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    • New Open Europe Report: No Deal – The economic consequences & how they could be mitigated October 15, 2018
      In a new macroeconomic study, ‘No Deal: The economic consequences & how they could be mitigated’, Open Europe finds that a UK withdrawal from the European Union without a preferential trade deal would be sub-optimal and would entail material costs. However, this medium-term cost would be limited in absolute terms, but also relative to other […]
    • Several Cabinet members object to PM’s new backstop proposal October 12, 2018
      Prime Minister Theresa May faces objections from several Eurosceptic members of the Cabinet over her new proposal for a backstop to avoid a hard border on the island of Ireland. The Daily Telegraph reports that at least three ministers are prepared to resign over the plan, which involves the UK staying in a customs union with the […]
    • Sobering Results in the Land of Oktoberfest? A Primer on the 2018 Bavarian Elections. October 11, 2018
      As the German state of Bavaria goes to the polls on Sunday, the results of the vote are likely to have wider repercussions. Open Europe’s Leopold Traugott explains what is at stake. The post Sobering Results in the Land of Oktoberfest? A Primer on the 2018 Bavarian Elections. appeared first on Open Europe.
    • DUP could vote down the Budget over Brexit deal October 11, 2018
      Northern Ireland's Democratic Unionist Party (DUP), on whose 10 MPs the Government relies upon for its majority, could vote down the Budget in Parliament later this month if the Government’s Brexit plans cross their red lines, according to the BBC and Sky. One DUP source told BBC Newsnight: "If we are not happy with what […]
    • Event summary: After Salzburg what next? October 10, 2018
      Open Europe held an event on October 9 in the House of Commons to discuss the next steps in Brexit negotiations after the Salzburg EU leaders informal summit. Below is an overview of the discussion.The post Event summary: After Salzburg what next? appeared first on Open Europe.
    • Brexit Secretary: Any extension to customs union membership must be temporary October 10, 2018
      Speaking in the House of Commons yesterday, the Brexit Secretary Dominic Raab told MPs that any extension of Britain’s participation in the customs union beyond the end of the transition period would have to be “temporary, limited and finite.” Raab added that any divorce deal would have to include clarity on the future UK-EU relationship, […]
    • UK Government downplays rumours of breakthrough in Brexit talks October 9, 2018
      The UK Government yesterday downplayed rumours of an imminent breakthrough in Brexit negotiations with the EU. A Government spokesperson said, “There is a difference between people talking optimistically about a deal and a deal being done,” adding, “There can be no withdrawal deal without a precise future framework.” He said that the government was “working […]
    • SNP would oppose Brexit deal based on Chequers proposal, says Scottish First Minister October 8, 2018
      Speaking ahead of the Scottish National Party (SNP) Conference in Glasgow, Scotland’s First Minister Nicola Sturgeon said that the SNP MPs in the House of Commons would not vote for a Brexit deal based on the Government’s Chequers proposal, telling the BBC’s The Andrew Marr Show, “We’ve always said our bottom line is membership of […]
    • Donald Tusk: EU offers UK a “Canada+++” deal October 5, 2018
      Speaking in Brussels yesterday, European Council President Donald Tusk said, "The EU wants a relationship with the UK that is as close and special as possible. From the very beginning, the EU offer [for a Brexit deal] has been not just a Canada deal, but a Canada+++ deal. Much further-reaching on trade, on internal security and […]
    • Why is the EU Irish backstop proposal unacceptable to the UK Government? October 4, 2018
      Open Europe's David Shiels appeared on TRT World News on October 4 to discuss progress on the Irish backstop in Brexit negotiations.The post Why is the EU Irish backstop proposal unacceptable to the UK Government? appeared first on Open Europe.

What is cryptocurrency

What is cryptocurrency:  21st-century unicorn – or the money of the future?

This introduction explains the most important thing about cryptocurrencies. After you‘ve read it, you‘ll know more about it than most other humans.

Today cryptocurrencies have become a global phenomenon known to most people. While still somehow geeky and not understood by most people, banks, governments and many companies are aware of its importance.

In 2016, you‘ll have a hard time finding a major bank, a big accounting firm, a prominent software company or a government that did not research cryptocurrencies, publish a paper about it or start a so-called blockchain-project.

