Crypto Finance: Knowledge Session

In this episode, Alessandro Chacón, Backend Engineer at Crypto Broker AG, takes up the recurring topic of privacy and gives an introduction to CoinJoin, its implementations and the related privacy aspects for bitcoin.

As the bitcoin blockchain is fully transparent and transaction records are publicly accessible to everyone, approaches to protecting transaction privacy are becoming increasingly important for anyone interested in financial privacy.

In general, CoinJoin can be viewed as a tool to enhance the privacy and fungibility of bitcoin. It involves a trustless approach, introduced by the bitcoin core developer Gregory Maxwell, to combine multiple bitcoin payments from multiple parties into a single transaction. This makes it more difficult for outside parties, such as blockchain analysis companies, to determine who paid whom.

For this internal knowledge session, our team experts – all with various backgrounds - discuss both the technical aspects of CoinJoin, and the concerns arising at the intersection of financial privacy, compliance, and regulation.

We hope you enjoy this lively episode.

Fees pay for Bitcoin's security. At least to a small part, the bigger chunk is currently subsidized. There is no fee-table, no guaranteed confirmation times. But still the system is stable and predictable.

Head of Research, Dr. Lewin Boehnke discuss fee economics, fee selection algorithms and handling of usual and unusual situations.

Websites that are mentioned in the podcast are https://mempool.observer/monitor/ and https://dashboard.bitcoinops.org/

Bitcoin and Ethereum use cryptographic signatures, as does your credit card.

Analogies break quickly when trying to explain what they do and how they work. So instead our Head of Research, Dr. Lewin Boehnke explicitly guides through a specific signature scheme. An unusual one, but one that is remarkably intuitive and easy to understand. The IOTA Signature Scheme ISS.

We would love to get your feedback. Write us at [email protected].

Motivated by the positive feedback to the mildly opinionated last episode about Ethereum's forks and difficulty bomb adjustments, our Head of Research, Dr. Lewin Boehnke, jumps right into the field of controversial discussions. This time, Bitcoin's electricity consumption. Taking on frequent talking points and misconceptions and presenting an outlook regarding scaling and the development of sourcing of energy.

We always do, but for this one in particular, we would love to get your feedback. Write us at [email protected].

After the fork is before the fork for Ethereum, with the last fork, Istanbul, very recently on 8th of December and the next fork scheduled for roughly 6th of January.

We discuss the history and reasoning of forks in Ethereum, what they have in common with forks in other chains, e.g. Bitcoin and what is distinctly different. The most notable difference for sure is the difficulty bomb. It's a major, but very often misrepresented component of these discussions and our Head of Research, Dr. Lewin Boehnke, aims to clear up misconceptions surrounding it.

In this episode, Alessandro Chacón, Backend Engineer at Crypto Broker AG, dives into one of bitcoin's second layer solutions called "liquid", which is developed by the blockchain technology company Blockstream.

Liquid is a sidechain-based settlement network for traders and exchanges, enabling faster, more confidential bitcoin transactions, and the issuance of digital assets. Today, there are already many well-known exchanges involved as "members" of the network.

Learn more about Liquid here: https://blockstream.com/liquid/

The episode was recorded in June 2019, so some of the quoted numbers were current at that time.

One of the ongoing topics is the use of smart contracts for real life applications. How does a smart contract work together with out-of-chain events? What is relevant to handle on the blockchain, what adds and does not add to the quality of the project by handling it there?

In this episode, our Head of Research, Dr Lewin Boehnke, guides the discussion through the complete code of a contract that is both extremely minimalistic and highly consequential in its use of the blockchain.

Here is a bit of background on the carbon vote that determined the future path of Ethereum after The DAO hack:

The smart contract is comprised of merely 15 lines of code, 6 of them empty or comments. Essentially only one line is relevant.

See the code here: http://v1.carbonvote.com/

We discuss how this was sufficient as a full voting contract.

During the original session, we had the contract code in front of us.

For reference, here is the full contract code:

----

/**

*Submitted for verification at Etherscan.io on 2016-07-06

*/

contract Vote {

event LogVote(address indexed addr);

function() {

LogVote(msg.sender);

if (msg.value > 0) {

msg.sender.send(msg.value);

}

}

}

----

Source: https://etherscan.io/address/0x58dd96aa829353032a21c95733ce484b949b2849#code

Mining is a component of blockchain economics that is often misunderstood. In this episode we look at the economic and technological roles that mining plays for a cryptocurrency and the implications of these roles.

Our Head of Research, Dr Lewin Boehnke, guides this discussion about the economics of asics, asic resistance, and a few real and potential developments, including the impact of botnets in the blockchain era, and how zero knowledge proofs could evolve.

Like many young fields, crypto assets don't have an established nomenclature yet. Deliberately or not, words get reused in very different meanings. This often makes project descriptions hard to understand.

We sat down for a session to talk about what 'tokenisation' actually is: what it is, what it is not, where blockchain comes in, and what it changes.

For a bit of context for this particular session, we had an internal task through all teams to evaluate what tokenisation means for Crypto Finance AG and vice versa. This session happened right at the start of it, to set the scope and develop substance instead of getting lost in buzz.

The audio quality for this session is far from good. Towards the end, the recording had significant jitters, which lead us to cut this episode a bit short - hence the slightly abrupt ending in this episode.

Bitcoin's deflationary nature is rarely questioned. Instead, it is often considered as part of its origin story. We're referring to bitcoin’s limitation to 21 million BTC – a message that is easy to convey and was tempting from the outset. With regard to the economic considerations, however, the asymptotic crawling to a fixed number might not be the wisest choice.

In cryptocurrencies, the expenditure of electricity towards the security of the network by the miners has to be reimbursed by some economic participant. There are two extremes. The cost is borne by the users of the currencies in each transaction through fees, or by the hodlers of the currency through inflation.

Crypto Finance's Head of Research, Dr Lewin Boehnke, discusses the economic rationale and consequences of that decision for bitcoin, and he presents original arguments and considerations around this decision from a technological rather than an economic standpoint. This knowledge session, recorded just over a year ago, remains relevant today, as bitcoin price moves can be considered in light of this aspect.