This week on-chain was a tough one to watch with the price of BTC dropping to the expected lower 40s suggested by last week’s prediction published by The On-Chain BTC Forecast: Week 37.  This week looked strong out of the gate with prices surging momentarily on Saturday night, only to be left like Cinderella at the ball as the price turned to pumpkins and shriveled by 10,000 USD in the early Sunday morning hours. 

Week #38 Major Takeaways

1. How can we link stock market action to price movement in BTC? It’s difficult to find data and direct links between stocks and BTC therefore it’s difficult to objectively link price action with random events in the world at large.
2. Where are we at in terms of larger cycles? Looking at metrics like the Puell Multiple, it’s fairly easy to see larger patterns in behavior as miners seek to find the best times to sell BTC. It looks as if we are at the bottom or nearing the bottom of a low Puell cycle.
3. Are we ready for a bull run as illiquid assets grow? Clearly, illiquid and liquid BTC are heading in opposite directions with illiquid assets on the rise and liquid assets decreasing daily. Common sense tells us as an asset becomes more scarce, it’s value increases–if demand increases. 

Social media reacted strongly and if nothing else there seems to be a direct positive relationship between the dropping price of BTC and the number of data charts and emojis that get squeezed into a tweet by every laser-eyed BTC bull monger. One must exercise caution when absorbing data that is explained with a 144 character short story rather than with the novel that BTC deserves.

Most on-chain experts quickly blamed the Evergrande situation for multiple failures, first in their failed forecasts and for the large dip in price; citing weak equities market action and an overall down week for most notable markets on-chain and off. 

Sentiment overall was pensive and sullen, with some sources indicating, as usual, that a bullish move is indeed ahead for the burgeoning cryptocurrency, there does seem to be convincing trends to indeed signal a strong recovery in coming weeks even while it may take some time to develop.

How can we link stock market action to price movement in BTC?

It’s difficult to make direct on-chain links, Looking at the stock prices of Grayscale and The Bitcoin Fund (ETF) we can see a closely linked relationship between the price of BTC and the respective equities, but understanding price movement this week in relation to Evergrande will be a hard connection to make.

Options volumes are up this week and looking at the relationship between price and volume, it’s not perfectly clear as volume seems to have an inverse relationship to price during some periods and a direct relationship at other times. Although different than the equities market, it could provide some insight into investor sentiment.

Where are we at in terms of larger cycles? 

We find more clarity here. Using the Puell Multiple we can see how profitable a miner is compared to the rest of the year. We know that miners sell overtime to pay for fiat expenses and of course they’d rather sell fewer coins than more coins when paying the bills. Taking a macro view over the past five years, we can mark times when it’s been extremely profitable for miners to sell. The higher the Puell Multiple, the more miners are enticed to sell off into the market strength to take profits. Conversely, when Puell is low, miners begin to accumulate which lowers liquidity and signals an opportunity for others to buy coins as the price stabilizes prior to reaching new highs. It’s fairly obvious by looking at this metric that we are Puell is relatively low but not bottomed in this cycle. The question is whether it will continue on its upward trend or linger towards the downside as the price stagnates offering an opportunity to buy more BTC before it climbs.

This year’s data seems convincing and zooming out to three years of Puell/Price data the trend looks clear, the potential for price growth is clearly apparent.

Going even further out to 10 years of data, we can see the longer-term relationship between price and Puell. The price of Bitcoin tends to be lower when Puell is lower. This corresponds to lower profitability for the miners and signals a potential price recession and a time for the opportunity to increase BTC positions prior to expansive growth. Price action that was observed as recently as this spring supports this assertion and is also illustrated in mid-2019 and early 2018. Going back further reveals similar behaviors as miners accumulate during periods of lower profitability followed by strong sell-offs into the rising price.

Are we ready for a bull run as illiquid assets grow? 

The total amount of Bitcoin in circulation is currently under 20 million BTC. Bitcoin can be classified into three main categories when it comes to liquidity: illiquid, liquid, and highly liquid. The first, illiquid, describes BTC assets that are being HODLed long-term in cold wallets or lost forever due to access problems. These assets are essentially completely unavailable to the market with little chance of being “spent” in the near term. Liquid describes bitcoin that is being held by entities like exchanges, which represents the smallest amount of the total circulating supply. Highly liquid BTC is the Bitcoin that is being constantly traded and transacted on a daily basis. 

We can clearly see a trend of illiquid supply growing over time which indicates a strong and growing HODL behavior in the market. Based on these figures, nearly 77% of the total supply of BTC (18.8m) is considered illiquid.

Current levels with the price at ~42k on 9/23/2021:

• Total Supply: 18.8m
• Illiquid: 14.4m
• Liquid: 1.3m
• Highly Liquid: 3.1m

Even more interesting are the linear long-term plots of this data which shows clear trends in regards to the illiquid vs liquid relationship. The general observation is crystal clear: liquid supply is diminishing while illiquid supply is growing. 

