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What is Bitcoin?

Bitcoin is a digital crypto-currency with no single point of failure due to its decentralized peer-to-peer architecture. The source code is publicly available and changes to the reference Bitcoin client are made via concensus within the community. Advantages of Bitcoin include irreversible transactions (i.e. no possibility of chargebacks as with credit cards), pseudo-anonymous, limited and fixed inflation, near instant transactions, multi-platform, no double-spend and little to no barriers to entry and more. It was created by an anonymous person known as Satoshi Nakamoto. Find out more at WeUseCoins.com.

Bitcoin Latest News

Segregated Witness Activates on Bitcoin: This is What to Expect

segwit acti.jpg

The Segregated Witness (SegWit) soft fork has activated on the Bitcoin network.

As of block height 481,824, found at 1:57 UTC by BTCC, all SegWit ready nodes started enforcing the new SegWit consensus rules. As Bitcoin’s biggest protocol upgrade to date, this introduces a whole new data structure, which changes the appearance of Bitcoin blocks for upgraded nodes — though non-upgraded nodes should continue to function as normal.

More concretely, SegWit activation means that Bitcoin’s block size limit is replaced by a block “weight” limit, which allows for blocks to increase to up to 4 megabytes in size. Additionally, and perhaps more importantly, SegWit transactions won’t suffer from the “malleability bug,” which in turn enables advanced second-layer protocols like the Lightning Network, atomic swaps, MAST, and more.

Here’s what to expect for the next couple of hours, days, weeks, months and beyond…

The Block Size Limit Becomes a Block Weight Limit

Depending on the types of transactions included, Bitcoin blocks can now be up to 4 megabytes big — though 2 megabytes is a more realistic maximum.

However, this doesn’t mean that all blocks will immediately bump to 2 megabytes in size today. For a transaction to utilize the added space, it must be sent from a SegWit address (or more accurately, a Segwit “output”) — not just to a SegWit address.

At the time of activation, of course, no bitcoins were locked up in SegWit addresses whatsoever. That wasn’t possible up till now. So at the very least, bitcoins must be spent once to a SegWit address. Only when they’re spent again will they benefit from the extra space.

Additionally, wallets and other applications need to be ready to accept SegWit transactions. Some wallets, like GreenAddress, may offer this option on day one, or shortly thereafter. “We had this in testnet on by default for a very long time now,” GreenAddress developer Lawrence Nahum told Bitcoin Magazine. “We’ll make it's available almost immediately after activation; we just want to make sure activation is smooth before we enable it.”

Similarly, large Bitcoin service providers could start accepting SegWit transactions right away, though some may need more time to prepare. BitGo, a Bitcoin infrastructure provider for major exchanges like Bitstamp, Kraken and OKCoin, expects to be SegWit-ready relatively soon as well.

BitGo engineer Jameson Lopp told Bitcoin Magazine:

“We’ve not set an actual date, though we certainly want to deploy it as soon as possible. I expect general availability sometime next week.”

Some other wallets and services, however, may take a little longer; how long will differ from wallet to wallet.

Lightning and More

Arguably even more highly anticipated than an increased block size, second-layer technologies like the Lightning Network or, further out, Merkelized Abstract Syntax Trees (MAST), will be more easily built on top of Bitcoin, thanks to Segregated Witness,

Most of this technology is still a work in progress, and it could take several more months before regular users are expected to use it. That said, it is likely that there will be experimentation on Bitcoin’s mainnet rather soon, according to Lightning Labs CEO and cofounder, Elizabeth Stark.

“Today we released version 0.3 alpha of our Lightning Network Daemon software, which is the last major release before our mainnet beta release,” said Stark to Bitcoin Magazine. “We're not giving any exact predictions, but our goal is to get it up and running as soon as it's thoroughly tested and stable. We may also see some test mainnet transactions by developers once SegWit activates.”

And even when the Lightning Network is functional and in use, it will take a little longer to roll out more advanced features that utilize the Lightning Network or similar protocols. These include atomic swaps, which allows for the instant and (near) costless exchange of cryptocurrencies over different blockchains, like bitcoin and litecoin. And Stark said a larger development ecosystem is growing around the technology as well.

“We're seeing app development on the Lightning Network taking off, which we're very excited about. Once the mainnet releases are out, we expect there to be a bunch of apps working on the Lightning Network out of the box,” she added.

Further, more nuanced benefits of SegWit, such as faster transaction signing by hardware wallets, will be available within a matter of days.

The Risks

At this point in time, SegWit activation does still present some risks for users.

The first risk applies to all soft forks, and depends on miners actually enforcing the new rules. If some don’t, non-upgraded nodes as well as many light clients in particular could accept invalid transactions and blocks, at least until the network corrects that through a blockchain reorganization (“reorg”). In the past, soft forks caused some (minimal) network disruption, but the risks do seem limited this time around.

