Blockchain validates transactions with consensus algorithms. Bitcoin and Ethereum use Proof-of-Work, while Polkadot and Cardano use Proof-of-Stake.

Other consensus protocols are used to verify transactions besides these two. This post focuses on Proof-of-Time (PoT), used by Analog, and Proof-of-History (PoH), used by Solana as a hybrid consensus protocol.

PoT and PoH may seem similar to users, but they are actually very different protocols.

Proof-of-Time (PoT)

Analog developed Proof-of-Time (PoT) based on Delegated Proof-of-Stake (DPoS). Users select "delegates" to validate the next block in DPoS. PoT uses a ranking system, and validators stake an equal amount of tokens. Validators also "self-select" themselves via a verifiable random function."

The ranking system gives network validators a performance score, with trustworthy validators with a long history getting higher scores. System also considers validator's fixed stake. PoT's ledger is called "Timechain."

Voting on delegates borrows from DPoS, but there are changes. PoT's first voting stage has validators (or "time electors" putting forward a block to be included in the ledger).

Validators are chosen randomly based on their ranking score and fixed stake. One validator is chosen at a time using a Verifiable Delay Function (VDF).

Validators use a verifiable delay function to determine if they'll propose a Timechain block. If chosen, they validate the transaction and generate a VDF proof before submitting both to other Timechain nodes.

This leads to the second process, where the transaction is passed through 1,000 validators selected using the same method. Each validator checks the transaction to ensure it's valid.

If the transaction passes, validators accept the block, and if over 2/3 accept it, it's added to the Timechain.

Proof-of-History (PoH)

Proof-of-History is a consensus algorithm that proves when a transaction occurred. PoH uses a VDF to verify transactions, like Proof-of-Time. Similar to Proof-of-Work, VDFs use a lot of computing power to calculate but little to verify transactions, similar to (PoW).

This shows users and validators how long a transaction took to verify.

PoH uses VDFs to verify event intervals. This process uses cryptography to prevent determining output from input.

The outputs of one transaction are used as inputs for the next. Timestamps record the inputs' order. This checks if data was created before an event.

PoT vs. PoH

PoT and PoH differ in that:

• PoT uses VDFs to select validators (or time electors), while PoH measures time between events.

• PoH uses a VDF to validate transactions, while PoT uses a ranking system.

• PoT's VDF-elected validators verify transactions proposed by a previous validator. PoH uses a VDF to validate transactions and data.

Conclusion

Both Proof-of-Time (PoT) and Proof-of-History (PoH) validate blockchain transactions differently. PoT uses a ranking system to randomly select validators to verify transactions.

PoH uses a Verifiable Delay Function to validate transactions, verify how much time has passed between two events, and allow validators to quickly verify a transaction without malicious actors knowing the input.

WRITE FOR THE WEB3

Why web3’s messaging is lost and how crypto winter is growing growth seeds

People interested in crypto, blockchain, and web3 typically read Bitcoin and Ethereum's white papers. It's a good idea. Documents produced for developers and academia aren't always the ideal resource for beginners.

Given the surge of extremely technical material and the number of fly-by-nights, rug pulls, and other scams, it's little wonder mainstream audiences regard the blockchain sector as an expensive sideshow act.

What's the solution?

Web3 needs more than just builders.

After joining TikTok, I followed Amy Suto of SutoScience. Amy switched from TV scriptwriting to IT copywriting years ago. She concentrates on web3 now. Decentralized autonomous organizations (DAOs) are seeking skilled copywriters for web3.

Amy has found that web3's basics are easy to grasp; you don't need technical knowledge. There's a paradigm shift in knowing the basics; be persistent and patient.

Apple is positioning itself as a data privacy advocate, leveraging web3's zero-trust ethos on data ownership.

Finn Lobsien, who writes about web3 copywriting for the Mirror and Twitter, agrees: acronyms and abstractions won't do.

Web3 preached to the choir. Curious newcomers have only found whitepapers and scams when trying to learn why the community loves it. No wonder people resist education and buy-in.

Due to the gender gap in crypto (Crypto Bro is not just a stereotype), it attracts people singing to the choir or trying to cash in on the next big thing.

