Wednesday, November 23, 2016

Anonymous Currencies Might Limit Financial Access


A recent report states that Bitcoin isn’t anonymous enough, and to an extent, the report is correct. While part of Bitcoin’s reputation has been built on the notion of privacy, the truth is that the blockchain records every transaction in real time, and nothing can escape its shuttering technology. In the long run, no matter how private Bitcoin claims to be, there always seems to be an open window to one’s financial history.

But one has to wonder if this isn’t a bad thing. Two of the cryptocurrency world’s most recent additions, Zcash and Monero, tout complete anonymity for those looking to remain duly private, but there seem to be issues emerging from the backend, and many investors and crypto-enthusiasts are having a hard time deciding where they stand.

First off, let’s look at criminal activity. Anonymity is often showered with praise, but when something is completely hidden like this, it can potentially give rise to back-door dealers looking for ways to exploit any lagging visibility. Monero, for example, is often labeled as the most popular cryptocurrency amongst drug purchasers on the dark net. Many regulators arguing against the notion of completely anonymous digital currency trading feel that the situation is likely to give rise to another Silk Road, only this time, things may be a little harder to shut down.

Zcash is another financial entity that claims to offer new waves of privacy. Again, good for some, criticized by others. Zcash recently hit new heights on cryptocurrency exchange Poloniex, hitting the $2 million per coin mark, but many argue whether this was real or caused by error or platform manipulation. If that’s the case, there’s certainly cause to worry. It was this same kind of manipulation that fired bitcoin into the $1,000 range in 2013 prior to the sudden collapse of Mt. Gox.

Lastly, the likelihood that a government or legislative system would ever be willing to regulate or fully allow the trading of anonymous currencies is particularly slim. While this may sound positive at first (cryptocurrencies were designed to offer independence), access to digital currency for third world and developing nations could wind up limited in the near future. It’s precisely because Bitcoin isn’t fully anonymous that it probably has the highest chance of ever going mainstream and reaching acceptable terms on a global scale.

As consumers, we have to ask ourselves which we’d prefer – true anonymity, or higher monetary access? The independence these currencies claim to provide is what gives us such a choice in the first place.

Wednesday, November 16, 2016

Memphis Residents Now Have Their First Bitcoin ATM


The city of Memphis will now have a Bitcoin ATM as the firm Coinsource installs three new machines in the state of Tennessee. The company is the largest Bitcoin ATM provider in the U.S. and has averaged over one installation per week in 2016.

Memphis Bitcoin ATM One of Three in Tennessee

logo2-id-fa176b8a-9aee-44f6-9ad5-4672e628e52e-300x300Memphis, in Tennessee’s southwest, will get its first Bitcoin automated teller machine. Additionally, the company Coinsource installed two Bitcoin ATMs in the city of Nashville. Coinsource has established 60 Genesis Coin brand cryptocurrency ATM across the U.S. since its inception.

“The demand for bitcoin ATMs has never been higher than it is today. The most rewarding part of our job is to answer the call when requests come in for new locations, so it is exciting to make history in Tennessee,” said Coinsource CEO and co-founder Sheffield Clark. “Our reach in the South is growing. So far, we have 60 machines across eight states, and look forward to gaining a foothold in even more new cities around the country.”

Bitcoin ATMs in Tennessee via Coin ATM Radar
U.S.-Based Coinsource Will Soon Focus on International Expansion

Coinsource CEO and Co-Founder Sheffield Clark According to Coin ATM Radar, there are 482 installed Bitcoin ATMs throughout the United States. Coinsource, which Clark founded in February 2015, owns a large share of these devices. Bitcoin ATMs have provided people with easier access to cryptocurrency using cash. Additionally, with an automated teller machine that dispenses bitcoin all users need is a wallet to store the funds.

Coinsource says its mission is to make “buying and selling bitcoin as immediate and natural as withdrawing or depositing fiat from a traditional ATM.” The company claims it has first-class customer support and some of the lowest transaction fees in the market. The company aims to continue to be a forerunner amongst American Bitcoin ATM providers and will soon reveal its blueprint for inter

Sunday, November 13, 2016

Ethereum Smart Contract Issues Frustrate Developers with Fatal Bugs

Only weeks after the execution of a hard fork to mitigate various DoS (denial-of-service) attacks, the Ethereum network and its developers are struggling to deal with yet another major flaw. This time, major issues in regards to smart contracts have emerged, which have rendered the efforts of decentralized applications in the Ethereum network purposeless.

On November 1, the Ethereum development team and the founder of Solidity warned users and developers against a bug that allowed variables to be overwritten in storage.
Variables in a smart contract are agreements made between two or more parties. Thus, if an attacker can gain access to the storage and alters the variables, crucial agreements in decentralized applications can be affected and funds may be extracted, which may pressure developers to discard previous smart contract-based projects to recompile contracts.

Ethereum developers including Ansel Lindner stated that the development of an Ethereum application is failing to operate because of this bug.
"Imagine spending a year building an app for eth, just to find out the thing doesn't work," wrote Lindner.

He further noted that much like the memory bugs in Geth that continued to negatively affect the network for weeks, the recent smart contract bug will most likely lead to a series of other potentially fatal bugs.
"I could agree that it's a molehill on the side of a big mountain of other similar potentially fatal bugs," Lindner added.

Reitwiessner explains that luckily, Ethereum multi-signature wallet contracts are not affected. However, contracts containing two or more contracts will high likely be affected.
"The following contracts may be affected: Contracts containing two or more contiguous state variables where the sum of their sizes is less than 256 bits and the first state variable is not a signed integer and not of bytesNN type," Reitwiessner wrote.
Reitwiesnner recommended developers to deactivate and remove funds from already deployed smart contracts and compile new agreements using the Solidity release 0.4.4. Failure to do so may result in the loss of funds and may hugely impact decentralized applications that rely on these contracts.

To date, the Ethereum development team have discovered 10 vulnerable Ethereum smart contracts, 7 of which were exploitable.

Sunday, November 6, 2016

Stolen Bitcoin? Anti-Theft Feature Gets Second Life on Sidechains


At its core, bitcoin is about giving users better control of their money.

Often called "programmable money", bitcoin has scripts that limit how future bitcoin transactions can be spent (and that control variables like who can spend them). One such script ensures the correct person is spending the bitcoin by checking if the correct signature was used before unlocking and sending the funds.  This week, Blockstream core tech developer Russell O'Connor revealed he's been testing a couple of new scripts on an Elements Alpha sidechain (which is pegged to the bitcoin testnet) that could add new functionality.

Called "covenants", the new style of scripts potentially opens up possibilities for how bitcoin users can control, or restrict, spending of their money — possibly for their protection. (This is an idea that was previously explored by researchers Malte Möser, Ittay Eyal, and Emin Gun Sirer). One use case for these scripts is to help users rein in their coins in the case of a hack (an all too common occurrence in bitcoin).

When asked what he thinks of the new covenant work, Eyal said it was potentially a boon to bitcoin users who may be worried about losing their bitcoins or otherwise having them compromised or stolen.

Extending bitcoin's scripts
The idea is notable as a script that can limit how bitcoins can be spent hasn't been implemented in bitcoin before, a fact noted by Eyal.

In particular, there are two new covenant scripts that Blockstream explored, each of which take parameters and outputs whether the script is valid, or whether or not the transaction is currently spendable based on its restrictions.
It's worth noting that bitcoin's scripting system is currently quite simple for security's sake. There aren't limitless rules in bitcoin right now because new additions can be potentially dangerous and developers note that they take time to test.

This is where sidechains may come in handy, although they are not yet pinned to the main blockchain.
Bitcoin startup Blockstream has been working on these interoperable blockchains for experimenting with new features that could potentially be added to bitcoin since June of last year, and this is an example of how these new chains can be used to test new features.

