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Bitcoin was only the begining. Currency was only the begining. Blockchains are creating a new world.

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  • Fri, Mar 04, 2016 - 11:12am



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    Bitcoin was only the begining. Currency was only the begining. Blockchains are creating a new world.

In 1975 we ushered in the new era. It was called the “personal computer era” and it began to change the world.

20 years later we decided to hook them together to communicate and share. A new era was born called the “Internet Era”


20 Years later – the evolution of creating trust on the internet. Thus started the next era called “the blockchain era”. In this era we will create trust without a central authority, government, corporation. It allows trust to be a commodity.  This is the first post for a new group that is designed to discuss the process of the complex technology so nontechnical can begin to gain an understanding. 


Imagine being able to monetize data packets on the internet. We call these packets “tokens”. They are there – each packet being unassembled and reassembled on the receiving end and they don’t need travel the same route but still get routed to the destination. This is TCP/IP. The packets are free but their functional allows amazing technology leaps that allowed video voice communication email, and changed the world.


Blockchain tokens are created as a protocol too but stored on a shared public record that exists nowhere and everywhere at once. It is unchangeable because it lives everywhere. The tokens are created in a manner that forces them to be rare and thus valuable because of it’s shared and accepted use that becomes a source of trust. You can buy these tokens.  Each blockchain has their own and you cannot interchange them. Critical mass will develop and accepted standards will be agreed world-wide just as the world eventually agreed to use TCP/IP as the standard method for communication on the internet.


I’ll be your guide walking the tricky paths while exploring this new world. The landscape is riddled with traps, gangsters, and scams for the unaware and unexperienced.  You will need a guide if you want to remain relatively safe and possibly become prepared early. Those that arrive early to any new paradigm shift have time to adapt and profit before the rest of the world follows.

Do you want to take this journey?



  • Sat, Mar 05, 2016 - 05:43pm



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    Sure! What about Ethereum?

Sounds good, mrees!  I'd love to hear more.  

One of the biggest concerns I have with regards to cryptocurrencies is the danger of certain trading platforms collapsing (e.g. Mt. Gox).

If you could tell us more about how to best hold cryptocurrencies, that would be helpful.  

What about Ethereum, for example?  If I wanted to take a small position in this, what would be the simplest way to do so while exposing myself to the least amount of risk in terms of unreliable trading platforms?

I am skeptical, as I'm still not sure if these blockchain-based alternative currencies are a fad or if they really do have potential to hold some value.  But I'd certainly be willing to risk a Benjamin or two in for the possibility of some gains.  We don't have cable bills or car payments, so our budget could handle that.



  • Sun, Mar 06, 2016 - 12:38am



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    Etherem is the way to go. UP nearly 1,200% this year as of today

Ethereum has in my opinion,  the most potential of all the crypto-curries right now.  Its blockchain is now offered as part of a live service from Microsoft called "Blockchain as a Service". This new development is helping dozens *if not hundreds* of companies prepare to use private blockchains to revolutionize their business processes.

The other is the banking consortium of R3 CEV. This has membership of 55 of the world's biggest banks looking and adopting Ethereum (other non-ethereum blockchains are also being evaluated) as the back-bone of all settlement and movement of funds between banks world-wide. This would replace ACH and SWIFT. This is intended to make settlements in trade reduced from days to seconds. 

You are smart to be skeptical. Keep that view and be very careful.  My advice is to not trust any exchange. Wise people inside the bitcoin community did not lose any money from Mt Gox because we didn't trust them and rumors were that it might have gotten hacked and  were going down had been discussed a full year before it actually imploded. Almost all of the money lost was from people with little knowledge trying to just ride the wave without any effort to get knowledge of their own. It pays to have a contact friend with a good deep knowledge on your side. That's one of the reasons I've created this group – to help newbies stay safe and get crypto -smart.

Move bitcoin to the exchange just long enough to make your purchase then move your ethereum to your own private wallet using easy ethereum software. Then use that software function to make a backup to store on a usb key. There is even software to print a 'paper wallet' and you can send funds to the paper and store in your safe completely off-line. (there are cautions to this too however).