“I suspect that the reorg risk is relatively low for full nodes with SegWit. The only prior case like this was that validationless mining chain-split two years ago, but that didn't affect full nodes,” Blockchain consultant Peter Todd told Bitcoin Magzine. “And fortunately Bitcoin Core includes a lot of improvements to speed that older and alternative implementations don't have, so there's a good chance basically all miners are running Bitcoin Core with only small modifications to non-consensus code, if any.”

Additionally, the first couple of hours after activation could open a small window for advanced types of miner attacks, which resemble (or are) 51% attacks. If large amounts of bitcoin are sent to SegWit addresses after activation, miners could theoretically still “roll back” the blockchain to a point in time before activation to re-build it from there. Since SegWit outputs are not secure before activation, such a rollback could allow miners to steal these funds.

Luckily, like any other 51% attack, the costs to perform this attack increase for every block that is found after activation, to the point where the attack becomes infeasible within a couple of hours. That said, it is probably wise not to send huge amounts of bitcoin to SegWit addresses straight away, and instead to wait at least a couple of hours or maybe days.

Lastly, Todd pointed out that some (untested) services may fail shortly after SegWit activation, as they have likely only integrated SegWit support partially. “For example, remote procedure calls could request SegWit transactions, while at the same time rejecting these transactions because they didn’t expect to get them.” These kinds of issues should be easy to fix, however.

Also read Bitcoin Magazine’s cover story for the month: The Long Road to SegWit: How Bitcoin’s Biggest Protocol Upgrade Became Reality

/articles/long-road-segwit-how-bitcoins-biggest-protocol-upgrade-became-reality/

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The post Segregated Witness Activates on Bitcoin: This is What to Expect appeared first on Bitcoin Magazine.

Posted on 23 August 2017 | 8:01 pm

Big Governments Will Crush Bitcoin, But Won't Kill It - Forbes


Forbes

Big Governments Will Crush Bitcoin, But Won't Kill It
Forbes
... against the ultra-accommodative policies of central bankers, and the rise of geopolitical tensions in Asia. Add venture capitalists, who saw Initial Coin Offerings (ICOs) as a process to make quick bucks, and you have a Bitcoin bubble blooming like ...

Posted on 23 August 2017 | 6:27 pm

Floyd Mayweather Just Promoted His Second ICO on Twitter

Floyd Mayweather, Jr., just promoted another ICO.

Posted on 23 August 2017 | 4:36 pm

MGT Capital Raises $2.4 Million to Expand Bitcoin Mining Operation - CoinDesk


CoinDesk

MGT Capital Raises $2.4 Million to Expand Bitcoin Mining Operation
CoinDesk
Bitcoin mining is an energy intensive process by which new transactions are added to the blockchain, with new coins being created as a reward for the miner that creates the next transaction block. Profits are earned when the proceeds of mining exceed ...

and more »

Posted on 23 August 2017 | 4:04 pm

China's Fosun Group Buys Stake in Blockchain Startup

Chinese conglomerate Fosun Group has invested in Shanghai blockchain startup Onchain.

Posted on 23 August 2017 | 11:44 am

Bitcoin and Ether rise, helping take crypto space above $150 billion market cap - MarketWatch


MarketWatch

Bitcoin and Ether rise, helping take crypto space above $150 billion market cap
MarketWatch
The price of digital currency bitcoin rose on Wednesday, putting it on track for a second straight daily increase, a rally that took total market capitalization of the entire cryptocurrency space above $150 billion. Ether, the chief rival to bitcoin ...
Bitwala: We Will Not 'Fork Away' from Bitcoin Version Core SupportsCoinTelegraph
SegWit Goes Live: Why Bitcoin's Big Upgrade Is a Blockchain Game-ChangerCoinDesk
Segregated Witness Activates on Bitcoin: This is What to ExpectBitcoin Magazine
CoinJournal (blog) -Bitcoin News (press release) -CryptoCoinsNews
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Posted on 23 August 2017 | 10:49 am

Chasing Profit? Bitcoin Miners Swap Networks As Difficulty Swings

A change to the bitcoin cash blockchain has provided further clues as the evolving relationship between the two competing blockchains.

Posted on 23 August 2017 | 10:45 am

Bitcoin Price Struggles To Break Free Of Current Range - Forbes


Forbes

Bitcoin Price Struggles To Break Free Of Current Range
Forbes
Iqbal Gandham, UK Managing Director of social trading platform eToro, also asserted that Bitcoin's relative stability would only be temporary, asserting that the $4,000 level was "starting to look like a great consolidating step prior to the next push ...

