Innovation of Things - IoT

How Bitcoin is to banking what cell phones were to communications.

Financial exclusion is a big topic especially in developing countries, but also in first world countries like the USA there is still about 1/3 of the population unbanked.

But can Bitcoin solve this problem? I think it can in the long run. As the world get's more and more connected and with projects like Google's internet balloons soon you will have access to the internet everywhere.

The personal bank as Bitcoin promotes it is a good thing but it only really works as long as you only use the Bitcoin in a digital environment. As soon as you want to get paper money from any sort of ATM you need at least a central bank managing the reserves.

One difficulty that comes with financial services provided on a peer-2-peer basis is the regulation of it. So one of the challenges will be to create a framework on which basis these solutions can work.

At the moment Bitcoin and M-Pesa are quite different in their approach and also in what problem they solve. But with Bitcoin ATMs getting more popular you could also solve the problem M-Pesa currently solves.

A major step towards this goal will still be the change in volatility of Bitcoin and the end of Bitcoin being a speculation object rather than a real currency.

With bitcoins getting more and more popular, there is also the question of how to make bitcoins more accessible to the common user. This includes in particular how to make the exchange of bitcoins to any FIAT currency as easy as possible.

One idea is to keep bitcoin just as money transfer backend (so for digital transfers) and offer the possibility to get cash from bitcoins in the same way we are used to at the moment.

To provide this a few companies started to produce bitcoin ATMs (e.g.https://bitcoinatm.com/)

This is a good step forward but at the moment I feel like using bitcoins is similar to using an electric car. It is supposed to be better but there are very big companies (banks, oil companies) who fight for their industry and profits and therefore you have to overcome certain inconveniences - low availability of electric power stations to reload your car, literally no bitcoin atm at the moment (and banks will for sure not go for it).

We will see what the future brings but making small steps is better than standing still. 

All bitcoin is building upon is an immense distributed system of hash blocks - the so called block chain. Each of these blocks contains information about executed transactions and is publicly accessible - as one of the main principles of bitcoin is transparency. You can for example look at all the blocks and all included transactions at blockchain.info.

The exciting part about that is that you can create automated voting systems, micropayments or even complete organisations (DAOs - Decentralized Organisations) on top of this protocol. With this new technology of confirming transactions automatically by the community you make large regulation organisations obsolete.

This is not only useful for the financial sector, imagine a completely distributed grid of small generators trade power with each other on their own, using a decentralized and trustless cryptocurrency.

More and more news are appearing about self-driving cars from Google, Tesla or Audi with a recently published video of a RS7 going autonomously around a race track.

Now what if an upcoming traffic jam could be automatically resolved by the computerized vehicles by bidding for right of way?

The same goes for other voting related applications as for example a mass of people crossing a street taking priority over a single car at the traffic light, as their phones vote, trustlessly and reliable, for their presence.

Can we efficiently route networks of assets like water and power, and liabilities like pollutants and sewage, across a distributed grid? Can we trade stocks and financial assets with no brokers, custodians, or agents?

As promised you get a ROI calculation on a cloud mining service called ZenCloud. Last week I bought 6 miners for a total of $ 154.70 and over the last 5 days I earned ~ $ 6 as shown below with date and accumulative earnings data.

10/10/2014 - $ 1.14 11/10/2014 - $ 2.44 12/10/2014 - $ 3.73 13/10/2014 - $ 4.77 14/10/2014 - $ 5.99

So to calculate this through (assuming the payouts stay the same) you would need about 4 months to start earning money. Anyhow as the difficulty of solving hashes doesn't stay the same you have to consider that in 4 months the processing power is not worth the same as now and therefore the payouts will go down. As for me I will use the option of ZenCloud to sell my miners for 80 % of the buying price as soon as I reach my ROI with this option (roughly in 1 month).

This makes bitcoin mining far more accessible to the open public as you don't need an extensive technological background to do it. Also without actual hardware you don't have to worry about electricity, maintenance or difficulties about selling the mining hardware later on if you don't want to use it anymore.

Today I decided to start investigating what's going on in the digital currency business, namely bitcoin and litecoin.

The first step when starting with digital currencies is to download a so called wallet, a digital storage of the bitcoins and litecoins you will later own. The clients can be downloaded from the following pages (or vairous other wallet providers):

bitcoin: https://bitcoin.org/

litecoin: https://litecoin.org/

So as I have already tried out bitcoin some months ago, I was curious if litecoin is any better and downloaded the litecoin windows client. After downloading and installing it first has to update the transaction history which will take some hours.

Litecoin client ~4h after installing - still syncing

But meanwhile you can already start to look for coin mining solutions if you are interested in such - which I am and so I started looking.

First I came across a mining pool called litecoinpool. There you can register the mining software running at your PC and get paid accordingly to the percentage you contribute to the total successful bitcoin processing. This model is called PPS and is described in more detail on the bitcoin wiki together with other pooling models.

So I started mining on my PC and after about two hours I got to this result:

Mining stats on litecoinpool.org

With these results I calculated that I would need about 15,000h (625 days) of mining to get to about 0.05 litecoins (the lowest possible amount to get paid out) which at the current exchange rate translates to GBP ~0.12. As you can see this sounds not very promising.

I decided to look for a so called ASIC (Application-specific integrated circuit). This is a piece of hardware especially developed to do exactly one job and this one job incredibly well - processsing bitcoins/litecoins.

While looking for ASICs I stumbled upon a new coin miner cloud solution called zencloud. There you can buy specialized mining hardware to be operated at a serverfarm of zenminer. So without having to struggle with hardwarecosts, internet failures, electricity bills you can run your own bitcoin/litecoin miner.

To test this all out I purchased one so called HashletPrime for $ 49.95 and 5 ZenHashlets for $ 104.75 and I'm currently testing how well it works and how my ROI will look like.