All posts in "Fundamentals"

Understanding Blockchain Tech – CAP Theorem

By Shawn Dexter / February 5, 2018

Blockchain technology has been around for a long time now.  It is a peer-peer, distributed and append-only database. In this discussion, we analyze the role CAP theorem plays in blockchain technology.

About CAP Theorem

CAP Theorem, also called as Brewer's Theorem proposed by Eric Brewer, identifies three specific system properties for any distributed/decentralized system. They are: Consistency, Availability and Partition Tolerance

  • CONSISTENCY -  Any read gives the latest write on the nodes.

  • AVAILABILITY -  At any point of time irrespective of whether the read is the latest write, client always gets a response without an error.

  • PARTITIONING -  In a distributed network of nodes, even though there is no possibility for the whole network to go down, there is possibility for partitions between nodes. This partition attributes to the delay or latency between nodes communicating in the network.
According to the CAP theorem, in any distributed network it is impossible to provide more than two of these three properties as a guaranteed feature
CAP theorem blockchain

Application of CAP Theorem in Blockchain Technology

Let's try and analyze blockchain in terms of its features and see if CAP Theorem applies to blockchain at all.

PartitionING is an inherent feature of any distributed system. That leaves us with only two choices to pick from: Consistency or availability

Scenario: Picking Availability over Consistency

If we pick Availability over Consistency in blockchain, any reads that happen are not guaranteed to be up-to-date. Although, there is a response from the network at all times, the purpose of the blockchain being a single source of truth is taken away.

On the other hand, lack of Consistency is something we simply can’t have in any monetary system. Consistency always takes priority in blockchain technology.

Say we consider Availability as an optional feature, This would force the network to be unavailable when there is a Partition – which would disrupt consensus. Hence, availability cannot be sacrificed in blockchain technology since consensus is key. 

Does That Mean Blockchain Violates CAP Theorem ?

Simply Put - NO, blockchain does not violate the CAP theorem

Those interested in blockchain, opt for AP (Availability + Partition) + Strong/Eventual Consistency.

Let’s consider Bitcoin – which uses Proof of Work as it’s consensus mechanism. Currently, bitcoin maintains a Read & Write protocol. The protocol is designed to consider the longest chain as the accepted main chain. A transaction is confirmed only if it is “X” number of blocks deep into the chain. Although a probabilistic model, it is left to the users to choose the value for X. Currently, for large transactions, a minimum of 6 blocks wait is considered a win. The same kind of protocol has been used in other blockchains as well Ex: Ethereum. There has been a lot of debate on whether to term this as strong or eventual consistency.

To summarize, configuring a client doesn't violate CAP theorem. It’s just a tradeoff between consistency and availability.

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5 Reasons To Consider High Performance Blockchain (HPB) For Your Portfolio

By Shawn Dexter / February 2, 2018

High Performance Blockchain (HPB) has been receiving a lot of buzz recently. People are hailing it as the “EOS of China”. Several have asked me whether they should pull the trigger on this potential “hidden” gem.

Here Are 5 Reasons Why You Should Consider HPB For Your Portfolio

We're here to sift through tech worth looking into. Trade at your own risk and analysis. This is not investment advice etc.

Reason 1: Speed & Scalability with TOE

Mango Research firmly believes that 2018/19 will be the battle of scalability & mass adoption. However, the current throughput and latency of blockchain tech are insufficient to meet current business needs.  There is an urgent need for a solution. HPB has chosen an innovative approach to meet the needs of large enterprises. 

High Performance Blockchain (HPB) achieves high throughput and low latency.  They do so by combining hardware with with software – the first blockchain to do this. They achieve this with a dedicated custom network card - their TCP/IP Offload Engine (TOE) - to work as a specialized accelerator. This network card will purportedly allow for the following:

  1. Millions of transactions per second
  2. Parallel processing tasks (as opposed  to serial processing)
  3. High concurrency & confirmation within seconds.
  4. Three Second Block Time

High Performance Blockchain can thus extend dApps to meet the high requirements of real-world business needs with ease.

Reason 2: Market Is Huge. Market Penetrability Is Easy

As mentioned in the previous section, 2018/2019 will be the year of mass adoption. Most of the current blockchain solutions scratch their head to solve their scalability issues. HPB, however, have a scalability solution already in the works. This allows them to approach enterprise clients immediately.

They have already positioned themselves to serve massive enterprises. Their whitepaper mentions the likes of Alibaba, Tencent & Baidu - all of who will benefit massively from blockchain technology & scalability that HPB seeks to provide them.

