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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

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Posted on 22 January 2018 | 2:21 am

Opera Browser Adds Cryptocurrency Miner Protection for Smartphones

The Opera web browser is now protecting smartphones from cryptocurrency miners embedded in websites, the company says.

Posted on 22 January 2018 | 2:00 am

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Don't HODL, BUIDL: How Blockchain Tech Will Add Value in 2018

The question is what can we solve, enhance, or deliver that will make individuals or organizations produce more, be more efficient or enjoy life more?

Posted on 22 January 2018 | 1:00 am

Indian State Partners With Fund To Launch Blockchain Ecosystem

The Indian state of Andhra Pradesh announced a partnership with Covalent Fund to kickstart a blockchain ecosystem at its Fintech Valley Vizag.

Posted on 22 January 2018 | 12:00 am

Why Bitcoin is taken more seriously than Dogecoin - The Conversation AU


The Conversation AU

Why Bitcoin is taken more seriously than Dogecoin
The Conversation AU
As Bitcoin loses value, it may seem like it's just as useful as the cryptocurrency invented for a joke - Dogecoin. But there are genuine differences between these cryptocurrencies, and it's not just because one is “much currency, such volatility ...
The Bull And The Bear Case For Bitcoin, Ethereum, Ripple, Litecoin ...Forbes
Bitcoin price LIVE: Bitcoin price steady as London waits on Crypto jobs BOOMExpress.co.uk
The Illusion that is BitcoinThe Good Men Project (blog)
Moneycontrol.com -Bloomberg -Hacked
all 51 news articles »

Posted on 21 January 2018 | 10:33 pm

How Nigerians Beat Bitcoin Scams - Bloomberg


Bloomberg

How Nigerians Beat Bitcoin Scams
Bloomberg
Depending on your feelings about Bitcoin, it may seem appropriate that Nigeria's love for the cryptocurrency began with a scam. Mavrodi Mondial Moneybox (MMM), a 30-year-long global Ponzi scheme that began in Russia, roped in millions of Nigerians from ...

Posted on 21 January 2018 | 10:16 pm

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Opening Hyperledger: Consortium to Create Experimental Labs for Startups

An effort to connect startups with companies formally recognized by Hyperledger, the measure may accelerate the rate at which new ideas find traction.

Posted on 21 January 2018 | 10:00 pm

BENITEZ | The Real Cost of Bitcoin - Cornell University The Cornell Daily Sun


The Australian

BENITEZ | The Real Cost of Bitcoin
Cornell University The Cornell Daily Sun
Bitcoin mining consumed nearly one percent of the United States' electricity last year. Globally, Bitcoin's estimated yearly power usage is greater than that of Ireland, or 30 times more than that of Tesla vehicles. Considering this, one wonders ...
Investors flee bitcoin for goldThe Australian

all 2 news articles »

Posted on 21 January 2018 | 9:27 pm

More than Half of Russians Know About Bitcoin Now - Bitcoin News (press release)


Bitcoin News (press release)

More than Half of Russians Know About Bitcoin Now
Bitcoin News (press release)
The number of knowledgeable respondents rises to 66% of active internet users. The awareness among young Russians has reached 75% (18 to 24-years-olds), and 71% of all men know about bitcoin. 74% of the residents of the capital Moscow and the second ...

and more »

Posted on 21 January 2018 | 8:34 pm

Bitcoin Price Bubble Could Last 100 Years, Says Yale Economist - Investopedia (blog)


Investopedia (blog)

Bitcoin Price Bubble Could Last 100 Years, Says Yale Economist
Investopedia (blog)
When it comes to the future of cryptocurrencies, even Nobel Laureate, Ivy League professors aren't quite sure what to say. (See also: Bitcoin Price Falls Into Correction Territory.) According to a report by Coin Telegraph, Yale University economics ...
Bitcoin Is Likely to 'Totally Collapse and Be Forgotten,' Nobel Prize-Winning Economist SaysMoney Magazine
Yale Prof. Shiller Thinks Bitcoin's 'Bubble' Could Actually 'Linger 100 YearsCointelegraph (Bitcoin, Cryptocurrency and Blockchain News)

all 25 news articles »

Posted on 21 January 2018 | 5:07 pm

There Is Nothing Virtual About Bitcoin's Energy Appetite - New York Times


New York Times

There Is Nothing Virtual About Bitcoin's Energy Appetite
New York Times
The total network of computers plugged into the Bitcoin network consumes as much energy each day as some medium-size countries — which country depends on whose estimates you believe. And the network supporting Ethereum, the second-most valuable ...