Posted on 23 August 2017 | 9:35 am

Bitcoin Transactions Aren't as Anonymous as Everyone Hoped - MIT Technology Review


MIT Technology Review

Bitcoin Transactions Aren't as Anonymous as Everyone Hoped
MIT Technology Review
An increasing number of online merchants now offer the ability to pay using the cryptocurrency Bitcoin. One of the great promises of this technology is anonymity: the transactions are recorded and made public, but they are linked only with an ...
Bitcoin IRA Reviews - How To Put Bitcoins In Your Retirement AccountHuffPost
Chasing Profit? Bitcoin Miners Swap Networks As Difficulty SwingsCoinDesk
Middle America Is Crazy in Love With BitcoinNBCNews.com
MarketWatch -Forbes -Futurism
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Posted on 23 August 2017 | 9:27 am

Hackers Swipe Bitcoin by Stealing Your Cell Phone Number First - Inc.com


Inc.com

Hackers Swipe Bitcoin by Stealing Your Cell Phone Number First
Inc.com
Hackers are identifying bitcoin and other virtual currency investors and users online, figuring out which telecommunications provider they use, and convincing a cell provider customer service agent to transfer the number to a provider and device under ...
Hackers have found a vulnerability and are targeting BitCoin ownersForexLive

all 11 news articles »

Posted on 23 August 2017 | 8:52 am

Bitcoin Prices Are Up Over $100 Already Today - CoinDesk - CoinDesk


CoinDesk

Bitcoin Prices Are Up Over $100 Already Today - CoinDesk
CoinDesk
The average price of bitcoin across global exchanges is trending up, having already climbed over $100 during today's trading. At press time, bitcoin prices were ...
Bitcoin price rises again above $4,000 - but will it hit a new all-time ...Telegraph.co.uk
25-Year-Old Bitcoin Millionaire Travels the World, Becomes Bitcoin BoosterCoinTelegraph

all 3 news articles »

Posted on 23 August 2017 | 7:08 am

Bitcoin Prices Are Up Over $100 Already Today

The average price of bitcoin across global exchanges is trending up, having already climbed almost $130 during today's trading.

Posted on 23 August 2017 | 7:00 am

WikiHow Users Can Now Secure Their Online Identities with Civic

WikiHow Users Can Now Secure Their Online Identities with Civic

Blockchain-driven digital identity fraud firm Civic has partnered up with wikiHow​ ​to provide its user base with login security.

The partnership will mean that around 150 million monthly wikiHow users will now able to use Civic’s identity platform to log in securely with a verified identity, without needing a username and password.

Vinny Lingham, CEO of Civic, said in a statement: “We are pleased to officially welcome wikiHow to Civic’s Partner Network. This collaboration illustrates our continuing, strong momentum in building our ecosystem for on-demand, secure and low-cost access to identity verification services.”

Civic says it will help improve wikiHow’s user experience, providing users with a more secure account creation and login process.

WikiHow is an open source online “how-to” platform that operates in 87 different languages. Its focus is on “teaching anyone in the world how to do anything” in a collaborative, shared-learning environment.

The advantage for wikiHow in this collaboration with Civic is that it can now verify that user accounts are created using true identities and it won’t have to deal with security hassles associated with weak passwords and password resets. All user data is encrypted in the Civic app on the user’s device and never stored by Civic or wikiHow.

"Working with Civic, wikiHow provides greater trust and security to its users," Lingham told Bitcoin Magazine. "With the Secure Identity Platform, Civic helps ensure all wikiHow accounts are created by the true owner of the identity data — which ultimately ensures that wikiHow's how-tos are created and edited by verified users."

"wikiHow is partnering with Civic because we believe in their long-term goal of decentralized identity," said Jack Herrick, CEO of wikiHow in a statement. "We hope to live in a future where people, not corporations, control their own personal information."

In an earlier interview with Bitcoin Magazine, Lingham talked about the problem of distributed mobile identity. “This is what we are focusing on now,” he said, “to build the world’s largest identity platform, powered by technology that decentralizes and secures consumer identity information.”

In June Civic sold $33 million in ICO tokens. Civic tokens provided access to the product while allowing token holders to benefit from its network effect.

The company also received $2.75 million in funding via Social Leverage, an early-stage seed investment fund, as well as through various VC firms that are engaged in Bitcoin and blockchain technology, including Pantera Capital, Blockchain Capital and Digital Currency Group.

Lingham is a vocal advocate for Bitcoin and the blockchain movement both in the media and at industry events. He was a leading pioneer in the effort to integrate bitcoin payments at Gyft during his tenure there.

He believes that blockchains are likely the most secure place to store information right now, which is why Civic is constantly assessing opportunities to leverage and capitalize on the emerging technology.

This article was updated in include new quotes from Vinny Lingham and Jack Herrick.

The post WikiHow Users Can Now Secure Their Online Identities with Civic appeared first on Bitcoin Magazine.

Posted on 23 August 2017 | 6:49 am

How-To Website WikiHow Partners With Blockchain Startup Civic

Popular how-to website wikiHow is partnering with blockchain startup Civic to boost the security of its login process.

Posted on 23 August 2017 | 6:30 am

$150 Billion: Total Cryptocurrency Market Cap Hits New All-Time High

The combined value of all publicly traded cryptocurrencies has set a new record, surpassing $150 billion for the first time today.

