Segregated Witness is the name used to describe a soft fork change in the transaction format of Bitcoin. Within the Bitcoin community, the term is often referred to as SegWit. As you may recall from previous discussions, block size and scalability have always been a major concern of miners, developers, and full node users. Very briefly, let’s review block size and scalability.
Bitcoin Scalability Problem
Blockchain scalability is the rate at which the Bitcoin network can process transactions. The transaction processing capacity is limited in size and frequency. For example, on the Bitcoin network, the average block creation time is 10 minutes, and the block size is limited to 1 megabyte. Hence, the average time to process a transaction on the network is three to seven seconds. These size and frequency limitations were never a problem until Bitcoin exploded in popularity beginning in 2017. Bitcoin entered a raging bull market during Q3 2017. Suddenly, it became abundantly clear that the blockchain network had a major scalability problem. SegWit attempts to solve this problem. Let’s discuss.
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The Solution to Bitcoin Scalability Problem
Segregate means to separate. Witnesses are the signatures associated with each transaction. Therefore, segregated witness means to separate transaction signatures. Segwit increases the block size limit by removing signature data from Bitcoin transactions. The capacity of the blockchain increases when the transaction’s parts are removed.
The Bitcoin blockchain is comprised of a large group of nodes spread across a peer-to-peer network. Nodes are responsible for managing all transactions on the blockchain by verifying their authenticity. Upon verification, each transaction is included in a block which is added to the general ledger for public access.
When Satoshi Nakamoto launched the Bitcoin blockchain, no one could predict the number of users that would eventually embrace the concept of a decentralized network. This explains why Nakamoto dramatically underestimated block size and scalability. As we previously discussed, block size and scalability were never a concern until Bitcoin exploded in popularity in 2017. During the past few years, the blockchain network has experienced persistent delays in the processing and verification of transactions.
Dr. Pieter Wuille, the original creator of SegWit, introduced the idea that digital signatures need to be segregated from the transaction data. In his original research on the subject of blockchain scalability, he discovered that digital signatures accounted for 65% of the space in a given transaction. Therefore, he concluded that the “key” to solving the blockchain’s scalability problem was to separate the digital signatures from the remainder of the transaction.
Although the Bitcoin community continues to struggle with scalability, SegWit has substantially improved the user experience of the Bitcoin blockchain. Many Bitcoin experts claim that scalability is a good problem to have because it means that people are migrating to a decentralized ecosystem. This is very bullish for the future price direction of Bitcoin.
Brief Summary of Segregated Witness
- Segregated Witness or SegWit describes a soft fork change in the transaction format of Bitcoin.
- The main purpose of SegWit is to solve the problem of block size and scalability.
- Block size and scalability have always caused problems for miners and developers.
- The block size problem is solved by removing signature data from Bitcoin transactions.
- SegWit has proven to be a reliable method for removing signature data.
- Dr. Pieter discovered that digital signatures account for 65% of the space in a given transaction.
- Dr. Wuille used this information to solve the blockchain’s scalability problem.
- It involved separating the digital signatures from the remainder of the transaction.
- The Bitcoin community continues to struggle with scalability.
- However, SegWit has substantially improved the user experience of the blockchain.
What Is Elliott Wave?
Ralph Nelson Elliott was regarded as one of the greatest technical analysts of the 20th century. In the early-1930s, Elliott began working on a systematic study of fluctuations in the stock market. Based on his analysis, he concluded that fluctuations in the stock market were mainly based on collective human behavior.
Elliott believed that all speculative markets followed fairly predictable price movements based on investor psychology and underlying social principles. In 1938, he combined all of his research into a book called The Wave Principal.
Elliott’s book was very well received within the investment community, particularly among traders who relied on technical analysis.
The Elliot Wave Principle
Elliott passed away in 1948, leaving behind a treasure trove of historical data and research based on his Wave Principal. Elliott’s original work in the field of human behavior actually became more popular in the years following his death.
Several technical analysts expanded on his research, particularly in the area of investor psychology. This additional research also looked at crowd psychology and the herd mentality of crowds. Today, Elliott Wave is one of the most popular forms of technical analysis used to forecast the stock market and other speculative markets.
The Elliott Wave Principal moves between optimism and pessimism in natural sequences. These mood swings create various patterns or waves. Based on Elliott’s model, all market prices fluctuate between impulse and corrective phases. These fluctuations occur regardless of the time frame. In other words, Elliott Wave can be successfully applied to long-term studies or short-term studies.
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Impulse Phases and Corrective Phases
Impulse phases are subdivided into five smaller waves. Corrective phases are subdivided into three smaller waves. In a bull market, waves #1, #3, and #5 of the impulse phase are bullish. Waves #2 and #4 are retracements of the primary bullish trend.