Last year, the industry was booming, so writing wasn't necessary. Now that the bear market has returned (for everyone, but especially web3), holding readers' attention is a valuable skill.

White papers and the Web3

Why does web3 rely so much on non-growth content?

Businesses must polish and improve their messaging moving into the 2022 recession. The 2021 tech boom provided such a sense of affluence and (unsustainable) growth that no one needed great marketing material. The market found them.

This was especially true for web3 and the first-time crypto believers. Obviously. If they knew which was good.

White papers help. White papers are highly technical texts that walk a reader through a product's details. How Does a White Paper Help Your Business and That White Paper Guy discuss them.

They're meant for knowledgeable readers. Investors and the technical (academic/developer) community read web3 white papers. White papers are used when a product is extremely technical or difficult to assist an informed reader to a conclusion. Web3 uses them most often for ICOs (initial coin offerings).

White papers for web3 education help newcomers learn about the web3 industry's components. It's like sending a first-grader to the Annotated Oxford English Dictionary to learn to read. It's a reference, not a learning tool, for words.

Newcomers can use platforms that teach the basics. These included Coinbase's Crypto Basics tutorials or Cryptochicks Academy, founded by the mother of Ethereum's inventor to get more women utilizing and working in crypto.

Discord and Web3 communities

Discord communities are web3's opposite. Discord communities involve personal communications and group involvement.

Online audience growth begins with community building. User personas prefer 1000 dedicated admirers over 1 million lukewarm followers, and the language is much more easygoing. Discord groups are renowned for phishing scams, compromised wallets, and incorrect information, especially since the crypto crisis.

White papers and Discord increase industry insularity. White papers are complicated, and Discord has a high risk threshold.

Web3 and writing ads

Copywriting is emotional, but white papers are logical. It uses the brain's quick-decision centers. It's meant to make the reader invest immediately.

Not bad. People think sales are sleazy, but they can spot the poor things.

Ethical copywriting helps you reach the correct audience. People who gain a following on Medium are likely to have copywriting training and a readership (or three) in mind when they publish. Tim Denning and Sinem Günel know how to identify a target audience and make them want to learn more.

In a fast-moving market, copywriting is less about long-form content like sales pages or blogs, but many organizations do. Instead, the copy is concise, individualized, and high-value. Tweets, email marketing, and IM apps (Discord, Telegram, Slack to a lesser extent) keep engagement high.

What does web3's messaging lack? As DAOs add stricter copyrighting, narrative and connecting tales seem to be missing.

Web3 is passionate about constructing the next internet. Now, they can connect their passion to a specific audience so newcomers understand why.

I've never seen this before.

Focus on native crypto development, not price activity or turmoil.

CT is boring now. Either folks are still angry about FTX or they're distracted by AI. Plus, it's year-end, and people rest for the holidays. 2022 was rough.

So DeFi fans can get inspired by something fresh. Who's building? As I read the Defillama daily roundup, many updates are still on FTX and its contagion.

I've used the same method on their Raises page. Not much happened :(. Maybe my high standards are to fault, but the business may be resting. OK.

The handful I locate might last us till the end of the year. (If another big blowup occurs.)

Hashflow

An on-chain monitor account I follow reported a huge transfer of $HFT from Binance to Jump Tradings.

I was intrigued. Stacking? So I checked and discovered out the project was launched through Binance Launchpad, which has introduced many 100x tokens (although momentarily) in the past, such as GALA and STEPN.

Hashflow appears to be pumpable. Binance launchpad, VC backers, CEX listing immediately. What's the protocol?

Hasflow is intriguing and timely, I discovered. After the FTX collapse, people looked more at DEXs.

Hashflow is a decentralized exchange that connects traders with professional market makers, according to its Binance launchpad description. Post-FTX, market makers lost their MM-ing chance with the collapse of the world's third-largest exchange. Jump and Wintermute back them?

Why is that the case? Hashflow doesn't use bonding curves like standard AMM. On AMMs, you pay more for the following trade because the prior trade reduces liquidity (supply and demand). With market maker quotations, you get a CEX-like experience (fewer coins in the pool, higher price). Stable prices, no MEV frontrunning.