These new proposed opcodes may work as the foundations for new functionalities, ones that could even come to help stop bitcoin exchanges and users from losing stolen funds.

Monday, October 31, 2016

Walt Disney Company Goes Big On Blockchain With Dragonchain


The Walt Disney Company is #71 of the top 2000 companies in the world ranked by Forbes. It has an annual revenue in the tens of billions of dollars, assets near 100 billion dollars, and recently developed a keen interest in blockchain technology for use within its massive organization, which includes online retail, television endeavors, and, of course, their world-famous theme parks.


The most obvious benefit of a blockchain system is easier tracking of inventories, sales, shipments, and even people in the case of the parks, but Dragonchain innovates on existing blockchain implementations. According to their design document, they introduce something called “context-based verification.” Their blockchain will have various types of nodes, and a “level 5” of these nodes will interact with an existing public blockchain like Bitcoin, notably providing a “public checkpoint” or “proof of existence” for the blocks within the permissioned ledger.


The other levels of the Dragonchain should be noted for understanding. The first level is the business node, which will process transactions and be able to determine whether a transaction is approved or declined. Level two is an enterprise verification node, which can determine the validity of data submitted by level one nodes. The purpose of the level three nodes is to ensure requisite diversity of sources of information – it acts as a check against errant nodes which may be compromised, for one thing. Dragonchain also calls for a third-party verification/“independent witness” of data at its level 4 nodes, to whit:


Another feature of the Dragonchain is that it will not have a singular currency at its heart in the way that Bitcoin does. Instead, they believe that if a base currency were to be required within an organization, then a separate node should manage it. For the purpose of the Dragonchain, though, a multitude of currencies should be considered.


And most interesting about this is that the Dragonchain will apparently support multiple cryptocurrencies inside a private blockchain transaction, using their transaction class header field. At least at the outset, the network will use Bitcoin-based cryptographic addressing and cryptography. Part of the logic behind this is to make use of existing infrastructure, including Counterparty and hardware wallets for verification purposes within the organization.


Blockchain of Blockchains

Different organizations will have different purposes for Dragonchain, but one thing that may make it very useful is its ability to act as a “blockchain of blockchains.” In this way, various third-party providers can bring to market solutions based on Dragonchain or to integrate competitively with existing Dragonchain implementations. Or, perhaps easier to imagine, third-party vendors can come up with interesting applications, such as methods of tracking inventory, event attendance, line congestion at theme park attractions, and more.



Wednesday, October 26, 2016

Smart contracts for bitcoin



As we approach the release date for the SEGWIT (Segregated Witness) update to the blockchain, we were pleased to see a complete update from the BitcoinCore team about how this update will affect the network, what will change and where are we going to proceed in the future.


For those of you who don’t know what SEGWIT is software that is used to produce transactions for which it separates the TxID transaction signatures from the rest of the data, thus Segregated Witness. This allows miners to place the transaction signatures outside of the block-chain.


Pros and cons

There are benefits that we will immediately be able to enjoy once the update has been complete. The first benefit is that malleability will be ultimately eliminated, and third-parties won’t be able to interfere with the transaction process, and transaction ID’s will be hidden from everyone, while at the same time allowing the transaction software to calculate the transaction without reference to the witness. This update will open up development paths for Bitcoin, by eliminating security holes and lowering the complexity of smart contracts for Bitcoin.


The second benefit is that capacity of transactions will modestly increase. New-style blocks can hold more data than current versions, which means that the amount of transaction data will increase per block. That doesn’t mean that witness data is stored off-chain, but rather following this soft-fork, the data will start being signed on the new-style blocks (which include the old-style block and extra space).

Overall this update will simplify things for developers to produce new features for Bitcoin use and it improves the efficacy of running full nodes. We are happy to see that long-term benefits will come out of this update.


According to the blog post that the BitcoinCore team released on June 24th, 2016, SEGWIT has been extensively tested by Bitcoin developers, and this was necessary because of the way SEGWIT changes parts of the Bitcoin system. One of the most important change happens to the consensus rules that full nodes use to agree on the current state of the ledger. That shift is the primary reason for such tests to be performed, because if we come to a position where the network stops agreement on the current state, Bitcoin transactions become dangerous.


Other notable changes happened to the peer-to-peer code that’s used by the network to distribute blocks and transactions. (This was all included in the 0.13.0 BitcoinCore Update, but it’s not going to happen be accepted on the main network until at least ver. 0.13.01) SEGWIT blocks and transactions are different from previous versions, so it’s important that the network is capable of distributing both SEGWIT and old-style data.

The complete update added about 7800 lines of code to the proprietary software, with the majority of lines relating to the SEGWIT capabilities. A large part of the code update related to the automated testing system, which enabled Bitcoin developers to test out the features on a separate network extensively, promptly called “testnet”.

SEGWIT was initially implemented by the Elements Project, led by Pieter Wuille. This initial implementation was happening in April through June of 2015. It was never intended for the main blockchain but is actually considered a side-chain. A few months later in October 2015, Luke Dashjr describes a method that allows SEGWIT to be implemented by using a soft-fork and they team up with Wuille to work on the implementation that is going to be completely compatible with the main blockchain.


The first version of this new code comes out in December 2015, close to the end of the year. (New year, new updates!) It’s implemented and tested extensively for the whole duration, ranging from the beginning of the year to August 23rd, 2016, when the BitcoinCore team launched the update.


Within this update, SEGWIT is completely implemented, but it’s sitting there in a passive state, only used for testing purposes. Like I mentioned before, it will become operational with the next update! The Bitcoin Core developers are finally convinced that implementation of SEGWIT will not cause any adverse effects and it won’t negatively influence Bitcoin, it’s value and reliability.


SEGWIT won’t change a lot about how you perceive Bitcoin transactions happening, well… There is one pretty perceptive change, but I’m sure you’re not going to mind it.


Transaction fees are going to get a little bit cheaper.

I’m sure we all can appreciate spending a little bit less on our transactions. But wait, what about Bitcoin smart contracts?

Yes, I’ve mentioned them. Well SEGWIT will not introduce any smart contracts, but it’s the first step allowing the development of the capability to support these.


It solves a crucial problem that currently is affecting the creation of smart contacts and script functioning. It opens up the doors to new development paths and creates new opportunities that were previously inaccessible due to security loopholes and visibility of transaction identifiers. In the future, smart contracts and scripts will use MAST, an acronym for Merkalized Abstract Syntax Trees.


A short description of MAST is that it allows the creation of conditional Bitcoin scripts to be utilized. For now, it’s being reserved for the extremely tech-savvy people, the developers to use these tools and potentially make them available to Bitcoin users. MAST is going to be available for use following the SEGWIT update in the future.

Sunday, October 23, 2016

ShadowCash - A new era of anonymous and untraceable payments is coming



Umbra, launched for privacy, is a new crypto currency aimed at privacy. With so many ways to use it, it's no wonder so many are using it today- it was built primarily for security and has many secondary features, like opening up a chat lobby or creating a marketplace

that's completely anonymous. Interested? Let's take a look at it.



Built for privacy, the Umbra project was created open-source and has more security features than most crypto currencies do, on top of having excellent usability. Umbra allows you to stack additional security measures on top of the existing ones built into the client, so attackers have multiple barriers to break to find who you are and more. Plus, the messaging platform is built for Tor and L2P, so you can carry out your transactions with even more security!


Encrypted Messaging

Encryption is one thing built into the Umbra platform, and it's one of the most integral features that provide security to it. Many messages do provide good security and good quality, but many of them expose your IP to centralized servers. Umbra allows you to message with decentralized nodes that don't expose your IP, making the platform a much better choice if you plan on doing something with that

level of secrecy. As mentioned before, Umbra features L2P and Tor, so it's possible to further encrypt yourself! Their messaging platform provides most of the normal things in such a service, with private and public channels, and even direct messages!



