17 January 2015

IBM Reveals Proof of Concept for Blockchain-Powered Internet of Things

Internet of Things

IBM has unveiled its proof of concept for ADEPT, a system developed in partnership with Samsung that uses elements of bitcoin’s underlying design to build a distributed network of devices – a decentralized Internet of Things.

The ADEPT concept, or Autonomous Decentralized Peer-to-Peer Telemetry, taps blockchains to provide the backbone of the system, utilizing a mix of proof-of-work and proof-of-stake to secure transactions.

IBM and Samsung chose three protocols – BitTorrent (file sharing), Ethereum (smart contracts) and TeleHash (peer-to-peer messaging) – to underpin the ADEPT concept. ADEPT was formally unveiled at CES 2015 in Las Vegas.

According to the draft paper, blockchains deployed within the ADEPT system would serve as a ledger of existence for billions of devices that would autonomously broadcast transactions between peers in a three-tier system of peer devices and architecture. By using an implementation of the bitcoin protocol, ADEPT could serve as a bridge between many devices at low cost.

The paper adds:

“Applying the blockchain concept to the world of [Internet of Things] offers fascinating possibilities. Right from the time a product completes final assembly, it can be registered by the manufacturer into a universal blockchain representing its beginning of life. Once sold, a dealer or end customer can register it to a regional blockchain (a community, city or state)."

The draft paper outlines a number of use cases, including several based in domestic settings. When CoinDesk spoke with chief architect Paul Brody in October, he noted that IBM was looking at how, in theory, implementations of the bitcoin protocol could change the way people live, in both big and small ways.

Blockchains in the home

IBM and Samsung envision networks of devices that are capable of autonomously maintaining themselves. In theory, the paper states, appliances in the home would be able to signal operational problems and retrieve software updates on their own. Devices could also use ADEPT to communicate with other nearby devices in order to facilitate power bartering and energy efficiency.

The authors explain:

“We demonstrate how, using ADEPT, a humble washer can become a semi-autonomous device capable of managing its own consumables supply, performing self-service and maintenance, and even negotiating with other peer devices both in the home and outside to optimize its environment.”

“All this is achieved without a central controller orchestrating or mediating between these devices,” the paper adds.

According to the paper, a Samsung W9000 washing machine reconfigured to work within the ADEPT system uses smart contracts to issue commands to a detergent retailer in order to receive new supplies. These contracts give the device the ability to pay for the order itself and later receive word from the retailer that the detergent has been paid for and shipped.

This information would be broadcast to the smartphone of the washer’s owner, a device that would also be connected to that home’s network.

Challenges remain

Certain issues, including scalability and the nature of cryptocurrency development today, are cited as potential challenges for ADEPT should the concept ever be applied on a grander scale.

The ADEPT team addresses the issue of network scalability within the context of a distributed Internet of Things, and according to the authors, there are no clear paths forward to scale the system as-is to incorporate billions of devices, but that work in this area is promising.

They explain:

“Multiple efforts like sidechains, treechains, and mini-blockchains are ongoing to address this problem. While each approach has its merits and demerits we are yet to see consensus on a common approach across the board. A blockchain to cater to hundreds of billions of devices needs to be scalable.”

The paper notes that challenges associated with Ethereum’s existing design as it relates to ADEPT’s proposed infrastructure could pose problems, saying that those concerns “are being addressed” as Ethereum moves toward its planned launch sometime this year. The authors also cited ongoing developments around anonymizing technology for cryptocurrency as potential areas where ADEPT could be impacted.

The full ADEPT draft paper can be found below:

Image via Shutterstock

IBM ADEPT Practictioner Perspective - Pre Publication Draft - 7 Jan 2015

ADEPTblockchain applicationsIBMInternet of ThingsSamsung

January 17, 2015 at 07:12PM

11 Top Responses from Andreas Antonopoulos' Reddit AMA

andreas antonopoulos reddit ama

It’s no secret that social networking website Reddit is a hub for many in the bitcoin community.

While some bitcoiners may stick strictly to the r/bitcoin subreddit, though, there’s another part of Reddit that has become famous in its own right: ‘Ask Me Anything’ (AMA) threads.

AMAs are great opportunities for anyone with an interesting story – ranging from Barack Obama to Bill Gates – to field questions from the community of redditors and provide candid responses that often can’t be found in the traditional press release culture of mainstream media.

A number of prominent figures in the bitcoin industry have already done AMAs: Gavin Andresen, Jeff Garzik, Patrick Murck, and now another big name can be added to that list – Andreas Antonopoulos.

Antonopoulos is widely regarded as one of the trusted voices of the industry, and as such he recently authored a new book ‘Mastering Bitcoin,’ which was published last month by O’Reilly Media.