Smoothing out the data clarifies this trend, and the assumption can be made that as the accessible supply of BTC (liquid supply) decreases and becomes illiquid, the price of Bitcoin should react by rising in the face of greater demand and usage. Especially since the trend appears to support the idea that HODLing, if tied to illiquid supply,  will increase, reducing the accessible amount and driving price up due to increased demand.

Conclusion: BTC Price in a slight downward trend with a potential upside in coming weeks.

It seems obvious that those who control the supply of Bitcoin, control the price. In this case, the miners seem to be firmly in the driver’s seat. When looking at the Puell Multiple and factoring in recent profit-taking, the potential for price growth is possible. Whether or not it is eminent is unclear since in the past even when Puell was low, the price of BTC stabilized or dropped further as profitability dropped.

Next week

The forecast for BTC in week #39 is that prices will stabilize and hover in the low to mid-40s with possible modest gains or losses in price over the week prior to any considerable price action. 

Later this year

Looking further into the later weeks of 2021, the expectation that prices will begin to climb with the potential to reach beyond ATHs of early 2021 into the high 50s and low 60s looks promising.

Featured Photo by Bermix Studio on Unsplash

On-chain this week #37 of 2021 has been exciting and the price of BTC has swelled to recent local highs. While many in the crypto markets are looking for the strong winds to blow off tops as we leave the dog days of summer, BTC remained rather sleepy with little weekly price change.

The question remains if Bitcoin will follow other traditional markets this autumn and begin to expand through Q4 into the late spring of 2022. This week’s sentiment seems bullish, but sentiment taken from social media can be deceiving; by asking the right questions we can uncover the true nature of the factors that are driving the price of Bitcoin.

• What are the miners doing? This week we can see a significant sell-off of BTC reserves held by mining wallets. Supply has increased as they empty coffers.
• Are the HODLers HODLing? As if in lockstep with the miners, we saw a decrease in HODLing.
• Does increased wallet activity mean increased BTC adoption? With price spikes, we see more action. As nations beginning to use BTC as their primary currency; it’s easy to infer that we’ll see more of this.

What are the miners doing?

Historically, BTC miners make the early move as they control the levers of their supplies to the bitcoin market. This recent price surge last week was no different. As the price of BTC grows, miners–who are compulsory sellers, usually sell when they have a large supply of BTC from mining rewards, and historically, they sell into strength. In this chart, we can see a sell-off that started towards the end of last week.

Notice how the actual data differs from the “smoothed” 7-day moving average. We can see a consistent change in the amount of BTC that miners held through the last week, rather than a growing trend as the 7d-MA might lead us to believe. 

Are the HODLers HODLing? 

As we look into the wallet balances of BTC holders who have decided to never give up the dream of the million-dollar Bitcoin, we can see that the population of HODLers may not be holding as much BTC as they claim. HODLers seem to be paper-handing their way all the way to the bank, and selling into strength just like the miners do. Look at last Saturday and you’ll see a sharp decline in HODLers HODLing.

Does increased wallet activity mean increased BTC adoption?

As the price of Bitcoin increases, we see that the number of addresses that go active increases. Since each individual person can control multiple addresses, it’s difficult to directly link activity with price movement, but, by looking at the chart above we can see that users typically take weekends off. The “Number of Active Addresses” metric seems to validate this assumption with decreased activity over the weekends in the past month, with a strong rebound towards the end of the week. 

One might suggest that the sharp increase of activity could be explained by countries like El Salvador creating wallets for its citizens and allowing for BTC to be exchanged as legal tender. Our intuition might tell us that more activity, regardless of the source of that activity, is a good overall signal. However, we should be use caution when making such connections without taking into account the changes that are happening in how we use BTC on a daily basis.

Conclusion: BTC Price will sink to the lower 40s.

Looking forward to the end of week #37 and into week #38, we should see prices relatively flat through the weekend with the potential for some small gains as miners head back to the mines in search of more coins. 

Comparing the 7-Day Moving average to the 14-Day Moving average, we reveal that even though on a small scale–it appears that price is moving upwards when we look at the 14-day trends, it’s clear that price hit a high-point with an obvious expansion. This indicates that we should expect to see a downturn in price with a drop off to the lower 40s as we seemed to have reached a new local high in this cycle. 

Featured Photo by Harrison Kugler on Unsplash

There are few technologies that leave me searching for words to begin. Most have fancy marketing, cool logos, and things that draw you in and try to distract you with features that are as shallow as the technologies they are based on–we can safely turn our heads and ignore most of what’s going on out there. This time, in our quest for understanding the cryptographic, it’s time to explore another puzzle: Solana.

Solana is an open source project implementing a new, high-performance, permissionless blockchain. The Solana Foundation is based in Geneva, Switzerland and maintains the open source project.

https://docs.solana.com/introduction

This time, our task is extremely and wonderfully dense. Understanding the value in Solana is hard because understanding how it works is hard, and, in search of a whitepaper for the project I found 8 whitepapers that are necessary to understand this technology. As I go through them, it’s like reading mini-doctoral dissertations on different areas within cryptography–I challenge you to read through these and understand them. In this article though, I promise to paint a high-level picture if I’m already losing you.