Umbra's system uses ShadowCash, an anonymous cash system that allows nearly completely anonymous transactions while still allowing seamlessly easy transactions to occur. Similarly to Monero, ShadowCash operates on dual-key stealth addresses and ring signatures for security. It's even possible to stake ShadowCash, at an annual rate of 2%. You an also receive transactions through both a public and secret address; funds can be seamlessly transferred to either wallet in seconds. If you wish to opt in for more secure transfers, it's recommended that you use the private wallet, and everyday transactions are more easy to use through the public wallet.



Online marketplaces require lots of anonymity and security, and Umbra realizes this. While it is still under development and is still constantly being tested, their decentralized marketplace has already received lots of hype and support from various large media outlets, and it's expected that the marketplace will become the first of its kind - an inter-dependent, decentralized marketplace that will forever change the way people look at markets.



Umbra has many very secure and easy-to-use features that don't require lots of crypto experience, and the client GUI is especially friendly to new users in the Crypto world as well as the more experienced. With so much potential and so many ways to use their platform, Umbra is looking like it'll become a hit among the crypto community in no time!


ShadowCash Specifications

Block time: 60's

Difficulty re-target: every block

Nominal stake interest: 2% (PoSv3 – static inflation annually)

Min. stake age: 8 hours (no max age)

P2P port: 51737

RPC port: 51736


Read more about the Shadow project here. Information about Umbra can be found here. 

Thursday, October 20, 2016

HitBTC Cryptocurrency Exchange Intensifies EUR & USD Depositing


EE, October 11, 2016 at 13:57 BST


October 11, 2016 a well-established cryptocurrency exchange, HitBTC, publicly increases support for EUR and USD depositing. From now on, all new registered users can easily pass the verification process, deposit fiats on their accounts, and proceed to cryptocurrency trading.


While there's a number of cryptocurrencies, paired directly with USD or EUR, including most popular Bitcoin, Litecoin, and Ethereum, a whole set of more peculiar digital currencies can also be traded. Altogether, the exchange provides more than 20 trading markets, continuously listing new, promising digital assets.


By enhancing support for fiat currencies, HitBTC is aiming to attract professionals, engaged with conventional types of trading, like stock markets, forex trading, commodities, etc. Here are the words of Paul Clarkson, product manager at HitBTC: "After three years of hard work, we're finally ready to bring mainstream traders to cryptocurrencies, and vice versa. Сryptocurrency trading is a young, sharp, and fluctuating, yet quite established field. Like any other markets, cryptocurrencies are influenced by a plenty of factors, and follow certain patterns that can be analyzed and used professionally for making profit. Therefore, we're making steps towards traders, so that they can capitalize their knowledge in a relatively new, promising niche."


Despite the fact that blockchain technologies and assets arise and gain traction on an annoyingly regular basis, digital currencies still haven't crossed the gap between the tech-savvy community that plays around with blockchain technologies, and the real business world that needs cryptocurrencies to fulfill its specific needs. This is especially the case in sphere of trading, where most exchanges prefer to remain a niche playground for cyberpunk enthusiasts, rather than build a solid trading platform, which requires investments, legalization, and support for traditional financial instruments.


Conversely, HitBTC aims to reach the mainstream financial market, by growing into a gateway between cryptocurrencies and traditional finance. The most important components of this process are:

●     Transparency. HitBTC is a registered trademark, owned and operated by Beta Business Solutions Inc. The exchange platform and business providing tools are leased under a platform as a service (PaaS) model.

●     Due diligence. HitBTC implements KYC to identify and verify its clients. KYC allows to build bridges between virtual currencies and real fiat trading. Every registered user can verify their account to start depositing EUR/USD, and trade virtual coins for traditional currencies.

●     Dependable API. The API provides the most functional access to HitBTC facilities. It gives access to the market data, allows performing trading operations, provides funds management, and more. The API is robot-friendly and can be used for algorithmic trading.

●     Support for the FIX protocol. Unlike any other crypto exchange, HitBTC provides support for the Financial Information eXchange protocol. While FIX is a de-facto standard for trade communication in the global equity market, it hasn't been implemented for cryptocurrency trading before now.

●     Special offers for market makers. HitBTC provides special contracts for both individual market makers, and companies that know how to rule the markets. Market making is also possible through the HitBTC's APIs.

●     Advanced reporting. The exchange team is focused on creating useful trading tools, hence, all traditional reports like profit and loss report and trade analysis are featured on HitBTC, and can be used by every user.


Paul Clarkson continues, "Besides having a professional team of developers, we have a well-organized team of financiers, and outsourced trading experts. The massive financial expertise allows us to make our product mature for penetrating the traditional financial market. As for development, we are especially proud of our support for FIX, which is unprecedented for bitcoin exchanges."


As HitBTC is already finished with core development, it is now ready to engage newcomers with 0% depositing fees that can be requested by all new verified users from October 6 to October 20, 2016.


About HitBTC

HitBTC is one of the leading cryptocurrency exchanges, providing trading services for individual traders since 2013. The HitBTC trading platform is known for its advanced matching engine, multi-currency support and friendly customer service. Besides trading between cryptocurrencies, HitBTC provides proper markets for exchanging cryptocurrencies for fiat currencies, namely USD and EUR.


The innovative and technological nature of HitBTC is expressed in a stable dependable API, which satisfies the needs of algorithmic traders. Moreover, HitBTC provides support for FIX protocol through FIX trading and FIX Market data end-points.

Monday, October 17, 2016

Korean Credit Card Giant to Integrate Blockchain Identity Service


South Korea’s largest credit card company is set to use a blockchain identity solution developed by local bitcoin startup Coinplug.

The service will be based on what Coinplug calls FidoChain, a “private blockchain technology” aimed at providing a distributed means of verifying and maintaining digital identities. KB Koomkin Card, a subsidiary of KB Koomkin Bank, plans to complete its integration by the end of this year.


The startup has been working in the area of digital identity for some time, netting a $45,000 prize last year after submitting a prototype system based on the concept to a competition held by JB Financial Group.

It’s a use case that has been pursued by established enterprises as well as new companies working in the blockchain space. Now, following additional development, Coinplug is pushing ahead with what it calls the “Coinplug Identification System”, or CIS.

According to Richard Yun, director and chief operation officer from Coinplug, KB Koomkin wants to integrate the tool into its credit card onboarding services.

In addition to its enterprise blockchain projects, Coinplug operates a bitcoin exchange service. The tech, launched last month, comes just under a year after Coinplug raised $5m in a Series B funding round. The startup has raised more than $8m to date.


Targeting identity pain point

Using FidoChain, the identity solution allows users – in this case, KB Koomkin Card – the ability to add, verify or revoke identities tied to a credit card product.

Yun said the startup wanted to potentially resolve security and user experience problems associated with existing identity solutions in South Korea.


“We thought it is very important to provide secure and easy to use identification and authentication service to banking service users, and we believed that private blockchain technology can be very effective to implement secure and scalable identification/authentication service.”

It’s a prospect that, according to Yun, has attracted significant interest from KB Koomkin. The company, which reported $2.6b in operating profit for 2015, is said to be looking at applying the tech to both services it offers now as well as new ones in the future.

“They [are considering whether to] expand the coverage of CIS to other existing and new services,” Yun explained.

KB did not immediately respond to a request for comment.

Ethereum is getting ready for its second hard fork



At this moment in time, Ethereum represents the basis of a popular digital currency, alongside with a decentralized platform meant to support apps that run as they are, without facing censorship, fraud or any form of third part interference.


