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Ethereum Meets Zcash? Why IPFS Plans a Multi-Blockchain Browser

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The Interplanetary File System (IPFS) sounds like just the kind of futuristic protocol that would coalesce with blockchain, and its inventor, Juan Benet, has big plans for the two decentralized technologies.

By storing multiple copies of data, the IPFS protocol, heralded as a tool for building a more permanent web, makes data more difficult to erase. Notably, it caught the attention of global warming archivists earlier this year when many worried that US government agency data would disappear under the new administration.

But Benet envisions future blockchain applications as well.

Mainly since blockchains have proven an inefficient and expensive way of storing data, Benet believes data, from webpages to PDFs, can be offloaded to another computing layer like IPFS. Since distributed ledgers can be put on top of IPFS for application building, he calls the two systems a “great marriage”.

“If you add it to IPFS and take that hash and put it in a block, you can then use IPFS to browse the transaction and browse the file directly on the web,” he told CoinDesk.

Benet continued:

“IPFS connects all these different blockchains in a way that’s similar to how the web connects all these websites together. The same way that you can drop a link on one page that links to another page, you can drop a link in ethereum [for example] that links to zcash and IPFS can resolve all of that.”

The ethereum–zcash example, which is currently in progress, is an interesting one, since those blockchain’s developers have previously floated the idea of connecting the two blockchains.

Linking blockchain data

So, how does it work? It’s a bit of a complex process, one that’s more easily grasped by understanding IPFS and its functionality.

Much like ethereum developers, IPFS developers want to decentralize the internet. The protocol is an experimental replacement for HTTP, the technology currently responsible for delivering webpages like this CoinDesk article to a computer.

But rather than central servers managed by a few companies storing webpages online in the cloud (think Google Docs and emails), IPFS distributes data across a web of computers. A single computer, for instance, could participate in storing a slice of data.

The way this is achieved is through content addressing, hash-linked lists and other technology that’s still being worked on today.

With this underpinning, data links can be embedded in other places, such as in blockchains.

“What we have is a situation where you can create a link. You can go into the ethereum blockchain and issue a transaction that links to zcash. You can browse and access the entire ethereum blockchain and the entire zcash blockchain on IPFS,” Benet said.

Effectively, it’s a way to abstract away from cryptocurrencies.

“Imagine you’re browsing one blockchain,” Benet explained. “You can click through from one to the other, which means that you can write applications that relate the two without those applications having to understand either ethereum or zcash.”

The idea is, if ethereum, zcash and other blockchains can store smaller amounts of data, IPFS can be a tool for linking them and browsing them.

But, while IPFS and MetaMask developers have presented how this would work with the two blockchains, there are still challenges. The biggest hurdle is coming up with one data format to work between all the networks.

Interplanetary ambitions

If this sounds forward-looking, Benet’s long-term vision is much stranger, and revolved around the ‘interplanetary’ in the protocol’s name.

“Yes, we mean it,” Benet said, noting the team is working on versions of today’s most popular applications available over IPFS in time for people to travel to Mars.

“By the time SpaceX sends the first people to Mars – or NASA if it’s them – we want people to be able to use their normal computer applications there so that they have a good internet experience,” he said.

The idea is an homage to computer scientist and internet pioneer JCR Licklider, who directed ARPANet, one of the precursors to the internet, Benet said. In one of his early memos, the word internet is actually short for ‘Intergalactic network’.

“He had this crazy vision of all these computers hooked up together and this network of networks, and then he wanted to extend it to the whole galaxy,” Benet said.

IPFS is then an extension of Licklider’s original vision, one that cryptocurrency and other blockchain technology have expanded on by added immutability and permanence of data.

For now, however, it’s watch and wait as the idea tries to stand the test of time.

Earth network image via IPFS

U.K.’s Royal Mint, the Blockchain and Gold: A Look Ahead

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Dovetailing off of its 2016 blockchain-backed project announcementaimed at providing physical gold that’s cost-effective, convenient and assured, the UK’s Royal Mint and the Chicago-based CME Group has now begun live testing Royal Mint Gold (RMG).

The CME system for RMG, powered by AlphaPoint, is currently undergoing rigorous testing with institutional traders. Its goal is to create a trading platform that satisfies customer demands for a more rapid, cost-effective and secure means of purchasing, storing and selling gold.

In addition, Blockchain security company BitGo has been collaborating with CME Group in developing the architecture, rules and parameters of the blockchain. The multi-signature wallet technology BitGo currently uses for its current client base will be the foundational security protocol for RMG. This is generally regarded as the safest way to deal with digital assets like gold. Developers, business and research are able to now access the code for evaluation and testing purposes.

The release of the open source code ahead of the launch is critical to the effectiveness of this distributed ledger technology. As a permissioned private network, allowances will be made for some of the source code to be enhanced and modified.

