Cryptocurrency is a “Boys’ Club.” Is This Good or Bad?

Guest post by Pauline Farris

Back in the early 2000’s, the “dot.com” bubble burst, and investors lost huge amounts. One of the interesting elements of that entire bubble was that it was an investment niche dominated by men. Women, for some reason, just didn’t take the risks involved. And while they were scoffed at for not investing, they had the last laugh.

Studies have shown that women who invest in markets—either for themselves or for organizations— are more cautious and risk-averse than men (and it should be noted that their approach tends to work well in terms of long-term income/revenue growth). We are witnessing the same phenomenon with cryptocurrencies as with the “dot.com” bubble. While anonymity is part of the attraction of investing in cryptos, there are surveys that point to a large underrepresentation of women. In fact, the latest Google Analytics result for the bitcoin gender divide, as reported in Coin Dance, is as follows:

Obviously, males “rule” this investment product. For those who remember the history of such investment gender divides, this should serve as a warning. On the other hand, there are those who predict that, over time, women will enter this investment market, for some clear reasons:

1. Cryptos are becoming more mainstream

Companies from a variety of sectors, as well as non-profits and even political campaigns, are now accepting Bitcoin payments. As early as 2014, Dell began to accept them as a legitimate source of payment. Most companies and organizations that accept payments do so through third-party services, as they facilitate the exchange between Bitcoin and fiat currencies. Among companies and organizations now accepting Bitcoin are: Steam, Save the Children, Shopify, Microsoft, Overstock, and eGifter. And this was as of the end of 2017.

2. Global Acceptance

Cryptos are moving into the global marketplace as a preferred method of international financial transactions. As companies continue to move into foreign markets, they will also begin to use cryptos and the blockchain technology that undergirds them in everything from smart contracts, to logistics, to payments. As Margaret Reid, content writer for The Word Point, a professional translation service, has pointed out: “We are seeing an increase in requests for contract translations from clients who are dealing in Bitcoin and who want to record and store those contracts in the Bitcoin blockchain. This is a growing sector of translations that is not going away.”

3. The Technology Holds Great Promise

While blockchain technology and cryptocurrencies are rather intimately tied to one another, the technology is now becoming recognized as having the potential to disrupt almost every economic sector. Because of its distributed ledgers of blocks that are immutable, there is the potential for security and fraud prevention that traditional technologies do not offer. Identities, contracts, purchases, shipments, personal records, and more can be stored in these blocks and provide permanent information and data that cannot be altered and only accessed by keycodes. The implications for government, insurance, travel, healthcare, education, and almost any business are huge. As everyone begins to recognize its potential, blockchain is becoming highly reputable. Interestingly, the cryptos that it undergirds are being pulled into reputable phenomena with it.

4. There are a Few Women Role Models

Iliana Oris Valiete is an accountant by profession. She moved into the Bitcoin market when it was fully new. Now working for Accenture on blockchain innovations, she has also made it her mission to encourage more females to move into the cryptocurrency investment market. According to Valiete, of the current ICO’s (initial coin offerings that are basically investment fundraising), about 13% are headed by females, and this represents good gender participation growth. She believes that these women will act as role models for the gender-mates, but that growth in female participation will still be rather slow.

So, Is It Good or Bad?

The debate continues on this one. And the verdict is certainly still out. Among those who are raising a red flag of alarm is Duncan Stewart, Research Director of Deloitte’s technology division in Canada. According to Stewart, just the fact that the gender divide is so large constitutes a bubble in itself. He further states that, throughout history, there is no such gender divide of this magnitude, in any stock or security, that has resulted in survival of that asset.

And yet, there are other considerations. First, when men get into an investment, they tend to share that investment potential and make recommendations to their “buddies,” usually men. And this may have factored in to the current gender divide. Couple that with the fact that the Bitcoin foundation Board of Directors is 100% male, and you have a rather “perfect storm” of male domination.

But bitcoin is still relatively new. And many certainly predict that it will become a critical currency whose use will only continue to grow, steadily and impactfully. As consumers continue to increase their use of Bitcoin to purchase legal products and services, and as it continues to be a valuable holding, women will increase their participation.

Time will tell. For now, Bitcoin remains a male “thing.” Whether it turns into another “dot.com” bubble or not is simply a matter of waiting and watching.

Pauline Farris speaks Portuguese, English, Spanish and Italian. She travelled the world to immerse herself in the new cultures and learn languages. Today she is proud to be a voting member of the American Translators Association and an active participant of the Leadership Council of its Portuguese Language Division.