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Posted on 21 January 2018 | 3:22 pm

90% of bitcoin's value could get wiped out, Wall Street veteran Peter Boockvar warns - CNBC


CNBC

90% of bitcoin's value could get wiped out, Wall Street veteran Peter Boockvar warns
CNBC
That's where bitcoin, the largest cryptocurrency player, was trading less than 12 months ago. Friday afternoon it was trading above $11,000. Boockvar sees the collapse coming in tandem as interest rates rise around the globe. He blames central banks ...
Bitcoin falls backFin24
Bitcoin can fall to $1000”MyBroadband
Wall St veteran predicts Bitcoin could lose 90 percent of its value in 2018Nine

all 6 news articles »

Posted on 21 January 2018 | 3:00 pm

Bitcoin Hurt By Lack Of Viable Pricing Model And The Ghostbusters Stairs Syndrome - Forbes


Forbes

Bitcoin Hurt By Lack Of Viable Pricing Model And The Ghostbusters Stairs Syndrome
Forbes
Among these, the most intriguing were from those persons, including risk managers at securities firms, who are trying to get a handle on what the value of Bitcoin should be matter of fundamental analysis. Fundamental analysis looks at a variety of ...

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Posted on 21 January 2018 | 10:12 am

Contortions for Compliance: Life Under New York's BitLicense

New York passed the BitLicense in a vacuum. Now state and federal laws are catching up, often with poor coordination, causing a compliance nightmare.

Posted on 21 January 2018 | 5:40 am

Public Blockchains' Lure Will Become Irresistible for Enterprises in 2018

Decentralized public blockchains are the only way enterprises will commit to digitizing services in an interoperable manner, says EY's Paul Brody.

Posted on 21 January 2018 | 5:05 am

Lightning Network May Not Solve Bitcoin's Scaling 'Trilemma'

It isn’t possible to have decentralization, a fixed money supply and sufficient liquidity for an efficient payments system, says Frances Coppola.

Posted on 20 January 2018 | 5:20 am

Battle-Testing Lightning: Schools Start Contest to Secure Bitcoin’s Layer 2

Organizers hope a new competition will spur security advances for Lightning, but also steer bitcoin debates in more constructive directions.

Posted on 20 January 2018 | 4:30 am

Bitcoin Price Analysis: Potential Bearish Continuation Sets Up Lower Lows

Bitcoin Price Analysis

Shortly after a sharp drop from the mid $14,000 to the lower $9,000s, bitcoin saw a strong bounce to the upper $11,000s. At the time of this article, bitcoin appears to be consolidating and is ready to make its next move:

fig1

Figure 1: BTC-USD, 1 Day Candles, Macro View

In the previous BTC market analysis, we discussed the distribution trading range the market fell out of as it reached for lower support boundaries. Ultimately, it found support on the macro 50% retracement values near $10,000. Once it broke south of the trading range, the price fell sharply and with high volume:
fig2

Figure 2: BTC-USD, 15 Minute Candles, Current Support and Resistance Levels

After bouncing off the macro 50% values, the market rallied and ultimately tested the linear trendline shown in Figure 1. Now, after several failed attempts to break the linear trendline’s resistance, the market finds itself in a consolidation pattern where it decides where it will move next.

fig3

Figure 3: BTC-USD, 60 Minute Candles, Potential Bear Flag

One possibility to keep a close eye on is this potential, strong bear flag. After finding support on the macro 50%, the subsequent rally saw decreasing volume throughout the length of the movement. This sort of price action could potentially lead to a bearish continuation with a measure move between $4000 and $5000 — a price target of approximately $6,000 – $7,000. If a drop of this magnitude continues the downtrend, we can expect to find support on the 61% macro Fibonacci retracement values shown in Figure 1.

