The DAO under attack Today it was a really importand day for the DAO and Ethereum. The DAO was hacked and everything looks a little bit like the Mt.Gox horror. The positiv view of this event is, the community works fast and constructive on this exception. At the moment not all facts are on the table, but it looks like the situation is under control.
See also the reddit thread for this event. Ethereum is not the DOA, but the trust in Ether as a currency was reduced.
Allianz Blockchain experiments The German Insurance bets on blockchain for catastrophe bond trading. It sounds macabre and logical. It should only be used with institutional customers, nothing for retail customers.
How to create a provably-fair high risk financial product with live data feeds provided by oracles.
Introducing Binary Options
This time, we gonna gamble. We will construct a financial product, more specifcally: a binary option, European style, cash-or-nothing.
Binary options are “a type of option in which the payoff is structured to be either a fixed amount of compensation if the option expires in the money, or nothing at all if the option expires out of the money” , therefore cash-or-nothing. European style means the option “can only be exercised at the end of its life, at its maturity” .
This is a high risk product which is “most likely traded over the Internet on platforms existing outside of regulations” , so “the customer is betting against the broker, who is acting as a bucket shop.” 
In general, this means that “because these platforms operate outside of regulations, investors are at greater risk of fraud”  and “manipulation of price data to cause customers to lose is common” .
So, in contrast to common regulated financial products we have a really comprehensible option, which is mostly valued as high-risk, because there is a real clash of interests if the broker also evaluates the stock against the strike price and thus is highly motivated to manipulate this evaluation.
Smart Contracts to the Rescue
So, can smart contracts help here? You bet! The blockchain is trust-less, so you just don’t have to trust anyone, be it broker or bucket shop or both, but you can just prove if everything’s ok.
If a smart contract guarantees you that you will get 195% if you predict correctly and 0% if not, this rule has to be implemented in the contract.
Meeting the Oracle
Given that we can trust the contract, it should be easy to implement a binary option like this:
After deploying the contract, you have 1 hour to invest Ether on calls or puts on the contracts conditions (eg. DAX is above the strike price in 1 hour). After the 1 hour offering period, it's rien ne va plus, no purchase of calls or puts are possible. At this point of time, the current value of the DAX is stored. After exactly 1 hour the DAX is evaluated against the stored DAX value.
if the value is above or equal to the stored value, all calls are returned 195% of their investment, all puts lose all invested money
if the value is below the stored value, all puts are returned 195% of their investment, all calls lose all invested money
Sounds simple? It is!
You can easily prove that the contract actually implements the described rules, but there are two problems: how does the contract know the DAX spot? Contracts in Ethereum intentionally cannot connect to the outside world, therefore the outside world has to call the contract and provide the necessary data. Who tells the contract the exact time it has to retrieve the DAX spot? There must be some callback mechanism, since Ethereum smart contracts are not able to call themselves, have a Daemon, Threading etc.
Let’s gonna oraclize.it
There is a startup solving this problems in a elegant way: oraclize.it
You should look up and understand how oraclize.it works and helps us to solve our problems. In short, callbacks are used by oraclize.it and you can determine the exact data feed of the data which oraclize.it will provide at a certain point of time to our contract.Here the two problems are addressed:
The contract has to provide a callback for the oracle to call. The data feed is configured when the callback is provided, as well as the time interval.
The oracle facilitates a scheduling to call the provided smart contract callback at the configured time interval.
Both solutions require the user and the contract owner to actually trust the “trusted datasource” (the contract’s user can decide if he trusts this datasource) and the oracle itself to have a working scheduling and not to manipulate the data. In contrast to the “broker” above, the oracle has no interest in manipulating the data.
However, oraclize.it not only offers a service, but even more defines a protocol, so there will most likely be more than one oracle to choose from to offer redundancy in the future.
Building Binary Options in Ethereum Studio
…in the next post.
Realizing how long this post already is, we decided to split the tutorial and the theoretical part. The tutorial will follow soon! Please let us know in the comments if you’d like to have this tutorial and what you expect of it.