But beyond the noise and the press releases the overwhelming majority of people – even bankers, consultants, scientists, and developers – have a very limited knowledge about cryptocurrencies. They often fail to even understand the basic concepts.

So let‘s walk through the whole story. What are cryptocurrencies?

  • Where did cryptocurrency originate?
  • Why should you learn about cryptocurrency?
  • And what do you need to know about cryptocurrency?

What is cryptocurrency and how cryptocurrencies emerged as a side product of digital cash

Few people know, but cryptocurrencies emerged as a side product of another invention. Satoshi Nakamoto, the unknown inventor of Bitcoin, the first and still most important cryptocurrency, never intended to invent a currency.

In his announcement of Bitcoin in late 2008, Satoshi said he developed “A Peer-to-Peer Electronic Cash System.“

His goal was to invent something; many people failed to create before digital cash.

After seeing all the centralized attempts fail, Satoshi tried to build a digital cash system without a central entity. Like a Peer-to-Peer network for file sharing.

This decision became the birth of cryptocurrency. They are the missing piece Satoshi found to realize digital cash. The reason why is a bit technical and complex, but if you get it, you‘ll know more about cryptocurrencies than most people do. So, let‘s try to make it as easy as possible:

To realize digital cash you need a payment network with accounts, balances, and transaction. That‘s easy to understand. One major problem every payment network has to solve is to prevent the so-called double spending: to prevent that one entity spends the same amount twice. Usually, this is done by a central server who keeps record about the balances.

In a decentralized network, you don‘t have this server. So you need every single entity of the network to do this job. Every peer in the network needs to have a list with all transactions to check if future transactions are valid or an attempt to double spend.

But how can these entities keep a consensus about this records?

If the peers of the network disagree about only one single, minor balance, everything is broken. They need an absolute consensus. Usually, you take, again, a central authority to declare the correct state of balances. But how can you achieve consensus without a central authority?

Nobody did know until Satoshi emerged out of nowhere. In fact, nobody believed it was even possible.

Satoshi proved it was. His major innovation was to achieve consensus without a central authority. Cryptocurrencies are a part of this solution – the part that made the solution thrilling, fascinating and helped it to roll over the world.

 

 

 

The transaction is known almost immediately by the whole network. But only after a specific amount of time it gets confirmed.

Confirmation is a critical concept in cryptocurrencies. You could say that cryptocurrencies are all about confirmation.

As long as a transaction is unconfirmed, it is pending and can be forged. When a transaction is confirmed, it is set in stone. It is no longer forgeable, it can‘t be reversed, it is part of an immutable record of historical transactions: of the so-called blockchain.

Only miners can confirm transactions. This is their job in a cryptocurrency-network. They take transactions, stamp them as legit and spread them in the network. After a transaction is confirmed by a miner, every node has to add it to its database. It has become part of the blockchain.

For this job, the miners get rewarded with a token of the cryptocurrency, for example with Bitcoins. Since the miner‘s activity is the single most important part of cryptocurrency-system we should stay for a moment and take a deeper look on it.

What are miners doing?

Principally everybody can be a miner. Since a decentralized network has no authority to delegate this task, a cryptocurrency needs some kind of mechanism to prevent one ruling party from abusing it. Imagine someone creates thousands of peers and spreads forged transactions. The system would break immediately.

So, Satoshi set the rule that the miners need to invest some work of their computers to qualify for this task. In fact, they have to find a hash – a product of a cryptographic function – that connects the new block with its predecessor. This is called the Proof-of-Work. In Bitcoin, it is based on the SHA 256 Hash algorithm.

 

What is Cryptocurrency

 

You don‘t need to understand details about SHA 256. It‘s only important you know that it can be the basis of a cryptologic puzzle the miners compete to solve. After finding a solution, a miner can build a block and add it to the blockchain. As an incentive, he has the right to add a so-called coinbase transaction that gives him a specific number of Bitcoins. This is the only way to create valid Bitcoins.

Bitcoins can only be created if miners solve a cryptographic puzzle. Since the difficulty of this puzzle increases the amount of computer power the whole miner’s invest, there is only a specific amount of cryptocurrency token that can be created in a given amount of time. This is part of the consensus no peer in the network can break.

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