It’s important to note that bitcoin has a penchant for breaking upwards when all signs say “down,” so tread lightly and wait for confirmation of the move. Confirmation of the bear flag breakout would show a pretty obvious outlier in volume, combined with wide price spread.

Summary:

  1. Bitcoin recently saw a steep drop in price where it ultimately found a local bottom in the low $9,000s.
  2. Since it bottomed out, it has seen a rally on decreasing volume which leaves the door open for a bearish continuation.
  3. If the bearish continuation continues, expect support on the 61% macro retracement values.

Trading and investing in digital assets like bitcoin 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.


This article originally appeared on Bitcoin Magazine.

Posted on 19 January 2018 | 2:48 pm

Two New Services Could Help Investors Rate Cryptocurrencies

Cryptocurrency Rating Services Launched

Increasing interest in cryptocurrencies has led to an influx of new investors. Unlike traditional markets, there are few tools that can help people make informed decisions, a situation that has already begun to claim victims in a particularly volatile environment.

In separate announcements, Weiss Ratings and Intercontinental Exchange (NYSE: ICE) have announced the introduction of new financial tools to help investors navigate the cryptocurrency market and make smarter investments.

Weiss Ratings, an established independent rating agency of financial institutions, says they will begin issuing ratings for cryptocurrencies on January 24, 2018, to help investors make informed decisions.

ICE, an operator of a network of global futures, equity and equity options exchanges, is partnering with blockchain technology provider Blockstream to launch the Cryptocurrency Data Feed (CDF).

Weiss Ratings Takes On Cryptocurrencies

Founded in 1971, Weiss is an independent rating agency of financial institutions. They will begin issuing letter grades for cryptocurrencies including Bitcoin, Ethereum, Ripple, Bitcoin Cash, Cardano, NEM, Litecoin, Stellar, EOS, IOTA, Dash, NEO, TRON, Monero, Bitcoin Gold and many others.

According to Weiss Ratings founder Martin Weiss, the data they are using is a combination of purchased data and data collected through other sources. It is updated on a daily basis, covering a sliding 12-month window.

Regressive testing to verify past data that the company uses to confirm predictions is still ongoing, but results have been accurate thus far, Weiss told Bitcoin Magazine.

“We have built an analytical technology over the years using intelligent models to replicate the real world and we are applying [these] to cryptocurrenc[ies]. These have been very accurate for many years.”

Ratings are built up across multiple indexes. The company built new models to reflect cryptocurrency data and developed an overall grading system that is broken down into four separate sub-models:

  1. Risk Index — The level of risk involved in the investment, based on factors like price activity and volatility.
  2. Reward Index — The potential reward outcome, based on historical patterns of buying and selling.
  3. Technology Index — A primarily manual process, where company analysts review the source code and white papers, analyze price movement and make ratings in a Query Tree (their internal software) to generate a quantitative result.
  4. Adoption Index — A measurement of adoption along two dimensions: how broadly it is adopted, transaction speed, settlement times, etc.

“A weighted average of those 4 indices is used to get the final grade,” said Weiss. “The goal at Weiss is to empower the investor to make prudent decisions.”

ICE Data Services: Real-Time Trading Data

The Cryptocurrency Data Feed (CDF) is a multi-asset and multi-venue data feed, capturing nearly 80 percent of cryptocurrency exchange trading volume over more than 15 exchanges around the world. It measures leading cryptocurrencies against the U.S. dollar and other major currency pairs.

The captured data is normalized to create a unique number sequence to identify the transaction, details of where the trade took place, quantity, price, currency, timestamp and other relevant order book data. This is designed to enable ICE Data Services’ customers to receive global market–representative trading data in a real-time feed with high-quality information.

“With the broad array of cryptocurrencies and exchanges, and given the price variances between exchanges, it’s critical that investors have a comprehensive source of pricing information,” said ICE Data Services President and COO Lynn Martin in a statement.

According to Blockstream SVP of Business Affairs Alex Fowler, the initial exchange partners set up through cooperative agreements include Bitbank, Bitfinex, BitMEX, Bitso, Bitstamp, BtcBox, BTCC, CEX, Coinfloor, Coincheck, itBit, GOPAX, OKEx, SurBTC, The Rock Trading, Unocoin, Vaultoro and Zaif, with more coming soon.