R3 Ethereum Review R3 published an Ethereum review, written by Vitalik Buterin. In the managed summary written by the R3 CTO, he highlights the challenges of Ethereum for financial marked requirements. From our perspective it just emphasizes the fact that one blockchain concept doesn’t fit all requirements. Ethereum has the first mover advantage for smart contracts development and DApps, like Bitcoin for crypto currencies, both is unstoppable. Santander Introduce Blockchain Technology for International Payments Most institutes still discuss the Blockchain like the car industry the electric engines. Santander UK starts with international payment based on blockchain. The Santander solution works with Ripple (!!!), it works well for this kind of use cases. During the last months, with everybody looking at Ethereum, it’s a good idea to look little bit more left and right. First salary offers for Blockchain developers As there are almost all institutes of the financial service industry, but also companies from health care, real estate and music, evaluating the blockchain and starting first proof-of-concepts, it becomes obvious that there is a huge demand meeting a real scarcity of developers, with probably “…less than 100 true blockchain experts in the world”. Obviously, this mismatch raises the salary offers, and the first official offers are about $250.000 at Wall Street (free German Jaxenter-Post). So, if the blockchain still doesn’t impress you, here’s one argument more for dealing with it more closely in the future.
From Blockchain to Distributed Ledger Technology (DLT) If you follow the news, you might have realized that the term DLT is currently more and more used to describe what we usually describe with “the Blockchain”. Even though the definitions are more or less subjective, a good comparison between these technologies is here. In really easy terms, the DLT is the Blockchain without the “chain of blocks”, which also means without the security and immutability of the blockchain. However, as with private chains vs. public chains, this might exactly be what you need for your use case. So, keep in mind that Bitcoins are not the Blockchain and that the Blockchain is more than DLR and all of these technologies fit perfectly to their use cases, which are certainly not the same. It helps to know about the definitions to get more information about the complete topic, since DLT is not as spammed (aka SEOed) as Blockchain, a Google searchs gets you more valuable results like the BaFin evaluation and the really well made UK Government Science report. Even more about the Blockchain Fed up with all the small bits and pieces about Blockchain technology on all those news sites? Then read a book, we recommend “The Blockchain” from leanpub and hope that it will be completed soon. More into videos? Then watch primavera in her talk about Skynet or Freenet or her more current talks.
The DAO .. reached $ 157 mio. founding. The ethereum based crowd funding decentralized business organization collects a lot of money to support ether based business. It looks like the first blockchain venture capital organization to boost the ethereum cosmos. Strong disruption alert ! Deloits Rubix blockchain Beta launched Deloits starts their own blockchain program Rubix. It focuses on Enterprise Blockchain distributed apps (Dapps). Rubix should become an industry-leading blockchain infrastructure provider. It’s still enough space for solution witch helps to transform the old economy to the distributed economy. The DAO – Part 2 What is it? Is it a bubble or even a ponzi scheme (as everything unknown is a ponzi scheme obviously)? Is it a great investment possibility? Is it Freenet or Skynet? Or is it just the betting on Vitalik Buterin and his gang that they will put forward something extremely useful which is worth all this founding? Make up your own mind, but beware that this is no recommendation to buy DAO-Tokens. Don’t get it wrong: we actually believe in the concept of the DAO and that it will establish an intelligent, interactive investment possibility with huge gains, but looking at the current DAO: ~$200 mio. for slock.it and another, not even published proposal? Smells like tulips.
Developing for the Ethereum World Computer – Revisited
Taking these different contexts into account, evaluating the different development environments is only possible by identifying the different aspects and value them according to the own preferred usage.
Aspects of Dapp Development
Solidity Development / Solidity Environment
User can edit Solidity content in a text editor, there should be at least syntax highlighting.
Versioning is supported, eg. by enabling the user to check edited content into a versioning system, show diffs, apply patches, etc.
Modification of code by multiple users is supported, at minimum support of different versions of the code is possible to avoid conflicts.
This is also a teaser for the upcoming blog posts, which will explain the environments in detail.
Solidity Browser / Ethereum Wallet
In terms of architectural styles, both environments represent minimalism. They are slim and handy, easy to use and fast to learn, but lack some functionality if real development “in the large” is necessary.
