the moon. 

In much the same way there is ‘BUIDL’ which is a warping of the word ‘build’.

What is BUIDL in crypto speak?

The crypto universe attracts a whole host of character types, those that are in it to make a quick buck, those that join the crypto bandwagon because everyone else seems to be and the purists.

These purists for want of a better word are in it beyond solely personal gain and believe in a much bigger idea. 

They see crypto changing the world, challenging the status quo and hopefully bringing about greater equality in the world. 

This group and perhaps also the developers want the crypto ecosystem to grow, to infiltrate all aspects of society one day, they are builders or ‘buidlers’ in crypto terms. 

These buidlers encourage people from all walks of life, techies and non-techies alike to contribute to the growth of crypto as a whole. 

This could mean simply using crypto-based services based on smart contracts, writing about crypto as we are, using crypto wallets, playing blockchain-based games and so forth.

The importance of buidling and not just hodling

If we look at our societies the majority of us exist within the system, contribute taxes and perhaps support some social causes dear to us but for the most part, we are not really involved in what happens in our local neighbourhoods.

We are not building, we are existing, using and consuming what is available to us. 

However, for any system or society to thrive and grow there needs to be a group of people that have a broader vision. 

One such proponent and user of the buidl term is Ethereum co-founder Vitalik Buterin who has used the term when referring to the ongoing development of Ethereum.

Let’s use the example of the internet to illustrate the importance of buidling

One of the biggest technological revolutions of modern times and in many ways the precursor to the crypto world now was the arrival of the internet and before that the beginnings of the personal computer revolution. 

They were revolutionary, disruptive and very geeky. 

Just as with crypto. In the early days of personal computing and the internet, it was the techies who were experimenting with the fledgling technology as it was back then. Think of the two Steves in their garage building the Apple 1 or Jeff Bezos turning to selling books on the internet.

If personal computers and internet technology had only stayed within these niche circles they probably would not have gotten to where they are now. 

Nowadays not only techies use personal computers and the internet! 

People from all ages and walks of life use the internet and personal computers without really needing to understand how they work. 

To get to where we are now, people outside of the tech community had to start using early personal computers hence creating demand for manufacturers to make and sell computers. 

Early internet companies created e-commerce websites (Web2) selling all manner of things and people started using them, think of tiny little Amazon.com when it started off selling books online

We could think of those early Amazon customers buying books as buidlers. 

In much the same way, crypto is a little like the early days of the internet and as more and more people use crypto services they are buidling. 

Conclusion

As it stands today anyone who buys crypto or uses a crypto-based service is in some ways a buidler as they are aiding adoption and helping the crypto ecosystem to grow. 

We are buidlers as we are writing about crypto to help people understand what it is. 

The level of buidling, of course, varies depending on the contribution but in the end, it all counts. 

It’s not inconceivable to imagine crypto in another ten or twenty years as an everyday utility as the internet is today, especially with the growth of DeFi. 

So, let’s all get buidling and play our parts in the crypto revolution taking place under our noses right now!

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Crypto layer-2

Crypto Layer-2 Explained

Layer-2 is a scaling solution to enable faster and lower-cost transactions on a blockchain network like Bitcoin or Ethereum.

As crypto has exploded in popularity it has inevitably stretched the capabilities and limitations of the major blockchain crypto networks like Bitcoin and Ethereum.

You could imagine the early days of crypto like a shiny new three-lane highway, freshly tarmacked for a smooth ride and almost no traffic due to the relatively small number of cars. 

Fast forward to today and that same highway is bursting at the seams just as our real highways are. 

It’s not easy or sometimes even possible to add a new lane to ease the traffic. Crypto networks like Bitcoin and Ethereum face a similar dilemma.

The limitations of layer-1 when it comes to transaction speed

The core blockchain network is what is known as Layer-1. 

In the case of crypto, one major problem with layer-1 is the relatively slow speed at which transactions can be confirmed. 

Take the case of the credit card company Visa, it is capable of processing up to 20,000 transactions per second (TPS).

Bitcoin on the other hand is capable of 3 to 7 transactions per second on the main blockchain. 