The data is collected using the exchanges’ APIs and, in some cases, by setting up dedicated connections with them. The current feeds lack standardized formatting and information: part of what ICE is providing is a single source that consolidates and standardizes the data, which will average out the information from the multiple sources into a more accurate overall view.

Historically, the data currently only goes back to the initial integration; however, Blockstream is working with the exchanges to try and incorporate older data as well.

Fowler told Bitcoin Magazine, “We believe that a consolidated data source, resulting from the combined participation of a strong and growing list of exchange partners globally, will enable us to address these gaps and thereby promote better liquidity, price stability, and public confidence in cryptocurrency as asset class.”

CDF will include bitcoin and a wide range of cryptocurrencies and currency pairings on launch; the final list will be on their website. ICE will develop and publish a selection of criteria for decisions on the addition and/or removal of assets in the feed. This will be an ongoing process as the market evolves. Access to the real-time CDF will be available to subscribers of ICE Data Services’ Consolidated Feed in March 2018.


This article originally appeared on Bitcoin Magazine.

Posted on 19 January 2018 | 2:03 pm

Bulgaria Joins 'International Operation' Against OneCoin

Bulgaria's government has revealed it is part of an international crackdown of OneCoin.

Posted on 19 January 2018 | 11:15 am

OKCoin Eyes Cryptocurrency Exchange Launch in South Korea

Cryptocurrency exchange OKCoin is reportedly moving to launch in South Korea – possibly as soon as next month.

Posted on 19 January 2018 | 10:20 am

TEPCO Invests in Blockchain Startup in Bid to Decentralize Systems

The Tokyo Electric Power Company Holdings announced it had invested in blockchain startup Electron to develop an asset management platform.

Posted on 19 January 2018 | 9:15 am

Cornell IC3 Researchers Propose Solution to Bitcoin’s Multisig “Paralysis” Problem

Cornell IC3 Researchers Propose Solution to Bitcoin’s Multisig “Paralysis” Problem

Owning cryptocurrency comes with its own set of challenges. One of the biggest of those challenges is managing the private keys that enable you to spend funds. Lose your private keys, and your money is gone.

In a business environment, a common way to manage funds owned by multiple people is via what’s called a multisignature (multisig) address, a type of smart contract requiring two or more parties to sign off on a transaction to move the funds. 

This can be problematic, however. Let’s say you have a three-of-three multisig that requires you and two business partners to sign off on a transaction. If one person dies, disappears or becomes incapacitated, those assets become frozen — a risk some might feel uncomfortable with when dealing with tens of thousands of dollars or more.   

One way to ameliorate that risk might be to opt for a two-of-three multisig, where only two instead of all three individuals need to sign off on a transaction. But that’s not a complete solution either. Two players could conspire against the other one and run off with the money.

What now? If your funds are on the Ethereum blockchain, you could write a smart contract that would allow you to free the funds if one person in your trio disappeared.

However, Bitcoin with its limited scripting language makes things more difficult. “This seems like an unsolvable problem if you think about the traditional tools,” said Ari Juels, a professor at Cornell Tech and co-director of the Cornell Initiative for Cryptocurrencies and Contracts (IC3).

Paralysis Proofs

In a paper titled “Paralysis Proofs: How to Prevent Your Bitcoin from Vanishing,” researchers Fan Zhang, Phil Daian, Iddo Bentov and Ari Juels from the IC3 outline how to deal with what happens when a party is unable, or unwilling, to sign off on a multisig transaction in Bitcoin. The solution involves a combination of blockchain technology and trusted hardware — Intel SGX, in this case.   

Trusted hardware allows you to run code inside a protected enclave. Even a computer’s own operating system is unable to access data inside an enclave, so if your computer were to be hacked, the code in the enclave would remain secure.

IC3’s solution proposes replacing a trusted third party, such as a lawyer or a bank, who would put money in an escrow, with a trusted hardware solution that retains control of a master key to the funds.  

If one of the three people in the contract dies, the other two initiate a “paralysis proof.” That proof is based on a challenge sent to the missing third person. If the missing person responds to the challenge, the money stays put. If the missing person does not respond, the trusted hardware releases the funds to the remaining two players.  