In fact, various other high throughput industries like the IoT Industry, Financial industry and Supply Chain industry will be able to leverage HPB to use blockchain technology to their advantage. HPB have already partnered with major companies like UnionPay to facilitate their foothold in these industries.

Furthermore, High Performance Blockchain will be interoperable with both the NEO Virtual Machine as well as the Ethereum Virtual Machine – allowing for even easier market penetration.

Reason 3: Partnerships & Core Team

It’s common knowledge that High Performance Blockchain is backed and partnered with NEO.  HPB will be using the NEO Virtual Machine – and will be the first blockchain to do so.

However, even more noteworthy is their partnership with UnionPay. UnionPay is the VISA of China  – but bigger.  UnionPay controls 80% of all of China’s banking transaction data. As mentioned in the previous section, HPB is perfectly suited to serve the financial industry.  This partnership will solidify their foothold in the industry.

CPChain and HPB have engaged in a strategic partnership – another worthwhile mention. CPChain  is a promising platform that is developing a distributed infrastructure for IoT devices.

The HBP team is stacked with expertise and excellence. The CEO  – Wang Xiao Ming – is an early blockchain enthusiast. He has a wealth of knowledge and experience – and has proved it by writing three books on blockchain technology and speaking at several events.

Wang has also formerly worked at UnionPay, while the rest of the team have been gathered from Intel and Huawei. Their background positions them perfectly to develop a  blockchain hardware accelerator such as TOE and penetrate the financial industry

Reason 4: Smart Contracts​​​​

While reading the whitepaper, I was pleasantly surprised with HPB’s plan for a sophisticated Smart Contract System.HBP will be developing a Smart Contract LifeCycle Management system. This SC LifeCycle Management system will allow for complete control and management of the submission, use and cancellation of the Smart Contracts.

Auditing & testing of the smart contracts will be done by combining audit automation tools, professional auditors, code review and integrated unit testing tools.

Note: HBP will be using Status Channels (off chain) to deploy smart contracts to further improve speed and reliability – while maintaining scalability.

Reason 5: This Idiot Is Shilling It...

I mean... Seriously?

As much as I’ve tried, there’s no denying it anymore – People like this guy, help build the initial momentum and awareness for gems like High Performance Blockchain.

But other than him, we have some respectable community influencers who rate HPB pretty well. It's evident that HPB has drawn the eyes of some influential community members. Strong tech coupled with a strong growing community usually result in rapid increase of price.  

Here are a couple of videos from worthy Crypto YouTuber's that I recommend you watch:

Conclusion

All in all, HPB is definitely worth some strong consideration.  The technology is still under the radar, and has a lot of upward potential. (Disclaimer) Mango Research Team has a put a small portion of their portfolio into this – but we expect this allocation to grow significantly in the months to come.

Special thanks to Ryan – from the Mango team for locating the gem =)

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Consensus Methods – POW vs POS vs Tangle vs Tempo

By Shawn Dexter / January 15, 2018

Bitcoin and related blockchain technology (Ethereum, Ripple etc) have garnered a sudden surge of interest. But what really are the core differences between these various technologies? Aren’t they all simply… blockchains? What makes them different other than their team and brand-name? One of the core aspects that make some technologies differ from others is their consensus methods.

There’s a lot to wrap your head around when trying to understand blockchain (& distributed ledger) technology. So in this post, I will attempt to keep things as simple as possible.  

While there are many factors that make these technologies different from each other, the most crucial factor lies in the consensus method that the technology adopts. 

What Do You Mean By “Consensus Method” ?

Remember, any entity or individual can add information to an open blockchain or ledger. Hence, a bad actor can add false information into the ledger to serve his selfish purpose. Consensus Methods are adopted by blockchain technology to invalidate (or ignore) such attempts of false information.

Consensus: "Come to general agreement"

Essentially, a consensus method is employed to allow all actors in the network to come to agreement on what the true information is. This is done by the majority of the network agreeing on the information presented.

(Note: This can be bypassed if a bad actor managed to achieve majority control of the network -  51% or more. More on this in another post)

(EDIT:  In fact with only 33% of control of the network, a bad actor can bring the network to a deadlock in the decision making process. I will explain this briefly in a future post.)

​​​Types Of Consensus Methods

​​​​In this section, I briefly summarise some of the popular consensus models adopted. Hopefully, I can keep it simple while still hitting the core concepts.

