Bitcoin & Blockchain



Bitcoin & Blockchain has caused a commotion in the banking world. It is only right to give discusses the prospects of blockchains and bitcoin with retrospect to Pakistani markets.

So what is blockchain?
While I was thinking of answering this question, I figured its important to define bitcoin first but then I realized that its important to touch this matter first so people get a better understanding what it is and why its important before getting into bitcoin.
Blockhain is a ledger. An empty ledger which keeps records on pages in our regular accounting terms which is time stamped and encrypted. For a the tech savy think of it as big database that is stores information in a distributed decentralized manner.

Oky So what is bitcoin and why is it less important then blockchain?
I believe that thinking that its more important then bitcoin might be a bit premature. We have to really deep dive into this to understand the what and the why. I will try not to get to technical on this and keep it simple for the average person to really understand the technology. Bitcoin was created by satoshi nakamoto it is simply a token on the blockchain which denotes its ownership to the person who holds the wallets public and private keys.

Now to touch on the fact why is it important. For this I think its very important to understand current banking structure. Banks use local central bank in this case State Bank Pakistan to clear and settle their inter day transactions. While most funds are held at head offices and transactions are done by physically delivery when settlements need to take place. Blockchain presents an interesting aspect where you can have a token and take ownership as when you work blockchains you dont really send or receive anything, the only thing that is happening is that ownership of the token is exchanging hands. Hence something that belonged to you now belongs to me. Once this happens a time-stamp is put on the ledger denoting the change of ownership. This is then verified by miners or ledger holders in a distributed manner so that all records are updated on all ledgers.

The one advantage this has is saving overhead costs of running a central server with a central point of failure. Banks and financial institutions are looking at this from the prospective of settling payments over a central permissioned / primisonless blockchain. However security for such chains will always be an issue. It imperative to note that bitcoin blockchain is the most secure open database in the world. You can use it to store records, transact it like funds or even just use it for means of trade. We have seen decentralized encrypted storage to validation of legal documents. Since if you want to hack the blockchain you will have to pretty much have to hack 51% of the entire systems running the bitcoin blockchain.



Enter Smart Contracts:
While smart contracts are new, they basically allow programming into the blockchains. These are still very new and not very secure. We can read up on Krypton hack and DAO hack over ethereum which is a smart contract based platform. These contracts can also be programmed over the bitcoin blockchain which makes it very powerfull. Something like rootstock, omni or counterparty allows you to that. What you can do with these have and endless possibilities and too long for discussion of this post.

Use Case:
The case that I really wanted to touch on was easypaisa, upaisa jazz cash and the likes of such. Like M-Pesa in Kenya, these mobile branchless banking services have helped cater an unbanked sector of Pakistan. While it is still very new, its catering to people who dont have access to bank in their home town. The design is such that they sign up merchants which could be a local store in any locality and allow them to cash in cash out money from a near by store rather then a bank. Pakistan having a banking penetration of around 16% only has seen its growth due to the introduction of such services. We have seen additional 4% now using the easypaisa type services in Pakistan.

The problem with this type of setup is overhead costs. The servers are subject to frequent breakdowns, in addition a hack could result in a catastrophic event on the micro finance bank offering this type of service. Shifting to a blockchain based setup and implementing a smart contract based token over bitcoin blockchain could result in using the most secure distributed database in the world with no point of central failure. The transactions will happen over the bitcoin blockchain without the need of a central server.

A private blockchain or a public permissioned blockchain can also be implemented which will require all agents of the network become custodians of the blockchain. The overheads of this type of setup while less secure is still very cheap as a simple $35 raspberry pi could even handle the entire node(or ledger at a local agent level). You could also implement this in a way where your local transactions are happening on the local chain but at the same time you allow remittance over bitcoin on your local network. This could in turn save millions to the local financial service providers while enabling a 24/7 network. I have tried to keep this article as close to explaining in English as possible. The technology implementation may not be as easy but can be done depending on what methodology is chosen at time of implementation.


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Ethereum has caused quite a buzz in the crypto world. Smart contracts and BaaS services now being offered by Microsoft have got the enthusiasts buzzing on the potential of what blockchain based services could bring.

There are however a few things that smart contracts cant do at present. Something that even eth founder has admitted to. You can argue that these might be limitations of smart contracts, but you have to remember that you dont need to use smart contracts everywhere. In some cases these might be very useful. Please understand that the technology under discussion here is quite new and can be improve and will be improved upon in time. What is to be covered here is why as a business owner or supplier a system such as a smart contract will not be used.(Again this is my opinion).

