CryptoURANUS Economics

Saturday, August 11, 2018

Unbanked: Defined in CryptoCurrency

Unbanked: Defined:

Many reasons people may be unbanked including:

Unbanked are adults who do not or cannot use banks to store their money.
After experiencing a banking crisis, they may have a distrust of the banking system.
Some individuals don’t have enough money to meet the minimum requirements of a bank.
Illegal European Immigrants may not have the paperwork needed to open a bank account.
A small group of the unbanked are criminals who are trying to avoid the attention of law enforcement.
Some cryptocurrencies aim to help the unbanked by allowing them to store, use, and transfer their money with very few requirements.

What is Unbanked really?

DEFINITION of 'Unbanked':

"Unbanked" is a slang term regards those who do not use banks or banking institutions in any capacity.
Unbanked persons generally pay for things in cash or else purchase money orders.
Unbanked persons also typically do not have insurance, pensions or any other type of professional money-related services.
They may take advantage of alternative financial services, such as check-cashing and payday lending, if such services are available to them.

BREAKING DOWN 'Unbanked':

Estimated, 10 million American households are unbanked.
Nationwide, about 7.7 percent of households are unbanked.
The rate of unbanked citizens vary greatly from one state to the next.
Mississippi has the highest rate of unbanked, at 16.4 percent.
Rates of the unbanked in some U.S. cities and counties exceed 20 percent.
These places include Detroit; Newark, N.J.; Cameron County, Texas; Laredo, Texas; Hialeah, Fla.; Miami; and Starr County, Texas. Unbanked rates exceed 40 percent in Cleveland; Savannah, Ga.; Nashville; and Atlanta.
Half of the unbanked had a bank account previously, but are now choosing to conduct their financial lives without such exchanges do to interest rates and legal actions brought against them.

Why Persons Become Unbanked:

Most unbanked are white, native-born Americans: but many immigrants, legal and illegal, are also unbanked.
People can choose to be unbanked for many reasons. Criminals avoid using financial institutions because law enforcement officials can track their actions in their accounts.
Survived of global the Great Depression have deep distrust for financial institutions.
Great depression survivors do not trust, nor use private financial institutionalized banks.
Recent immigrants who experienced banking crises in their countries of origin are the same consensus.
Extremely poor individuals may also have no need for the banking system.
Those below and slightly above the poverty-line survive bearly day-to-day with little to no money for food and poor to no housing inthe United States.
Many citizens living in poverty find being unable maintaining minimum bank-account balances, to afford bank-account fees, or arrange for vehicle-transportation to and from bank branches during banking hours.

Initiatives to Help the Unbanked:

State and federal level politicians have attempted to help the unbanked gain financial literacy, benefit from banking services, and the banks fail them 93% time..
Former California Gov. Arnold Schwarzenegger’s, (AKA: Terminator), Bank on California Initiative, and the FDIC’s Money Smart program.
The U.S. Treasury Department’s Section 326 regulations, which allow banks and credit unions to accept identification issued by foreign governments, seeks to help undocumented aliens become banked and to collect social-security benifits.
The U.S. Treasury Department makes federal payments to unbanked federal benefits recipients using a MasterCard prepaid debit card.

TRUSTED VS TRUSTLESS: Defined in CryptoCurrency

Truth in the means of stock-exhange and cryptocurrency operations

It means you don’t need a trusted party to settle transactions.

When you send funds you trust the banks to send it for you.

Settling a financial agreement between two parties involves both the bank of the sender as well as the bank of the receiver.

Cryptocurrencies like Bitcoin cut out the need of this middle man role.

It has nothing to do with trusting the seller. Neither does a bank if you pay upfront and the seller refuses to send the goods. Then it’s become a civil case.

Just like with bank statements you can prove on the blockchain that you transferred funds to the address the seller gave to you.

‘Trustless’ has become a rallying cry for Bitcoin evangelists, focusing public attention on the fact that Bitcoin enables P2P transactions without the participation of a trusted third party acting as an intermediary.

Before Bitcoin, to use digital money, we needed a trusted third-party to keep a ledger of who owned how much. Examples of this trusted third-party are MasterCard, VISA, your bank or your MNO if you use mobile money. So if Alice sent Bob $100, this trusted third-party would debit Alice's account and credit Bob's account - they would update their ledger and we all had to trust this 'trusted' third-party to do the right thing and be good stewards of our money.

Now with Bitcoin, everyone has a copy of this ledger so we mo longer need to trust a single entity/organisation/third-party because there is no need to trust when you can just verify against this ledger because you have a copy of it. This decentralised ledger is called the Blockchain BTW.