However, during its reign so far, the network was forced to implement a hard fork, to prevent the theft of millions of dollars’ worth of DAO funds, after the systems had been hacked. Whenever a fork is suggested on the digital currency market, its purpose is to divide the supporters of two different ideas, and continue the branch which has the most supporters at the time of the fork.


Recent reports indicate that after the recent DDoS attack, Ethereum is planning to carry out another fork, in order to deal with the EIP150 gas cost changes being implemented. With this in mind, last month, on the 22nd of September, Ethereum representatives announced that the network was facing a strong DDoS attack, thus causing an immediate slow0down of the network. As the attacks have been quite crafty when it came down to finding vulnerabilities in the client implementations and protocol specifications, the only way to prevent future attacks like this would be to carry out a reparatory hard fork.

To prepare the network for its second hard fork, Ethereum made a couple of announcements, including:


To help minimize the effects of the recent attack, miners are encouraged to lower their gas limit to a total of 500k gas.

Once the fork is launched based on the EIP 150, version 1C, it will be put in effect starting with the block 2463000, thus repricing a couple of operations, and making them better respond to their particular computational complexity.

A second fork will be carried out moments later, right after revering the state-bloat that has been caused by the attacks. This one will also remove all accounts which are empty, lack code and have a balance and storage of 0.

It’s worth keeping in mind the fact that consensus for this hard fork has been reached, and that the Go Ethereum client will be released quite soon. The hard fork code has been kept under development during the last few days, and is currently facing testing and reviews. Once everything is confirmed as working properly, the Ethereum network will begin the hard fork, thus repairing the damage caused by the hackers. Fortunately, consensus is met this time, which means that another Ethereum Classic network won’t be brought back to life.


Once the hard fork is issued, the entire network is most likely to upgrade in the next 2-3 days. Although some bugs may be present for a while longer, each of them should be taken care of.


Based on everything that has been outlined so far, what do you personally think about the newest Ethereum hard fork? Let us know your thoughts in the comment section below.

The Future of Artificial Intelligence & Ethics on the Road to Superintelligence


The human brain, consisting of roughly 86 billion neurons, rivals the world’s best supercomputers in terms of magnitude, efficiency, and speed, using as little energy as a small 20-watt light bulb. Human evolution took tens of thousands of years to adapt noticeable brain size and architecture changes.


Evolution is a slow process that can take eons for changes to occur. Technology, on the other hand, is amazing in terms of how fast it is moving along, blending into the world seamlessly. The technological evolution notably occurs at a faster pace compared to biological evolution.


To further understand the situation, imagine a frog in a pot of water that heats up 1/10th of a degree Celsius every ten seconds. Even if the frog remained in that water for, say an hour, it would be unable to feel the minute changes in temperature. However, if the frog is dropped into boiling water, the change is too sudden and the frog jumps away to avoid fate.



Let's take a gigantic chessboard and a grain of rice, for scale, and place each grain of rice to a corresponding chess square following a sequence: for each passing square, we double the amount. Upon applying this, we get:


1) 1

2) 2

3) 4

4) 8


And so on. You must be thinking, “What difference does doubling a grain of rice for every box make?” But one must remember that, at some point, the number from which the count started will be totally indistinguishable to the end result. Still on the 41th square, it contains a mountainous 1 trillion grains of rice pile.


41) 1,099,511,627,776


What started out as a measly amount, barely feeding a single ant, has become massive enough to feed a city of 100,000 people for a year.



The development of technology over time

In the year 1959, the global output of transistor production of 60 million was huge. It was deemed a manufacturing achievement to produce such an amount. Although looking at the world today, it pales because of how far the transistor development has come. A modern i7 Skylake processor contains around


(Skip to 5:15 in the video, to hear the global transistor manufacturing achievement in 1959)


1,750,000,000 transistors. It would take 29 years of 1959’s transistor global production to match one i7 Skylake transistor count.


The transistor manufacturing size in an i7 Skylake processor is 14 nm. For reference, a silicon atom is about 0.1176 nm across: 14/0.1176=119 Meaning, a transistor in an i7 Skylake processor is only about 119 atoms across.


Therefore, one can conclude that it takes technology to build technology. In the past, civilization was limited to the usage of paper and writing. Calculations done by hand tend to be slow and tedious. - Lets think about the future

Artifical Intelligence - Artificial Intelligence & Ethics on the Road to Superintelligence


Could Bitcoin Be the Future of Blockchain Post Trade?


Conventional thinking about blockchain technology's use in stock markets may be wrong, according to one academic.

The argument was put forward by Professor David Yermack, chairman of the finance department at New York University, this week at Imperial College London's first FinTech-focused academic conference.
There, Yermack presented an unpublished report that argues blockchains will evolve differently in capital markets than widely expected. For example, according to Yermack, functions such as stock settlements will one day be carried out on public blockchains like bitcoin, as opposed to private or premissioned alternatives.

Overall, Yermack, who teaches a cryptocurrency course at NYU’s Stern School of Business, offered a much broader vision for the use of blockchain in finance than what the industry is considering, as well as more critical takes on how incumbents are exploring the tech. Taking a dig at DTCC, for instance, Yermack said its report "Embracing Disruption" did little to show or illustrate how blockchain could change the current state of affairs.

Agents of change
That's not to say that Yermack didn't take a measured view of public blockchains. On the contrary, Yermak acknowledged the limitations of bitcoin's throughput and its proof-of-work consensus system today, but noted that it's something he believes the industry will need to work out better solutions for.

Still, he insisted that the future of finance will be brought about by a real decentralized blockchains that don’t have monopolies that guard access to stocks, bonds and currencies. Speaking of the direction where the disruption will come from, Yermack sees three potential players. These include challengers (complete outsiders looking for disruption); collaborators (like the DTCC and R3); and regulators (countries like the UK, Australia, and Canada).

Overall, he believes that the challengers were the most likely to succeed, but that some regulators (like those in the UK) are better positioned to bring about change than others.

Quick wins
Interestingly, Yermack believes one of the easiest and quickest ways for the industry to move to a blockchain model is by exploring use cases in corporate elections by shareholders, an avenue already being pursued by Nasdaq. Yermack said shareholder voting on corporate elections is currently inefficient when it comes to vote counting, and that the voting results are often plus or minus 5% of what they should be.

Further, in the current model, there are many challenges when it comes to corporate elections, he said. There are various different ledgers of ownership, maintained by the company, the broker, and the market in general, which gives rise to different voting results. Broadridge, which has what he called "a monopoly that is very inefficient" administers corporate elections voting, is also interested in blockchains.

But, Yermack went beyond words, showing that corporate elections are prone to favor management proposals. Such issues, he believes, could be eliminated with the help of blockchain-based voting systems.

In China, Two Cities Mirror Blockchain-Bitcoin Divide


Beijing and Shanghai, China's two most populous and developed cities, are often reminiscent of two siblings. They are similar, but each has its own distinct character.

In this light, some rivalry is as inevitable, and it's now spilling over into the country's blockchain industry.

In Beijing, visitors are likely to meet "bitcoin maximalists", those who shrug at the idea an alternative blockchain or bank consortium could challenge the network effect of a $10bn digital economy. In Shanghai, the difference of attitude is pronounced – there, you are more likely to be told that bitcoin is passé. Metaverse, a company based in the Shanghai's Huangpu district, is in many ways representative of the city's new blockchain startups.

Relatively unknown even in its home country, Metaverse has over 20 employees – no small feat for a blockchain startup that has been around for less than a year, and it recently held a blockchain token crowdsale, raising over ¥10m within weeks. The sight of a roomful of busy developers gives the impression the startup is onto something big – which is exactly what Eric Gu, CEO and co-founder, wanted to convey in interview. But he is also candid about his personal transition and what it says about the state of the blockchain industry.

