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Fiat Money vs Cryptocurrencies

Fiat Money vs Cryptocurrencies

BlockchainTech Congress is the first edition of the event, which is entirely dedicated to blockchain technology. Blockchain is a big chance for most sectors, which can be completely changed by the ultra-modern technology. On 28 March 2019 at The Westin Warsaw Hotel, I am going to moderate a debate on “Fiat Money vs Cryptocurrencies – How are cryptocurrencies not just another form of fiat money?”

Panelists include Kumar Gaurav, Founder & CEO, Cashaa, UK, Justyna Laskowska, CMO, BitBay, Bartłomiej Michałowski, Expert in New Technologies, Sobieski Institute

To start this topic, first we need to know what “Fiat Money” and “Cryptocurrency” is.

Fiat is Latin for “let it be done.” and a Fiat money is currency that a government has declared to be legal tender, but it is not backed by a physical commodity.

  • Because fiat money is not linked to physical reserves, it risks becoming worthless due to hyperinflation.
  • If people lose faith in a nation’s paper currency, like the U.S. dollar bill, the money will no longer hold any value.
  • Fiat money is inconvertible and cannot be redeemed (unlike Representative money)
  • Fiat money rose to prominence in the 20th century, specifically after the collapse of the Bretton Woods system in 1971, when the United States ceased to allow the conversion of the dollar into gold
  • There are more opportunities for the creation of bubbles with a fiat money due to its unlimited supply.

A cryptocurrency is a digital asset designed to work as a medium of exchange that uses cryptography to secure its transactions, to control the creation of additional units, and to verify the transfer of assets.

  • On March 5th, 2018, the word “cryptocurrency” was added to the Merriam-Webster Dictionary.
  • Cryptocurrencies are a type of digital currencies, alternative currencies, and virtual currencies.
  • Cryptocurrencies use decentralized control as opposed to centralized electronic money and central banking systems.

According to Jan Lansky, a cryptocurrency is a system that meets all of the following six conditions:

  1. The system does not require a central authority, distributed achieve consensus on its state.
  2. The system keeps an overview of cryptocurrency units and their ownership.
  3. The system defines whether new cryptocurrency units can be created.
  4. Ownership of cryptocurrency units can be proved exclusively cryptographically.
  5. The system allows transactions to be performed in which ownership of the cryptographic units is changed.
  6. If two different instructions for changing the ownership of the same cryptographic units are simultaneously entered, the system performs at most one of them.

Q: The Federal Reserve controls both the supply and ease of borrowing our money and thus controls inflation. Inflation is a transfer of wealth from poor and middle-class to rich and wealthy people. Why should bankers operate a scheme that transfers wealth in this way?

Q: Gareth Murphy, a senior central banking officer has stated: “widespread use [of cryptocurrency] would also make it more difficult for statistical agencies to gather data on economic activity, which are used by governments to steer the economy”. He cautioned that virtual currencies pose a new challenge to central banks’ control over the important functions of monetary and exchange rate policy

Q: In addition to the social damage and the trillions of dollars that money laundering costs the global economy, it is estimated that an additional $1.6 trillion is lost to governments around the world every year (BBC News, 2009) due to corrupt politicians and public officials.

Q: The Association of Certified Fraud Examiners estimates the yearly cost of fraud to be 5% of global revenues, or, $3.7 trillion per year, based on 2013 global figures (Association of Certified Fraud Examiners, 2014).

Q: Due to the frequency and magnitude of thefts in legacy systems, I will only refer to single theft events larger or similar in size to the largest ever single alleged Bitcoin theft event (Mt Gox in 2014), so as to not encumber the reader with too many examples.

Q: It is estimated that 1.4% of retail revenues, or $112 billion in 2012, are lost to petty theft and shop-lifting every year (Griffin, 2013).

Q: In addition to the more than $3 trillion dollars lost to laundering and corruption, the world’s economy is subject to a further loss of $1.8 trillion dollars to the black market. A lot of the money that enters the black market is “clean”, i.e., a citizen using legally obtained money to purchase illegal goods. The breakdown of this $1.8 trillion dollar market is shown in the table below (Havoscope, 2014).

How to recognize a fake ICO?

How to recognize a fake ICO?

BlockchainTech Congress is the first edition of the event, which is entirely dedicated to blockchain technology. Blockchain is a big chance for most sectors, which can be completely changed by the ultra-modern technology. On 28 March 2019 at The Westin Warsaw Hotel, I am going to moderate a debate on “How to recognize a fake ICO in the jungle of constantly emerging new blockchain implementations?”

Panelists include Piotr Smoleń, CEO & Managing Partner at Data Ventures VC, Katarzyna Ciupa, Bitcoin Austria Verein, Adam Vaziri, Director, Diacle.