Hashflow is innovative because...

DEXs gained from the FTX crash, but let's be honest: DEXs aren't as good as CEXs. Hashflow will change this.

Hashflow offers MEV protection, which major dealers seek in DEXs. You can trade large amounts without front running and sandwich assaults.

Hasflow offers a user-friendly swapping platform besides MEV. Any chain can be traded smoothly. This is a benefit because DEXs lag CEXs in UX.

Status, timeline:

Wintermute wrote in August that prominent market makers will work on Hashflow. Binance launched a month-long farming session in December. Jump probably participated in this initial sell, therefore we witnessed a significant transfer after the introduction.

Binance began trading HFT token on November 11 (the day FTX imploded). coincidence?)

Tokens are used for community rewards. Perhaps they'd copy dYdX. (Airdrop?). Read their documents about their future plans. Tokenomics doesn't impress me. Governance, rewards, and NFT.

Their stat page details their activity. First came Ethereum, then Arbitrum. For a new protocol in a bear market, they handled a lot of unique users daily.

It’s interesting to see their future. Will they be thriving? Not only against DEXs, but also among the CEXs too.

STFX

I forget how I found STFX. Possibly a Twitter thread concerning Arbitrum applications. STFX was the only new protocol I found interesting.

STFX is a new concept and trader problem-solver. I've never seen this protocol.

STFX allows you copy trades. You give someone your money to trade for you.

It's a marketplace. Traders are everywhere. You put your entry, exit, liquidation point, and trading theory. Twitter has a verification system for socials. Leaderboards display your trading skill.

This service could be popular. Staying disciplined is the hardest part of trading. Sometimes you take-profit too early or too late, or sell at a loss when an asset dumps, then it soon recovers (often happens in crypto.) It's hard to stick to entry-exit and liquidation plans.

What if you could hire someone to run your trade for a little commission? Set-and-forget.

Trading money isn't easy. Trust how? How do you know they won't steal your money?

Smart contracts.

STFX's trader is a vault maker/manager. One trade=one vault. User sets long/short, entrance, exit, and liquidation point. Anyone who agrees can exchange instantly. The smart contract will keep the fund during the trade and limit the manager's actions.

Here's STFX's transaction flow.

Managers and the treasury receive fees. It's a sustainable business strategy that benefits everyone.

I'm impressed by $STFX's planned use. Brilliant priority access. A crypto dealer opens a vault here. Many would join. STFX tokens offer VIP access over those without tokens.

STFX provides short-term trading, which is mind-blowing to me. I agree with their platform's purpose. Crypto market pricing actions foster short-termism. When you trade, the turnover could be larger than long-term holding or trading. 2017 BTC buyers waited 5 years to complete their holdings.

STFX teams simply adapted. Volatility aids trading.

All things about STFX scream Degen. The protocol fully embraces the degen nature of some, if not most, crypto natives.

An enjoyable dApp. Leaderboards are fun for reputation-building. FLEXING COMPETITIONS. You can join for as low as $10. STFX uses Arbitrum, therefore gas costs are low. Alpha procedure completes the degen feeling.

Despite looking like they don't take themselves seriously, I sense a strong business plan below. There is a real demand for the solution STFX offers.

I apologize if this sounds basic, but throughout my career, I've always been clear that a company's activities are shaped by its founder(s)' morality.

I consider Palantir, owned by PayPal founder Peter Thiel, evil. He got $5 billion tax-free by hacking a statute to help middle-class savings. That may appear clever, but I think it demonstrates a shocking lack of solidarity with society. As a result of this and other things he has said and done, I early on dismissed Peter Thiel as someone who could contribute anything positive to society, and events soon proved me right: we are talking about someone who clearly considers himself above everyone else and who does not hesitate to set up a company, Palantir, to exploit the data of the little people and sell it to the highest bidder, whoever that is and whatever the consequences.

The German courts have confirmed my warnings concerning Palantir. The problem is that politicians love its surveillance tools because they think knowing more about their constituents gives them power. These are ideal for dictatorships who want to snoop on their populace. Hence, Silicon Valley's triumphalist dialectic has seduced many governments at many levels and collected massive volumes of data to hold forever.