According to Gu, support from local officials is strongest when they are presented with a project that he said avoids the revolutionary stigma that has surrounded bitcoin. "If you expect the government to back a blockchain project, it will at least be one that they feel more comfortable with," Gu explained.

Not quite a battle
Meanwhile, in Beijing, the city's outlook is defined by the notable startups that call it home, including bitcoin mining giant Bitmain and major exchanges like OKCoin and Huobi. Da Hongfei, CEO of Shanghai-based Onchain, argues that this has made for "a very different community and industry landscape" in each city. The creator of a "universal" blockchain platform that aims at adoption in both public and private markets, he acknowledges his firm would be an outsider in this location. "Beijing is well-known as an established bitcoin center. It enjoys a comprehensive bitcoin ecosystem," he acknowledged.

Like Metaverse, Onchain has also differentiated from the venture-backed startup model common in Beijing, raising more than $4.5m in a public token sale, while inking a partnership with Microsoft and contributing to the Linux-led Hyperledger project. By contrast, Beijing firms have often elected foreign venture capital over the token sale model, sometimes called an initial coin offering (ICO), whereby unaccredited investors back a firm by purchasing cryptographic assets.

Despite this investor approval (and the heated debate around ICOs), Da went on to argue there is still a greater "stigma" associated with bitcoin, one his company has sidestepped. "As for blockchain technology, or DLT, a large extent, it's free from this burden," he said.

Trend or fad
But as for which brand of blockchain is winning, it might be too early to say. Da, for example, hinted he believes other cities are now following Shanghai's lead, in what could be a sign its view on the technology could win out. "Hangzhou is taking the lead in the lower-layer, distributed ledger technology R&D," he said, "not necessarily everything bitcoin."

Companies seem to be following their lead, as well. Metaverse, for instance, is utilizing this strength to tackle the country's collectable calligraphy and painting market, where collectors have been searching for tools to enable them to record their transactions and check previous ownership of art pieces to ensure authenticity. Onchain, on the other hand, is working with Everbright Bank, a major Chinese commercial bank, to build a blockchain-based reputation point system. Both projects see value in enterprise markets, particularly because there have been strong signals of interest from leading domestic firms.

In this way, Da argued that he believes "blockchain" might bring about the most benefits for Chinese consumers, though he sought to stress that there's a larger, more important goal that unites innovators in both Shanghai and Beijing, in bitcoin and blockchain.

Friday, October 14, 2016

Pros and Cons of Blockchain



Blockchain is almost always right, and has an incredible number of associated opportunities – from storage, to coding, and far beyond. The most popular and supported example is the Ethereum smart contract, which has revolutionized the coding and cryptocurrency world forever. It showed thousands that crypto isn’t just for payments, but for coders and programmers alike. With so many choices, programmers or cryptocoiners may be wondering – what’s so great about the blockchain? In this article, we have all the information you need so you can make your own decision.


Blockchain has many pros – the fact that data can be stored on it is a huge one. A notable example is in the very beginnings of Bitcoin – the genesis block. What’s interesting about this specific block is that it doesn’t reference any other block, because there were not any blocks to reference, and so it has a lot of zero bytes. All blocks have a special section called the coinbase, which is the area that is capable of storing the actual data.


Blockchain isn’t only present in Bitcoin, though; Ethereum is another notable example, with smart contracts that can execute any input code for a small fee. This allows for elaborate plans and security check systems to be put in place. The fact that those lines of code cannot be interfered with is also amazing. Coding isn’t the only pro with cryptocurrency, however; the blockchain can also support transfer of funds, which is what most people are familiar with. Funds can be transferred using blocks, which are mined. They also have a set difficulty to control blocktime, and with a low enough difficulty, funds can be transferred almost instantaneously. The blocks also create a ‘confirmation’ system that makes sure double-spends, which are discussed below, don’t occur. This means that the blockchain not only offers permanent storage of code, but also of funds. Nothing like this has ever been created prior to the creation of cryptocurrencies.


Now onto the cons: we’ll only cover double-spending here, which is a huge disadvantage. Double spending is the reversal of a transaction to another address, and is a huge factor as to why confirmations are required with most bitcoin-based payment systems. There are lots of double-spends happening, but fortunately, most are very minor and only deal with a few cents. This is still an issue, however, and will likely never disappear completely. Confirmations do help prevent this, but it’s still not a guarantee.


With these listed cons and pros, we hope we’ve provided you an accurate view of blockchain. Nothing is perfect, but the system keeps improving and gets better every day.


If you liked this article, be sure to share it with friends and family; we’ve got more articles on similar topics, and we guarantee you won’t be disappointed.

Thursday, October 13, 2016

Blockchain Surveillance is Accelerating Privacy Tool Development


When it comes to cryptocurrencies one treasured goal is the ability to remain private, which requires both an anonymous and fungible currency. At times, it seems fungibility is the holy grail of the ecosystem. Bitcoin definitely achieves most of the qualities of sound money, but some believe it needs a lot of work in the development of fungibility.


Privacy cannot work without the basics of a fungible asset as both fundamentals are mutually exclusive. The rise in popularity concerning both fungibility and anonymity can be seen with the latest trends in market trading and development.


Just recently spoke with Daniel Krawisz about his new bitcoin shuffler, Shufflepuff. Krawisz explained he was still in the developmental process but had achieved the first shuffled transaction on August 15th. The Coin Shuffle protocol finds other users to tumble their bitcoins as variants of this technology are the most common protocol for mixing Bitcoins.


On August 29th, another tumbling protocol called TumbleBit was announced on Reddit, with the post being very popular among cryptocurrency community. The project developers say they are producing a roadmap in the near future. The team gives credit to David Chaum’s ecash for inspiring some of the project’s attributes.

FW: Ways to stay anonymous and protect your online privacy


Now more than ever, your online privacy is under attack. ISPs, advertisers, and governments around the world are increasingly interested in knowing exactly what you’re up to when you browse the web. Whether you’re a political activist or simply someone who hates the idea of third-parties scrutinizing your surfing habits, there are plenty of tools available to keep prying eyes off of your traffic.


In this post, I’m going to highlight 19 ways to increase your online privacy. Some methods are more complicated than others, but if you’re serious about remaining private, these tips will help shield your traffic from snoops. Of course, internet security is a topic in and of itself, so you’re going to need to do some reading to remain thoroughly protected on all fronts. And remember, even the most careful among us are still vulnerable to imperfect technology.


The Onion Router (Tor)

If anonymity is what you're after, The Onion Router (Tor) is what you need. It uses a vast network of computers to route your Web traffic through a number of encrypted layers to obscure its origin. Tor is a vital tool for political dissidents and whistleblowers to anonymously share information, and you can just as easily use it to help protect your privacy. Get started by downloading the Tor Browser. This customized fork of Firefox automatically connects to the Tor network, and includes some of the privacy-enhancing browser extensions discussed later in this post. This package has everything you need to use Tor successfully, but you'll also need to change your web surfing behavior to retain as much anonymity as possible. Abide by the Tor warnings, and remember this isn't a magic bullet. It still has some significant weaknesses.



Justified paranoia

You might not think you have anything to hide, but that doesn’t mean you shouldn’t enjoy the benefits of online privacy. Some of these recommendations are a real hassle to live with — I’m well aware. It’s a lot easier to shove your fingers in your ears, and pretend like the NSA and your ISP aren’t watching every move you make. But what you browse is your business, and your business alone. Now is the time to stand up for yourself, and take back your privacy.

In time for Black Hat and DEFCON, we’re covering security, cyberwar, and online crime all this week; check out the rest of our Security Week stories for more in-depth coverage as the week goes on.