This is a gigantic difference and poses serious scalability issues. 

The reasons why are too complex to get into here but in essence, Visa uses a centralised system whereas Bitcoin uses a completely decentralised system where every single transaction needs to be verified by every node on the blockchain. 

This produces a highly secure, cost-effective and super-resilient network but this security and robustness comes at the cost of lower transaction speeds. 

Layer-2 is one solution to the problem of scaling

As a result technologists in the crypto world have been exploring ways to ease this congestion and layer 2 is one such solution.

To illustrate what layer-2 is we can use a different analogy this time. That of banking. 

Imagine a major bank like HSBC or Barclays. It has a centralised technology or systems that store all the balances and transactions for thousands or maybe even millions of customers. 

Every time money is deposited, withdrawn or transferred by an account holder the information is updated on the central network and most often in real-time. So far so good. 

Now imagine we didn’t have online banking or ATMs and like the old days of banking, every single customer would have to physically visit a branch office and conduct the desired transaction no matter how small. Imagine the queues! 

Well, this is what layer-1 kind of looks like. 

As you can imagine, even with lots of branches it would take a lot of time to get things done. 

Banking solved much of this problem by going online and by offering ATMs. 

This has resulted in a huge amount of daily transactions being removed from the workload of branch offices. We could think of ATMs and online banking as layer-2 in crypto.

Now that we have an idea of what layer-1 and layer-2 are we can go a little deeper into what they are in crypto terms

Blockchain networks like Bitcoin and currently Ethereum, (although this will change), use what is known as a Proof of Work (PoW) consensus mechanism. 

In simple terms, every time a transaction or “block” is recorded on the blockchain a miner has to solve a highly complex computational puzzle first by beating other miners and winning the opportunity to record the new block and in return earn some coins and corresponding transaction fees. 

This transaction has to be verified by the entire blockchain network and then it is set in concrete so to speak. 

This process takes time and energy, literally. If this proof of work consensus mechanism didn’t exist, say in the case of Visa, a transaction could be recorded instantly and naturally 20,000 transactions per second are possible. 

In the case of Bitcoin, it is a physical limitation due to how the blockchain was originally conceived and developed. 

Layer-2 is designed to divert transactions from the layer-1 network onto a faster network

What layer-2 does in very simple terms is “divert” a transaction away from the main layer-1 network, process it on a faster separate layer, “layer 2” and then when the transaction has been completed punch it back into the main layer 1 and set it in concrete so to speak. 

This results in a reduction in small transactions occurring on the main layer 1 of the blockchain but still recording the final transaction with the same level of surety. 

In addition to reducing congestion layer-2 also helps by offering lower transaction fees which are essential for very small transactions or micro-transactions where high fees simply wouldn’t work.

We could go back to the highway analogy again to illustrate layer-2 as well. 

Imagine the main highway as layer-1, the primary blockchain of say Bitcoin or Ethereum. 

Layer-2 could be an exit onto a separate super wide and fast stretch of road that leaves the main highway and then rejoins again several junctions later. 

Now if we imagine a lot of these separate stretches of road in existence that are diverting traffic away we could expect a reduction in traffic on the main layer-1 highway. 

Of course, it’s not as simple as that but hopefully, the analogy makes it easier to understand the issue and how layer 2 can ease congestion.

The Lightning Network is an example of a layer 2 crypto scaling solution for Bitcoin

One example of a layer-2 scaling solution is the Lightning Network on the Bitcoin blockchain. 

The Lightning Network simultaneously takes transaction loads from the Bitcoin layer-1 and reports to it as well. 

This results in an increase in processing speed on the Bitcoin blockchain. In addition to this, the Lighting Network brings smart contract capabilities to the Layer-1 Bitcoin blockchain. 

This is pretty major as the layer-1 Bitcoin blockchain, unlike Ethereum, does not inherently support smart contracts. 

Smart contracts, in very simple terms, are automated contracts that allow for more complex possibilities on a blockchain beyond the storing and transferring of cryptocurrencies. 

Conclusion

As with almost all new technologies that experience mass adoption, like banking or cars, there is inevitably going to be a scaling problem. 