Posted on 23 August 2017 | 5:31 am

IRS Uses Chainalysis to Track Down Bitcoin Tax Cheats - CoinTelegraph


CoinTelegraph

IRS Uses Chainalysis to Track Down Bitcoin Tax Cheats
CoinTelegraph
The IRS is actively seeking out tax evaders using Bitcoin, employing tools like Chainalysis to unmask them. Many people believe that Bitcoin is anonymous, but it is in fact pseudonymous. All transactions linked to a particular address are visible on ...

and more »

Posted on 23 August 2017 | 5:03 am

Silicon Blockchain: Intel's Distributed Ledger Strategy Is All About Hardware

Upending the narrative that software is key in the blockchain space, Intel details its years-long effort to link distributed ledgers to hardware.

Posted on 23 August 2017 | 5:00 am

Brazil's Ministry of Planning Is Testing Blockchain Identity Tech

A government agency in Brazil is investigating how it could leverage blockchain technology to verify the legitimacy of ID documents.

Posted on 23 August 2017 | 4:00 am

Advertise with Anonymous Ads

Lightning's Tadge Dryja is Working On a Bitcoin Cash 'Splitter'

Lightning Network creator Tadge Dryja is developing a tool to help bitcoin users safely claim their newly created bitcoin cash.

Posted on 23 August 2017 | 2:00 am

Russian Real Estate Firm Experiments With Selling a Luxury Mansion for Bitcoin

Russian house for sale in crypto

The Russian real estate firm Kalinka Group has announced that once of its clients is selling his luxurious home for bitcoins. The 4200 square foot country mansion is located in the village of Nikolino, situated in a fashionable neighborhood off the Rublevo-Upenskoe highway. According to the Kalinka Group, this is the first time in the history of the Russian real estate market that a client has offered to sell a property for cryptocurrencies.

"Such transactions are still a novelty, even for world real estate markets,” Ekaterina Rumyantseva, the chairman of the board of Kalinka Group, said in a statement. “We are pleased to be pioneers and open new frontiers in business.”

She pointed out that Russian legislation has not yet defined the rules for working with bitcoins, and so far there is no legal definition of the cryptocurrency. Also, as there is no regulatory or legal framework governing the sale, the agency's service fees will still be paid in the national currency, rather than in bitcoin.

The legal department of the Kalinka Group is currently investigating whether the sale of a property for cryptocurrencies is legal, according to the laws of Russia.

The real estate firm cited China and Switzerland as examples of countries that consider bitcoin to be a tangible asset, which means a transaction is possible under the “barter agreement.”

However, if cryptocurrencies are considered cash in Russia, according to the law on foreign exchange operations, a transaction in BTC would be impossible since the only currency permitted in the sale of Russian real estate is the Russian ruble.

Kalinka Group recognized that volatility is another issue to consider when property sales are listed and transacted in cryptocurrencies. The real estate company acknowledged that bitcoin is much more volatile compared to other currencies, thus, exchanging the payment into rubles can “significantly change the value of the object.”

"The sale of the house in Nikolino will probably become a precedent in the legal practice and real estate market. We [will] carefully study the world experience of conducting such transactions and understand that cryptocurrencies should be described at the legislative level in the shortest possible time because this innovative method of settlement is already able to affect the money turnover in business,” Rumyantseva said.

Kalinka Group added that since bitcoin is volatile, the exact value of the designer-furnished mansion — which has an open-air jacuzzi and a movie theater along with many other luxurious features — will have to be determined at the moment of the sale. At the time of the announcement, the house was listed for 3000 BTC.

The post Russian Real Estate Firm Experiments With Selling a Luxury Mansion for Bitcoin appeared first on Bitcoin Magazine.

Posted on 22 August 2017 | 4:01 pm

Exchange Strains Drive Crypto Exchange Kraken to Trim Trading Pairs

Kraken is making some platform changes in a bid to reduce the strain on its cryptocurrency exchange.

Posted on 22 August 2017 | 2:34 pm

Why Bcash Mining Shouldn't Affect Bitcoin Much (But Bitcoin Mining Could Ruin Bcash)

BCH vs BTC mining

For the past couple of days, Bitcoin Cash (Bcash or BCH) was more profitable to mine than Bitcoin (BTC). This has resulted in miners switching from Bitcoin to Bcash, causing a significant speedup of blocks on the Bcash chain, to the point where several dozens of blocks were found per hour. Meanwhile, the Bitcoin blockchain had slowed down significantly; in some cases only one or two blocks were found each hour.

In the short term, therefore, Bitcoin users were inconvenienced: they had to wait longer for their transactions to confirm, and they had to pay more fees to get them confirmed quickly.

In the longer term, however, this dynamic could make the Bitcoin Cash chain very unstable.

Here’s why.

Theory Versus Practice: Assumptions

It should first be noted that, for simplicity's sake, this article makes some assumptions that do not quite (or necessarily) hold up to the full extent in reality.

For example, the article will assume that all (or most) miners mainly care about short-term profits, it will assume that miners can switch between different blockchains at no (or little) cost, it won’t take into account that miners need to wait 100 blocks before they can spend their block rewards, and more.