Proof Of Work: Used by Bitcoin -  Proof of Work (PoW) is one of the most popular consensus models.

In the PoW consensus model, a participant is required to solve hard computational puzzles in order to add information to the blockchain. (Don’t worry - humans aren’t solving these problems themselves, their computers are doing all the “work”) 

The puzzles are set up in a way that are “difficult to solve” but “easy to verify”. Think of it as you solving an extremely hard calculus problem, and your lazy teacher is only ticking the last step to “check” your answer.

In Bitcoin, it takes – on average – 10 minutes to solve a problem and can be verified by other participants almost instantly. Solving this computational problem can consume a lot of electricity. This can get expensive. Because of this, it  is very difficult/infeasible for a bad actor to achieve 51% control of the network. And without 51% control a bad actor cannot achieve consensus on false information.

Proof Of Stake: Used by Waves, and currently being implemented by Ethereum (Casper) – Proof of Stake (PoS) is a consensus algorithm that many of the newer blockchain’s are leaning toward. 

In PoS, participants “stake” their coins on the network in order to achieve consensus. Essentially, a participant is putting up his own coins as collateral against the event that he tries to add false information/cheat.

So while Proof Of Work disincentives bad actors because of the tremendous power/electricity that would be consumed (at their cost) – Proof of Stake disincentives bad actors by making them risk their own wealth.

Furthermore, to achieve a 51% attack, a bad actor will have to hold more than 50% of all the coins in the network. Supply & Demand will make this prohibitively expensive.


Note: There are two types of widely known POS - Delegated Proof Of Stake (dPoS) and Leasing Proof Of Stake (LPoS). dPoS allows for participants to vote for a delegate that will maintain the integrity of the system. LPoS is similar but allows for participants to lease out their coins in order to share in the rewards of verifying a block.

Tangle/DAG: Used by IOTA – Tangle is not so much a shift in consensus mechanism, but more so a shift in structure of the distributed system. ​

Tangle uses Directed Acyclic Graphs (DAG) instead of a blockchain. Unlike a blockchain, a DAG’s horizontal architecture allows for more scalability.

tangle vs blockchain

Tangle is IOTA’s implementation of a ‘Directed Acyclic Graph’. In tangle, the entire network are participants of the consensus model – unlike blockchains where only a certain portion of the network are participants of the verification process. It’s important to note that Proof Of Work is still used by Tangle. However, the burden is shared by the entire network.

Furthermore, PoW is only part of the consensus model in Tangle (to serve against sybil and spam attacks). Because of the structure of a DAG, a good actor in the Tangle’s consensus method will have to spend a trivial amount of computational power. But a bad actor will have to spend increasing amounts of computational power with diminishing returns.


Note: A Directed Acyclic Graph (DAG) is simply a non-circular graph of nodes connected to each other with a fixed direction. The non-circular aspect will ensure that following the direction of the nodes will not lead you back to the same node)

Tempo: Used by Radix Tempo is a radical approach to achieving consensus as well as scalability while still maintaining true decentralization.  

Radix is neither a blockchain or a DAG – but a unique approach to achieving consensus on a distributed ledger. Fair Warning this may be a bit technical, but I will do the best I can to simplify the method.

Tempo uses sharding (taking partitions of the ledger) and “logical clocks” to achieve proper ordering of events that take place in the entire network. The magic-sauce lies in the usage of the logical clocks to generate temporal proofs.  

A logical clock is essentially an ever-increasing integer value. This value increases each time it witnesses an event. In Tempo, participants (nodes) increment their logical clock only when they witness an event that they haven’t witnessed before. The node stores the event and it’s corresponding logical clock value.

Every transaction in Tempo is stamped with  with a “temporal proof”. Please note  that “Temporal Proofs” aren’t “temporary proofs” – but more so proofs that deal with “time” and “ordering”. Achieving proper ordering of events is essential to prevent bad actors from achieving malicious transactions (like double spend).  

The second half of Tempo's consensus system lies in the "commitments". Commitments essentially involve propagating the information (temporal proofs etc) through out all the nodes. Essentially, the nodes "gossip" to the other nodes, and thus prevent mischief from a bad node.

I will be writing a more detailed post explaining the fundamentals of Tempo on a high level. For now, I hope this post suffices in giving you basic & high level understand of the various consensus mechanisms available today.

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Why Atomic Swaps Are Important

By Shawn Dexter / January 4, 2018

Over the past year or so Atomic Swaps has emerged as the trending topic of choice for crypto enthusiasts. Atomic Swaps will be an potential game changer in 2018 and the years to come.