Crypto is experiencing this scaling problem right now. In order for crypto to truly go mainstream robust solutions will be needed. 

Layer-2 is one such solution trying to help ease congestion and keep traffic moving!

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ERC-20 Ethereum

ERC-20 Explained

ERC-20 tokens are specifically created to work on the Ethereum blockchain platform. ERC-20 is a common standard that allows ERC-20 smart contract tokens to be easily created, shared, exchanged and transferred to a compatible crypto wallet.

Ethereum arrives on the crypto scene in 2015

As the cryptocurrency world continues to evolve at a rapid pace and an ever greater number of developers and crypto entrepreneurs invent new dapps (decentralised apps) it has become increasingly important to find a way to maintain a standard level of interoperability and compatibility.

The original cryptocurrency Bitcoin is relatively basic when we look at the entire crypto world of today. 

The primary purpose of Bitcoin is the holding, sending and receiving of value in a digital world. 

When Ethereum arrived on the scene in 2015 it opened up a great deal more possibilities beyond simply being another cryptocurrency. 

Ethereum created an exciting new crypto eco-system where new decentralised applications (Dapps) and innovative use cases could be developed and the result has been, well, astounding.

How is Ethereum different from Bitcoin?

Before going into any detail about what ERC-20 is we really need to first grasp what Ethereum is and how it fits into the overall crypto world.

We have to give props to Bitcoin, the cryptocurrency that started it all. The vision being a universal, decentralised digital currency that nobody controls, this means no government, corporation or central banking organisation. 

Bitcoin fused cryptography and something called blockchain technology to provide the foundation on which Bitcoin operates. 

As with almost all new technologies, they are relatively basic when compared to later arrivals. Look at the first automobiles that arrived on the scene, whilst revolutionary and certainly paving the way for better cars, they were in relative terms of course way more basic compared to today’s cars. 

Of course, they still perform the same core function, autonomous transportation, however, cars today are way faster, more efficient and superior in just about every way. 

In the world of crypto, something similar happened and is still happening. 

Bitcoin spawned an entire industry and some bright people saw a bigger future. One of these people was Vitalik Buterin, the creator of Ethereum. 

Think of Ethereum as v2 of the automobile. Vitalik saw a use case beyond that of a digital currency and instead saw a platform or eco-system where blockchain technology and smart contracts could be put to use for an almost limitless amount of uses. 

Ethereum was born and has played a pivotal role in the world of crypto ever since and is now the second most valuable cryptocurrency after Bitcoin.

Ethereum and smart contracts

In essence, Ethereum is a blockchain that can record transactions and also a virtual machine that can produce smart contracts. Smart contracts were a game-changer in crypto!

Smart contracts are in very simple terms computer code that perform certain very specific functions whenever a predetermined action takes place. 

A very simple way to imagine a smart contract is a vending machine. The vending machine is programmed to release the specific item the user wants after they have inserted the correct amount of money. 

If the correct amount of money has been inserted the vending machine releases the product. It will also be programmed to give back the correct amount of change. 

A smart contract works in pretty much the same way. It is designed to perform certain functions when certain actions take place, for example, a person pays X in the correct amount of cryptocurrency and the smart contract releases Y to the person, like the deeds to a house or a piece of valuable artwork. 

Of course, smart contracts are way more complex but you get the general idea.

Going back to Bitcoin, there are no smart contracts. It is purely a means of storing and transferring value digitally.

Now, the two core functions of Ethereum, the blockchain and the ability to create smart contracts means that Ethereum is able to support an almost unlimited amount of dapps (decentralised apps) and this is where the ERC-20 token standard comes in very handy.

Depending on the intended use, DAPPs might create ERC-20 tokens to function as an in-game currency, points in a loyalty program, or even ownership of an actual real-world asset like gold, silver, artwork or the deeds to a property.

This is exactly what happened and before long all sorts of new tokens were invented for different purposes. 

In 2023, there are nearly 450,000 different ERC-20 tokens according to the Etherscan website

ERC-20, a standard that developers can use to ensure quick and easy compatibility

With so many ERC-20 tokens around and way more to come, a standard or framework was going to be needed before long.