Perhaps more importantly, the article will also assume that Bitcoin block rewards are more valuable than Bitcoin Cash block rewards. At the time of writing this is the case, by a relatively large margin. Both Bitcoin and Bcash miners are awarded at least 12.5 new coins per block, but BTC is about six times more valuable than BCH. On top of that, Bitcoin blocks contain significantly more fees.

While the reality of the situation is more complex than this, the overall dynamic should hold up — at least until and unless Bcash block rewards become more valuable than Bitcoin’s.

Normal Mining Dynamics

Miners mine to turn a profit, or at least that’s the assumption for this article. They invest resources — time, electricity, hardware, and more — in return for coins.

Mining profitability is determined by the value of the block reward, and the “difficulty” to mine a block. If the difficulty is higher, miners need to invest more resources to find a block. If the difficulty is lower, miners need to invest less.

Notably, what doesn’t actually matter for profitability in the short term, is how many other miners (by hash power) are mining on a particular chain. If many miners are, for example, mining on the Bcash chain, it just means that all these miners find Bcash blocks faster for a while.

This situation does self-correct over time, when the difficulty adjusts. On both Bitcoin and Bcash, difficulty adjusts once every 2016 blocks, which is “supposed” to happen every two weeks. If these 2016 blocks are found in less than two weeks, difficulty adjusts upwards, so the next 2016 blocks will be harder to find. If these 2016 blocks are found in more than two weeks, difficulty adjusts downwards, so the next 2016 blocks will be easier to find.

These adjustments happen relative to how much faster or slower blocks were mined than they were “supposed” to, but it can increase or decrease fourfold (x4 or x0.25) at most.

Bitcoin Versus Bcash

Now, since one Bcash block reward is currently worth about seven times less than one Bitcoin block reward, Bcash can only be more profitable to mine if its difficulty is more than seven times lower. (This has been the case for the past few days.)

But if that occurs, something interesting happens. From the very moment that Bcash is more profitable to mine, it immediately becomes more profitable to mine for all miners. In this hypothetical, all miners would immediately abandon the Bitcoin chain, and instead mine Bcash exclusively.

Of course, this can’t go on forever. If there are so many miners on the Bcash chain, the 2016 blocks will be found extremely fast. (This has been the case for the past few days.) As such, the next difficulty adjustment comes very fast too; potentially within a day or two. (This just happened.) Importantly, because that’s much too fast, the difficulty now adjusts upward by a lot: probably fourfold. (This just happened.)

That’s where Bcash's problems start.

At this point, Bcash’s difficulty is so high that Bitcoin is once again the most profitable chain to mine on. As such, after a lull of about two days, all miners should now switch back to mining Bitcoin.

Bitcoin’s difficulty, meanwhile, was already pretty high. Once all those miners switch back, the 2016 blocks may or may not be found a bit faster than usual. But nothing out of the ordinary.

As such, even after the 2016 Bitcoin blocks are found, not much changes. Bitcoin would still be more profitable chain to mine. Profit-maximizing miners would therefore all continue to mine on Bitcoin only.

And once the next difficulty period is over, once again, nothing will change. Bitcoin would still be more profitable for all miners.

Meanwhile, on the opposite end of the equation, no miners would mine on Bitcoin Cash whatsoever. It's not as profitable to mine. The Bcash blockchain should freeze in its tracks.

Bcash’s Solutions

Bcash does have solutions for this problem — sort of.

First off, Bcash implemented an emergency re-adjustment scheme to deal with situations like these. If, within a time-frame of twelve hours, fewer than six blocks are found, difficulty adjusts downward by 20 percent. This can help get difficulty down to normal levels quicker.

But that’s not a perfect solution in itself. For one, it does still require at least six blocks to be found, and probably more to get difficulty back to normal. This means that miners still need to mine on the Bcash chain at a loss, against their short-term interests. Furthermore, miners that are unfriendly toward Bcash could — somewhat ironically — mine on this chain just enough to prevent such a re-adjustment.

And even if some miners do mine on the Bcash chain toward a difficulty adjustment, it would just set the exact same dynamic in motion after a while. The Bcash chain would be more profitable to mine for a couple of days, after which difficulty shoots upwards and the chain should freeze in its tracks. Then these miners would have to, once again, mine at a loss to keep the chain alive, only to set the same dynamic in motion again. And again. And again.

Interestingly, this scenario could potentially benefit miners at large, especially if they coordinate. While some miners do need to mine against their short-term interests to reach the required difficulty adjustment, once that difficulty adjustment is reached, all miners get to sweep up massive amounts of block rewards within a day or two.

As long as there are buyers for these coins, such a stop-and-go cycle could be very profitable for miners in the long term. But it is of course not very desireable for users.

Other Solution(s)

This is not a new science.

Namecoin, one of the first altcoins, faced similar problems in 2011. After a sudden jump in hash rate, its chain got stuck, and it took months for ideologically motivated miners to work toward a next difficulty adjustment at a loss. This cycle repeated a couple of times, at which point Namecoin fixed the problem by “merged mining” the coin with Bitcoin. All Bitcoin miners can now automatically mine Namecoin using the same hash power, without needing to switch between chains. Many Bitcoin miners do.