And the other thing is that everyone using is following the same rules we are so we don't even need to trust them because we know that Bitcoin was built to make it impossible to break the rules.

Bitcoin makes it possible to conduct money transfers without intermediaries. Intermediaries who could otherwise gain control over funds in a transaction, censor transactions or act as points of failure.

Does this give grounds to assert that Bitcoin and other cryptocurrencies are a form of money that does not require trust? Is it possible to completely eliminate trust from monetary relations, and is there even a need to? This article is devoted to the study of the role of trust in monetary transactions (including cryptocurrencies), and its main conclusion is that this role is hard to overestimate.

The article is divided into four sections. First, we analyze the role of trust in monetary relations, including the role of trust in Bitcoin’s functioning, and show that trust is necessary for any money. Next, we proceed to justify the need for credit and credit money, which cannot exist without trust.

Transaction [TX-ID]: Defined in CryptoCurrency

Transaction [TX-ID]: Defined in CryptoCurrency

A Transaction ID, or TX ID is defined as a unique string of letters and numbers used to identify an exchange of cryptocurrency between two people.

Because blockchains are public data, many websites have been built to let you explore the data. These are known as blockchain explorers. Using a blockchain explorer, you can copy/paste your transaction ID and easily find the status of your transaction.

Just make sure you’re using a blockchain explorer that has access to your blockchain. Some blockchain explorers only have access to one blockchain, like bitcoin.

Is TXID the hash of a transaction's data? Yes!

A TXID (Transaction ID) is basically an identification number for a bitcoin transaction.

Examples:

f4184fc596403b9d638783cf57adfe4c75c605f6356fbc91338530e9831e9e16 - First ever Bitcoin transaction to Hal Finney in 2010.

a1075db55d416d3ca199f55b6084e2115b9345e16c5cf302fc80e9d5fbf5d48d - Pizza transaction for 10,000 BTC in 2010.

4ce18f49ba153a51bcda9bb80d7f978e3de6e81b5fc326f00465464530c052f4 - The transaction containing the first donation I received for making this website.

SO, A TXID is always 32 bytes (64 characters) and hexadecimal.

NOW, this hiw how we create a TXID below:

AND... you get a TXID by hashing transaction data via SHA256 twice.

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

169e1e83e930853391bc6f35f605c6754cfead57cf8387639d3b4096c54f18f4 (Note: reverse the byte order first if you want to find this transaction in the blockchain...)

What about searching for TXIDs in the blockchain?

If you have just hashed a transaction data and want to search for a TXID in the blockchain, you have to search for it in reverse byte order.

The TXID (original): 169e1e83e930853391bc6f35f605c6754cfead57cf8387639d3b4096c54f18f4

The TXID (searching): f4184fc596403b9d638783cf57adfe4c75c605f6356fbc91338530e9831e9e16

Why?
Because, this is cryptocurrency, welcome to Bitcoin.
The tx and block hashes that bitcoin core uses are byte-reversed.

Where are TXIDs used?

1. Searching the blockchain.
If you've just made a transaction, you can use the TXID to find it in the blockchain. For example:

bitcoin-cli getrawtransaction 0e3e2357e806b6cdb1f70b54c3a3a17b6714ee1f0e68bebb44a74b1efd512098

The console window in the Bitcoin Core Wallet

The console window in the Bitcoin Core Wallet

If you have been given a TXID by your bitcoin wallet, it's probably already in its "searchable" format (reverse byte order).

2. Spending outputs.
You use a TXID when you want to use an existing output as an input in a new transaction.
To refer to an existing output, you use the txid it was created in, along with the vout number for that transaction.

To refer to an existing output, you use the txid it was created in, along with the vout number for that transaction.

Because after all, a TXID is a unique identifier1 for a transaction.

Why hash twice? Why not once?

Things often get hashed twice in bitcoin for extra security.

Hash functions, like SHA256, for creating identification numbers are fast and secure.

Coinbase transactions having the same TXID.
There has been a situation where two "different" coinbase transactions had the same TXID, because the other is a backup and user-friendly.