During the very early days, if two different types of tokens, token A and token B wanted to work with each other, i.e. interoperate, they could each manually write their code to work with the other tokens code and token A and token B could technically work with each other. 

This was okay when there were just a handful of tokens, however, it became unmanageable pretty quickly as the number of new tokens being launched on Ethereum exploded. 

A standard was desperately needed that developers could use as a common framework.

In answer to this, the Ethereum community developed a common standard or specification called ERC-20 to which all compatible tokens must adhere and comply. ERC standards for Ethereum Request for Comment.

Before we get into the technicalities of what ERC-20 is, let’s look at a couple of simple analogies to get an understanding of why ERC-20 was needed and what it actually does in practical terms.

Let’s begin by Imagining a casino environment full of all manner of different gaming machines from different manufacturers. So far so good. 

Now imagine that when you enter the casino, you need to exchange your Euros or Dollars for 20 or 30 different types and shapes of tokens as every machine uses a different type of token. 

That would be completely impractical and frustrating. In answer to this problem, the casino would tell all the gaming machine manufacturers that in order to have their machines in the casino their machines would have to have a certain size and shape of coin so that the same coin could work across all the machines. 

When you get paid out from one machine, you can take those tokens and put them into any other machine or convert all the remaining coins back to a fiat currency at the end of the day. 

This clearly makes things a lot easier and in very simple terms this is what Ethereum created with ERC-20, a specific standard that all compatible tokens have to adhere to in order to be able to interoperate and also be easily and quickly listed on exchanges.

Another way to imagine the ERC-20 standard would be to think about how debit and credit cards work. 

We as consumers can in most cases take any brand of debit card or credit card from any bank to a store and buy whatever we need. 

Each card conforms to a standard and contains some core information. Now if every card used a completely different standard it would be chaotic in store, imagine how many different machines or systems would be needed let alone the delays and confusion. 

Thankfully this isn´t the case and we can very easily swipe or touch the card on a machine and in the majority of cases we´re good to go due to a framework of common payment processing standards.

Now, the above are very simple examples just to demonstrate the problem and solution. Crypto tokens are way more complex than a casino coin or a debit or credit card and can perform a multitude of tasks and hold a whole host of values for different use cases from being a currency to owning a piece of art.

At its core. ERC-20 contains 3 optional and 6 mandatory rules that every token must be compliant with.

The three optional rules of ERC-20

Token Name – This is the name of the token

Symbol – This is the symbol of the token, a bit like a stock symbol like

Decimal (up to 18) – -this the divisibility of the token, 0 would mean it’s not divisible, the decimal value can basically determine how small the fractions of a token can get

The six mandatory rules of ERC-20

TotalSupply – This holds information about the total supply of the token

BalanceOf – This holds information about the account balance of the holders account

Transfer – This executes the transfer of a specific number of tokens to a specific address

TransferFrom – This executes the transfer of a specific number of tokens from a specific address

Approve – This allows a user to withdraw a certain amount of tokens from a specific account

Allowance – This allows a user to return a certain amount of tokens to a specific account

In addition to the above, these functions will trigger up to two events. This would be the transfer event that takes place whenever tokens are transferred and the approval/validation event that takes place whenever approval is required.

ERC-20 tokens have played a big part in the ICO craze and growth in the Ethereum platform of recent years

ERC-20 tokens have played a huge role in the massive amount of ICOs (initial coin offering) that have taken place over the last few years to help developers get funding for their projects. 

As ERC-20 tokens are relatively easy to create and are designed to work on the Ethereum platform they have helped to fuel the IPO boom.

What about the downsides of ERC-20?

Whilst ERC-20 has played a crucial part in the growth of the Ethereum platform and made things much easier for developers and ultimately users, ERC-20 isn’t perfect. 

There are some issues that the ERC-20 token standard does not address

One of these is that tokens could be unintentionally destroyed when they are accidentally used as payment for a smart contract application instead of correctly using ETH, the native currency of Ethereum. 