Today, I want to introduce a few things that I’ve learned about Solana, and why later today I’ll be building a Solana validator. I can almost guarantee that I’ll be writing much more on this project. There’s just too much to cover in one article.

There are 8 key innovations that make the Solana network possible:

• Proof of History (POH) — a clock before consensus;
• Tower BFT — a PoH-optimized version of PBFT;
• Turbine — a block propagation protocol;
• Gulf Stream — Mempool-less transaction forwarding protocol;
• Sealevel — Parallel smart contracts run-time;
• Pipelining — a Transaction Processing Unit for validation optimization
• Cloudbreak — Horizontally-Scaled Accounts Database; and
• Replicators — Distributed ledger store

The major takeaways

The first thing I noticed when I started reading about Solana is that it’s being lead by a Swiss Foundation. This is interesting especially since it brings me to our first point. Time. If I had to describe the whole project, that’s where I’d start. Solana’s big-picture innovation is similar to the Swiss movement of the world’s best watches; what I mean is that the Swiss know how to keep track of time. It makes sense that they would be so deeply involved here–distributed computer systems need precise and near-perfect timing to operate in our world today. From what I can see, they’ve done it again. This time leveraging a different sort of proof–Proof of History.

Solana is a high-throughput, high performance blockchain.

Before we move forward though, I want to hit the pause button here and take an aside. We need to really understand why time is so important when it comes to computers and furthermore, why time is especially important when it comes to decentralized blockchains. We have to understand the problem that Solana is solving.

To begin, remember that every database, every ledger, every log needs a timing system of some kind to maintain order. Time is something we humans came up with, a measurement for when events happened or will happen. In a ledger, time is non-negotiable when it comes to verifying when something happened–it needs absolute order. The ledger needs to be able to record if something happened and exactly when it happened.

We need a point in time. Without timing, there is no blockchain.

Maybe two things happened exactly at the same time? In database speak we use the term Atomicity, to describe when a database operation occurs; which is interesting because we also use essentially flawed tools like atomic clocks as a “trusted third parties” to tell us when things happened. However, with time dilation (time in regards to clock timing, moves faster as we change altitude), the effects of Relativity, and even slight network delays can render timestamps inaccurate in a globally dispersed network of computers all trying to work together. Timestamps are not reliable and are essentially useless for deciding order at the scale of say the Bitcoin blockchain.

I find it fascinating that we cannot even measure time to a known level of precision, read about Planck time below–the smallest interval of time that physicists and philosophers are working with today. Furthermore, study of quantum gravity by people like Carlo Rovelli, expose even more problems that we have in how we experience time. Aristotle thought about time as simply a way we count changes, and Newton believed that time moves forward regardless of change, and Einstien, with his theory of Special Relativity, said that time is relative to your frame of reference.

Instead of asking what time it is, we need at ask what is time?

Planck time

The Planck time t_P is the time required for light to travel a distance of 1 Planck length in a vacuum, which is a time interval of approximately 5.39×10⁻⁴⁴ s.^[24] All scientific experiments and human experiences occur over time scales that are many orders of magnitude longer than the Planck time,^[25] making any events happening at the Planck scale undetectable with current scientific technology. As of October 2020, the smallest time interval uncertainty in direct measurements was on the order of 247 zeptoseconds (2.47×10⁻¹⁹ s).^[26] While there is currently no known way to measure time intervals on the scale of the Planck time, researchers in 2020 proposed a theoretical apparatus and experiment that, if ever realized, could be capable of being influenced by effects of time as short as 10⁻³³ seconds, thus establishing an upper detectable limit for the quantization of a time that is roughly 20 billion times longer than the Planck time.^[27][28]

https://en.wikipedia.org/wiki/Planck_units#Planck_time

To bring it back to what we need to understand, we need to be able to agree what time is, we need a specific time. Multiple computer systems run by people who don’t exactly trust each other is the issue with decentralization, but by solving the problem of timing, we bring about order. It must be noted that the fact that it’s impossible to reliably link a moment in time to a specific event in distributed computer system was the problem that made a decentralized blockchain impossible, until Satoshi Nakamoto invented the solution (read this email from Satoshi), Proof-of-Work.

Bitcoin has exposed us to many new ideas and has shaken the world with its innovation, but here’s another–the Bitcoin blockchain is possible because a side-effect of how blocks are written make it a large decentralized clock! Bitcoin has a function built into it called nLockTime that helps make agreeing on a time possible. The blocks in the blockchain operate like a global clock–with an average of 10min per tick. I would argue that this is one of the greatest “discoveries” of our modern age, brought to us through the use of cryptography and blockchains.

Solana has many ways to get involved.

When I first showed up at the Solana website, my head started to spin immediately, in a good way. The reason is that there are many ways to get involved with Solana.

Obviously, you can invest with Solana like other cryptocurrencies, you can also stake Solana through a validator, you can build your own validator (as I mentioned previously) as I am doing, or, you can develop applications with it. You can develop on-chain applications in Rust and in C.