Trusted hardware is only part of the solution, however. If the third person were to try and respond to the challenge request with an indication she is still alive, conceivably, the other players could intercept that message. To ensure that does not happen, the second half of IC3’s solution involves sending the message via the blockchain, which provides a tamper-proof and censorship-resistant medium.    

“By combining these two [methods], we can achieve the exact properties we’re after,” Juels explained to Bitcoin Magazine. “We can enable trusted hardware to determine whether or not somebody is alive, and there is no way to prevent a relevant message from getting transmitted if it is coming through the blockchain.”   

How It Works

Put simply, this is how to achieve a paralysis proof as outlined by the IC3 researchers:

  • Two players suspect a third is dead, so they post a challenge on the blockchain. The challenge consists of a tiny “dust” UTXO that the third person must spend within a certain period of time, say 24 hours, to prove she is alive.
  • The two players also get a “seize” transaction they may post to the blockchain later to collect the funds, if the third person does not respond to the challenge.
  • If the third person sends back a response by spending the UTXO, the game is over; the two others are not able to take control of the funds.  
  • Alternatively, if the third person does not return an “alive” signal by spending the UTXO before the time-out, then the two others can use the “seize” transaction to take control of the funds.  

This not the only use case for a paralysis-proof system. Juels thinks the solution would work well in any situation that called for a controlled access to private keys that could not otherwise be maintained on a blockchain. “It is actually a very general scheme you could use for lots of other purposes,” he said.   

For instance, a paralysis-proof system could be used as a dead man’s switch for control over the release (or decryption) of leaked information or a journalist’s raw materials. It could also be used in numerous ways to control daily spending limits from a common pool of money or as a conditioned expenditure based on an outside event (as reported by an oracle), like a student getting good grades or a salesperson meeting a sales quota.   

“Basically, you can a rich set of conditions around the expenditure of money using the fact that a trusted hardware kind of acts like a trusted third party,” said Juels.

This article originally appeared on Bitcoin Magazine.

Posted on 19 January 2018 | 9:07 am

PBoC Reportedly Orders Payment Services to Stop Serving Crypto Traders

The PBoC's Beijing division has reportedly issued a document requiring payment services to stop facilitating crypto trading activities.

Posted on 19 January 2018 | 8:00 am

Massachusetts Sues ICO Organizer for Alleged Securities Violations

Massachusetts' securities enforcement office is suing a resident and his company for selling unregistered securities in a token sale.

Posted on 19 January 2018 | 7:00 am

Stuck at $12K: Bitcoin Price Needs Quick Progress to Avert Further Losses

With its recovery stalled, bitcoin needs a quick break above $12,500 or the tide may turn in favor of the bears.

Posted on 19 January 2018 | 5:00 am

Global Securities Watchdog Warns Investors on ICO Risks

An organization of global securities regulators has issued a notice alerting investors to the perceived risks associated with initial coin offerings.

Posted on 19 January 2018 | 4:00 am

SEC Outlines Reasons for Reluctance to List Cryptocurrency ETFs

An SEC letter states there are "significant investor protection issues" to be examined before opening up crypto-ETFs to retail investors.

Posted on 19 January 2018 | 3:00 am

Decentralizing the Sharing Economy With Blockchain Technology

Decentralizing the Sharing Economy With Blockchain Technology

San Francisco–based startup Origin is creating a set of protocols that allow developers and businesses to build decentralized marketplaces on the blockchain, with a focus on the sharing economy.

The Origin Protocol is a set of open-source blockchain protocols for buyers and sellers of services like car-sharing or home-sharing to transact on a decentralized, open web platform.

The protocol’s applications will store transactional data such as pricing and availability directly on the blockchain.

Leveraging the Ethereum blockchain and the Interplanetary File System (IPFS), the Origin platform will create and book services and goods in a decentralized way, without traditional intermediaries.

Recently, Origin launched its functional, completely decentralized prototype Origin Protocol Demo DApp, live on the Ethereum test network. It also announced that several companies have committed to developing further applications on the Origin platform.