An estimated $3 million dollars of value has been lost due to this weakness. 

To resolve this problem, the Ethereum community is working on a new standard, ERC-223, however, this standard is not compatible with ERC-20, the dominant standard today so developers are still working primarily with ERC-20 until compatibility exists.

Another issue is what is known as the “batch overflow” bug that could allow an attacker to illegally potentially possess a huge amount of tokens by exploiting a weakness called the classic integer overflow issue. 

We are not going to get into this here but needless to say, it’s a potentially huge security weakness in ERC-20.

Conclusion

As with almost all industries and major technological breakthroughs, there is constant evolution, weaknesses are found, new use cases are discovered and innovation takes place every day. 

In the crypto world, the primary and not to be underestimated breakthrough was Bitcoin and the blockchain technology it uses. 

Bitcoin and blockchain technology paved the way for the likes of Ethereum where a broader use of crypto came about like DeFi (decentralised finance) and much more. 

ERC-20 is a standard that the Ethereum community introduced to provide a standardised means of compliance and ERC-20 has helped to propel Ethereum as a major crypto platform and ecosystem. 

ERC-20 isn’t without its flaws and will no doubt be superseded in time. However, for now, at least it plays a major part in facilitating the creation of compatible tokens that are easy and quick to create, transfer and hold in compatible crypto wallets. 

ERC-20 helped to fuel the ICOs that helped generate huge amounts of startup capital which in turn has helped Ethereum and the broader crypto world get to where it is today.

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IDO-initial dex offering crypto exchange

IDO – Initial Dex Offering Explained

An initial DEX offering (IDO) is a decentralised fundraising and bootstrapping method for crypto startups that is growing in popularity. It is in some ways a natural successor to the initial coin offering (ICO) or the initial exchange offering (IEO) that have been hugely popular in recent years.

The crypto world is still very much in its infancy, highly experimental and constantly evolving. 

As in the world of traditional business and especially startups, new crypto projects need to raise capital to fund the development and marketing of their tokens and services. 

One of the original and biggest funding methods has been initial coin offerings (ICOs), something akin to an initial public offering (IPO) in the traditional business world. 

ICOs certainly helped the likes of crypto giant Ethereum get going in their early days. 

Next came the initial exchange offering (IEO) which is a centralised form of crypto fundraising and of course, now we have the initial DEX offering (IDO), a new type of decentralised funding process used mainly by DeFi crypto startups at the moment. 

Below we briefly talk about ICOs and IEOs to help you get a better idea of what each one does and hopefully help you to make better sense of what IDO crypto is in relative terms.

 

Initial coin offerings (ICOs)

Initial coin offerings (ICO) provide a means for aspiring crypto projects to raise money directly via the organisations creating the new tokens/services. 

In an initial coin offering, there is no central body to verify the legitimacy of a project. The founders of the project would typically produce a whitepaper, something similar to a pitch deck, business plan or prospectus in the traditional business world and they would sell their tokens directly to people who think the idea is good and want to get in early.

In the traditional business world, it would be a little bit like a startup directly approaching investors and offering them shares in their company.

Investors wanting to get in early would take a risk and become investors/shareholders only here they hold tokens and not shares. 

It is important to note that, unlike IPOs, initial coin offers (ICOs) are not regulated and therefore even more risky. 

Whilst a huge amount of funding has come about via initial coin offerings there have also been a huge amount of frauds, scams and poor performers. 

This is due in part to the fact that just about anybody can issue an ICO. In recent years the initial coin offering has been getting less popular, paving the way for the Initial Exchange Offering and most recently the Initial Dex Offering.

 

Initial exchange offerings (IEOs)

This leads us nicely to initial exchange offerings (IEO), they are also unregulated, however, there is a central organisation in place (an exchange) such as Binance, Kucoin or  Huobi that performs some due diligence on the project before allowing the IEO and offers tokens to its existing user base. 

This of course makes things a bit safer for early investors. Aside from the due diligence or whitelisting process, another advantage of the IEO is the increased probability that a token will be listed on said exchange.

In comparison, with an ICO there is no certainty that a token will get listed at all and there is no independent due diligence. 