All of this highlights the value of blockchain technology in revolutionizing the way in which digital transactions are facilitated. From banking to healthcare to land title management, and now to gold, blockchains are poised to boost the efficiency of a broad range of functions.

Steven J. Ehrlich, associate at Spitzberg Partners LLC, a New York-based consultancy that assists clients in developing and executing market entry and M&A strategies says it’s very exciting to hear that the RMG project is moving forward following the initial announcement last year.

“Traders and institutional investors have long been frustrated with the high fees, lack of transparency, and counterparty risks that come with trading gold. So key players no doubt will be interested in any technology that is secure and makes their lives easier,” says Ehrlich.

He says that from the start of this project, it has been apparent that the implementation has been designed with the intent to quickly, but responsibly, go into production in an effort to validate the applicability of blockchain technology to gold markets. Ehrlich notes that the fact that the project is being run by the Royal Mint adds a degree of control over the project since it will operate on a closed network, issue all RMG tokens, and vault the gold. Additionally, he says, the teams at BitGo, CME Group, and AlphaPoint are reputable brands within the industry, which adds to the legitimacy of the project.

Ehrlich is also pleased to see that the participants are open sourcing the code, especially given that it makes sense to run this initial implementation as a closed network. This, he says, will not only add to the security of the network, but can also help promote interoperability moving forward.

“I hope that the companies involved will share some of the key lessons learned during the testing phase and once it goes live, as there is no better way to learn than “by doing.” These insights will prove invaluable to other developers, institutional investors, mints, et cetera, who are interest[ed] in exploring the applicability of blockchain technology to their operations.”

Bitcoin Price Analysis: Is a $1700 Target in Sight?

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The Securities and Exchange Commission (SEC) pulled an about-face this week and resurrected the rejected Winklevoss Bitcoin ETF COIN. Although the outcome is still binary and will likely be rejected a second time, there is renewed hope the COIN ETF or something similar will eventually pass SEC regulatory scrutiny. This would allow for the opportunity of a massive influx of untapped investors who do not otherwise have access to or confidence in the Bitcoin market.

The digital currency space market capitalization as a whole just surpassed $30 billion for the first time. This is certainly an indication of a growing and mature ecosystem and makes for a splashy headline, but overall, I put little stock into market capitalization for many alt coins which have various supply variables including no total cap on number of coins, pre-mines, insta-mines, or a majority of supply held by the development team.

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USD withdrawals continue to be halted on Bitfinex, one of the leading USD exchanges. This essentially means selling BTC for USD on that exchange can only buy more Bitcoin or another digital currency. It’s a bit of a one-way street at the moment so it’s no surprise that there continues to be a $100 premium on Bitfinex. We can fully expect this to continue until USD withdrawals resume, or the buyers get exhausted, and we probably won’t see full resolution until the former happens. Despite some circulating rumors, I don’t see any evidence to suggest that Bitfinex is insolvent; they are handling digital currency withdrawals without issue. Some users have been avoiding Bitfinex entirely. The Bitfinex cold wallet balance has been on a downtrend since the halt of USD withdrawals.

Bitcoin Unlimited blocks broke an all-time high and resumed their collision course for parity with Bitcoin Core blocks. Bitcoin Unlimited miners may opt to fork with as little as 51 percent of hash power support, though it would probably be closer to 70 percent. I fully expect a hard fork attempt to occur but remain unsuccessful.

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Node support for Unlimited and Core largely remain unchanged from the previous week.

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All eyes are currently on the inverted head and shoulders, a bullish reversal pattern, which has a neckline at an all-time high. Although traditionally occurring at the bottom of a downtrend with a volume profile, the pattern is convincing.

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Expect resolution of the pattern to occur with volume confirmation. The $1700 measured target may seem absurd, especially for some of us who have been watching this space grow over the past four or more years, but based on technicals, it’s the target nonetheless.

Many exchanges have again surpassed gold parity or are sitting just below parity, but the index is again flirting with the gold price, which historically has acted as heavy resistance.

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A convincing break of this arbitrary resistance would be additional bullish confluence coupled with the inverted head and shoulders breakout.

Summary

  1. The SEC is reviewing the rejection of the COIN ETF.
  2. Total digital currency market capitalization broker $30 billion for the first time.
  3. USD withdrawal on Bitfinex continues to be halted.
  4. Bitcoin Unlimited inches closer and closer to hard fork possibilities.
  5. A bullish chart pattern continues to project ~$1700 target. Watch for a large spike in volume once price breaks current horizontal level.
  6. There is another opportunity for Bitcoin to break and hold above gold parity.

Trading and investing in digital assets like bitcoin is highly speculative and comes with many risks. This analysis is for informational purposes and should not be considered investment advice. Statements and financial information on Bitcoin Magazine and BTCMedia related sites do not necessarily reflect the opinion of BTCMedia and should not be construed as an endorsement or recommendation to buy, sell or hold. Past performance is not necessarily indicative of future results.