Dangerous company. There are many more. My analysis of the moral principles that disclose company management changed my opinion of Facebook, now Meta, and anyone with a modicum of interest might deduce when that happened, a discovery that leaves you dumbfounded. TikTok was easy because its lack of morality was revealed early when I saw the videos it encouraged minors to post and the repercussions of sharing them through its content recommendation algorithm. When you see something like this, nothing can convince you that the firm can change its morals and become good. Nothing. You know the company is awful and will fail. Speak it, announce it, and change it. It's like a fingerprint—unchangeable.

Some of you who read me frequently make its Facebook today jokes when I write about these firms, and that's fine: they're my moral standards, those of an elderly professor with thirty-five years of experience studying corporations and discussing their cases in class, but you don't have to share them. Since I'm writing this and don't have to submit to any editorial review, that's what it is: when you continuously read a person, you have to assume that they have moral standards and that sometimes you'll agree with them and sometimes you won't. Morality accepts hierarchies, nuances, and even obsessions. I know not everyone shares my opinions, but at least I can voice them. One day, one of those firms may sue me (as record companies did some years ago).

Palantir is incredibly harmful. Limit its operations. Like Meta and TikTok, its business strategy is shaped by its founders' immorality. Such a procedure can never be beneficial.

How did his money blind me?

Like most fledgling entrepreneurs, I wanted a mentor. I met as many nearby folks with "entrepreneur" in their LinkedIn biographies for coffee.

These meetings taught me a lot, and I'd suggest them to any new creator. Attention! Meeting with many experienced entrepreneurs means getting contradictory advice. One entrepreneur will tell you to do X, then the next one you talk to may tell you to do Y, which are sometimes opposites. You'll have to chose which suggestion to take after the chats.

I experienced this. Same afternoon, I had two coffee meetings with experienced entrepreneurs. The first meeting was with a billionaire entrepreneur who took his company public.

I met him in a swanky hotel lobby and ordered a drink I didn't pay for. As a fledgling entrepreneur, money was scarce.

During the meeting, I demoed the software I'd built, he liked it, and we spent the hour discussing what features would make it a success. By the end of the meeting, he requested I include a killer feature we both agreed would attract buyers. The feature was complex and would require some time. The billionaire I was sipping coffee with in a beautiful hotel lobby insisted people would love it, and that got me enthusiastic.

The second meeting was with a young entrepreneur who had recently raised a small amount of investment and looked as eager to pitch me as I was to pitch him. I forgot his name. I mostly recall meeting him in a filthy coffee shop in a bad section of town and buying his pricey cappuccino. Water for me.

After his pitch, I demoed my app. When I was done, he barely noticed. He questioned my customer acquisition plan. Who was my client? What did they offer? What was my plan? Etc. No decent answers.

After our meeting, he insisted I spend more time learning my market and selling. He ignored my questions about features. Don't worry about features, he said. Customers will request features. First, find them.

Putting your faith in results over relevance

Problems plagued my afternoon. I met with two entrepreneurs who gave me differing advice about how to proceed, and I had to decide which to pursue. I couldn't decide.

Ultimately, I followed the advice of the billionaire.

Obviously.

Who wouldn’t? That was the guy who clearly knew more.

A few months later, I constructed the feature the billionaire said people would line up for.

The new feature was unpopular. I couldn't even get the billionaire to answer an email showing him what I'd done. He disappeared.

Within a few months, I shut down the company, wasting all the time and effort I'd invested into constructing the killer feature the billionaire said I required.

Would follow the struggling entrepreneur's advice have saved my company? It would have saved me time in retrospect. Potential consumers would have told me they didn't want what I was producing, and I could have shut down the company sooner or built something they did want. Both outcomes would have been better.

Now I know, but not then. I favored achievement above relevance.

Success vs. relevance

The millionaire gave me advice on building a large, successful public firm. A successful public firm is different from a startup. Priorities change in the last phase of business building, which few entrepreneurs reach. He gave wonderful advice to founders trying to double their stock values in two years, but it wasn't beneficial for me.