Jeff Garzik: “Blockstream Will Help Bitcoin Grow into The Future”


The world of Bitcoin and cryptocurrency never has a dull moment. Now that Blockstream has officially appointed Adam Back as their CEO, a few interesting things are bound to happen soon. But Jeff Garzik, who runs his own company called Bloq, hinted at a potential partnership between both groups.

Jeff Garzik Remains Keen on Blockstream

The name Blockstream has been a topic of substantial controversy among Bitcoin enthusiasts over the past few years. Even though this group of developers and engineers is looking to improve the Bitcoin ecosystem, there are lots of people in the community who feel they are trying to bring Bitcoin down eventually.

While there may have been some dubious discussions involving Blockstream in the past, they continue to receive a lot of support as well. Jeff Garzik, one of the most prominent people in the Bitcoin world, has high hopes for what the team is trying to achieve. In fact, he feels Blockstream will "help Bitcoin grow into the future".

This is a strong sentiment, and one that will hopefully come true. While Bitcoin is not designed to be steered in one particular direction by a group of coders, somebody has to propose improvements and changes to the code as they see fit. It is still up to the community to accept or reject these changes when they are implemented in a new Bitcoin Core client.

What is rather interesting is how Jeff Garzik openly hinted at "working together with Adam Back", the newly appointed CEO of Blockstream. This does not necessarily mean that Garzik will jump ship to the company, as they are both working towards the same goal. Making Bitcoin better and more robust is the top priority for both men. 

Bitcoin Price Increases 30% In Venezuela Due to Currency Devaluation


Venezuela, the South American country famous for its cheap gas (fuel) prices, has experienced a surge in both Bitcoin volume and price. The country is in the middle of the worst economic crisis ever seen in its recent history. According to the Venezuelan consulting firm, Ecoanalítica, the country’s annualized inflation reached the 1.108% mark.

The Venezuelan government has unofficially banned the country’s central bank (BCV) from releasing economic indicators such as inflation figures and price indexes. After much pressure from banks, consulting firms, and other institutions, the BCV reported an 180.9 percent inflation for last year. Consulting firm, Econoanalítica, criticized the methodology used by the BCV to calculate inflation. BCV altered the weight of several goods and services used to “embellish” the figure.

Amidst this grim landscape, bitcoin has gone through highs and lows. In Venezuela Bitcoin and other currencies prices are calculated using the unofficial black market rate. Traditionally, a website named Dolar Today has been used as the country’s market reference. However, its rate has slowly lagged behind. In consequence, many OTC transactions between private financial entities and individuals have ignored the 1,092 VEF/USD rate.

The bitcoin price has gone from 650,000 VEF per bitcoin two weeks ago, to yesterday’s 850,000 VEF/BTC high. This accounts for a 30% increase in less than 2 weeks. Dividing the local bitcoin price with the international one gives us a rate of approximately 1377 VEF/USD, a 22% increase compared to Dolar Today’s rate. The volume has also been consistently making new highs on LocalBitcoins alone, with over 243 bitcoins transacted in the past week.

Economists and consulting firms are predicting an increase in devaluation, inflation, and good’s shortages. If the black market rate continues to increase, the bitcoin price will follow. Only a change in macroeconomic policies will scare away the hyperinflation and bond default ghosts.

Kim Dotcom: Bitcache Will Be ‘Off Chain Due to Limitations’


Kim Dotcom has told the public many times that Bitcoin will be an integral part of Mega Upload 2 and Bitcache. Now, with the help from BnkToTheFuture, Dotcom is raising funds to scale the project. According to Max Keiser, the project is nearing 50 percent of its $1 million minimum goal.

Over the course of the Summer, Kim Dotcom has been teasing his new "Mega" file-sharing project and Bitcache. Dotcom said every file transfer will be "linked to a tiny Bitcoin microtransaction." Now the infamous Mega creator is teaming up with investment platform BnkToTheFuture to raise funds. According to BnkToTheFuture CEO Simon Dixon, the Mega2 investment has raised half a million dollars using bitcoin only.

Appearing on the Max Keiser show, Dixon explained there have been many investors who wanted to invest, but came to a barrier at its "Bitcoin only" stipulation. He also detailed that many "hardcore bitcoiners" have also asked about technical aspects of the project. Many have also enquired about the legal standpoint for investing in Mega. Dixon explained Dotcom's attorneys will provide the details. According to Dotcom, he has added a "sweetener" for investors who participate in the first million dollars.

Another investor concern was share dilution after the second and third rounds. Dotcom says he hears what the critics are saying, and will offer a second sweetener. This entails a "warranty" that initial investors will not be diluted in subsequent rounds.

Following Dotcom's responses, BnkToTheFuture's Simon Dixon announced that due to investors' issues they've also opened the crowdsale to bank transfers. Then, Dixon asked Dotcom some of the questions from "die-hard techies" concerning the project's technical details. Dotcom explained a little about the Bitcache prototype, stating: "We have to take Bitcache transactions off the chain and basically do it all on our own system. Because we can't deal with these limitations when it comes to millions and millions of file transfers which are at the same time transactions. In order to provide a service that works with Bitcoin, we had to come up with our own payment solution. The Bitcoin basically enters the Bitcache wallet system and off the chain," Dotcom added.

blockchainDotcom said once the transactions leave the Bitcache system, they will be accounted for on the blockchain. He believes there really isn't a "major security concern" because the transfers are only dealing with microtransactions. The Mega creator did mention in the broadcast that the default transfer amount per file is roughly five cents. He said, however, he doesn't believe people will be keeping significant amounts of funds in Bitcache wallets.

The Mega 2/Bitcache fundraising round continues, and Dotcom seems very excited about the project. He's boasted many times that Mega 2 will bring Bitcoin's price to $2,000 per coin. He also noted he would love if developers fixed the limitation, as he would love to have the platform operate on-chain.

"Right now we just can't do it because our expectations are that we will have millions and millions of users from the get-go. Providing critical mass to the service and we don't want a limiting factor to be the blockchain," he said.

Monday, October 10, 2016

How Bots Are Fueling High-Speed Bitcoin Trading


Investors have benefited from algorithmic ('algo') trading programs under many different circumstances, but these 'trading bots' can prove particularly valuable to those interested in cryptocurrencies.

Bot trading has reduced user error, enabled more rapid processing of information and given traders more time and flexibility. However, it may hold even greater potential in the crypto markets due to their immature nature.

Trading bots have been around for decades, seeing growing use in stock markets as digitization has taken hold. However, the digital currency markets are less than a decade old and with far less tenure than more mature markets, have had significantly less time to integrate algo trading.

Tim Enneking, chairman of cryptocurrency investment manager EAM, highlighted the differences between high-frequency trading (HFT) in traditional markets and those for cryptocurrencies.

He told CoinDesk:

"When it comes to use HFT for stocks, milli – and even micro – seconds matter. However, for cryptocurrencies, these very small increments of time are not nearly as important."

By harnessing algo trading, investors can obtain access to a wide range of trading strategies. HFT, for example, necessitates the use of software because it involves very rapid trades.

Arbitrage trading

Another strategy traders can access through trading bots is arbitrage – buying assets in one market and then selling them in another for a higher price, thus earning profit on the difference.

"Generally, bot trading can be profitable beyond a short period of time if it involves a sort of insightful arbitrage," Petar Zivkovski, director of operations for leveraged bitcoin trading platform Whaleclub told CoinDesk.

Further, there is more than one form of arbitrage, said Arthur Hayes, co-founder and CEO of leveraged bitcoin trading platform BitMEX, who elaborated on several other approaches.

Traders can look to profit from strategies involving futures contracts, Hayes noted. For example, they can benefit from the difference that exists between a futures contract and its underlying asset, an approach called futures arbitrage.