As a blockchain and ICO advisor, one of my responsibilities is to have an eye on almost all new ideas, and I have to say it is becoming harder and harder to spot a fake ICO simply because scammers are getting better at it. First this article, I will talk about major factors to spot the right ICO, later during the debate, we will challenge all these ideas and try to demystify the definition of a fake ICO. Just to start by an example, we can monitor the Benebit ICO.  They had everything you look for in a legitimate ICO and it was so convincing that even reputable ICO review websites like icobench gave them a 4.1 out of 5 score, much higher than many legit ICOs. Benebit had a professional website, well written white paper translated into 3 languages, strong team with convincing linked profiles…etc. They could have run off with more money until someone found the team pic stolen from Thsboys.org.uk (Pictures below). They ran off with $2.7 million worth of Ether. They could have scammed more if not for the accidental find and we should all take that as a heavy lesson moving on.

Have a play at Yet Another ICO to see how easy to fake an ICO.

Here I am going to ask a few questions and try to provide more information about it to help you understand ICOs and be able to make your decision with more certainty. You can ask your questions in the comment section and will update the post after the debate.

What are the differences between Tokenized securities and Utility tokens?

Generally speaking, tokens that represent shares of business considered Tokenized securities. However, the SEC believes any token that can’t pass the Howey test should be considered as a security and fall under the 1934 Security Exchange Act.
The Howey test consists of the following:

  • Is it an investment of money or assets?
  • Is the investment of money or assets in a common enterprise?
  • Is there an expectation of profits from the investment?
  • Does any profit come from the efforts of a promoter or a third party?

The final factor of the Howey Test concerns whether any profit that comes from the investment is largely or wholly outside of the investor’s control. If so, then the investment might be a security.

The utility tokens are services or units of services that can be purchased. Balaji S. Srinivasan, CEO of Earn.com compares utility tokens to API keys, used to access the service.

How do you review the four T’s of ICOs (Team, Technology, Token, Timeline)?

Team: It can be said that in the ICO world, your team sells your project. The team should have a relevant track record in the same sector as the ICO and this claim should be able to be backed by multiple sources. The team is the initial point for determining whether a company is legitimate or a scam. You should be looking for how to complete their team’s LinkedIn profile is, how long the team has been in finance or tech, and if the team is backed by any major players.

Technology:  More tech-savvy investors determine if they want to invest in an ICO solely on the platform. Having solid technology is a surefire way to sell any ICO investor into spending their hard-earned money. This is akin to crowdfunding in a lot of ways. People are promised a product in the future, investors line up to buy, and the product delivered is either faulty or not delivered at all. It can be very disheartening for any newcomer to experience an exit scam the moment they join the ICO world. Unfortunately, it occurs at a higher frequency every single day.

Token: Token’s and their tokenomics are important to look at, but it is hard to define how useful they are in determining the viability of an ICO. Unfortunately, if you ask 100 different people on which of the three (utility, security, and equity) tokens is the best and why you will get 100 unique answers. Many veterans advise you to look at a platform’s tokens. If you cannot determine whether a project is legit or not after reviewing their team and technology, tokenomics may help you decide whether an ICO is worth it. Good tokens backed by a solid team and platform will usually be legitimate. The opposite is completely true as well. A bad token usually means a bad ICO.

Timeline: Timeline is last but not least. Knowing when a project plans to deliver on its promises is incredibly important. While not as pressing as tech and team, a weak timeline will convert into less interested users and increased levels of FUD. It is hard to find an example of a successful ICO with a weak timeline. Most usually never make it past their “raise.” Most usually exit scam. An excellent way to get a sense of a company’s timeline is to visit their Slack or Telegram groups. If the core team is responding regularly, it is an excellent indication of a legitimate ICO. People who care about their projects tend to be slightly neurotic about it. If a CEO or founder is constantly correcting or answering questions, it is a good sign that the team is connected.

What is the best industry to be disrupted by blockchain?

Voting: Blockchain can eliminate voter fraud, providing a clear record of the votes cast, and prevent any chance of a rigged election. Furthermore, this could all be done on a mobile platform, allowing busy individuals the opportunity to cast their vote without going to a polling station. Follow My Vote promises an ‘online voting solution for the modern age’ via blockchain technology.

Healthcare: Current challenges in the healthcare sector include keeping patient records private from hackers while allowing authorized access by providers. Applying blockchain to healthcare records promises improved data security, with better access for healthcare professionals and patients alike, and greater transparency for healthcare transactions. Gem has partnered with Philips in this space.

Photography: Photographers can face challenges when it comes to getting paid royalties for their snaps, especially in our digital world where image theft is often just a click away. With that in mind, at the recent CES show in Las Vegas, Kodak revealed its new digital currency, KODAKCoin, which is backed by a blockchain ledger and image rights platform called KODAKOne.