Reason is the transaction data is the same along with the TXIDs. Here are the transactions and the blocks they were included in:

e3bf3d07d4b0375638d5f1db5255fe07ba2c4cb067cd81b84ee974b6585fb468
block 91,722: 00000000000271a2dc26e7667f8419f2e15416dc6955e5a6c6cdf3f2574dd08e
block 91,880: 00000000000743f190a18c5577a3c2d2a1f610ae9601ac046a38084ccb7cd721

d5d27987d2a3dfc724e359870c6644b40e497bdc0589a033220fe15429d88599
block 91,812: 00000000000af0aed4792b1acee3d966af36cf5def14935db8de83d6f9306f2f
block 91,842: 00000000000a4d0a398161ffc163c503763b1f4360639393e0e4c8e300e0caec

The Bitcoin Administrators made a BiP-34 Fix

BIP 30 introduced a rule preventing blocks from containing a TXID that already exists. BIP 34 requires coinbase transactions to include block height of mining into the transaction data. Hence, coinbase transactions now are different...

Transaction Fee [TX Fee]: Defined in CryptoCurrency

A transaction fee is defined as payment made to people who do the work of keeping an accurate, up-to-date financial system when money is being sent and received.

Typically, when you send money using banks or receive money as a business, you pay the bank a fee. This fee covers their costs for hiring people to do the work involved in your transaction.

With cryptocurrencies, there are no banks. Instead, people use their computers to verify transactions are correct and then record this information in the blockchain. Because there are thousands of transactions happening every minute, fees motivate these people to do this computer work.

If you provide a larger fee, typically your transaction can jump the line and get recorded first. In other words, the larger the fee, the greater the chance of your transaction going through sooner than the rest.

Tokens-(Security and Equity)

Token:

A token is defined as something that represents value, services, or a product.

There are three main types of tokens built with blockchain technology:
Utility Token: Defined in CryptoCurrency that provides access to a product or service including software, digital content, etc.

A security token that represents a real-world, physical asset.
An equity token that represents partial ownership in a company.

All three types of tokens are bought and sold with the hope of gaining a profit.
The words “crypto asset” and “digital asset” can also be used to describe tokens.

Tokens is a digital asset that lives on a cryptocurrency. The term token is often used in the meaning of user issued token, in opposition to native token that comes into existence along with the cryptocurrency itself.
See also: Cryptocurrencies supported by Trezor

Native and user tokens

All cryptocurrencies have at least one token. This is a native token which is created along with the cryptocurrency, is essential to its function and is often synonymous to it. For example Bitcoin has bitcoin (BTC) as its native token, while Ethereum has ether (ETH).
Some cryptocurrencies also support user asset issuance. Such assets are reffered to as a user tokens. For example Ethereum has a growing number of ERC20 tokens issued by individual users and companies during ICOs or crowdsales.

It is quite common, that native tokens are referred to as cryptocurrencies (or less formally as coins), while user tokens are called just tokens.

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Thursday, August 9, 2018

Private-Key

Private-Key:
Defined in Cryptocurrency

A Private-Key is a randomly generated secret number that must only be known to the owner of the associated address, and no-one else.

Private-keys are contained in a wallet and are mathematically linked to the corresponding public-keys.

A Private-Key can be used to spend the funds that are associated with a specific address and should always be kept private.

Publicly sharing a Private-Key will result in a loss of funds; -i.e. most likely theft.

Private-Key are generated locally on your Trezor-device and never leave the device.

The Private-Key is defined as a string of letters and numbers known only by the owner that is used to spend cryptocurrency.

NEVER SHARE your Private-Key with anyone unless you want someone else to be able to theft, and-or own all of your money!

Your Private-Key is your most prized possession as your password is to access your cryptocurrency account(s) and must always be in private.

Compare a Private-Key with a Public-Key and address:
Your Public-Key is rarely ever used, but you can use it to receive cryptocurrency in trust.

Your address is a safer version of your Public-Key and is what you should use to receive money.

Private-Key for Trezor devices are generated based on a recovery-seed and (optional) passphrase.

In addition to creating and signing transactions, Private-Key can be used in the Trezor-Wallet to sign messages from a specific address to prove ownership of that address.

See also Account private key

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Mnemonic Phrase: Defined in CryptoCurrency

A mnemonic phrase (also mnemonic seed or seed phrase) is defined as a secret list of words used in sequence to gain access to your cryptocurrencies.

“Mnemonic” just means a memory aid such as rhymes, abbreviations and songs that help you remember something else. A mnemonic phrase is a group words, often 12 or more, created when a new wallet is made to store your cryptocurrency.

If your the computer running your wallet broke, you could use your mnemonic phrase to recover your wallet and crypto. The words must be typed in exactly in the same sequence they were created.

Most people store their phrases on a piece of paper and then keep that in a safe place. Your phrase must be kept secret, anyone who discovers it can steal your crypto.

Mnemonic is pronounced: nuh-mon-ic.

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