  1. Expensive:
  2. Risky
  3. No Legal Binding

Expensive:
From a sellers prospective I have to buy eth which is a token on the ethereum blockchain to put into the smart contract. This has to be valued at the same amount as the user putting in for the purchase. What that does is basically double the cost of the seller. Lets say I want to sell a candle costing $1 or Pkr 105, I have to buy eth worth Rs 1 or $1 and put it as a bond. This increases my cost and puts me at double the risk. Now as a retailer I have to not only send the item but have to put additional funds in place to back that. While in a perfect world this would make sense. Not only that if the seller just marks the item as sent and doesnt actually send it, it will put the buyer and seller funds both at risk. If the buyer decides to cheat he can simply implement that he never received the product to begin with. So from a business stand point of view my cost is doubled to operate while the rewards tend to stay pretty much same. One thing that can be used here is time bound contracts.

Risky:
The smart contracts are not that smart yet, so the receiver is required to mark in a certain period of time that he/she received the proper item or not. Yes he has put equivalent amount at risk by locking that in a time bound contract but if the buyer receives the item and decides to mark that he did not receive the item or he received a bad item and wants a full refund it will put the seller at great risk. This also causes the seller short of his item and his funds are now stuck, which in-turns put the buyer at a very strong bargaining point even if the seller did everything right. This can also play bad for the seller suppose the seller sent a bad product, or didnt ship at all, now the refund is a problem since either both can lose funds without actually receiving anything.

Legal Binding:
Since no government officially supports smart contracts, they have no legal binding. This is one area where smart contracts can shine. Contracts, partnerships, verifications are all areas that smart contracts can live by. For this to be successful in today’s world, it will be required for law to accept this as legal.

These issues are highly dependent on human nature and also exist in current system. However the aspect that there are trusted third parties that can resolve the issues based on facts and figures makes smart contracts not so feasible YET.

Enter Open Bazaar:
Personally I view openbazaar as more complete system. One thing that it offers is to provide a source of income while also giving the services of escrow agents. Where neutral third parties can become moderators of trade without even knowing they are mods. The only time these mods come into play is when a dispute occurs and to solve this dispute they are paid. I believe open bazaar has the potential to replace the current smart contract visions by ethereum and many other such coins/smart contracts tokens. As it helps develop a system which with current set-ups maybe more feasible. The cost for the sellers is good, additionally even if you put contracts on open bazaar not sure if that is possible right now can be enforced my neutral third party that can act with without vested interest, with viewable facts provided by both parties. I believe right now open bazaar has the potential to be a true decentralized platform for buying and selling goods as well as services that people envision with smart contracts.

NewsBTC Pakistan team has been looking to get the word out on decentralization, cryptos and bitcoin in general. This is why the team has decided to start small sessions in Karachi to educate the masses on what it is how it is. It is very important for Pakistan to realize the potential bitcoin brings to masses. Most people see bitcoin for just its monetary value, but bitcoin is a concept which has been built on principle of decentralization, and a peer to peer network that can be used for much more then just money transfers.

This Public meetup or session or seminar will be held on January 30 2016 at Chainak, where we will cover many topics such as, what is bitcoin, blockchain, POW, POS, mining, trading arbitrage, crypto currencies and talk a bit about smart contracts. The idea is to teach people that bitcoin is not a company, and give them a better understanding of the decentralized, open source, peer to peer model originally envisioned by its creator. At the same time we would like experts in the field to join us and give their healthy input on the matter.

The idea is to help people understand bitcoin crypto in general, the charges for the session are only Rs 200 and all proceeds will be donated to charity. You are more then welcome to register and pay via bitcoin, easypaisa or bank transfer. Additionally we will be unveiling the the first NewsBTC’s home-made NFC enabled bitcoin wallet card which can be used to keep your bitcoins offline. This will be handed out the select few who will be sharing the article on how to use this card. The seats are very limited and will only be available on first come first serve basis. It is advise to register yourself in advance.

The trend in bitcoin acceptance continues as we wind down 2015. New entrants into this rising trend are Topup24, operating out of its main office in UAE and branch office in UK, topup24 offers prepaid/postpaid/billing easyload and/or topups in 120+ countries with payment methods such as bitcoin and paypal.

Topup24 is owned and operated by Mr Azeem Javed, who wants to penetrate the online e-commerce market in Pakistan.

What is Topup24?
Topup24 presents itself as to provider of mobile balance recharge service. They Offer mobile recharge service 24/7 throughout the world and especially in Pakistan, where the cellular density sits at 64%. Pakistan being the 6th most populous country in the world lagged features of online or internet mobile loads to Mobilink, Telenor, Ufone, Zong and Warid.

Topup24 looks to be on top.
Topup24 aims to provide unparalleled service in mobile recharge services to all those clients looking to add credit to their prepaid mobiles as well as their family members or friends living in other countries while making sure that the minimum balance recharge of  Rs 100 in Pakistan or $5 internationally. The rates are the best in the market with Pakistan leading the way $1 = Rs 100 recharge. The other thing to keep in mind here when the idea of topup24 was to provide mobility. Hence the compatibility on range of devices was kept in mind. The design elements of the website were kept to the minimum so in-order to enable usability on the go.