I want to make a note here and mention that from a developers perspective, the Rust programming language is widely used and loved by developers–according the the 2021 StackOverflow Developer’s Survey, it’s the most loved language in the world. I believe that due to this fact, adoption of Solana will accelerate–especially since Solidity, the language that Ethereum Smart Contracts use–isn’t even on the list.

The other thing I love about Solana’s infrastructure is the simplicity of how they word things. CryptoCourt and I have had many discussions about the use of strange jargon to describe things in the crypto world–and even how using the term Smart Contract can be confusing to people. Instead of trying to confuse people and come up with new terms for things, Solana simply calls its on-chain smart contracts–programs. I like that.

Additionally, there is lots of starter code for people to learn how to write on-chain programs, along with a large community of developers that are providing starting points and tutorials that make developing programs relatively easy. I was able to set up an escrow program in just a few hours.

Conclusion: it’s just the beginning for Solana

There’s a lot to unpack with the Solana universe–and it really has just begun. Overall, it’s an exceptional project with fantastic marketing, a huge community, well-thought out implementation, and it leverages the best things that blockchain has to offer. I’m going to continue to explore and report on the developments that I learn through my experiences.

I’ve already started my validator–I’ll update you when you can stake SOLs (the native token of Solana) on my own system! Solana takes the best things from Bitcoin (the timing concepts) and is looking a lot like a better Ethereum. My prediction is that when Solana hits the mainstream–it will overtake Ethereum in regards to price.

Featured Photo by Mickey O’neil on Unsplash

By CryptoCourt – Guest Contributor — I’m an attorney, crypto investor, and crypto miner.   One thing I’m not:  a software engineer.  Following crypto conversations on social media is very much like watching people speak a language I barely speak, and one that I know I will never speak fluently.  No doubt tech gurus have felt similarly listening to attorneys discuss contract law.

But as an attorney interested in helping the crypto world interact with “the state” (whether through federal, state, local or international law), I do my best to understand the technology.  

When researching Smart Contracts, it is common to come across visions of use-cases that, to me, seem greatly distanced from our present.  Yes, I can envision a future where crypto is easily transferred for the clean and clear title of PHYSICAL real estate, but (unless someone can show me otherwise) we are many, many steps away from that happening, involving the complex interaction of technology, law, and politics.   There is a big difference between buying virtual property in Decentraland, and buying physical property in Omaha, Nebraska.  In Omaha, you may move into your dream home and discover an underground oil tank that costs you 50k to clean up. Not in Decentraland.  The difference is real-world risk.  Making deals is about allocating risk.  

So why do outlets like CoinDesk regularly publish articles suggesting that Smart Contracts are on the verge of  changing the way we do deals? 

From “16 Ethereum Predictions From a Crypto Oracle”: 

Contracts are the connective tissue of the world – sales contracts, college acceptances, employment offers, insurance policies, medical prescriptions, NDAs, ISDA agreements, etc. Yes, Earth runs on contracts (not on Dunkin’). Ethereum allows contracts to go truly digital. The digitization of the contract is the digitization of the global economy, which has been valued at an estimated $270 trillion (compared to the $18 trillion market cap of gold that bitcoin stands to capture). Ethereum has the opportunity to upgrade entire economies, not just one asset class. 

That is pretty big talk, and the tone is that these changes are happening imminently.   Are they?  I see the vision, but I just see a big … gap …

From “Top 12 Smart Contract Use Cases”  

Smart contracts can be used in a real-estate deal. Both the parties (buyer and seller) can create a smart contract that can automate the deal once the buyer pays the property value to the seller. To make all of these happen, the property first needs to be digitized on blockchain technology. Once done, both parties can carry their deal using smart contracts.

The catch:  the property needs to be digitized.  When you realistically think what needs to happen – in terms of legal and regulatory hurdles, not to mention technological hurdles – for a physical property to be “digitized” in a way that it can be easily transferred through a Smart Contract on the Ethereum, that seems far off.

Don’t get me wrong, I love Eth.  I look at a list like “100+ Ethereum Apps You Can Use Right Now” here, and I see plenty of existing or imminent use-cases for Eth in the space of DeFi and NFTs.  But for those who are promising more out of Ethereum Smart Contracts, I would love to hear more about how we are realistically going to get there.

Featured Photo by Sebastian Pichler on Unsplash

A few years ago, I remember trying to explain what blockchain is to a friend. We went over it again and again, and finally, he got it. Back then my understanding was good, but still a little under-educated, it took me a lot of time and reading to solidify what it can and can’t do in my mind.

Today I can confidently explain that blockchain is just a next-generation of database that uses cryptography to write and store data in a way that is immutable. Bitcoin is just a software package that interacts with a blockchain. That software can do essentially do two things: 1. You can write data and 2. you can read data on the Bitcoin blockchain. And, yes–Bitcoin is a smart contract. It’s a software package in a class of packages that interact with a blockchain. Someone started calling that class, smart, and then others started to think smart in that context meant wise and intelligent. That’s where we went wrong.

Software is only as good as the programmers that wrote the code. Bad software is bad, calling programs that interact with blockchains “smart” is just marketing.