At least with an IEO, if an exchange is performing an IEO there is a more than fair chance that the token is going to get listed on the exchange and increase the chances of success and importantly, gain instant liquidity.

 

Unlike ICOs and IEOs, tokens are released after the IDO

Now, let’s move on to the IDO. In both of the above examples, the initial coin offering and the initial exchange offering, tokens are sold prior to the listing. Initial DEX offerings are different. They are sold and issued after.

 

Initial DEX offerings, what are they?

Now that you have a bit of background info and understanding of what ICOs and IEOs are it´s easier to understand what an initial DEX offering is and how it is different. 

Let’s get into IDOs and what they do.

Initial DEX offerings are in contrast decentralised and are instead promoted by specialised platforms called launchpads. 

This is one of the fundamental differences between the IEO and IDO, the IEO is a centralised exchange whereas the IDO uses a decentralised exchange but is promoted by a 3rd party launchpad. 

IDOs also tend to raise relatively smaller amounts when compared to ICOs. The ICO would be similar to a company going public via an IPO and raising a huge amount of money whereas an IDO could be similar to a company raising a few million via crowdfunding.

So, you could think of IDO launchpads like crowdfunding platforms such as Kickstarter but for crypto and instead of the IDO taking place entirely on the crowdfunding platform, it takes place on a decentralised platform. 

If a crypto project would like to raise capital they can approach a launchpad like PolkaStarter or Dao Pad. 

The beauty is that launchpads are gatekeepers and decide who can promote a project and promote an IDO on their platforms and therefore they need to ensure quality and credibility. 

For investors looking to get in really early, these launchpads and IDOs provide quite a nice and perhaps slightly safer vehicle when compared to the ICO. 

Additionally, IDOs are relatively less expensive and also make it a little easier for smaller investors to get in early. They also tend to be less expensive for the project operators in terms of fees.

 

How do initial DEX offers (IDO) work?

Unlike with ICOs and IEOs, IDO-issued tokens are not pre-sold, instead, prospective investors create a sort of IOU within a pool by contributing their funds in the form of crypto, say BTC or Eth. 

In other words, they pay for their tokens in advance. Once the IDO has been completed the tokens are issued and this event is called a Token Generation Event (TGE). 

Usually, within a matter of hours, they are instantly liquid when they are listed on a decentralised exchange such as Uniswap.

Uniswap is popular as currently the majority of projects are built on Ethereum and their tokens are based on the ERC20 protocol standard. 

Still, not all the action is taking place on say Uniswap/Ethereum. 

Other blockchains are growing in popularity including Polkadot, Binance Smart Chain (BSC) and Solana. 

Some projects prefer to launch their tokens on blockchains such as these to avoid the high network fees on Ethereum. 

In this case, the token would be listed on native exchanges such as BSC´s PancakeSwap as an example.

 

A new trend, multiple launchpads and multi-chain IDOs

As IDOs evolve, there is a trend developing towards projects launching on multiple launchpads in order to be on more blockchains and thus attract a wider range of investors. 

For example, a project could perform an IDO on an Ethereum-based platform and another or maybe even on several other platforms built on Polkadot, Solana or Binance Smart Chain as examples. 

Users can then choose where they would like to participate and the project improves its chances of a successful raise.

 

The instant and powerful marketing and community-building effect of IDOs

One of the major benefits of IDO crypto projects is the almost instant marketing and community-building effect. 

As in the traditional business world, if nobody knows about your startup it’s difficult to successfully raise money or grow. 

Think of crowdfunding campaigns on platforms like Kickstarter or Seedr, the successful ones almost always have a fair amount of marketing / PR / social media running behind the scenes drumming up awareness of their crowdfunding campaign. Something similar happens in IDOs but in a slightly different way.

Due to demand for IDO tokens tending to be high, the launchpad platforms can only allow a limited number of users to participants and as a result can only provide a very limited size allocation, typically only a few hundred dollars worth each. This process is called whitelisting.

 

Whitelisting and participation in IDOs

To this end, every single IDO out there goes through an extensive whitelisting process that narrows down the participants to a supported maximum. 