GRAFT Major Network Update 1.4.2 (“v10”)

As previously announced, we have released network node version 1.4.2 (“v10”) for a major network update. This update will correct the emission curve by reducing block rewards by 50% starting at block 176,000, which will be reached around September 17, 2018.

The new block reward formula will be as following:

reward = (M – A) * 2^-19 * 10^-10 / 2

Where M is the maximum total supply and A is the current supply.

This correction will not change the maximum supply of GRAFT that will be ever created, it will just stretch the emission curve such that it will take longer to mine the maximum supply. All GRAFT supporters should benefit from the corrected emission formula because it will stabilize the growth of the circulating supply.

In addition, GRAFT v10 will drop the mining difficulty algorithm adjustment made in the previous (v9) major network update (LWMA+tweak) and return to a standard LWMA difficulty calculation. The adjustment was originally added in an attempt to make the difficulty drop faster after a network attack, as it was believed that such network attacks were responsible for block delays and network stalls in the turbulent days between the first (v8) and second (v9) major network updates. As it turned out, however, those issues were caused by an unrelated bug inherited from Monero and have been long-since fixed on Graft’s network (the fix did not require a fork).

In retrospect, the v9 algorithm adjustment had the unintended side effect of inducing larger swings in mining difficulty because it made difficulty drop too quickly. Over time, opportunistic miners learned to exploit those difficulty swings by mining on the graft network with huge hashrates whenever difficulty dropped to win a handful of low-difficulty blocks, then leaving the network as soon as difficulty increased again. This would, in turn, result in long block times that would then trigger another difficulty drop, thus repeating the cycle. While such difficulty shifts are unavoidable, the v9 difficulty adjustment made the swings a little worse and are being removed in this fork to help make the mining difficulty more stable.

The major network update means that each GRAFT network node must be updated to the new software version before the specified block/date. Otherwise, any node that isn’t updated will be on the wrong version of the blockchain. The source code and the Linux and Windows binaries are currently available for download. The installation instructions are unchanged.

As another reminder, a major network update means that if you are running the GRAFT network node (graftnoded daemon), you must upgrade it to the current software release as soon as possible. If you do not install the updated node before block 176,000, it will be disconnected from the mainnet after block 176,000.

Note that the users of GRAFT mobile and desktop wallets will not be affected by the upcoming major network update and don’t need to do anything—as long as they are still connected to the default proxy supernodes (if you are connected to your own supernode, however, do not forget to upgrade the underlying network node to stay on the right network).

Comments on Square’s Cryptocurrency Payment Network patent

Square has made the news recently with a patent on Cryptocurrency payment network with real-time transactions.

We’re very excited about this development as it completely validates the approach we’ve taken with the GRAFT blockchain!

Another important question one might ask is “Will GRAFT project be impacted by this development”?

We will be studying Square patent further and any action we might want to take, but we wanted to provide a brief summary of our initial thoughts on the subject:

  • Square’s provisional application was dated later than GRAFT published its first white paper (July 15, 2017), providing GRAFT an excellent basis for prior art argument should this ever come to a head.
  • There are enough substantial differences in GRAFT and Square’s approaches starting with Square’s emphasis on a private, closed system, while GRAFT’s being on an open, decentralized approach
  • Decentralized open source projects are extremely resistant to outdated IP prosecution practices as there’s not single central commercial entity to go after
  • Square is not known for predatory IP behavior, which could be the case if the patent was issued or sold to a patent troll. We believe that Square filed the patent to ensure their own “freedom to operate”.
  • Additionally, the fact that the patent was granted proves that there was little known prior art (GRAFT nonwithstanding) before July 2017 which is when GRAFT white paper was published and Square provisional application filed.

    Finally, patent doesn’t equal product. Square and its competitors will be considering whether to develop these systems in-house or to use an existing public network like GRAFT.

    All in all, we view this development as a very positive one both for the industry and for GRAFT.

    With that said, we would like to ask for our community’s help in raising the visibility of the fact that GRAFT implementing the system that Square has attempted to patent – this is a very opportune time to do this building on the attention this patent has generated. Please help bring this up on the appropriate social media and discussion threads.

Exchange Brokers Explained!