In this brief analysis of Atomic Swaps, we will discuss the following:

  • What are Atomic Swaps?
  • Why do they matter?
  • Advantages
  • Challenges 

What are Atomic Swaps?

An Atomic Swap allows you to exchange one crypto/altcoin for another from your wallet without a third-party intermediary (like an exchange). In other words, instant settlement trading from one blockchain to another blockchain.

[

An atomic swap is a direct trade between two different coins running on two separate blockchains; there are no centralized-exchange websites or other third-parties required for this trade. The technology enables common users to bypass the labyrinth of website-exchanges currently necessary to purchase cryptocurrencies. Once implemented, the atomic swap will allow common users to trade and purchase any desired coin directly within their own wallets.
Komodo Platform

]

It’s worth noting that this feature of instant settlement, is made available from the folks at Lightning Labs creators of the Lightning Network protocol.

According to Elizabeth Stark, co-founder of Lightning Labs, the Lightning Protocol functions as a “checking” account with instant settlements, while cryptocurrency/bitcoin on the blockchain would act as a “savings” account. The two will be connected via the Lightning Protocol. Crypto on the blockchain could be transferred to lightning for day-to-day trading/expenses, where transactions and settlements will be seamless and automatic.

The Lightning Network protocol scales Bitcoin and other blockchains such as Litecoin, Decred, VertCoin, MonaCoin, Syscoin, Digibyte, Groestlcoin, and Viacoin.

In order to perform an atomic swap between 2 cryptocurrencies, there are several prerequisites. Both chains must support:

  • Branched transaction scripts
  • Identical hash algorithm in both chains’ transaction script
  • Signature checks in transaction scripts
  • CheckLockTimeVerify or CheckSequenceVerify (“CLTV” and “CSV” for short) in transaction scripts

Why Do Atomic Swaps Matter?

Prior to Atomic Swaps, you were required to use a third -party middlemen to conduct trades.

Fast forward to today, and with the advent of atomic swaps conducted between Bitcoin and LiteCoin, Litecoin & Decred, and Litecoin & Vertcoin, you can now implement a trustless exchange between two parties without a third party such as an exchange.

According to Andreas Antonopoulos, author and speaker on Bitcoin and cryptocurrencies, the main benefit of Atomic Swaps is the ability to couple two inherently separate blockchains together and creating an exchange of value whereby both parties are ensured and protected from fraud and or malicious intent to cheat.

In other words, a transaction utilizing Atomic Swaps will either take place successfully where both parties are satisfied, or not at all. The benefit of Atomic Swaps is that transactions become completely and fully automated as the currency morphs itself into another currency instantly, fluidly and liquidly.

Atomic Swaps - Advantages

We covered some of the advantages above but let’s quickly recap:

  • ​Instant transactions - Wait time for confirmation and transactions to clear have been reduced
  • Lower Costs - switching costs are near zero
  • Security - Ability to retain your private key as opposed to keeping your private key on an exchange
  • True P2P - Atomic swaps are true peer to peer exchange of value
  • Transparency - A sort of “open” network - Trades are conducted in a manner the prevents one person with large amounts of market share from creating fake volumes.

Atomic Swaps - Transaction Fees & Privacy

Atomic swaps were created for large trade volumes that require low latency and high frequency. And as transactions depend on the blockchain, (for example an atomic swap between BTC and LTC) one might have to wait for the confirmations to be cleared one one side.  Thus, contributing to somewhat of a low latency response. Moreover, with the BTC to LTC atomic swap example, transaction fees could be inflated as well, as BTC tends to have higher transaction fees.

Another potential disadvantage to atomic swaps is in the area of privacy. As the hash value is shared during the atomic swap transaction(s), the transaction(s) can be easily traced.

Atomic Swaps that are conducted on-chain can have privacy issues that users need to be aware of. As each transaction is “swapped” a hash value is created, unfortunately that same hash value is used throughout the transaction lifecycle. Thus making it easy for someone from the outside to monitor the two blockchains as the coins get swapped from one to the other. Following the coins from one chain to the other can pose potential issues, however there is no specific identifying data on either side of the swap that can link the transaction to the actual user’s true identity.

Conclusion

Atomic swaps certainly will be a game changer in the crypto space.  The ability to easily and effortlessly exchange value between one altcoin to another and thereby effectively bypassing the third-party exchanges and intermediaries allows users the freedom, comfort and security and therefore restoring the power back into their own hands.