“Our vision for Origin is to create protocols that allow marketplaces to be governed by a set of rules instead of corporate rulers. We want to eliminate the rent-seeking middlemen, maximize personal liberty, reduce censorship and redistribute value to the early participants in the network,” Origin co-founder Josh Fraser said in conversation with Bitcoin Magazine. “Partners are building on Origin because they realize they can get to market sooner and we can share network effects by working together.”

Tackling the Problems of the Centralized Marketplace

Uber and Airbnb, the hugely popular marketplaces for ride-sharing and home-sharing, are usually considered the leading players in the emerging “sharing economy.” Another buzz phrase, “people as a service,” describes the business models of these two companies, both of which attracted funding that values them in the tens of billions of dollars.

Consumers perceive that Uber and Airbnb are faster, cheaper and better alternatives to traditional services like taxis and hotels, delivered via sophisticated yet easy to use apps. But, while the consumer has the impression that they are buying services directly from individual providers in decentralized, P2P networks, Uber and Airbnb are centralized systems where transactions between individual consumers and providers are routed through infrastructure, hubs and software that belong to the companies that own the platform.

Centralization makes Uber and Airbnb vulnerable to regulatory actions, and there is the possibility that both services could be shut down by the government at any time. In the meantime, besides taking a fee, the platform owners are in complete control of the networks and the individual providers and are often accused of predatory behavior.

“Look at Uber and Airbnb as examples,” said Fraser. “Both companies have been banned or heavily regulated in cities all around the world. Likewise, those companies have a history of banning certain individuals for life from ever using their marketplaces.”

Uber and Airbnb (the Services) without Uber and Airbnb (the Companies)

According to data provided by Origin, Uber, Airbnb and other centralized sharing marketplaces are expected to earn $40 billion in platform fees annually by 2022, and the sharing economy as a whole is expected to top $335 billion by 2025. Some centralized sharing services charge upwards of 30 percent fees for hosting transactions.

Origin wants to cut out these middlemen with new standards based on blockchain technology.

The Origin platform “enables people to freely transact on the blockchain in decentralized marketplaces without rent-seeking middlemen,” says Coleman Maher. who recently joined Origin as its first business development hire. “We aim to eliminate excessive transaction fees, reduce censorship and redistribute value back to the community.”

“We imagine a broad collection of vertical use cases (e.g short-term vacation rentals, freelance software engineering, tutoring for hire) that are built on top of Origin standards and shared data,” reads the Origin product brief. Origin applications will be able to share users, creating a “shared network effect” that could benefit all application providers, as well as the consumers.

Bee Token, SnagRide, JOLYY, Acquaint, Aworker, BlockFood, Edgecoin and ODEM have committed to building on the Origin platform. More partners will be announced in the coming months.

The first two projects are in Airbnb and Uber territory. The Bee Token team, a group of former employees from Google, Facebook, Uber and Civic, is building a middleman-free, peer-to-peer network of hosts and guests on the decentralized web, with the stated goal of “reinventing the home sharing economy.” SnagRide is a ride-sharing application for mid– to long-distance rides, which leverages artificial intelligence and blockchain-powered smart contract technologies to smartly manage drivers and passengers willing to travel together between cities and share the cost of the trip.

The Origin ecosystem will offer incentives based on the Origin token, an ERC20 utility token on the Ethereum blockchain, described in the Origin white paper. The Origin token, to be distributed later in 2018, is the currency used for transactions on the Origin platform. However, the Origin team plans to implement on-the-fly conversions of fiat currencies and Ethereum to the Origin token in future releases.

This article originally appeared on Bitcoin Magazine.

Posted on 18 January 2018 | 11:06 am

Blockstream Releases Lightning Charge, Launches Test E-Commerce Store

Blockstream Releases Lightning Charge, Launches Test E-Commerce Store

Following the release of the first Bitcoin Lightning Network white paper, published in February 2015, developers have been working on Lightning Network implementations to enhance the throughput and usability of the Bitcoin network. For an overview, see this three-part series on “Understanding the Lightning Network.”

In December 2017, lightning developers ACINQ, Blockstream and Lightning Labs, announced the 1.0 release of the Lightning protocol and the world’s first Lightning test payments on the Bitcoin mainnet across all three implementations. The standardization and deployment of the Lightning Network’s second-level, off-chain payment layer is expected to result in instant bitcoin transactions, improved scalability and lower fees, enabling fast and cheap micropayments.