Ethereum Studio, the all-in-one-solution
The Ethereum Studio, in our opinion, resembles Deconstructivism. Why’s that? Because here all aforementioned aspects of software development are taken apart and are reconstructed to fit perfectly to Dapp development. This is an all-in-one-solution which we can really recommend, with two limitation: you have to agree to a uncertain pricing model (it just doesn’t exist right now, you can still test the product) and a “closed” environment, which works seemless and smooth, but expects you to let in to this tool and the development process.
But no other tool lets you test your code this easy with manual and even unit testing built into the environment.
Stay tuned for the detailed explanations of these great development tools.
Amazon’s Blockchain as a ServiceAmazon announced Blockchain as a Service. You can use a blockchain from Microsoft Azur or from the IBM Cloud, now Amazon also want to offer a service. I like working with AWS, so I hope the blockchain service will fit perfectly to the existing datacenter services. Akasha Project The Akasha Project has a high disruption potential. It is a decentralized social multimedia network, based on Ethereum. Akasha could be a game changer. Satoshi Nakamoto This week you found many articles about Craig Steven Wright. “Is he Satoshi, or not”, the trough is … the articles are interesting, but you know nothing, Jon Snow.
ECB – works on blockchain The European Central Bank works on blockchain concepts, but they don’t talk about their own currency, they just spend some work on distributed ledger technologies (DLT). Since R3 announced Corda the big players don’t talk about blockchain anymore, they use the description DTL. more IBMIBM launch a blockchain cloud service, you can start your own test environment directly at the Bluemix site. Local Meeting in Ethereum Space: the Ethereum-MZ meetup Last week there was an Ethereum Meetup in Mainz (at the Hipster space dock eins mainz, an old customs port). So, Mainz really is a beautiful city, but with 200.000 citizens, why is there a Ethereum Meetup? For a really good reason: Heiko Hees, core developer of the Ethereum Python client pyethapp, which is one of the Ethereum Foundation supported clients, founded his company brainbot technologies AG there. Heiko and Max from brainbot gave a introductory talk about Ethereum and an insight in developing for the platform with the Ethereum wallet to an interested and active auditorium. Several people had to leave at 11 pm for Frankfurt, but would have liked to stayed even longer. Nice, interested people, cool location and last but not least beer & pizza. Thanks again Heiko & brainbot! If you have the opportunity to go to the next meetings, you should not hesitate.
Die Blockchain bei der JAX 2016 Vom 18.04. – 22.04. fand mit ca. 2000 Besuchern die größte Entwicklerkonferenz Deutschlands in Mainz statt. Anfänglich stand JAX für Java, Apache und XML und dies sind auch immer noch die Schwerpunkte, es geht viel um Enterprise- und Webentwicklung mit Java, um Architekturen und Vorgehensmodelle in der IT usw.. Umso erstaunter war ich, dass mit Taming the Bitcoin Blockchain von Caterina Rindi ein reines Blockchainthema als Keynote vorkam, zwar erst um 20 Uhr abends, aber mit ca. 200 Teilnehmern sehr gut besucht (von denen auf Caterinas Nachfrage auch einige Bitcoins besitzen). Der Vortrag war eine gute Einführung, Caterina kam über NGOs zu Bitcoins und beschäftigt sich seitdem aus einer fachlichen Sicht mit der Blockchaintechnologie. Eine weitere Nachfrage von Caterina ans Publikum: „wer kennt Ethereum?“. Auch hier gab es vereinzelte Meldungen, aber „noch zu wenig“. Genau dies war auch die Kernaussage Ihres Vortrags: ihr seid Entwickler, ihr könnt mit dieser Technologie die Welt ändern, also macht das auch. Dieser Aussage können wir uns nur anschließen. Decentralized, Peer-To-Peer Bitcoin Exchange Bitsquare to Launch Next Week Nachdem mit OpenBazzar ein peer to peer Marktplatz für alles mögliche live gegangen ist, gibt es bald die dezentrale Bitcoin Börse Bitsquare. Der Ansatz ist hat ein hohes Disruptionspotential. Zentrale Marktplätze bekommen Konkurrenz. SWIFT arbeitet an der Blockchain Technologie Bekanntlich ist das SWIFT Netzwerk der quasi Bankenstandard. Die Blockchain Technologie gefährdet dieses Monopol. Um selber im “Driver Seat” zu bleiben, arbeiten sie jetzt intensiv an dieser Technologie.