Exchange Brokers are a critical component of the system, paving the way for pay-how-you-want-it / receive-how-you-want-it capability. Exchange brokers (pay-in / pay-out / interchange) are open to both large and small participants. Watch the new video from All Things GRAFT about how the exchange brokers work

Airdrop cancellation

We don’t take promises lightly. Ever. And this time is no exception. This, however, is a situation when reconsidering a promise is warranted. The airdrop idea to compensate for the disparity for the ICO buyers was not well thought out (as frequently pointed out by the community) and if we were to proceed, would result in unintended consequences such as significant GRFT float dilution and potential additional downward pressure on GRFT pricing, negatively affecting ALL GRAFT stakeholders including ICO participants.

As such (after much deliberation) we have decided that it is better to cancel the airdrop altogether now and remove this cloud from the market, providing the project with the best chance of organic growth.

We believe that taking this action now will allow GRAFT to best capitalize on the progress with RTA, go to market partners, and other exciting developments we’ll be announcing shortly.

With that said, we will keep looking for other ways to thank our early supporters (in ways that don’t involve dramatic increases in GRFT circulation)

We hope you understand our decision and we can move past this issue, focusing on technology and go-to-market.

Best Regards,

Sincerely,

GRAFT Team

What’s Real and What’s Not in the Blockchain Payment Space



The Blockchain Payment solutions space has recently become a very hot topic, with both legitimate developments and a multitude of questionable claims. This article attempts to separate facts from fiction by outlining the lay of the land and Graft’s competitive positioning based on our view of the space.

With that in mind, let’s start with some definitions of key components of the electronic payment chain:

Payment processor — a service provider that processes a payment authorization, settles the transaction, and deposits a merchant payout.

Payment network — a network (or protocol) that provides an infrastructure for processing payments by coordinating the activity among multiple participating parties.

Payment gateway — a service that provides access to a payment network. These categories are important when deciphering what various providers are trying to do.

Centralized Payment Processors

The first class of payment solutions that are operating today are the centralized payment processors such as Coinbase and Bitpay. To enable crypto payments, these players simultaneously act as a payment gateway, a payment processor, and a clearing house. There’s nothing significantly wrong with this approach other than the fact that 1) it goes against the principles of decentralization; 2) it’s not a network, but rather a single entity; 3) it doesn’t scale very well because a payment processor needs to be able to handle an unlimited volume of the transactions and provide cross-border support; and 4) they represent a single point of failure and, more importantly, a single point of attack making themselves extremely attractive to hackers.

Solution Integrators

Integrators usually take existing blockchains and make them work for a specific use case. In the case of payments, they would be the “last mile” solution for making Dash, for example, work at the point of sale. Integrated solutions usually work okay but they only support specific point-of-sale systems, specific merchants, and have limited flexibility. They also decide who gets to participate in the ecosystem and they essentially act as a bank by fulfilling a lot of the clearinghouse functions themselves.

Payment Blockchains

This category includes legitimate blockchain projects that attempt to facilitate cryptocurrency payments. Dash and Ripple are good examples of payment blockchains, as they have made significant advances in facilitating the use of blockchains for payments. Dash implemented on-demand privacy and on-demand speed, whereas Ripple implemented inter-blockchain swaps.

Payment Networks

Payment network implies that there are multiple participants that are being connected together to form a network. In the case of traditional credit/debit card processing networks, they are bridging the issuing banks, acquiring banks, and payment processors into something that works in the context of a single transaction.


Source: PYMNTS.com

Processing a payment at the point of sale is a complex chain of events that includes obtaining pre-authorization or authorization from the issuing bank through the acquiring bank, putting funds on hold, releasing the payment for settlement, and, finally, clearing the payment by transferring the funds from the user’s issuing bank to the merchant’s bank account.

In the case of cryptocurrencies, use of such a network implies pre-authorization by verifying and placing funds on hold in real-time, transferring the payment from the payer’s wallet in the currency of their choice, converting that currency into the currency of choice for the merchant, and distributing the fees — all this is accomplished by accepting and coordinating services from service providers. This is exactly what a network like GRAFT is doing (while providing integration points for the point-of-sale applications, and in a decentralized manner to boot!).

There’s only one other network-like solution (other than GRAFT) that’s looking to resemble some fragment of a payment network: the Lightning Network. However, the Lightning Network concerns itself with instant currency swaps, without much regard for fees or compatibility with the merchant point-of-sale systems and processes. It also relies on pre-existing payment channels, making it suitable for repeat transactions as opposed to what you would see in the point-of-sale environment.