To promote the book, Antonopoulos took to Reddit as the latest influencer in bitcoin to host an AMA. Here are the top 11 responses:

On bitcoin's scalability:


On favoring bitcoin over altcoins:

bitcoin not altcoins

On the cause of bitcoin's recent price drop:

Screen Shot 2015-01-17 at 12.48.25 PM

On why 'average' people should use bitcoin:

Screen Shot 2015-01-17 at 12.48.40 PM

On where he sees bitcoin in one year:

Screen Shot 2015-01-17 at 12.52.39 PM

On the centralization of mining:

Screen Shot 2015-01-17 at 12.53.01 PM

On non-user friendly bitcoin addresses:

Screen Shot 2015-01-17 at 12.53.35 PM

On non-reversible charges:

Screen Shot 2015-01-17 at 12.53.49 PM

On bitcoin's volatility:

Screen Shot 2015-01-17 at 12.54.11 PM

On VC investments in the bitcoin in 2015:

Screen Shot 2015-01-17 at 12.54.28 PM

On the first (and last) thing he bought with bitcoin:

first thing bought

Featured image via Tom Sharkey for CoinDesk; Screenshots via Reddit

AMAAndreas AntonopoulosReddit

January 17, 2015 at 06:02PM

12 January 2015

Markets Weekly: Questions for Bitcoin Price After Torrid Week

markets weekly

It has been a torrid week for the bitcoin price. Trading closed on 5th January at $272.95, losing 2.78% over the week to end on 11th January at $265.37, according to the CoinDesk Bitcoin Price Index.

With prices trading below $300 for the first time in a year, Bitstamp revealed that it had lost $5m in coins during a security breach. It pulled the plug on trading for four days as its team scrambled to migrate its systems and introduce new security measures.

During the outage, punters drew comparisons to the suspension of trading at Mt Gox, which signalled the end of that once dominant venue for cryptocurrency trading. While Bitstamp management issued updates on their efforts to get the platform back online, the exchange also missed self-imposed deadlines for the resumption of services, adding to the worried speculation.

Jan 12 - coindesk-bpi-chart (1)

Trading volumes rise

Despite last week's weekend price crash and the outage at one of the largest USD/BTC exchanges, total trading volume across exchanges rose. Data from Bitcoinity shows a 10% increase in traded volume, from 2.25 million coins in the week ending 4th Jan to 2.49 million coins for the most recent seven-day period.

Some exchanges appeared to have reaped the rewards of the four-day Bitstamp outage. ANXBTC showed a 75% increase in traded volume, compared to a week earlier with 87,000 coins changing hands there. Bitfinex, which regularly sees more traded volume than Bitstamp, recorded a 30% increase in volume, or 203,652 coins traded. BTC-e also displayed a rise in volume, albeit by a smaller proportion of 18% to 60,000 coins traded.

With even the largest and most reputable exchanges vulnerable to being taken offline by hackers, at least some bitcoiners appear to have reverted to a less centralised way of converting their coins. The second-largest volume gainer in percentage terms however was LocalBitcoins, the peer-to-peer trading platform. LocalBitcoins saw a 46% jump in traded volume in the last week with 18,759 bitcoins changing hands there.

Even with the Bitstamp outage this week, the price shed only about $7 or 2.8% week-on-week. The biggest intra-day swing for the week took place on 7th January while Bitstamp was down. The price achieved a high of $300.30 and a low of $282.06, making gains for the day.

Where does price go from here?

To put this in perspective, devoted bitcoin watcher Martin Tillier at the Nasdaq's trading blog points out that the US dollar has been devalued by the Federal Reserve's quantitative easing measures to the tune of about 10%. Bitcoin meanwhile has only grown in utility since the halcyon days of its storming bull-run at the end of 2013. That run started at around $125, so Tillier suggests that fair-value for a coin should be around $140 today.

Tillier recommends going long if the price holds above $250, but cutting losses if the price falls below that level, because a drop under $200 could well take place.

Similarly Gavin Smith at derivatives offerer First Global Credit recommends watching for the price to cross the psychologically important $250 level. Smith is going long but with plenty of stops placed on the way down to $250 and under.

"I recommend a very disciplined use of stops at the moment as a further slide can't be ruled out," he wrote on his company's blog.

Derivatives exchange BitMEX takes a slightly more bearish view. Its weekly Crypto Trader Digest recommends subscribers take advantage of "lower lows" as the price will head for $250 and then $200. But even as traders short the bitcoin price, they must remain vigilant to a "short squeeze", where the price moves against them and forces them to close their positions at a loss.

"Monitoring the level of short swaps on Bitfinex is a must. A successfully executed short squeeze could send the price screaming above $300," the Digest observed.

Some analysis for a longer time period is offered by leveraged trading platform BTC.sx. Its chief marketing officer Josh Blatchford applies 'Random Walk' theory, popularised by the Princeton economist Burton Malkiel's 1973 best-seller 'A Random Walk Down Wall Street', to cryptocurrencies.

By BTC.sx's analysis, the bitcoin price can be viewed as being part of a bi-annual cycle: a price rally followed by a random walk. This has been the case in 2011 (rally) and 2012 (positive random walk) and then 2013 (two rallies) and 2014 (negative random walk). The analysis stops short of calling a rally in 2015, suggesting only that volatility is expected to increase in late March.

Speculation Image via Shutterstock

BitMEXBitstampBTC.sxFirst Global Credit

January 12, 2015 at 02:52PM