Investors can seek profits from the difference in prices of futures contracts based on the same underlying asset, but that trade on different exchanges.

Market making

Another strategy investors can access through trading bots is market making.

Hayes described this practice as "providing continuous buy and sell prices on a variety of spot digital currencies and digital currency derivatives contracts" in an effort to "capture the spread between the buy and sell price".

Zivkovski said that this practice involves "placing limit orders, generally near the current market price, on both sides of the book" meaning both buy and sell orders. Over time, as prices fluctuate and a trader's algo program automatically and continuously places orders, he or she can profit from the resulting spread.

However, he added the caveat that the intense competition surrounding this practice can make the strategy unprofitable, "especially in low liquidity environments".

"There is only so much firepower to go around," Zivkovski said.

Getting started

Fortunately, anyone can participate in bot trading. Traders can use off-the-shelf solutions, though relying on pre-made software programs can prove dangerous, noted algorithmic trader Jacob Eliosoff.

"Any money-making machine you can just buy and turn on will quickly get bought by lots of other people too, and there go your profits," he said. "Often even the initial profits are a mirage."

Investors who are new to bot trading might want to either learn programming or find an open-source bot they can configure based on their view of the market, Zivkovski said.

Hayes offered some slightly more technical advice, emphasizing the key importance of risk management and error handling.

"There is no standard Application Programming Interface (API) for all digital currency exchanges, and some exchanges have better API's than others," he said. "This means that a lot of time and energy needs to be spent making sure the trading logic can handle outages and properly calculates portfolio risk metrics."

Once a trader has developed and implemented their solution, constant revision is required, Enneking explained, adding:

"Algo trading is not a fire-and-forget missile. You don't just let it run by itself for extended periods."

Why Weight? Bitcoin Scaling is Moving Beyond Block Size


"We were all busy arguing about the block size, but everything else is crucial."

That statement, by Cornell's Emin Gün Sirer, may have come in the middle of the second and final day of the Scaling Bitcoin conference, but it was perhaps the overriding theme of this year's edition of the digital currency network's developer summit.

Despite the public visibility of a protest event scheduled in parallel with the conference, the content of this year's event did much to showcase that, for many developers, the "block size" is no longer a significant factor in discussions on how the network should increase capacity.

Over the course of both days, talks largely moved on to more incremental discussion of the various "trade-offs" that should be considered when making changes to bitcoin's basic components and the complex ways they interact.

Bitcoin Core developer Eric Lomborozo told CoinDesk:

"All engineering requires trade-offs. We're trying to figure out the range of possibilities and what trade-offs are more preferable."

Still, Lombrozo acknowledged that the block size (and the pronounced and public feud over whether to change the hard-coded limit to the number of transactions bitcoin can process) remains a "cultural phenomenon", one its technical community is still trying to move forward from as it navigates a market now dominated by blockchain solutions.

The day's talks provided a deeper explanation of subtle change in thinking, with Blockstream principal architect Christopher Allen noting that the social consensus of developers has deemed the block size a non-issue.

"I think it was very clear after [the previous conference], which debuted SegWit, that there's now a rough consensus of how things are going. The technical community is already a few steps beyond that," he explained.

Blockstream's Greg Sanders, emphasized the argument in his morning talk centered on lessons he hopes the community takes away from progress on Segregated Witness, a planned soft fork that will change how transactions are stored by the network and that continues to inch toward implementation.

"Let's stop talking about the block size. Let's talk about weight, the weight of a transaction, the weight of a block, the externalities it puts on the system. Let's talk about throughput. We can put more information in small spaces, so let's look at these problems," Sanders said.

Put more flatly, Blockstream's Jorge Timón said the block size is simply: "not an interesting topic."

'Social fork'

Yet while Timón spoke for the majority of attendees surveyed, a vocal minority was still represented at the conference in full force, a development Wong called a "social fork".

Investor Roger Ver, a vocal proponent for larger blocks, held a "Free Speech Party" on the night of the first event. Attracting roughly 20 guests to a nearby hotel, the event saw the screening of proposals that were rejected from the Scaling Bitcoin conference, as well as discussion on why capacity should be dramatically increased to accommodate more users.

That meeting emphasized discussion of a proposal for "Xthin blocks", as well as work by researchers to prove how larger bitcoin blocks, as enabled by an alternative proposal called 'Bitcoin Unlimited', could be executed on the network without increasing the time it takes for the blocks to relay to nodes and miners located around the globe.

Also aired were reasons why the initiative should have been considered by the Scaling Bitcoin conference, as well as fears that an alternative digital currency could overtake bitcoin's market position. Further, attendees criticized the conference's approach as "not data driven", while top-level bitcoin scaling initiatives like Lightning were dismissed as "vaporware".

Bitcoin Unlimited's Jerry Chan, who spoke and attended both events, said he believes the decision to exclude the talk was due to a desire to "avoid contention at all costs".

"I think that some of the talks that were excluded would have been very useful because they directly address issues that were brought up in the past," he said.

Perhaps most notable, however, was who the protest event attracted, as major mining sector representatives, including Bitmain's Jihan Wu and ViaBTC's Haipo Yang attended.

Incremental changes

Elsewhere, the theme of the day's talks was on smaller changes that could be made to the network, and the sometimes intricate side-effects they may have on bitcoin at large.

For instance, Blockstream's Peter Wiulle gave a talk on Schnorr signatures and how they compare to the elliptic curve digital signature algorithm (ECDSA) bitcoin uses to ensure funds are spent by their owners. Still, the talk highlight just how much work would need to happen should even this small tweak to bitcoin's gears be considered.

"Schnorr signatures are not a standard. ECDSA is a document that exactly specifies all the math that needs to happen," Wiulle said. "Schnorr is a general idea."

With Schnorr signatures, Wiulle presented how the concept is now enabled by SegWit and how it could require only one signature for transactions with multiple inputs, and that only this signature to be sent across the network for the transaction. However, he noted how bitcoin's address structure posed a problem for the change, as did new potential attack vectors, leading him to ultimately call for more academic work on the idea.

Yet another talk, on the performance of proof-of-work blockchains, saw a comparison of block propagation on the bitcoin network and other alternative blockchains.

Here, presenter Arthur Gervaise of ETH Zurich reviewed how simulations conducted at the Swiss university show the time between bitcoin blocks, currently set for roughly 10 minutes, could be reduced to 1 minute, while enabling 60 transactions per second safely.

That's not to say that big ideas were not discussed, as some proposals saw prominent developers including Peter Todd and David Vorick overview radical ways to rethink how bitcoin could work.

Particularly notable was Todd's talk on scaling via client-side validation. Here, Todd posed the question of whether miners were needed to validate transactions at all, questioning how redefining their relationship with nodes (a fundamental building block) could lead to better scalability.

"You can say miners validating is kind of an optimization. It does have some interesting social effects. I can create this rule and a litecoin and bitcoin can exist on the same system," Todd theorized.

Academic mindshare

Yet, there was a sense that bitcoin's emphasis on fundamentals is perhaps frustrating to academics intrigued by how it could solve larger issues.

For example, Sirer's talk on an update to his 'Bitcoin Vault' proposal, in which 'covenants' would be added to transactions as a way to restrict the risk they could be executed a malicious actor in the event of theft. In a Q&A session, the idea was met with more pointed questions.

There was particular disagreement, acknowledged in the talk by Sirer, about how this would compromise the fungibility of individual bitcoins, or the property by which any one bitcoin can be exchanged for any other. However, Sirer called for a willingness to except perhaps imperfect solutions to the negative side effects.

"At the end of the day fungibility is already not protected by any in-protocol mechanism, it's protected by the social contract that we must have fungibility," he said.