Blockstream’s implementation of the Lightning spec, c-lightning, is a low-level technology designed to implement the Lightning spec without added complexity. At the same time, Blockstream realizes that developer tools are needed to unlock the power of Lightning for advanced applications, such as those that integrate with credit card companies and with existing online payment systems.

Blockstream is releasing the Lightning Charge complementary package for c-lightning to make it simpler to build sophisticated applications on top of c-lightning.

“Web developers will be able to work with c-lightning through their normal programming techniques, and they’ll also get expanded functionality such as currency conversion, invoice metadata, streaming payment updates and webhooks,” reads the Blockstream announcement. “Together, these additions make it easy for developers to use c-lightning to create their own, independent web-payment infrastructures.”

Lightning Charge is a micropayment processing system written in node.js. It exposes the functionality of c-lightning through its REST API, which can be accessed through JavaScript and PHP libraries, both of which have also been released through the Elements Project.

"Lightning Charge makes integration with the Lightning Network much simpler, since it bridges the needs of application developers and the underlying infrastructure, to provide a simple and extensible way to accept Lightning payments," Blockstream developer Christian Decker said in conversation with Bitcoin Magazine.

“Since the introduction of Lightning Charge, less than 48 hours ago, we have seen a dramatic interest in the Lightning Network, both on the user as well as the developer side,” Decker added. “We have gotten a lot of feedback, and the mainnet network has doubled in the number of participants."

The desired effect of the Lightning Charge launch was to reach a wider audience, get early feedback from future users and to showcase what will be possible in a not-so-distant future, and I think we have achieved that goal.

Israeli entrepreneur Nadav Ivgi, founder of Bitrated, worked with Blockstream developers to create Lightning Charge. “Together with him we built this new code, or this immediate piece of software that provides this nicer to use interface,” said Decker.

“So far the development for Lightning has been mostly on the network side of things. It’s been very much this close-knit group of people that are building it and are trying to build the infrastructure. Infrastructure is nice to have. But if nobody can actually use it then it’s not worth much, right?”

To test Lightning Charge, Blockstream is launching the Blockstream Store, a working e-commerce site that allows users to make small purchases of stickers and t-shirts. “By offering an early demonstration of this cutting-edge technology, we hope to bring Lightning to life with real-world functionality, providing a way for you to test Lightning and become a part of the micropayment revolution,” states the Blockstream announcement.

The Blockstream Store, built on WordPress and WooCommerce, connects with Lightning Charge and c-lightning through a WooCommerce Lightning Gateway, which Blockstream also released as part of the Elements Project.

The only way to purchase the items in the Blockstream store is with a Lightning payment. A disclaimer warns that, although the products sold in the store are real, this store is for testing and demonstration purposes only.

“Lightning is still very new and contains known and unknown bugs,” reads the disclaimer, adding that users may lose funds.

"We believe this is an important step towards a full rollout of the network as a whole, however we’d like to remind users that the Lightning Network is still experimental and that testnet is to be preferred for testing before making the jump to mainnet," Decker told Bitcoin Magazine.

This article originally appeared on Bitcoin Magazine.

Posted on 18 January 2018 | 10:37 am

“Bitcoin Laundering” Study: Where Do Criminals Turn to Mask Illicit Cryptoassets?

Bitcoin laundering study

A recent study (PDF) from the Foundation for Defense of Democracies’ Center on Sanctions and Illicit Finance and blockchain analytics company Elliptic explored the “bitcoin laundering” ecosystem. In the study, Elliptic’s forensic analysis of the Bitcoin blockchain and other publicly available data were used to track the flows of illicit funds from 2013 to 2016.

“This study aimed to identify where individuals turn in order to cash out or transmit bitcoins (BTC) acquired from illicit entities and to discover typologies for criminals ‘laundering’ bitcoins,” the report says.

The study describes bitcoin laundering as a special type of money laundering that exists within the Bitcoin network where a user moves some bitcoins to a new address in a manner that obscures the original source of funds. The conversion of bitcoins into fiat currency on exchanges that lack adequate anti-money laundering (AML) and know-your-customer (KYC) policies can also fall under the category of bitcoin laundering.