The problem that Namecoin had to face is also a key reason why Litecoin's creator, Charlie Lee, decided to implement the Scrypt mining algorithm in Litecoin, another early altcoin. He realized that a secondary cryptocurrency should not compete with Bitcoin for hash power on the SHA256 algorithm at all, exactly because of the instability that would result. By picking an entirely different algorithm, miners can’t hop from one chain to another, thus resolving the problem as well.

And many other altcoins, like Ethereum, have much faster difficulty readjustment schemes. While this may technically still require miners to mine at a loss in some cases (and could have other detrimental effects), this situation should resolve within hours or days — not weeks or months.

If Bitcoin Cash chooses to adopt any of these solutions, the coin will probably require another hard fork.

Alternatively, of course, its block rewards will have to become more valuable than Bitcoin’s…

Thanks to Litecoin creator Charlie Lee for information and feedback.

The post Why Bcash Mining Shouldn't Affect Bitcoin Much (But Bitcoin Mining Could Ruin Bcash) appeared first on Bitcoin Magazine.

Posted on 22 August 2017 | 2:11 pm

Hyperledger Blockchain Consortium Reveals Hybrid 'Sawtooth Ethereum' Tech

In collaboration with Monax, Intel released Sawtooth Ethereum to allow ethereum smart contracts to be deployed on enterprise-grade Sawtooth platform.

Posted on 22 August 2017 | 1:15 pm

Op Ed: A Cryptographic Design Perspective of Blockchains: From Bitcoin to Ouroboros

A Cryptographic Design Perspective of Blockchains: From Bitcoin to Ouroboros

How does one design a blockchain protocol? Back in 2013, while in Athens, I set out to design a non-proof-of-work-based blockchain protocol motivated by the debt crisis in Greece, looming bank liquidity problems and the increasing discussions about the possibility of having a parallel currency. The new protocol had to be based on proof of stake to make sure that it can run even on cellphones and be secure independent of any computational power existing that is external to it.

Very soon it became clear that the problem was going to need much more than a few months’ work. Fast-forward three years to 2016: I was at the University of Edinburgh and had joined forces with IOHK whose CEO, Charles Hoskinson, was poised to solve the same problem. The protocol, “Ouroboros” as it would be eventually named, was there but the core of the security proof was still elusive when my good friend Alexander Russell visited me.

Together, we tackled the problem of proving the security of the system. Whiteboards were filled over and over again until we felt we mined a true gem: a clean combinatorial argument that enabled us to argue mathematically the security of the scheme. 

Diving Into the Mindset of a Cryptographer

Security is an elusive concept. Take a system that is able to withstand a given set of adverse operational conditions. When can we call it secure? What if it collapses in the next moment when it is subjected to a slightly different set of conditions? Or when it is given inputs different from any that have been tried before?

Security cannot be demonstrated via experiment alone since attacker ingenuity can rarely be completely enumerated within any reasonable timeframe. Cryptographic design, thus, has to somehow scale this “universal quantifier”: the system should be called secure only if it withstands all possible attacks.

In response to this fundamental problem, “provable security” emerged as a rigorous discipline within cryptography that promotes the co-development of algorithms and (so-called) proofs of security. Such proofs come in the form of theorems that, under certain assumptions and threat models that describe what the attacker can and cannot do, establish the security of cryptographic algorithms. In this fashion, modern cryptographic design pushes the “burden of proof” to the proposer of an algorithm.

In the world of academic cryptography, gone are the days when someone could propose a protocol or algorithm and proclaim it secure because it was able to withstand a handful of known attacks. Instead, modern cryptographic design requires due diligence by the designers to ensure that no attack exists within a convincing and well-defined threat model.

This approach has been a tremendously powerful and inspiring paradigm within cryptography. For instance, the notion of a secure channel has been studied for more than 40 years. This is the fundamental cryptographic primitive that allows the proverbial Alice and Bob to send messages to each other safely in the presence (and possibly active interference) of an attacker. Today’s provable security analysis, even using automated tools, has unearthed attacks against secure channel protocols like TLS that were unanticipated by the security community.

Back in 2009 though, the blockchain was a concept that was presented outside regular academic cryptographic discourse. A brief white paper and a software implementation were sufficient to fuel its initial adoption that expanded rapidly. In retrospect, this was perhaps the only way for this fringe idea to ripple the waters of scientific discourse sufficiently and force a paradigm shift (in the sense of Thomas S. Kuhn’s “Structure of Scientific Revolutions”) in terms of how the consensus problem was to be studied henceforth.

As the shift settled though, a principled approach became direly needed. The newly discovered design space appears to be vast and the avenues of exploring it too numerous. The “burden of proof” needs to return to the designer.

Blockchain protocols need to become systematized, as they have gradually become one of the dominant themes in distributed consensus literature. The blockchain is not the problem; it is the solution. But in this case, one may wonder, what was the problem?