We at Mango Research, foresee extra-ordinary new developments in and around the area of atomic swaps and we are extremely excited for its mass user adoption into the crypto-sphere.

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Waves Blockchain: Ahead of the Competition

By Shawn Dexter / December 29, 2017

The Waves Platform has been a silent giant for a while now. But in the past few months, this giant’s rumbles have been getting louder – too loud to ignore anymore. While 2017 has drawn a lot of attention to the massive adoption of Ethereum & Bitcoin, it has also begged the question of blockchain scalability. As 2017 draws to a close, neither (Ethereum and Bitcoin) have shown a satisfactory solution to the scalability problem. Yes, Ethereum has promising plans in place – but we are far off from seeing those plans realized. The Waves Platform, however, have silently developed and deployed a solution that makes them the fastest blockchain in the world.

Putting Matters In Context

  • Visa averages 2000 transactions/per second   (peaking at 50k per second)
  • Bitcoin averages at 3 transactions/per second  (peaking at 5 per second)
  • Ethereum averages at 5 transactions/per second (peaking at 7 per second)

It’s evident – in order to compete and support continued growth, scalability needs to be addressed as soon as possible. Failing this, confidence in blockchain technology will wane until the tech catches up to the demand and expectations.

Enter: Waves-NG

A week ago Waves-NG went live on the Waves Platform mainnet – allowing them to process  upto 1000 transactions per second!  This effectively makes them the fastest decentralized blockchain operating in the world.

Waves Blockchain:  1000 transactions per second - (currently capped at 100 tx/s)

Let’s be clear – this is NOT a theory/whitepaper. This is a working solution that is live for everyone to use. This allows the Waves platform to go mainstream while other platforms stagger to overhaul their architecture to improve their scalability (while possibly risking security – a major feature of blockchain tech)

The Waves-team have demonstrated inspiring and commendable “forward-thinking”. They focussed on laying the foundation to allow for maximum throughput on their blockchain technology before the bells & whistles (unlike many other teams).

What & How : Waves-NG 

TLDR

Waves-NG is an implementation of “Bitcoin-NG” – originally proposed by Emin G. Sirer & Ittay Eyal.
(I’m going to try to not get too technical here… but bear with me)

What it’s NOT:

While the Bitcoin community is a never-ending debate on whether “blocksize” needs to increase or not, NG does not concern itself with that argument. NG does not increase the size of blocks. NG does not reduce block interval time.

NG discards the block-size and block-interval solutions. Due to the nature of the distribution algorithm,  increasing block-size or decreasing block interval lead to security risk and unfairness (because of increased forks, prunes etc).

What It Is:

Waves-NG approaches the problem by inverting the behaviour of the blockchain.  The current bottleneck for the throughput of the bitcoin system is its block-propagation.  NG breaks open this bottleneck by reversing how the blocks are propagated.

In the original Bitcoin system, the system has to wait idle while miners work to “discover” the next block. Hence, throughput is limited by blocksize and block interval. NG, on the other hand, uses a leader-election method (via keyblocks & microblocks) to allow blocks to be mined in a continuous approach – without being limited by block size and block interval.

NG essentially allows for the system to achieve the highest throughput allowed by the network. This allows the Waves Blockchain to handle hundreds of transactions per second without sacrificing the ideology of decentralization.

In a nutshell: Waves-NG  increases the number of transactions significantly and allowing for optimal use of the network (without being limited to number of nodes, block size etc) while still keeping intact the essence of decentralization.

Moving Forward

It has to be noted that even with Waves-NG, the scaling problem is far from “solved”. The crucial problem of every node processing every transaction still serves as bottleneck.

But this is a great start – and puts the Waves blockchain miles ahead of its competition. With Waves-NG in place, every scaling effort will achieve a multiplicative result.  Vitalik Buterin, founder of Ethereum, said just as much in regard to technology improvements and the NG protocol:

The increased scalability offered by NG should be multiplicative with increases from added tech (ie. if tech gets 4x better and NG gets added that's a 40x improvement)
Vitalik Buterin

It’s Only Getting Better:  Smart Contracts, Multisig, Atomic Swaps

The Waves team have been inspirational in their forward-thinking and discipline. With NG and a fresh new user interface in place, the team are now tackling feature developments that can take advantage of the scalability foundation and usability that the Waves blockchain already offers.

2018 will usher in smart contracts, multisignature, unique atomic swaps and even anonymity.  This giant’s rumbles are definitely getting louder

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