Beating the competition.
While talking with NewsBtc Pakistan Mr Azeem stated “Topup24 have fewer competitors in Pakistan with hardly any online presence” It is the motto of his service “be No.1 mobile recharge provider in Pakistan with minimum top up rates and with an online presence.” However to beat the international competition they plan to offer 10% bonus on referrals. “We have strong competitors providing mobile recharge internationally. They have very strong online presence, we are aiming to lead them by providing bonuses on international top ups and a better service”, Azeem.

How does topup24 work?
It is very simple to get your mobile top up. Simply visit Topup24 ,enter your e-mail and get your login information in your provided e-mail.
OR
Login using your social media accounts.Once you are logged in, provide your mobile number, choose amount and payment method. Once your payment is approved you will instantly get balance into your given mobile number to use. It usually takes 15-20 seconds to get it done. It’s that simple.

Support:
Topup24 aims to become the de facto force in mobile recharge service in Pakistan and internationally. They are committed to providing live chat, email and phone support while fulfilling the needs of users of mobile services.

You can contact us on live chat, e-mail and Phone.

Phone: +92 300 6145155 (Pakistan)
Phone: +971 50 30 65123 (United Arab Emirates)
Skype: azy0wzy
E-mail: [email protected]

 

While covered many times, the recent turn of events at NewsBTC Pakistan has enticed me to write another article on what, why and how to bitcoin. The things that led up to this decision had to with so entry of  new people, who are trying to use bitcoin as a payment gateway.  The reason to this recent increased traffic especially from Faisalabad, Pakistan is the reason that a PTC Site named e2click has switched its payment terms to bitcoin.

PTC Sites:
These are paid to click websites e2click being very active in Faisalabad. We at newsbtc and newsbtc Pakistan dont support paid to click services. Most of these sites are either a scam and some even do things not permitted by Law.

Faisalabad:
Recently a flurry of calls were received at our office for people trying to understand bitcoin and how to get paid in it. Most of the calls originated from Faisalabad Pakistan. It seemed that there are a numerous people working there on ptc sites such as e2click. These sites charge you for purchasing the right to clicking on paid ads. Once you click on the link you get paid anywhere from  $0.01 to $0.50+(USD). Once e2click decided to switch the earning into bitcoin we started receiving inquires into bitcoin cash out methods or coverting bitcoin to pkr queries from different cities in Pakistan.

Bitcoin:
This is the most important part I wanted to cover, the issue we faced was most people didnt know English and didnt understand blockchain or bitcoin. They compared it to the likes of Perfect Money, Paypal and even wanted to know how it was to be transferred to bank account directly from blockchain.info as they considered this as bitcoin. It is imperative to explain this here and this article will mostly cover helping these people understand how to cash their bitcoin or transfer bitcoin dollars as most were calling it to their accounts.

Please understand Bitcoin is a peer to peer gateway that lets anyone transfer bitcoins to anyone. Blockchain is the public ledger that records these transactions. Blockchain.info is just a online wallet that allows you to store your bitcoins online or on your phone so you can easily send these to someone else. You can utilize other wallets if you dont like blockchain.info (but this is by far the most popular and a bit easier to use for the new entrants into the field).

The price of bitcoin varies on different exchanges and at the time of trade. Bitcoin works entirely on supply and demand principle. Bitcoin can be sold to anyone and even used for payments on major sites. For those who are using such sites or any freelancers sites to earn bitcoins I would suggest either to make online wallet, mobile wallet or even a paper wallet. The reason I dont suggest the full core wallet is because Pakistani electricity is very expensive, additionally the requirement of internet speed and storage also becomes an issue for it. However that being said the core wallet is the most secure. Once you have that in place just give your wallet address to anyone you want to receive bitcoins from.

Cash Out Bitcoin In Pakistan:
The first question comes to mind is how to get usd to bitcoin or bitcoin to usd or get the bitcoins converted in Pakistani Ruppes. The best source would be to check the local exchanges. There are a few options here such as OTC(over the counter trading). Usually this method is expensive and risk as you have to send bitcoins the the exchanger first before they send you back fiat. Since bitcoins are irreversible its a risk of the exchanger running away with your funds. Addtionally this is expensive and the trusted sellers or buyers charge up to 20% commission. These can be found if you have install mycelium wallet on your android mobile or through localbitcoins.com. Second option would be to search facebook for this type of trade. Other option is to either join an international exchange and convert there and have them wire you funds to Pakistan(again the wire fee and interbank rates plus longer time period will be required, which makes it exp too). Its only feasible if you have large amounts of btc that you want to sell or buy. The last option would be to look for the local trading platform which in Pakistan is urdubit.com. Urdubit is the cheapest as you can offer to sell your bitcoins on your own terms on there or sell instantly to other users who already have orders up on the exchange.

Please do realize once again that bitcoin is decentralized and its price varies on supply and demand of that particular country or even exchange/trading platform/exchanger in that country. It is advised that you search all options and understand the risks involved. Usually exchangers are risky and expensive. While its easier to deal with them as they dont require KYC/AML, but security wise I would like to recommend a trading platform where you can sell or buy bitcoins.