Internet of Things (IoT): In 2015, IBM and Samsung showed off an application of the blockchain known as ADEPT (Autonomous Decentralized Peer-to-Peer Telemetry), which is designed to decentralize the IoT, and allow devices to communicate directly, without a manufacturer’s hub getting in the way and trying to lock users into a particular ecosystem.

Cloud storage: Storing data in the cloud has become an increasingly popular and convenient practice, although it still has potential problems – like downtime and losing access to your data temporarily, or more seriously, the cloud service being hacked. Storj is a company that’s using the blockchain for open source cloud storage.

Public records: The use of the blockchain represents an innovative solution to encode the public data in a digital ledger, keeping the info safe from being altered. In the US, Delaware-based Ubitquity has the first blockchain-based system for property record management including titles, which is in testing overseas at the Land Records Bureau in Brazil.

Banking: Financial institutions continue to face challenges with identity theft, cost efficiency of transactions, and just general security. The blockchain will certainly digitally disrupt this industry, and holds the potential key to faster transactions, at less cost, and with a higher degree of security. IBM has partnered with Axoni and R3 to develop and deploy distributed ledger technology to the financial industry.

Car Leasing: Leasing a car can end up being a protracted process, with multiple parties involved in the transaction, all needing to verify information before the car rolls off the lot. DocuSign, has partnered with credit card giant Visa to apply blockchain technology to Smart Contracts that promise a streamlined ‘click, sign and drive’ approach to securely leasing a vehicle.

Music rights: The entertainment industry is looking to blockchain technology to secure digital rights for music and other media, with the potential to recapture that income. The British company JAAK has grabbed attention with its effort to create Smart Content with a “global view of content ownership and rights”.

Worker credentials: When companies hire an individual for a job, they want to get the best-qualified person with the most appropriate experience levels. The Learning Machine is applying blockchain technology, worker and professional credentials can be verified and kept in a secure digital ledger, which cannot be altered down the road to fit another position the applicant is subsequently interested in. The firm promises inherent fraud protection which could make choosing the right person for a job a good deal easier.

University of Warsaw and deepsense.ai join forces

University of Warsaw and deepsense.ai join forces

University of Warsaw researchers and deepsense.ai launch reinforcement learning project powered by Google’s TensorFlow Research Cloud

Researchers from the University of Warsaw, Google AI and deepsense.ai take on a new reinforcement learning challenge on Cloud TPU hardware accelerators. The goal of the experiment is to end-to-end train an artificial intelligence to play video games fully inside a computation graph.

A team from the University of Warsaw made up of Piotr Miłoś, Błażej Osiński and Henryk Michalewski, has started a collaboration on reinforcement learning research with Łukasz Kaiser from the Google Brain team and with researchers from deepsense.ai. This project is connected to a research program on RL that deepsense.ai started last year.

In the experiment, an artificial intelligence will be end-to-end trained to play video games fully inside a computation graph. Assuming that a game simulator would also be a part of the graph, this could make tasks such as training AI to play video games even faster than what deepsense.ai’s team achieved last year. The intent is to run the training process entirely on Cloud TPUs, which are new machine learning accelerators designed by Google. This will save time previously spent on communication between accelerators and a host computer.

The main experiments are being run on Cloud TPUs via the TensorFlow Research Cloud program and supported by Google Warsaw’s Antonio Gulli, Ignacy Kowalczyk, and Maciej Pytel, who are helping us to deploy our experiments on the Google Cloud Platform. TFRC provides ML researchers with access to second-generation Cloud TPUs, each of which provides 180 teraflops of machine learning acceleration.

Henryk Michalewski, a research team leader on the project, offered his appreciation. “Many thanks to Google for sharing early access to Cloud TPUs with us, as well as to Antonio Gulli and Ignacy Kowalczyk for providing the Google Cloud Platform power to deploy our experiments. With such a strong infrastructure, we’re perfectly equipped to tackle our ambitious goal and leverage the research on reinforcement learning efficiency we started last year.”

In 2017, Michalewski’s team from deepsense.ai published a paper describing a new method they had developed to train a robotic arm to grip a can of coke. Their work was recognized by the General Chairs of the Conference on Robot Learning (CoRL) as one of 11 noteworthy papers in the reinforcement learning and robotics category. The team presented the paper in November at Google’s headquarters in Mountain View. The method could be used, for example, to train humanoid robots to combine single steps into a walk or a run.

About deepsense.ai:
deepsense.ai supports organizations in unlocking their data potential at all stages of data science maturity. The company delivers AI-based solutions and helps clients grow data science skills in-house under the Training & Development Hub. It has also developed two products for data scientists: Neptune – the Machine Learning Lab, and Seahorse, a visual framework powered by Apache Spark.
deepsense.ai is founded and managed by CodiLime, an IT consulting and software engineering company providing professional services for global clients in three core areas: Networks, Security and Big Data & Data Science.