The other failing entrepreneur had relevant, recent experience. He'd recently been in my shoes. We still had lots of problems. He may not have achieved huge success, but he had valuable advice on how to pass the closest hurdle.

The money blinded me at the moment. Not alone So much of company success is defined by money valuations, fundraising, exits, etc., so entrepreneurs easily fall into this trap. Money chatter obscures the value of knowledge.

Don't base startup advice on a person's income. Focus on what and when the person has learned. Relevance to you and your goals is more important than a person's accomplishments when considering advice.

How I monetized and sold an abandoned side project for $20,000

The Origin Story

I've always wanted to be an entrepreneur but never succeeded. I often had business ideas, made a landing page, and told my buddies. Never got customers.

In April 2021, I decided to try again with a new strategy. I noticed that I had trouble acquiring an initial set of customers, so I wanted to start by acquiring a product that had a small user base that I could grow.

I found a SaaS marketplace called MicroAcquire.com where you could buy and sell SaaS products. I liked Shareit.video, an online Loom-like screen recorder.

Shareit.video didn't generate revenue, but 50 people visited daily to record screencasts.

Purchasing a Failed Side Project

I eventually bought Shareit.video for $12,000 from its owner.

$12,000 was probably too much for a website without revenue or registered users.

I thought time was most important. I could have recreated the website, but it would take months. $12,000 would give me an organized code base and a working product with a few users to monetize.

I considered buying a screen recording website and trying to grow it versus buying a new car or investing in crypto with the $12K.

Buying the website would make me a real entrepreneur, which I wanted more than anything.

Putting down so much money would force me to commit to the project and prevent me from quitting too soon.

A Year of Development

I rebranded the website to be called RecordJoy and worked on it with my cousin for about a year. Within a year, we made $5000 and had 3000 users.

We spent $3500 on ads, hosting, and software to run the business.

AppSumo promoted our $120 Life Time Deal in exchange for 30% of the revenue.

We put RecordJoy on maintenance mode after 6 months because we couldn't find a scalable user acquisition channel.

We improved SEO and redesigned our landing page, but nothing worked.

Despite not being able to grow RecordJoy any further, I had already learned so much from working on the project so I was fine with putting it on maintenance mode. RecordJoy still made $500 a month, which was great lunch money.

Getting Taken Over

One of our customers emailed me asking for some feature requests and I replied that we weren’t going to add any more features in the near future. They asked if we'd sell.

We got on a call with the customer and I asked if he would be interested in buying RecordJoy for 15k. The customer wanted around $8k but would consider it.

Since we were negotiating with one buyer, we put RecordJoy on MicroAcquire to see if there were other offers.

We quickly received 10+ offers. We got 18.5k. There was also about $1000 in AppSumo that we could not withdraw, so we agreed to transfer that over for $600 since about 40% of our sales on AppSumo usually end up being refunded.

Lessons Learned

First, create an acquisition channel

We couldn't discover a scalable acquisition route for RecordJoy. If I had to start another project, I'd develop a robust acquisition channel first. It might be LinkedIn, Medium, or YouTube.

Purchase Power of the Buyer Affects Acquisition Price

Some of the buyers we spoke to were individuals looking to buy side projects, as well as companies looking to launch a new product category. Individual buyers had less budgets than organizations.

Customers of AppSumo vary.

AppSumo customers value lifetime deals and low prices, which may not be a good way to build a business with recurring revenue. Designed for AppSumo users, your product may not connect with other users.

Try to increase acquisition trust

Acquisition often fails. The buyer can go cold feet, cease communicating, or run away with your stuff. Trusting the buyer ensures a smooth asset exchange. First acquisition meeting was unpleasant and price negotiation was tight. In later meetings, we spent the first few minutes trying to get to know the buyer’s motivations and background before jumping into the negotiation, which helped build trust.

Operating expenses can reduce your earnings.

Monitor operating costs. We were really happy when we withdrew the $5000 we made from AppSumo and Stripe until we realized that we had spent $3500 in operating fees. Spend money on software and consultants to help you understand what to build.

Don't overspend on advertising

We invested $1500 on Google Ads but made little money. For a side project, it’s better to focus on organic traffic from SEO rather than paid ads unless you know your ads are going to have a positive ROI.