There are lots of things that I’ve come across working with computers that seem much more complicated than they actually are, and I’ve struggled to understand why we as a people do this. The initial thought that I have is there are people–marketing and salespeople, technophiles, politicians, pundits, who are all looking for ways to create polarity in the discussion of technology. That “interference” can obscure the actual technology behind the concepts that are being dramatized and sold to the mainstream.

Remember when people started calling computer servers, “the cloud?” The cloud became a term that people would use whenever they wanted to say that we were storing something on a remote server on the internet someplace. Before the cloud, we called them networks or clusters of servers. People in technology started to use the word, cloud, as simple jargon, an easy way to refer to the vast network of computers that everyone was building–and we are still building them–computer servers, and lots of them.

Terminology, such as, “the cloud,” is just a marketing term. If you understand computer networks, hypertext transfer protocol (HTTP), internet protocol (IP), domain name systems (DNS), then guess what, you got it! Because that’s all the cloud is–a collection of servers that are connected with HTTP, IP, and DNS. As simple as all these things are to me today, I suspect that there are a large number of people who use each of these tools for most of their workday who still have no idea what goes into “the cloud.”

Using that discussion as our appetizer, let’s move onto the main course of our discussion, the “smart contract.” If you jump on social media and try to find an objective definition for a smart contract there, you might be hard-pressed to find it. In fact, I don’t believe that’s where you should look in the first place–mainly it’s because there are hundreds, thousands, or millions of people out there who don’t really understand the basic fundamentals of a software program. Those folks are trying to make something that is just a few lines of code into a social movement or an all-powerful AI system that will take over the world. I’m seeing that there is a big misunderstanding being created with the term smart contract. People don’t get it, just like the cloud.

Google: “what is a contract” and see what you get.

con·tract

1. noun: a written or spoken agreement, especially one concerning employment, sales, or tenancy, that is intended to be enforceable by law.”both parties must sign employment contracts”

1. verb: enter into a formal and legally binding agreement.”the local authority will contract with a wide range of agencies to provide services”

These definitions are just two of the many that the word, contract, means. There are lots of meanings for the word in other contexts. In medicine, your muscles contract. In linguistics, it can mean to shorten a word or phrase by combination or elision: “quasistellar object” was contracted to “quasar.” Like many other words, the word contract needs context to be understood.

I think that this is the main reason why we are getting it wrong with the term, “smart contract.” Well, at least some people believe we are getting it wrong. Smart doesn’t mean intelligent to programmers, it means capable. It means digital capability. Smart Phones, Smart Cars, Smart Refrigerators, Smart Bulbs–all smart means is that something, a device, is digitally connected and capable. It doesn’t mean sentient, it doesn’t mean intelligent, it means connected and digital. That’s it.

Contract in the smart contract context is a programmed agreement to give and take. It’s not a legally enforceable agreement protected by law. It’s an agreement between machines. If you give me this input, I’ll give you this output. Our browser takes a website name, or URL–connects your computer to another computer that is associated with that URL, and returns the content from that server. You enter a URL, you get content. That’s the agreement there, that’s the contract. The only reason that people call it smart is that it’s simple and purpose-driven–it’s cause and effect–it’s not smart at all. It’s just smart to use such simple systems when you’re trying to get something done. After all, we really don’t want a truly smart and/or intelligent browser, do we? What would happen if you put a URL in your browser and your browser was really smart and instead sent you a message that said, “Hey Dan, it’s not time for you to watch Netflix now, you should be working.” Mass hysteria would follow. Cats and dogs would start living together and people would run amuck in the streets!

Let’s all just take a minute and a deep breath here. The term smart contract is just a marketing term being used by techies to define a program that interacts with a blockchain, it’s the software that we run on a computerized platform. The smart contract is the software and the blockchain is the computerized platform. They are as smart as the programmers who wrote them and the integrity is only as good as the platform it runs on. We should keep it that way–and understand it that way.

It’s not the smart contracts that we have to worry about because they just do what they are told, it’s the smart people that are creating them that we need to watch.

Featured Photo by Cytonn Photography on Unsplash

Cryptography is taking over, yes, let’s face it. Crypto is winning. Big time. Let’s take a moment to ignore all the drama and price speculations on all the moonshot coins out there and focus on some real technology. There are meme coins and altcoins, but let’s look at a couple of coins that have REAL WORLD PRODUCTS attached to them. Not just speculation, not just hype, not just a large Twitter or social frenzy–but tokens and coins that are supporting things like getting remote devices online, linking smoke detectors, or transmitting soil moisture data 5 miles away to a receiver? Guess what? People are using crypto to do this–and they are calling it mining! What??? Yes. You can buy these “miners” and make money. I’m doing it. Stick with me on this.

This is what we call next-generation tokenomics… Enter Machine Xchange Coin-MXC and the Helium Network-HNT.

• MXC Current Price: $0.040481
• HNT Current Price: $23.35

First of all. Let’s define some terms.

LPWAN: Low-Power Wide Area Network, think miles and kilometers rather than feet and meters. We use networks like this all the time and don’t think about the acronyms.