Suspects

Unfortunately, the blockchain space is rife with projects looking to capitalize on general lack of knowledge to pass themselves off as a legitimate payment solution in order to raise funds. They call themselves payment networks without building anything resembling a network, or a blockchain payment solution without having anything close to a viable solution. Their white papers are usually vague and full of buzzwords with little substance of the specifics of implementation. It’s often painful to watch millions, if not billions, of dollars being flushed into projects that show no signs of real technology or other innovation.

Here are some “giveaways” that can help identify suspicious projects:

  • They are based on ERC20, EOS, or other smart contract tokens rather than dedicated blockchains.
    It’s very easy to create these tokens, but unless the project will act as a bank and take on the brunt of arbitrage in releasing the funds before they themselves collect those funds, there’s no way for them to overcome the speed issue. They are also subject to the underlying network fees that the token is built on.
  • They advertise a “crypto credit card” that can be processed by a traditional credit card network.
    The impossibility here is that none of the traditional payment networks will license anyone but an issuing bank to accept network-backed payments. Unless the crypto credit card is backed by their own issuing bank which gets licensed by a traditional payment network (an unlikely scenario), this claim is quite dubious. Those that manage to pull off this feat will become a single-bank-backed, centralized solution, at the complete mercy of the local regulatory environment and traditional network continuous licensing.
  • They are creating their own point-of-sale devices.
    It’s easy to private label a payment terminal found on Alibaba or similar manufacturer marketplaces. The problem with this is a merchant will not place a new terminal into the store without PCI and other rigorous certifications, not to mention that it would have to integrate with their point-of-sale software. Adding new terminal to a store, or especially a chain of stores, is an extremely difficult and expensive process which implies significant integration, certification, testing, and employee training costs that must be thoroughly justified.

Summary

There are distinct and important differences in payment solutions, with true payment networks providing the most open and flexible option for payment processing, while centralized and integrated processors can provide “point” solutions.

There is quite a bit of disinformation in the cryptocurrency payment processing space, so it’s important to understand how payment ecosystems work in order to tell fact from fiction as you proceed to navigate this treacherous market space.

GRAFT vs. Others

How GRAFT is Going to Conquer the Crypto Payments World. Part 1: Blockchain and CryptoNote

Slava Gomzin, GRAFT Co-Founder

Although we have created a lot of materials explaining GRAFT (both existing features and future developments), including countless technical or semi-technical pages, marketing brochures, blog posts, and educational videos, it’s often difficult to see the whole picture while going through all of the specifics. A focus on the multiple features and their design details can obscure the view of the entire system, creating a so-called “you can’t see the forest through the trees” effect. We are getting many questions from supporting community members as well as potential customers and partners about “the big plan”: what is the ultimate goal, and how exactly are we going to achieve it? Whereas the answer to the first part of this question is quite simple and short, the answer to the second part requires some time and efforts. In this series of blog posts we will iterate through the various GRAFT features and try to explain why they are there, and how they help achieve our ultimate goal: Conquest of the crypto payments world.

Part 1: Blockchain and CryptoNote

Let’s start from the very beginning with the blockchain, or layer one of GRAFT. The blockchain is maintained by a peer-to-peer network of computers, or network nodes. We refer to these network nodes as “cryptonodes” to distinguish them from our “supernodes” (a.k.a. “masternodes” in other networks), which constitute the second layer of the GRAFT network (to be explained in a future blog post). The GRAFT blockchain is based on the CryptoNote protocol, which is the most private blockchain protocol in use as of today. In order to save time and resources, we used the luxury of the open source principle and forked the initial code of the GRAFT cryptonode from Monero — the best implementation of the CryptoNote protocol. In addition to acquiring fundamental privacy features “out of the box”, forking Monero provided a high degree of confidence in our blockchain from day one of the mainnet existence. It’s important to note that the code of GRAFT supernodes, which we create from scratch, is also open source, so essentially everything that we add on top of the previously existing features is also available for others to reuse.

Now let’s go back to the initial question and apply it to the blockchain layer: Why a brand new blockchain and why CryptoNote?

We’ll start with the new, dedicated blockchain: Yes, it would have been easy-peasy to run the GRAFT ICO on ERC20 or a similar token, as most people do these days to avoid blockchain maintenance, mainnet, mining, emission, seed nodes, etc. However, creation of the GRAFT payment network requires our own blockchain because we have to modify the cryptonodes as we develop the supernodes so they will support each other and work together. Without the ability to modify the code, we wouldn’t be able to create the network of supernodes and implement features like real time authorization or exchange brokers on top of any existing blockchain or token platform. In addition, there are features such as payout tokens, loyalty points, store credits, gift certificates, and discount coupons that are required for merchants — all of these are based on the merchant tokens platform, which cannot be built without a dedicated blockchain.