In 2014, jointly with Juan Garay and Nikos Leonardos, we put forth a first description of “the problem” in the form of what we called a “robust transaction ledger.” Such a ledger is implemented by a number of unauthenticated nodes and provides two properties, called persistence and liveness. Persistence mandates that nodes never disagree about the placement of transactions once they become stable, while liveness requires that all (honestly generated) transactions eventually become stable. Using this model, we provided a proof of security for the core of the Bitcoin protocol (a suitably simplified version of the protocol that we nicknamed the “bitcoin backbone”).

Given this proof, a natural question a cryptographer will ask is whether this protocol is really the best possible solution to the problem. “Best” here is typically interpreted in two ways: first, in terms of the efficiency of the solution; and second, in terms of the relevance and applicability of the threat model and the assumptions used in the security proof.

Efficiency is a particular concern for the Bitcoin blockchain. With all its virtues, the protocol is not particularly efficient in terms of processing time or resource consumption. This is exactly where “proof of stake” emerged as a possible alternative and a more efficient primitive for building blockchain protocols.

So, is it possible to use proof of stake to provably implement a robust transaction ledger? By 2016, with our Bitcoin backbone work already presented, this was a well-defined question; and the answer came with Ouroboros: our proof-of-stake-based blockchain protocol.

Ouroboros

The unique characteristic of Ouroboros is that the protocol was developed in tandem with a proof of security that aims to communicate in a succinct way that the proposed blockchain protocol satisfies the properties of a robust transaction ledger. Central to the proof is a combinatorial analysis of a class of strings that admit a certain discrete structure that maps to a blockchain fork. We called “forkable” those strings that admit a non-trivial such structure, and our proof shows that their density becomes minutely small as the length of the string grows.

With this argument, we showed how there is an opportunity for the nodes running the protocol to converge to a unique history. The protocol then dictates how to take advantage of this opportunity by running a cryptographic protocol that enables the nodes to produce a random seed, which, in turn, is used to sample the next sequence of parties to become active. As a result, the protocol facilitates the next convergence step to take place; in this way, it can continue ad infinitum following a cyclical process that was also the inspiration for its name. Ouroboros is the Greek word for the snake that eats its tail, an ancient Greek symbol for re-creation.

Having the protocol and its proof in hand gave us the unique opportunity for peer review, i.e., asking fellow cryptographers to evaluate the construction and its associated security proof as part of the formal submission process to a major cryptology conference.

Peer reviewing at the top cryptology venues is a painstakingly rigorous process that goes on for months. Papers are first reviewed independently by at least three experts, and afterward a discussion for each paper rages on as the three reviewers, as well as other members of the scientific committee, get involved and try to converge on the intellectual merits of each submission.

As a result of successfully passing this rigorous peer review process, Ouroboros was accepted and included in the program of Crypto 2017, the 37th annual cryptology conference. Crypto is one of the flagship conferences of the International Association for Cryptologic Research (IACR) and is one of the most exciting places for a cryptographer to be, as the program always contains research on the cutting edge of the discipline.

Furthermore, Ouroboros will be the settlement layer of the Cardano blockchain to be rolled out by IOHK in 2017, making it one of the swiftest technology transfer cases from a basic research publication to a system to be used by many thousands in just one year.

While all this may seem like a happy conclusion to the quest for a proof-of-stake blockchain, we are far from being done. On the contrary, we are still, as a community, at the very beginning of this expedition that will delve deep into blockchain design space. There are still too many open questions to solve, and new systems will be built on the foundations of the research that our community is laying out today.

The views expressed in this op ed are those of its author, Aggelos Kiayias , and do not necessarily reflect those of Bitcoin Magazine or BTC Media.

Ouroboros image courtesy of Wikimedia Commons.


The post Op Ed: A Cryptographic Design Perspective of Blockchains: From Bitcoin to Ouroboros appeared first on Bitcoin Magazine.

Posted on 22 August 2017 | 11:35 am

Ripple's XRP Price Climbs 40% on Surge in Korean Trading

The price of XRP, the cryptocurrency of the Ripple network, rose more than 40% today.

Posted on 22 August 2017 | 11:29 am

Congressional Group Pushes for Blockchain Security Standards

Members of Congress are advancing research into blockchain security standards, according to a new podcast.

Posted on 22 August 2017 | 10:45 am

The IRS Has Been Using Bitcoin Tracking Software Since 2015

The IRS has been using software tools to track the movements of bitcoin for the past several years, according to a new report.

Posted on 22 August 2017 | 10:09 am

Bitcoin Price Analysis: Long and Short Squeezes Shape a Weakening All-Time High

Bitcoin Price Analysis

This morning, BTC-USD pushed a new all-time high on several exchanges. However, this time, the momentum to continue higher seems to be waning. Shortly after establishing the new all-time high, there was a $150 flash crash that sprang a series of account liquidations across several exchanges in a move that would ultimately “long squeeze” the market. A long squeeze is a term used to describe the sudden cascade of long positions getting stopped out of their positions, causing market orders to propel the price even lower:

Figure_1 (1).JPGFigure 1: BTC-USD, 5-Minute Candles, Bitfinex, Long Squeeze

The figure above shows the price movement correlated to the volume during the $150 drop. Halfway through the drop we see a sudden spike in sell volume. This spike in volume is the beginning of the “long squeeze” that initiated the cascade of market sell orders caused by traders in long positions being forced out of their positions via their stop-loss market orders.