To be eligible for being whitelisted, users often need to perform various marketing tasks, which can typically include joining the projects Telegram chat, retweeting and commenting on a projects tweets and also liking a project on its social media platforms. 

This can rapidly elevate awareness of a project and community growth which can not only help a successful IDO fundraise but also help the project to more rapidly gain traction. 

It is not uncommon to see a future IDO project gathering over 100,000 followers on Twitter and as many people in their Telegram groups in just a matter of days. This is in itself pretty phenomenal.

Another whitelisting criteria can be for users to hold a certain amount of tokens that are native to the launchpad´s platform itself. 

As an example, the IDO platform PolkaStarter has two pools, one is open to everyone and the other is only for the participation of POLS holders. 

Naturally, the competition for allocations is considerably less. 

As IDOs are getting increasingly popular it is becoming clearly beneficial to be a token holder in the launchpad and have a better chance of getting in on the hottest new crypto projects. 

In many cases, the number of native tokens you hold in the launchpad can help to increase your probability of getting an allocation and also the size.

 

Conclusion

In summary, the IDO is the latest evolution in crypto fundraising and is perhaps in many ways an improvement on its predecessors, the ICO and IEO. 

Crypto is a rapidly changing landscape and this rate of rapid change, evolution and adoption of new techniques, projects and methods can make crypto very exciting indeed. 

The IDO is something that investors should certainly be aware of and can potentially offer access to promising early-stage crypto projects that are independently vetted, the IDO can be especially beneficial for smaller investors if they are able to get in on IDO projects in time and all being well, benefit from the rapid growth that will hopefully follow.

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web3 the new technological wave

Web3 and DeFi, the next big technological wave!

The crypto juggernaut is gathering speed and at a breakneck pace. What was once the sole domain of crypto enthusiasts is now entering the mainstream with a vengeance. 

It seems that nowadays everybody is talking about crypto and itching to get in on the action. 

In particular, the focus and excitement is in the explosive areas of Web3 and DeFi. 

In this article, we are going to look at some of the fundamentals and longer-term investment opportunities presented by the major technological shifts taking place in the world of web3 and Defi.

It’s 2009 and Bitcoin arrives on the scene

It all began in 2009 with the arrival of Bitcoin, a revolutionary decentralised digital currency without geographical barriers or any form of central government control. 

The pioneering blockchain technology running under the covers planted the seeds for where we are today. 

Bitcoin itself is still purely a means of holding and transferring value, much like a traditional fiat currency like the dollar or euro or a valuable commodity such as gold. 

Bitcoin does not serve any other extended purpose. The arrival of Bitcoin however introduced a breakthrough technology, the blockchain which has opened up a multitude of possibilities that have the ability to disrupt virtually every industry and in particular finance. 

Welcome to DeFi and Web3…

From its earliest beginnings, the crypto world has evolved at rapid speed and has in recent years spawned an entirely new industry known as decentralised finance or DeFi for short. 

DeFi mainly runs on the second largest cryptocurrency network, Ethereum. Ethereum has gone from being a cryptocurrency like Bitcoin to becoming a broader ecosystem for DeFi projects mainly due to the availability of smart contracts. 

Smart contracts are agreements or contracts written in software that are not open to interpretation, discussion or adjustment. 

They execute exactly as per the instructions written into the smart contract and provide an ideal instrument on which to build sophisticated businesses in a trustless environment. 

In DeFi a smart contract sits in the middle as the authority, as opposed to a centralised institution as is typical in traditional finance and most other businesses.

What is Web3?

Web1 was the original bare-bones internet, simple, informational websites mainly. You can get a taste of Web1 by looking at ancient search engines like Lycos, hotbot and webcrawler that are still lurking around on the internet.

Web2 was commerce-driven and spawned the internet giants we all know today, Google, Amazon, Expedia, Facebook and so on. 

Web3 is the new kid in town and one that is creating quite a ruckus. 

Web3 has the potential to truly shake up and revolutionise the world we live in, create entirely new industries and potentially level the playing field, especially in finance. 