Have you used Bluetooth recently? Bluetooth is a Low-Power Local Area Network(LPLAN) protocol. Bluetooth can send data a few meters away to your headphones or mouse, and it uses a Bluetooth proprietary radio. That radio transmits and receives LPLAN protocols. (BTW: There are billions of devices out there in the world that are using Bluetooth radios. Billions.)

Let’s look at this graphic:

How does this work? It’s simple really–and I know, I don’t like it when people say something is simple and then immediately start saying something that doesn’t make any sense. So let’s break it down like this.

Let’s say you’re in a room with lots and lots of people in it, and you’re trying to talk to someone that’s standing on the other side of the room. If you try to just talk to that person, with a normal tone of voice, and a normal volume–that person won’t be able to hear you. But if you shout a few short words in a lower tone but with more emphasis, “PLEASE COME HERE.” The chances that the person hears you and understands what you’re saying goes way up. Radios just amplify sound and transmit it a long way. They work the same way as you shouting, just with more efficiency. Dogs use the very same “technology.” A low bark can be heard from 100s of yards away by our ears… maybe miles away for dogs. Wolves howl to transmit data miles around them.

LPWAN is just a fancy name for a super-efficient radio that can transmit small amounts of data a long way without the use of a cellular or any other third-party system.

Okay, great–so dogs barking is a wonderful technology. What does it mean for us? How can we make money?

Now that we understand exactly what LPWAN is, and generally, how it works (with radios); we have to go back to our gif image above and make sure we make the connection (pun achieved) with what these things are doing. They are putting devices online for a fraction of the cost.

Farmers in China are using LPWANs to connect to their cows out in pastures miles and miles away.

What about that gas/electric/water meter on your house or apartment? Guess how other countries are collecting that data? Do you think in China, they have a meter guy walking around to every single power meter and recording it by hand on a piece of paper and then transcribing that paper into a database back at the home office? That’s what we do in some locations–in 2021!

I was at the pet store the other day and wanted to get a radio collar for my dog. They had Bluetooth trackers, and GPS trackers… all of them were expensive and required some kind of account with a cell phone provider like AT&T or Verizon. Or, they were short distance. Boo. I don’t want to pay for yet another phone line just to find my dog–especially if I can use something free like LPWAN technology to find my dog, bag, car, child… see what I mean.

Those little tiles that some people use to find their keys are awesome right? Imagine a tile that you could attach to something and then not charge for weeks or years. Hook it up to solar and now you can find it anywhere at any time… I think the more you think about it… the more ideas will come to you and you’ll start to see where we can use this.

Want to know how “Smart Cities” are being built? Yep. LPWAN.

What do we need to get started with this?

We need radios–and guess what. We have radios.

Back in May, I ordered a set of M2Pro Radios. In the image above they are the “Gateway Owners.” I’m a gateway owner. I have now set up 2 radios one at my home and one at a family member’s house about a mile away. Anyone can connect to me and use them to get to a network. The connection to use one of my radios is completely managed by the device itself–I am just providing a gateway and getting paid with MXC tokens to do this.

True Decentralized Networks

In the past, I’ve tried to understand how blockchain is important–if you get on Twitter or Reddit, you might find some good information about all of this, but a lot of it is just has too much interference from other channels. People mix politics, drama, and polarity into these things. Now I understand decentralization much better.

Imagine if the MXC foundation tried to officially pay me to host one of their gateways here in my house. I’d need a contract, some kind of agreement, some bank account, attorneys, accountants–all great but expensive.

Look at how they are doing it. All I have to do is buy one of their antennas–and put it in my house and connect it to the internet. That device sends small amounts of crypto to me, using the Data Dash App which is really just a device manager and a cryptocurrency wallet. As you read this, I’m collecting MXC tokens. That’s the incentive, and I’m getting paid just by turning on a radio. The MXC Foundation is willing to pay me “rent” to provide the capacity to other application developers and companies to use the network–and it’s extremely affordable. The cost for a downlink is 88 MXC at the time of writing. I’m still learning about these figures, and I’m in the process of building small devices that I can connect to these radios so I can see exactly what it costs me.

There are lots of ideas that come to me for this. You have to think low bandwidth though. Small amounts of data, not large ones… could we send movies with this? well… no. Text messages, Tweets? I’ll bet you a BTC!

LPWANs are great solutions for some applications requiring intermittent or inconsistent data transfer over long distances for a long time. Think smart garbage disposal meters, smart parking meters, or soil and water quality sensors, collars on cows in a Montana pasture, or maybe dolphins that a scientist is tracking without GPS.

It’s happening

There’s a lot I’m skipping over, obviously, there are some shortcomings to these devices, and haven’t really scratched the surface. But you can visit https://ussn.matchx.io/ and see the devices that are linked to the Huobi Pool. I’m connected there, but you can see there are way more gateways in other countries than in the USA. Europe is awash with these antennas.

Because this topic is so vast with so much to cover, I’m going to stop for now and call this Part One of a four-part series on LPWAN and how it’s colliding with cryptocurrency.