In comments, visiting academic Bryan Ford of École polytechnique fédérale de Lausanne (EPFL), noted he would have liked to have seen more examples of "significant improvements".

A self-proclaimed "outsider", Ford questioned how much he would continue to invest in the community given that the narrow focus.

As such, the comments point to the divisions that could be forming around the bitcoin community, even as it tries to put more contentious scaling debates in the past.

However, Ford at least acknowledged progress has been made, adding:

"It's good that it's at least diversified beyond block size."

Friday, October 7, 2016

Nasdaq Wants to Patent Blockchain Backups for Exchanges


Nasdaq is looking to patent a way in which a blockchain can be used to record exchange transaction records.

On 6th October, the US Patent and Trademark Office (USTPO) released an application for "systems and methods of blockchain transaction recordation", originally submitted by Nasdaq on 31st March. It is attributed to Tom Fay, Nasdaq's senior vice president of enterprise architecture, and Dominick Paniscotti, associate vice president for enterprise architecture.

Essentially, the application details an exchange system comprising digital wallets, an order book and matching engine, with a "closed blockchain" utilized as a record of transactions that is updated in real-time as participants act.

As the application details:

"A match is identified between data transaction requests and hashes associated with the digital wallets associated with the respective data transaction requests are generated. The counterparties receive the hashes of the other party along with information on the match and each party causes blockchain transactions to be added to the blockchain of the blockchain computing system."

From there, the exchange checks the contents of the blockchain, looking for the data associated with those digital wallets. An additional backup of that information is also kept in a separate database.

It's perhaps unsurprising that Nasdaq would move to file applications related to the technology. Last year, the exchange operator unveiled Linq, a blockchain project focused on private markets, and in May, it launched new blockchain services for its global client base.

The application's contents reveal that the company is largely looking to apply claims to the method of using a blockchain in an exchange environment, rather than the system itself. USTPO records show that Nasdaq originally sought a number of claims related to the tech, but that these were cancelled after the application was first filed in March.

So, Ethereum's Blockchain is Still Under Attack…


You might not have noticed, but ethereum is under attack.

What began over two weeks ago with spam attacks that led to large-scale ethereum node outages has escalated into a battle that has pitted the platform's developers against unknown antagonists. This might sound like an exciting Hollywood movie, but it's mostly been carried out on message boards and with code.

Shots were first fired at ethereum's big developer conference, Devcon2, with a mysterious message written in German and delivered via transaction method payload. The message said "Go home", but to those who have been following the network's contentious changes this summer, the full meaning was clear.

Since then, block creation and transactions have continued to be impacted, with nodes syncing up to the network more slowly. But while various fixes have since been implemented, the attacker continues to find vulnerabilities to exploit and, in turn, create new ways to launch denial-of-service (DoS) attacks.

The result: the network is being flooded with transaction spam.

Blockstack co-founder Muneeb Ali called it a "cat-and-mouse game" that could potentially continue to slow down transactions on the network, the second most popular by market cap.

Most of the attacks have thus far affected nodes running the Go-version ethereum client (Geth), the most popular implementation of ethereum, though Parity, an alternative client released at the conference, has been impacted in some instances.

The latest release, called "Dear Diary", aims to stop the "root cause" of many of the attacks with a technique called "journalling."

Anatomy of an attack

One problem that has emerged for client developers is that those behind the attack are constantly switching their tactics.

The attacker or attackers are deploying smart contracts to the ethereum blockchain, and then committing transactions that impact how clients handle data, slowing them down to the point that blocks and transactions become delayed.

(For a peek into what's going on, see the barrage of small transactions sent by the attacker to overwhelm the network).

The first line of attack targeted an out-of-memory bug, which the Geth team moved to fix in a subsequent software update.

"In ethereum one of the challenges is that we have this huge database that grows much faster for example than bitcoin," said ethereum developer Péter Szilágyi, who works on Geth, adding that the attackers have taken advantage of this issue.

"We never thought about this attack vector," he added.

The focus on Geth has prompted some users to spin up nodes using Parity. In the wake of the first attacks, most miners made the switch.

However, Geth is still by far the most popular client, numbering nearly 7,000 nodes compared to Parity's 900, although the numbers are constantly fluctuating.

Meanwhile, Ethereum Foundation IT consultant Hudson Jameson chose to emphasize that the Geth team has been able to fix every issue that's been thrown at it so far. This argument was also stressed by ethereum miner Jonathan Toomim, who called the fixes, deployed within days, "impressive".

"The network will go on, and these nuisance attacks will stop eventually," he reasoned.

Yet for how long remains unclear. Each time Geth or Parity releases an update, the attacker finds a new vulnerability.

Those behind the attacks don't seem to mind the cost of doing so, having spent thousands of dollars worth of ether – the cryptocurrency of the ethereum network – to fuel the attacks.

"To date, the attacker has spent over $3,000 worth of ether, solely in gas-costs," Jameson estimated.

Impact on users

Many argue that the attacks are an inevitable result of the way ethereum is designed, and that it has a  "large attack surface."

More on-platform capabilities means that there are more opportunities for trouble, at least compared to other blockchain networks, which are less ambitious..

"The larger problem is that the way ethereum is designed. There's too much exposure so the attacker can trigger certain things or send certain types of transactions," Ali said. "Think of it this way: ethereum allows people too much freedom over what they can do to someone else's computer."

Even if Geth nodes are no longer crashing completely, however, it has resulted in an overall slower network, making ethereum less available to anyone who want to spin up a smart contract or send a transaction.

Since the attacks, some users have reported having problems accessing their funds with Mist, the popular ethereum wallet.

One user even observed when switching pools that mining profitability has decreased for smaller pools, which is potentially a concern for an ecosystem that doesn't want bigger miners to have more control.

The network is also more vulnerable overall if all of its nodes are not functioning properly.

"Causing large portions of the nodes or miners to drop off the network, or fall behind, is naturally rather severe, since such attacks can be a prequel to a double spending-attack," Jameson said.

However, some users seem unfazed, with many developers continuing to work on other projects. Two ethereum projects, FirstBlood and SingularDTV, held crowdsales to raise project funds amid the attack.

Finding a fix

As far as reducing the impact, developers have come up with ideas for how to fix the problem with medium- to long-term changes, in what Jameson calls an "ecosystem-wide effort."

"One of the solutions is to make it more expensive to perform these kinds of attacks," Szilágyi said.

He explained that raising the prices for certain ethereum commands might mean protocol-level changes to Metropolis, ethereum's next big software release that is intended to be more developer-friendly.

Jameson also mentioned rebooting the bounty program, through which developers can earn bitcoin for detecting and reporting bugs. "That way people can submit their flaws legitimately instead of attacking the network," he said.

However, his hope is that the detection of these bugs will make ethereum stronger in the end.

"In the long-term, these attacks increase the resiliency of the Ethereum network," Jameson added said, arguing that the diversity of clients handicaps an attack from impacting all nodes.

Role of the foundation

Others seem to think that it's unclear how quickly that ethereum will recover.

"The Ethereum Foundation is trying to downplay them and spin the situation in a good way, saying that attacks will help to harden the network," ethereum classic lead developer, Arvicco, argued.

While the comments are not surprising given that he leads an alternative project, they point to the overall sentiment of those who have been critical of the organization that funds protocol development and its handling of the situation.

Others remain uncertain what to take away just yet.

Ali said he thinks ethereum team has done a good job thus far in addressing the vulnerabilities.

Still, he suggested there might be no end in sight should ideological motivations to disrupt the network continue unabridged, but that this ultimately might be the best outcome.

"[By then,] most of the practical issues with the software are fixed so that it becomes hard enough and it's no longer a problem," he said, adding: 

"I think it's hard to predict."