In essence, Web3 is the next major evolution of the internet, one that is decentralised and based on peer-to-peer technologies such as public blockchains. 

Take an organisation like Amazon, which is a centralised profit-driven Web2 business, it provides a centralised platform and infrastructure on which things can be bought and sold on the internet. 

In a Web3 world, there is no centralised Amazon, but rather a highly sophisticated blockchain technology using smart contracts that provide the software protocols and required levels of security needed to enable transactions without requiring a physical intermediary. Sorry, Jeff Bezos!

This Web3 model is extending into banking, trading, insurance and more. Just as there was an explosion in commerce-driven websites during the Web2 phase, we are seeing the same again with Web3 and this is presenting investors and novices alike with opportunities to get in early on the Web3 superstars of tomorrow.

Investing in protocols and the fat protocol thesis

Below every significant technology there are usually key protocols. There has been a fundamental shift in the way protocols are being monetised. 

Our current web technology is dependent on protocols like TCP/IP and HTTP and billions of emails rely on POP/IMAP protocols to enable sending and receiving. 

The crucial protocols that have enabled much of the technology we rely on today have been in effect given away for free by the developers who generously created them on an open-source basis. 

They are free to use and exploit and exploited they have been without a shadow of a doubt and one can argue with good effect. Imagine if every email cost money! (more on that later..)

Thin protocols/fat applications vs fat protocols/thin applications

In Web2, there are what are known as thin protocols and fat applications where the vast majority of the value is in the applications built on top of the protocols, think Google, Amazon and Facebook running on top of the core internet protocols. 

The value in Web2 is on the application side, not the protocol side. 

In Web3 this has fundamentally changed and has been flipped around, the protocol is fat and where the bulk of the value is and the applications running on top are on the thin side. 

Bitcoin’s creators cleverly invented a protocol and system that has an inherent value system and which rewards its participants at the core. 

If we were to look at POP3/IMAP, commonly used to send and receive millions if not billions of emails every day there is no financial reward. 

This on the one hand is great as emails remain free, but those that developed this essential protocol did not make a fortune from it. 

As a crypto investor, investing in protocols should be considered in addition to investing in the individual applications that are running on top of the protocols, a fundamental difference when compared to Web2. 

The name of the game is to be able to identify and invest in the protocols and applications of the future. 

There is something called the fat protocol thesis which says that the total value of all the apps running on top of a protocol such as Ethereum will never exceed the total market value of Ethereum. 

Thus according to this theory, Ethereum should continue to grow in value as the ecosystem it supports grows. 

The fat protocol thesis seems to be holding and provides a reasonable rationale on which to invest in protocols/blockchains for the longer term.

Web3 is the gold rush of the 21st century

One can liken the current Web3 boom to that of the famous gold rush of the 1800s. 

The pursuit then was gold and attracted hundreds of thousands of prospectors to California and South Africa. 

In a similar way, DeFi has exploded onto the scene with almost limitless possibilities, unlike gold however which is limited in quantity, DeFi projects are virtually limitless in scope.

However, not all projects will succeed and could be as useless as a hole in the ground so the secret is to know which tokens to pick and invest in and that isn’t easy even for seasoned crypto investors. 

Web3 money markets and how to earn a passive income from DeFi

Speculation is not the only way to profit in the crypto world. 

Just as with traditional financial markets, it’s also possible to earn a modest passive income by putting crypto assets to work. 

With interest rates still at a historical low there is a need for ways in which one can earn a reasonable passive income in DeFi from crypto assets by way of yield farming, staking, becoming a liquidity provider and through the lending of crypto. 

In very simple terms one can use their crypto assets to earn income in the form of fees or interest rather than profit from the growth of the underlying Web3 asset.

Conclusion

In the simplest terms, imagine having the chance to invest in Amazon, Facebook and Google when they were first starting out. Sadly, that boat has already sailed, however, the next generation of Amazon, Facebook, and Google are on the sidelines, fueling up and ready to make an impact. Just as with the web2 era, only a handful will become major players, the challenge is figuring out who the future DeFi and Web3 giants might be and get in on the action early!

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