In a bear market, waves #1, #3, and #5 are bearish. Waves #2 and #4 are retracements of the primary bearish trend. The big move always occurs in wave #3.
Waves #1, #3, and #5 are also known as motive waves. These waves always move with the underlying trend. Waves #2 and #4 are also known as corrective waves. They move against the underlying trend. Please review Chart #15.
Each motive wave and corrective wave has its own sub-cycle. Each sub-cycle is divided into mini waves. An entire Elliott Wave motive pattern consists of 89 waves, followed by a completed corrective pattern of 55 waves.
During his initial research, Elliott subscribed to the idea that each completed wave pattern represented a degree of movement based on a specific time frame. Each degree of movement was given a name.
Elliott labeled nine different degrees of movement.
- Grand Supercycle – multi-century
- Supercycle – multi-decade
- Cycle – multi-year
- Primary – months
- Intermediate – weeks to months
- Minor – weeks
- Minute – days
- Minuette – hours
- Sub-minuette – minutes
A grand supercycle is the longest degree of movement based on Elliott’s research. The reversal of a grand supercycle is incredibly rare. Most traders and investors will never see a grand supercycle reversal in their lifetime.
Although Elliott Wave has been extremely popular over the past several decades, the main criticism of this trading approach is based on the fact that the entry and exit levels are too subjective.
Additionally, the wave counts are open to interpretation. In an attempt to remedy this problem, many traders who use Elliott Wave on a daily basis prefer to combine the wave counts with Fibonacci ratios. Adding Fibonacci ratios to the mix provides specific entry and exit signals.
Elliott Wave is not perfect. It continues to remain one of the most widely followed trading techniques in the history of technical analysis.
Brief Summary of Elliott Wave
- Ralph N Elliott is regarded as one of the greatest technical analysts of all time.
- In the early-1930s, Elliott began to study fluctuations in the stock market.
- He observed that fluctuations in the stock market were based on human behavior.
- Throughout the 1930s, Elliott developed a systematic investment approach.
- The investment approach was based on his observations concerning human behavior.
- Following his death in 1948, traders continued to study Elliott’s original work.
- Elliott’s methods actually became more popular during the years following his death.
- His methodology became known as the Elliott Wave Principle.
- Elliott Wave Principal moves between optimism and pessimism in natural sequences.
- These mood swings create various patterns or “waves.”
- All prices fluctuate between an impulse phase and a corrective phase.
- According to Elliott, these fluctuations will occur regardless of the time frame.
- Therefore, Elliott Wave can be applied to long-term studies or short-term studies.
- In a bull market, waves #1, #3, and #5 are bullish.
- Waves #2 and #4 are retracements of the primary bullish trend.
- In a bear market, waves #1, #3, and #5 are bearish.
- Waves #2 and #4 are retracements of the primary bearish trend.
- An entire Elliott Wave motive pattern consists of 89 waves.
- This is followed by a completed corrective pattern of 55 waves.
- Elliott believed that each completed wave pattern represented a degree of movement.
- Each degree of movement was based on a specific time frame.
- Elliott labeled nine different degrees of movement.
- Elliott Wave continues to remain extremely popular among technical analysts.
What Is Hashing?
In simple terms, a hash is a function that converts an input of letters and numbers into an encrypted output of a fixed length. A hash is an essential ingredient of blockchain technology. As you may recall, we discussed hashing during our conversation about cryptocurrency mining. Hashing plays a critical role in the mining process, as miners collect transactions and organize them into blocks.
The most important component of a cryptocurrency is the blockchain. We will discuss blockchain technology in a later section. For the purpose of our hashing conversation, it’s important to know that a blockchain is formed by linking together individual blocks of transaction data. To prevent fraudulent transactions, the blockchain only contains validated transactions. These validated transactions are a series of encrypted letters and numbers, known as a hash.
Hashing involves processing the data from a block through a mathematical function, thus creating a fixed-length output. This increases security based on the fact that anyone trying to decrypt the hash won’t be able to determine the length of the input based solely on the length of the output.
A great way to think of how hash functions work on a blockchain is that they act as a digital signature. For the next block to be made, the signature (hash) from the previous block MUST match that of the next block. This is why blockchain tech is considered so secure.
Cryptographic Hash Function
In addition to cryptocurrencies, hashing and hash functions are used across many industries. A cryptographic hash function is a special class of hash function that has unique properties making it well suited for cryptography. A cryptographic hash function contains three specific properties needed to ensure security. Let’s briefly review each property.
This means that you will always receive the same result no matter how many times you pass a particular input through a hash function. This property is very important because it becomes impossible to track the input properly if you receive different hashes.
The hash function must be capable of returning the hash of input quickly and accurately. If the process isn’t fast enough, the system becomes inefficient.