To buy etheruem tokens you must own bitcoin first.  Bitcoin is your conduit to buy ethereum (the tokens are called 'ether". There are still only very few exchanges that have added ethereum to their list of support as it is fairly young only being available to purchase starting last July. There are a LOT of garbage and scam copy-cat "alternative coins" that people need to stay away from so it's taken a while for ethereum to rise above the garbage. Working with big name companies and having a huge network effect of people consolidating to the new technology is bringing the awareness I've expected. In full disclosure I was one of the many who 'kick-started' etheuem to begin the movement and pay the early core developers that were spending 60+ hours a week bringing it to reality. My investment was limited to one bitcoin (about 400 dollars at the time). They only held the crowd sale for a few weeks before closing it and went out of their way to prevent large corporations and big money investors limited by setting a maximum purchase quantity so regular people had an equal opportunity.  

Ethereum is an open protocol and it is open-source with hundreds of developers. You can download the ethereum program on your own PC and run it. You should probably be comfortable enough installing software. You can download the open source software wallet that comes include with the ethereum program. It's all free. When you install it – it will require you set up a password, do something with 10 – 15 characters (hints to make that easy – Make a password look kind of like a website address… something like "" – 18 character password that is easy to remember and type…. and could take a computer thousands of years to break).

Once you own some ethereum, transfer from the exchange it your own personal wallet that you stored on your pc (there are also other ways to make an ethereum wallet that I'll discuss in later posts).

One function of the etheruem wallet is to do a backup.  Really this is just copying one small directory on your pc to "drop box, google drive, a usb stick or whatever location you prefer (I like to make several copies and put them in various places).  These small files are encrypted so they won't do anybody any good without the password you set in the process I described before.

One of the only places in the US that you can buy ethereum in a market right now that I recommend and use personally is at out of Montana. They've got a very good reputation and comply with the USA regulations for "Know your Customer" and Anti-money laundering laws so you will have to provide ID if you want to open an account with them.  But remember you must own bitcoin first and transfer to your account with them.

A good moto for owning gold and silver is that if you don't hold it you don't own it.  The same is true with blockchain currencies. You must have the 'private key' to it in your possession for protection. Only use an exchange as an exchange, not a bank or storage location. Keep your risk low by keeping it in your possession.

More to come.










  • Sun, Mar 06, 2016 - 01:31am


    Jim H

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    How is Ethereum created?

Thank you for the discussion of Blockchain mrees… how do Ethereum coins come into being?  Are there limits to how much will exist?  If so, how are the limits encoded/enforced?   

  • Sun, Mar 06, 2016 - 03:09am



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    Ethereum Network Coin Creation

The blockchain for Ethereum barrows much from the first. – Bitcoin.  It has many improvements on it and many consider it the 'bitcoin 2.0'.

For now, ethereum tokens are 'mined' into the ecosystem. These tokens are issued randomly to computers that process all transactions on the network as incentive to do so. How does it create the randomness? Similar to bitcoin, it requires computers to 'brute force' factoring complex mathematical formulas. Think of a big Sudoku puzzle except the size of the grid might be 100,000 by 100,000. There is only one solution because they deal with very large prime numbers. This is called "Proof of work". It takes computing power to brute force the solutions and processors (miners) compete with each other to find this key. This simulates a lottery to make it far – and does double duty to act as security because in order to have a 'voice' you have to have strong computing power to be the 'lucky one' for each round.

Mining differences to bitcoin: Bitcoin's math allows it to self-adjust the complexity of these puzzles to allow the average time to complete one to be about 10 minutes. During this time all the transaction for bitcoin are compiled where they are signaled to the network as part of the protocol, but they are 'chained' into the permanent blockchain record until the puzzle is solved and the lucky computer gets the honor.  In Ethereum, this is shortened to an average of about 15 seconds and the reward is five ethereum tokens.

The hardware required to do this is very different. Bitcoin uses a process that does not require much memory and dedicated processors have been built to maximize the calculations possible. The combined processing power for the bitcoin network is now about 40,000 times the top 500 super computers of the world combined. But most of the mining now comes from China, with the cheapest hardware and subsidized electricity. This has caused a dangerous centralization.