I’ll be publishing the next parts of this soon. I’m still waiting for my HNT coin miners so I’m going to probably wait until I have those in hand and running for a while before I write about those. Here’s how I’ll go about this series… (subject to change)

• Part One: What is LPWAN, Exactly? *This Post.
• Part Two: What are real use case scenarios and which companies are actually using this technology.
• Part Three: How does crypto intersect with this technology?
• Part Four: Deep dive analysis into the M2Pro Miner and The HNT Miner.

Featured Photo by Jack Sloop on Unsplash

My journey with Chia started on 5/20/2021 at around noon, so that’s 105 days including today that I’ve been running a Chia “farm” as it is called. I won’t tell you that it’s hard, it’s really not–unless you try to go really big as I did.

• Price of XCH on May 15th: $1614.33
• Price of XCH on September 1st: $214.00

Let’s go back to the beginning of May when it launched. Why did I get involved? Was it the price? Well, yes and no. The price of Chia was attractive but the price isn’t what attracted me to it. It was non-GPU-based mining. I wanted to diversify what my company is mining. I had no idea that the price would tank very quickly after the bull run that we experienced in crypto the first couple of months of this year. We could do no wrong then.

GPU Mining is Bad (Really?)

I’m mining BTC and ETH of course, but back in May, there was a lot of talk about clean energy and how GPU mining is somehow wasteful and wrong to do. That talk has seemed to die down a bit–but I digress. Chia farming isn’t GPU-based. In fact, no GPU is needed at all if you’re running headless servers. You can even go very, very economical and run a Chia farm using a Raspberry Pi. You won’t be able to plot with a Pi, at least not that I know of–but, I went the other way with it. I started buying server gear. I went from consumer motherboards to boards that can support XEON processors with lots of cores. The more cores, the more you can plot at the same time. These servers do use more power than say your average desktop, but considerably less than say, 8 RTX 3090s.

Clean Mining

Sticking with the philosophy of more from less and the desire to broaden the range of cryptocurrency I was mining. I started investigating other “mining” platforms. I’d been looking at Livepeer(LPT), Helium Network(HNT), and Machine Coin(MXC) as well, and I decided to move on HNT, MXC, and XCH. Currently, I’m mining MXC, XCH with my HNT “miners” on the way–that should be here next month. I didn’t start running LPT because instead of a stock version of Linux, I’m running my ETH miners using Minerstat’s mOS, a custom build version of Ubuntu that is used for professional CPU/GPU mining.

The other thing that I liked and still do like about XCH is that it’s being run by guys like Gene Hoffman, Mitch Edwards (former founder and CEO of eMusic.com and Vindica the former acting-CEO of Overstock.com, respectively) and Chia’s founder, Bram Cohen. Bram’s past work has included technologies like BitTorrent which he developed in 2001. The other people were hand-picked and include the former HDD storage chief from Intel.

So, clean “mining, the great company behind it, and a new paradigm in regards to what you’re doing when you “mine.” In this case, it’s called farming, but here’s what Chia says it is:

“Chia Network is building a better blockchain and smart transaction platform which is more decentralized, more efficient, and more secure.

Chialisp is Chia’s new smart transaction programming language that is powerful, easy to audit, and secure. The blockchain is powered by the first new Nakamoto style consensus algorithm since Bitcoin launched in 2008. Proofs of Space and Time replace energy intensive “proofs of work” by utilizing unused disk space.

Chia Network supports the development and deployment of the Chia blockchain globally. Chia Network supports chia developers and supports the enterprise use of chia with software support and chia lending.”

https://www.chia.net/about/

Proof of Work vs Proof of Space

There are two things to note here.

1. Chia has its own programming language, Chialisp. So, like Ethereum which uses a language called Solidity. You can write smart contracts and build applications similarly to the way that you’d do the same thing on the Ethereum blockchain. This also means you can create new cryptocurrencies with Chialisp. Chia is a platform like Ethereum, I like this you can build on it just like ETH.
2. Chia isn’t vulnerable to a 51% attack the way Bitcoin and other Proof of Work(PoW) cryptocurrencies. Instead, Chia uses a new algorithm called Proof of Space and Time(PoST).

Background on 51% Attacks

“A 51% attack is an attack on a blockchain, which is a type of digital database in ledger form. With blockchain technology, information is collected together in groups or blocks and linked together to create a chain of data. In cryptocurrency trading, blockchain is used to record approved transfers of digital currencies and the mining of crypto coins or tokens.

With Bitcoin for example, “miners” can attempt to add blocks to the chain by solving mathematical problems through the use of a mining machine. These machines are essentially a network of computers. If miners succeed in adding a block to the chain, they receive Bitcoins in return.

The speed at which all the mining machines within the network operate is the Bitcoin hashrate. A good hashrate can help gauge the health of the network.