It is infeasible to find two different messages with the same hash value.
Without question, hashing is a difficult concept to understand. Thankfully, it’s not necessary for the average crypto user to fully grasp the idea of hashing. In reality, miners are the only people in the crypto community who work with hashing and hash functions daily.
Hashing and hash functions have been in existence well before Bitcoin arrived on the scene in 2009. Bitcoin (and cryptocurrency in general) has used hashing to create a decentralized money system that will one day be viewed by financial historians as arguably the greatest innovation in the history of money.
Brief Summary of Hashing
- A hash converts an input of letters and numbers into a fixed-length encrypted output.
- Hashing plays a critical role in the mining process.
- Through hashing, miners are able to validate all transactions on the blockchain.
- Hashing and hash functions are used across many industry groups.
- A cryptographic hash function is a special class of hash functions with unique properties.
- Cryptographic hashes are deterministic, quick, and have preimage resistance.
Everything You Need To Know About Binance Coin
What is Binance Coin?
Blockchain and cryptocurrency cover a wide range of assets and projects that serve different purposes. For instance, there are several types of crypto exchanges, with each crypto being unique in terms of construction and features.
Binance coin is a cryptocurrency issued by the Binance exchange and trading as a BNB symbol. Similar to other cryptocurrencies, Binance Coin offers multiple uses beyond the Binance Exchange. For instance, it can be used for trading, credit card payments, transaction fees, booking travel arrangements, entertainment, investment, and loans and transfers. It is currently among the most prominent cryptocurrencies globally, with over 1.4 million transactions per second.
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Binance Coin was created in 2017 by Changpeng Zhao, a developer who had created high-frequency trading software.
Binance Coin was launched in July 2017.
What Is The Price of Binance?
Being a cryptocurrency, BNB operates the same way as digital assets in the market—it rises and falls in value depending on how people use and trade it. It can be held in compatible wallets off crypto exchanges and sent directly to others as a form of payment or for other uses. It can be traded for other currencies or cryptos on various exchanges.
Binance Coin can also be used as a form of payment for crypto credit card bills through the Crypto platform. Businesses can also offer BNB as a form of payment for the goods and services they sell as an alternative to the traditional currency; for instance, book travel arrangements such as flights and hotels and buy lottery tickets. BNB is a sought-after option for investing in EFTs, stocks, and other investment opportunities.
How does one get BNB? Having understood the several purposes of the Binance Coin, where and how to get it is a question that crosses many people’s minds. It can be acquired through various platforms, and the most notable way is through Binance Exchange, the crypto’s own exchange. One can get BNB in four critical steps.
- Get a Binance Coin wallet, also known as coinomi or ledger
- Locate your own BNB address
- Sign up for Binance
- Buy Binance Coin with either a credit card or another crypto
BNB works in tandem with two blockchains—Binance Chain and Binance Smart Chain (BSC). While BSC is a separate blockchain built into the Binance Chain, it runs parallel to BC and carries different features like smart contract capability.
BC was designed for optimal performance. In fact, BC was based on a decentralized exchange (DEX) owned by Binance. Nonetheless, it was limited in allowing developers to build solutions. Therefore, BSC was designed to add more capabilities to the BNB ecosystem, thereby giving developers more functionality. An example is the smart contract functionality available on BSC and not BC.
Binance is currently the most popular and most used exchange to buy and sell coins and tokens. However, is it safe to leave or hold coins on the platform? Cryptosec confirms that Binance is safe and maintains its security in two ways. Firstly, Binance has cold storage where most of the funds are stored, making it significantly difficult to steal funds. Secondly, it has a SAFU fund used to store 10% of trading fees received on their emergency fund. This ensures that users who get their funds stolen can be compensated.
Despite the measures above, being the most popular cryptocurrency exchange means Binance will continue to be a target for hackers. Therefore, it offers guidelines on how users can secure their cryptos. For instance, using regulatory compliant centralized exchanges by AML and KYC checks when trading cryptos. However, prioritize peer-to-peer trading and decentralized exchanges with audits.
Binance offers multiple security options for storing cryptos. One of the ways includes keeping cryptos on regulated exchanges, especially if someone is a newcomer. Using a non-custodial wallet where a user owns the keys provides more security. A more secure option is to keep it in a wallet not connected to the internet. Also, using audited DApps can improve security.
We do not provide investment advice, only objectively presenting factual data around virtual currencies. That said, even though cryptocurrencies are highly volatile, BNB can be an excellent investment for long-term investors. It is the most popular crypto for a reason; it is attractive to investors. Binance Coin was only introduced to the market less than four years ago, and it has since rapidly grown. It also aims to revolutionize the cryptocurrency space through tokenomics and utilities.
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