Now for CryptoNote: it’s not just “nice to have”, it is absolutely required in order to be competitive with traditional payment systems such as Visa network or PayPal. Ironically, Visa and PayPal provide much better privacy to their customers than most existing cryptocurrencies such as Bitcoin and Ethereum. Let me explain. When you swipe/insert your payment card at the point of sale terminal, or click the PayPal’s pay button online, there are two entities in the world that are aware of your transaction: the payment network (Visa or PayPal in our case) and the merchant. In reality, of course, there are more organisations that “know” about your transaction because the payment network is more complex. This network includes, at the very least, the issuing bank (the one that gave you the payment card), the acquiring bank (the one that approves the payment), the payment gateway (the one that routes your transaction to the right payment processor/acquiring bank) and the payment processor (which processes the payment and merchant’s payout). However, in any case, this list of organizations is limited because they are under security and privacy regulations, and they have typically implemented some decent security controls that protect your transaction records from prying eyes. Of course, everyone in this list can be hacked or give away your info to a law enforcement agency, but this is a different story (which is, by the way, another good reason to switch to cryptocurrency payments and throw away your plastic cards!). For the sake of simplicity though, let’s assume that random people cannot gain access to your data in most situations.

Finally, let’s see what happens with blockchains. The key innovation of Bitcoin (the first blockchain and cryptocurrency) was the open ledger that is accessible to every node participating in the network because your transaction must be verified to make sure you are not trying to spend your money twice. But this also means that anyone in the world can see your transactions and how much money you have in your wallet! Now, unlike plastic cards, Bitcoin wallets are, in principle, anonymous because transaction records are not directly linked to your identity. At first glance, this feature appears to compensate for the fact that your transaction records are laying there in plain sight on the blockchain for anyone to see. Well, the problem is that there are ways to link addresses to identities. Once this happens, all of your transactions magically become visible forever because the blockchain is always there and it cannot be erased!

Fortunately, there is a solution: the CryptoNote protocol, which hides the sender’s address, the recipient’s address, and the transaction amount , while still preserving the ability to validate each transaction and prevent double spending — and it’s all thanks to advanced cryptography! One day I am going to explain how it works in layman’s terms to unveil the beauty of CryptoNote and its cryptography (the same as I have done to explain RSA and Elliptic Curves cryptography in my book about Bitcoin payments). But for now, let’s just take it on faith that CryptoNote ensures a high degree of privacy for all participants. Moreover, on top of existing CryptoNote features, GRAFT adds even more privacy and hides transaction fees!

Summary of Part 1:

Why a brand new blockchain and why CryptoNote?

The dedicated blockchain allows GRAFT to create a merchant token platform. This is required for features like payout tokens and loyalty programs, and the second layer supernode network, which enables special retail features such as real time authorizations and exchange brokers.

The Cryptonote blockchain protocol provides an absolute privacy to all participants of the transaction, which is required in order to compete with existing payment platforms such as Visa or PayPal that are more private than most exciting (non-Cryptonote) cryptocurrencies.

To Be Continued — Part 2: Supernodes and RTA

Anyone can be an Exchange Broker

Pay-in, pay-out and interchange brokers (aka exchange brokers) are a critical part of the system, and will likely be quite lucrative!

True to decentralization principles we’re also working on making it super-easy to launch an exchange broker – straight from the wallet!

** Exchange brokers are subject to laws and regulations of their jurisdictions

GRAFT files a patent on a Decentralized Payment Network

FOR IMMEDIATE RELEASE

About the Patent

The non-provisional patent application covers various facets of the network, but perhaps most importantly the multi-purpose Supernode layer which acts as the “pre-frontal cortex” of the network, handling super-fast sale and interchange transactions.

Why did we file this patent?

With the recent patent activity in the field of blockchain-enabled payments we felt compelled to protect GRAFT project and its eco-system participants from potential IP related encumbrances. Since it has been close to a year since we published the original white paper, it was the right time to get this done.

We hope the patent will help secure “freedom to operate” protection from patent claims in the future. While decentralization is at odds with patent systems in general, the system participants such as merchants, service, technology, and distribution providers might be interested in getting extra protection in the jurisdictions where they operate.

* Additionally the patent opens up potential licensing opportunities for private (non-competing) uses of the code, providing the project with additional revenue streams to help sustain operations and ongoing research and development.