Ethereum learned from bitcoin problems and built the mathematical cryptographic puzzle formula in a way that it requires a LOT of memory so calculations have to stack and be used in loops. This makes all the hardware built for bitcoin useless for ethereum. The did this so it would be very expensive to build dedicated hardware to run ethereum miners and thus 'hopefully' keep everyday-people competitive. There are Ethereum pools that regular people can point there hardware to share in the riskreward similar to how people pool money for lotteries. The only hardware necessary is a very good graphics card with a lot of graphics memory. I am currently mining ethereum using the AMD 290x video card.  I'm connected to the etheruem pool here:

There are at least  a dozen different pools around the world that people can join. They don't need to sign up – only have an ethereum wallet (which you can create on-line instantly here:

With a small free mining program, it's as simple as running a little command and include your wallet address and it goes to work. When it's your turn for the reward – they send it directly to your wallet. This means that ethereum miners remain anonymous.  To give you an idea of how profitable (or not) this is currently. I run two computers – each with their own video card and I'm the 'lucky one' in this pool averaging about one block every 4 days or so.  So I average about 1.25 ethereum tokens per day.  At the current price  -this is about $15 per day. This pool is nice that it shows you how well your miners are doing by the hour and estimates your earnings monthly based on difficultycompetition and current price. At this moment, it is predicting a monthly revenue of $385. I'm not sure, but I believe they are discounting that estimate to account for your electricity cost. 

I haven't tried other pools so I can't give an accurate comparison but this has been easy and reliable. The estimate when I first started a few weeks ago was about $200 per month but the prices has went far more than double, but that attracts more people into the mining business and the difficulty goes up with that competition. I won't be quitting my day job to be an ethereum miner.

But, this is where it gets interesting.  Ethereum mining will stop this year as they switch to a different kind of network integrity system called "Proof of stake". This new method won't require expensive processors or graphic cards, but it will require somebody with 'a lot' of ethereum to show they have a stake in the success of the network. The core developers haven't publicly told how much it will take to qualify to claim a 'stake'.  To start this process, there will be a world-wide group chosen to 'put up' a certain amount of their own ether to be able to qualify for this role. If they try to cheat the system – they will loose their staked tokens. This gives incentives to play by the rules. For their trouble, they will be paid a fixed amount of ethereum. The inflation rate will be targeted to match that of new gold discovery…around 1 to 2 percent per year – programmed into the protocol. Once this process is bootstrapped, the protocol rules will determine the most efficient candidates that qualify to run these processor nodes from that point forward.

Ethereum is the only blockchain that I know of that is planning on switching their network consensus method. This in line with one of the main principal values of the network which is to make it un-censorable. We can't have truth if the truth can be censored. Censorship is only possible if there is centralization of power. The entire network is built to avoid and resist centralization.



If anybody wants to open up a kryptokit ethereum wallet, I'll be generous to send you "a small' bit of ether so you can play with it. You just need to post your ethereum wallet address to this post and watch for it to come in.

When you set it up, you'll give it a password – then you must bookmark or copy that URL as it will create a unique wallet and URL for only you.  It doesn't ask for name, address, ID or anything – so you can then access that wallet from any device in the world- as long as you remember your password and have that unique URL. You can create as many as you like to play with it.  Until you know what you are doing – only play with small amounts (something less than a dollar).

That should get you started.









  • Sun, Mar 06, 2016 - 06:23am



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    asymmetric encryption, quantum computing

So I've done a bit of reading on quantum computing and its application to machine learning.  They're pretty cool.  On the side, I noticed that a quantum computer will have a much easier time factoring those large prime numbers that assymetric encryption requires to keep everything safe.

In other words, if I have a quantum computer and your public key, I can derive your all-important private key relatively rapidly because existing PK crypto is too easy for the quantum computer to break.

Symmetric encryption is still pretty safe, but the public/private key cryptography (on which pretty much all internet commerce is based these days) will be toast, according to what I read.  Every message previously sent will be decipherable.

Of course everything else that depends on Public/Private keys will also be vulnerable, so basically all internet commerce encryption to be redone if this occurs, but if this blockchain mechanism has a privacy component that depends on public/private keys, that's bad, because the privacy component will be lost.

My sense: don't send messages encrypted by public/private key encryption that you can't handle possibly being revealed at some later date in the future.  If you have such messages you want to keep private "forever", you'd better use symmetric key encryption.  That, or use PK crypto that uses quantum-resistant algorithms.

Not sure if and/or how this PK crypto vulnerability might apply to this new technology or the blockchain mechanism itself; I haven't studied it in any detail at all.

Unlike most personal and corporate applications, the NSA routinely deals with information it wants kept secret for decades. Even so, we should all follow the NSA's lead and transition our own systems to quantum-resistant algorithms over the next decade or so — possibly even sooner.