A 51% attack occurs when one or more miners takes control of more than 50% of a network’s mining power, computing power or hashrate. If a 51 percent attack is successful, the miners responsible essentially control the network and certain transactions that occur within it.”

https://www.sofi.com/learn/content/51-attack/

Proof of Space and Time

Reading through Chia’s Whitepaper, which they call a “Green Paper” reads like a doctoral dissertation in computer science rather than a typical business document. It’s dense and hard to understand. I had to print it out and read it line by line, over and over again to really understand it.

Earn Crypto with Data Storage

The easiest way to think about Proof of Space and Time (PoST) is that, unlike Bitcoin and Ethereum where computation (and lots of it) is necessary, data storage is used to earn cryptocurrency. PoST is very similar to Proof of Work (PoW), but it doesn’t use memory draining functions that create bottlenecks–in other words, the computers mining PoW have to access things in memory very fast and often, which takes a lot of power and fast computers; PoST is based on the amount of memory (storage) required, not the function of accessing the memory. I know this sounds a bit simplistic, but that’s because, at the heart of it, it is quite “simple.” There isn’t a whole lot going on when it comes to the general concepts. I’ve found this situation a number of times in computer science, we just sometimes want things to be more complicated than they have to be.

After the release of Bitcoin, alternatives to its PoW mining mechanism were researched and PoS was studied in the context of cryptocurrencies. Proofs of space are seen as a fairer and greener alternative by blockchain enthusiasts due to the general-purpose nature of storage and the lower energy cost required by storage, but have been criticized for increasing demand for storage. Several theoretical and practical implementations of PoS have been released and discussed, such as SpaceMint, Burstcoin, and Chia.

https://en.wikipedia.org/wiki/Proof_of_space

The XCH saga continues

Now that we are on the same page as to why I got involved with Chia Farming, you can probably see why I’m not ready to throw in the towel when it comes to farming and creating plots for storage. Let’s Pro/Con it out.

Pros:

1. Farming Chia makes sense because it provides a product (storage for others) as a side-effect for it’s mining-like activity. It still uses power, but, more at the service of others.
2. The Chia network is new, but it’s hearty and robust. It’s market cap is in the billions–it’s being traded on dozens of exchanges and held by thousands.
3. It’s a based on a blockchain that’s truly decentralized, just like BTC. The difference is that the project is being managed by a professional team. The blockchain is public and accessible to all.
4. The pooling protocol is well thought out and unique. Unique because the individual farmer who “mints” a new block also get’s 25% of the reward. That’s huge.
5. Additonally, the pooling protocol allows you to move your plots around quickly from pool to pool, so you don’t have to replot your plots for a specific pool. These innovations are possible because they have a professional development group working non-stop to making the project better and better.
6. It was specifically developed to address the problems with potential attacks that BTC and ETH are vulnerable to–it’s more secure.
7. Chia is using technologies like Non-Fungible Tokens (NFTs) to make each plot unique. So, it’s using cryptography to secure each plot that I create–making it that much harder to crack.

Cons:

1. After 100 days of effort with this project, I have very little XCH to show for it ~0.75 XCH. The main reason is that when pooling started, I got involved with a shady pool that now has been exposed to be scamming people. I now used Flexpool.io which has paid out exponentially more. It’s so new, I didn’t realize the number of Chia pools coming online and I just picked the first one I found rather than doing an indepth review. Since I didn’t have a basis for what I should be earning, it took me a while to figure out I was on the wrong pool. I was using ChiaHub, BTW. Thankfully, the folks on the Chia forum were onto this before me and posted about the inconsistencies they were seeing.
2. It’s hard to get the right equipment. I have 10–18TB drives and 30 or so 8TB drives and a handful of other odds and ends. I spent a small fortune on those drives. The price has gone down some since I started, and I have to look at most of my equipment purchases as learning experience. I believe the price will go back up at some point, but until then, the ROI in what I spent will take a while to realize a profit.
3. It’s still very new. No one knows about it yet–and we have to admit–most people still don’t understand with Ethereum is… so it’s hard to describe this to others as being a “better Ethereum” when the mainstream hasn’t even grasped the concepts behind ETH.
4. The number of people doing this has exploded. While this was a bonanza for everyone who got in on farming early, it led to an explosion in netspace from about 100 pebibytes at launch to over 30 exbibytes today. So that means less bang for your Chia buck. I expect there will be a tipping point in the future that will balance this out. So alas, even though I was early, I didn’t get enough plots out there at the beginning to make a huge amount of XCH from the outset.

Conclusion: Chia for the Win?

I’m a “chia pet” I suppose. It’s become a “hobby-vertical” in my company’s offerings. The difference is that back in 2012 when I started to mine BTC, I now have 10 more years of experience under my belt, mining, building rigs, and learning about this stuff. I also quit mining BTC almost as fast as I started. I didn’t have the foresight to see what BTC was to become. I’ve changed my approach to a lot of things and I’m happy to be working on new innovations in cryptocurrency.

I’m not sure if XCH is going to be as successful as BTC, but I do believe with the leadership that Bram is providing with the whole Chia Network team; good things are indeed on the horizon for this project. I’m going to continue to stick with it and enjoy what I’m doing with the project.

Featured Photo by Joanna Kosinska on Unsplash