Figure_2 (1).JPGFigure 2: BTC-USD, 15-Minute Candles, Bitfinex, Short Squeeze

Yesterday, at around 12 pm EST, the exact opposite thing happened in a market event known as a “short squeeze.” You can think of a short squeeze as literally the opposite of a long squeeze: People who are anticipating a great short entry are suddenly forced out of their positions via their stop-loss orders, and market buy orders propel the market higher, thus triggering more stop-loss orders until the market equalizes.

Today the BTC-USD market has begun a series of long squeezes that pulled the price down by $300 in a matter of hours, and it doesn’t show much sign of letting up at the moment. Let’s take a look at the macro trend and see where the market is likely heading:

Figure_3 (1).JPGFigure 3: BTC-USD, 3-Day Candles, Bitfinex

For the fifth candle in a row, the 3-day candles have managed to puncture the Bollinger Bands in a move that indicates an overbought market. We have yet to see an attempt to move within the Bollinger Bands and provide some relief for the high price range.

Zooming in a little closer, we can see that clear signs of bullish exhaustion formed as we began to push the most recent set of all-time highs:

Figure_4.jpg
Figure 4: BTC-USD, 2-Hour Candles, Bitfinex, Bullish Exhaustion

The first thing that pops out about this trend is the decrease in volume (shown in pink) leading into this morning’s all-time high. Upon reaching that high, sell volume began to pick up considerably (labeled in blue) and has continued to remain strong during the push into the $4300 and $4200 prices. The previous all-time highs (labeled in yellow) are currently paired with a decreasing MACD moving average/signal line trend that indicates the market is losing bullish momentum across the macro trend.

The BTC-USD market seems to be running on fumes at the moment, but I would not  be surprised at all to see an all-time high squeezed out of this market. However, I would be VERY surprised if that all time had any notable follow-through. The market volume on the macro levels has steadily declined, and there are key market indicators that hint toward the need for sustained sideways consolidation. Alternatively, a strong market pullback might be in the cards for BTC-USD. Each push toward the new highs has been greeted by strong sell volume. In the event of a market retracement, your key support levels on the macro exist along the Fibonacci Retracements shown below:

Figure_5.JPGFigure 5: BTC-USD, 4-Hour Candles, Bitfinex, Key Support Levels

When the market begins to struggle to push new all-time highs, it is important to keep a close eye on the volume and see how it interacts with the price movement. Consistent price growth on decreasing buy volume is a signal that the bears, although losing the battle in price currently, are gathering as the market nears its final top before ultimately correcting or consolidating. And given the price growth over the past 30 days, I would be inclined to lean toward the former rather than the latter.

Summary:

  1. Short squeezes and long squeezes have begun to shape the current market trend.

  2. On the macro and micro scale, the market is showing a highly overbought market and is beginning to lose upward steam.

  3. Key support levels lie on the Fibonacci Retracements shown in Figure 5.

Trading and investing in digital assets like bitcoin, bitcoin cash and ether is highly speculative and comes with many risks. This analysis is for informational purposes and should not be considered investment advice. Statements and financial information on Bitcoin Magazine and BTC Media related sites do not necessarily reflect the opinion of BTC Media and should not be construed as an endorsement or recommendation to buy, sell or hold. Past performance is not necessarily indicative of future results.

The post Bitcoin Price Analysis: Long and Short Squeezes Shape a Weakening All-Time High appeared first on Bitcoin Magazine.

Posted on 17 August 2017 | 2:57 pm

Bitcoin price climbs over $4,000

Posted on 14 August 2017 | 1:16 am

Bitcoin reaches new all-time high: $ 3,000

Posted on 12 June 2017 | 1:06 am

CRYENGINE now accepts Bitcoin

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Bitcoin Trading Bots

There have been a wide variety of situations in which algorithmic trading programs have proven to be beneficial for investors. However, investors who only trade a cryptocurrency can also take advantage of bitcoin trading bots. Through bitcoin bot trading, traders can become more flexible and prompt, minimize errors and process information more rapidly. At this… Read More »

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Steam accepts Bitcoin

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Microsoft accepts Bitcoin

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Mozilla accepting Bitcoin

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PayPal and Virtual Currency

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Wikimedia Foundation Now Accepts Bitcoin

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German Newspaper "taz" accepts Bitcoin

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airBaltic - World’s First Airline To Accept Bitcoin

Posted on 22 July 2014 | 11:03 am

Expedia to accept Bitcoin payments for hotel bookings

Posted on 12 June 2014 | 12:41 pm

August 24, 2017 -
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