EDITED TO ADD: Seems that I need to be clearer: I do not stand by my 30-40-year prediction. The NSA is acting like practical quantum computers will exist long before then, and I am deferring to their expertise.

  • Sun, Mar 06, 2016 - 08:39am



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    Quantum Computing possible threats to blockchain

As blockchain technologies were create by the world's most advanced and the current development teams for many of the blockchain technologies include the whose who of the crypto world, from the forum boards I follow they scoff at how easy it is to make quantum proof transactions.


For ethereum, it sounds like it is baked in. They've added a piece called Lamport Signature which is one-way functions. I've linked a relavent post from their forum that speaks to some of their latest work.

Here's the founder of ethereum giving a presentation on it applies to bitcoin a few years back. For those not into advanced math -feel free to skip if it hurts your head. Yes he was a teenager then and is only 21 years old now.  I would content that he is our generation's answer to Isacc Newton or Einstein. As you watch this, remember he didn't bother going to University.$B5H8od


And here's a guy with much better speaking skills speaking about how it's done for bitcoin





  • Sun, Mar 06, 2016 - 08:55am



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    Quantum Computing possible threats to blockchain?

As bitcoin and blockchain technologies were given birth by cryptographers, it's probably no surprise that this group of the highest level math PHDs find this area as their new playground. This is the field where all the action is so there is no shortage of work being done.

This is ultra-geeky information for anybody else who is following this thread and if you don't want to be intimated by high level math – feel free to skip this section, only know that it's addressed in these the two blockchains I know best…bitcoin and ethereum.  The bigger worry is that the current standard is SHA256 and this is what millitary communications use and our regular world-banking system. If these are broken, you'll have bigger headaches than blockchains.  But – as a matter of course blockchains will offer likely the best protections and will likely take the banking system of today and offer it the protection already built in to things like ethereum.


Ok, for the math geeks – here's more:

This is openly discussed on several forums and questions addressed regularly as this is one of the most often posed questions. I've linked internal developer forum posts speaking about how ethereum addresses quantum computer challenges here:

In short they plan to make one-way functions "Lamport Signatures" and rehashing starndard methods which is quantum proof.

As an added bonus I've linked a couple of videos that speak to it and how it is addressed in Bitcoin as well.


Ethereum's main creator – 21 year old Vatalik speaking about it a few years back (yes he was still a teenager – on the level of Newton and Einstein).$B5H8od




  • Sun, Mar 06, 2016 - 12:26pm



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    Dave, calm down about quantum computing.

Dave, quantum computing isn’t the only computer out there. Read up on physical computers.
No, even better, make one.

take a board and pound a bunch of nails in it. these nails represent cities on a map. Then make yourself a solution of Joy detergent and water bubble mix. Dip the board into the soap, draw it out, and you see a map of how your telecom should most cheaply wire up the cities.

Of course, that model doesn’t include incentives, sales, kickbacks. Either You’ll have to figure out a modification of your physical computer to handle the brave new world, or you’ll have to just take that information into account.

The key takeaway here is that the hardest part is figuring out how to make the physical computer or quantum computer match the actual problem you want to solve.

Get a really good model, and your quantum computer solves it in one clock cycle.

So back to the public key / private key. If I were with the NSA, I would long ago have mnde a physical computer based on difraction and the single slit experiment. And I would let the bright fringes tell me where to search for the solution first.

Or if I were into bitcoin mining, I’d make a physical computer to tell me where to look for my blockchains.

A quantum computer is no different.

oh, and BTW… I rather suspect that a physical computer based on single-slit diffraction IS a quantum computer.

  • Sun, Mar 06, 2016 - 01:02pm



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    and so the takeaway is…


So I read your email twice, and I'm still looking for the money shot.

Let me try again.

Are you saying

a) Quantum Computing isn't a threat to PK Crypto and that I should calm down, and that Bruce Schneier and the NSA are just confused?  Or,

b) it IS a threat to PK crypto, that the NSA (probably) already has such a computer in operation by constructing something from nails and some soap (and that presumably, everyone else under the sun will have one relatively soon, given the payoff for getting one working is basically the keys to the kingdom, and that nails and soap are pretty cheap), but for some inexplicable reason, you counsel me to remain calm anyway and ignore the existential threat to both commerce and privacy?

See, I got the calm down part.  I'm just not sure why I should remain calm.


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