In addition to describing the common mechanisms for bitcoin laundering and explaining that this sort of activity is a small percentage of all transactions sent to exchanges and other conversion services, the study also offers some recommendations for law enforcement in terms of preventing the masking of illicit funds on the Bitcoin network.

It should go without saying that any study related to the dark web or illicit use of the Bitcoin network needs to be taken with a grain of salt because avoiding detection is the whole reason for a criminal to use these sorts of platforms in the first place.

The Bitcoin Laundering Ecosystem

Much of the study, which is titled “Bitcoin Laundering: An Analysis of Illicit Flows Into Digital Currency Services,” revolves around the use of “conversion services.” Conversion services are basically platforms where users convert bitcoins to fiat currency (a Bitcoin exchange) or another cryptocurrency (a cryptoexchange), or move the bitcoins to another Bitcoin address accessible to the user. This results in a flow of funds that cannot be viewed or traced directly on the public blockchain.

According to the study, darknet markets are the main source of funds that are sent to conversion services in bitcoin laundering attempts.

Additionally, the number of illicit services that could be the source of “dirty bitcoins” sent to a conversion service increased fivefold from 2013 to 2016. Having said that, the study finds that the sources of illicit funds entering conversion services are quite centralized.

“Only a small number of entities account for the majority of illicit activity in our sample,” the study says. “Nine of the 102 illicit entities were the source of more than 95 percent of all laundered bitcoins in our study. All nine were darknet marketplaces.”

bitcoin-laundering_Figure1.png

While exchanges are the most commonly used type of conversion service, bitcoin mixers and gambling sites have much more illicit funds coming into their platforms as a percentage of their overall transactions. As potential conduits for bitcoin laundering, these two types of conversion services benefit from concealing their country of operations and avoiding enforcement of AML regulations.

“Fewer than 10 percent of all transactions overall passed through unknown jurisdictions ... while 52 percent of illicit laundering went through them,” the study says.

Much like the sources of illicit funds, the conversion services where these funds are sent are also highly centralized, the study finds. The data indicates that 97 percent of illicit transaction volume at mixers and gambling sites goes through three different entities. Additionally, two platforms in Europe account for half of all illicit transfers that go into exchanges.

Not Much Bitcoin Laundering Activity Overall, and It’s on the Decline

Another notable aspect of the study is that the data indicates a low level of bitcoin laundering as a percentage of all payments sent to conversion services.

“The amount of observed Bitcoin laundering was small (less than one percent of all transactions entering conversion services),” notes the study.

The report clarifies that the actual volume of illicit Bitcoin transactions sent to conversion services is “almost surely to be significantly larger” than what the data in the study shows because intermediate transactions are not counted. In other words, the report only covers transactions made directly from an illicit source, such as a darknet market, to a conversion service.

The study also indicates a decrease in illicit Bitcoin transaction volume going to conversion services over time.

bitcoin-laundering_Figure2.png

“It is likely that illicit bitcoins fell as a percentage of total volume entering conversion services due to the cryptocurrency’s increasing popularity as a speculative investment as well as new laundering techniques,” the study says. “The drop may also reflect better AML/CFT compliance by conversion services, including the use of blockchain analysis services to determine customers’ source of funds.”

The study later adds, “Our study, the first of its kind, indicates that while most types of conversion services have received some bitcoins from illicit activity, the vast majority of the funds they receive do not appear to be illicit.”

Recommendations for Law Enforcement That Will Likely Fall Short

The report offers recommendations for law enforcement in terms of what they can do to combat the effectiveness of bitcoin laundering.

First, the study says proper KYC and AML policies need to be enforced on the bitcoin mixers and gambling sites that allow for anonymous usage. It notes that the three conversion services that account for 97 percent of bitcoin laundering on these types of platforms should be targeted by financial authorities.

“The fact that most mixers and gambling sites hide their location of operations indicates they probably seek to evade the basic regulations in place to uphold transparency and financial integrity standards in most jurisdictions,” adds the study.

Of course, it should be noted that targeting these sorts of services will become nearly impossible as they become more decentralized over time. Decentralized platforms like JoinMarket, TumbleBit and ZeroLink remove the ability for authorities to clamp down on bitcoin mixing in an effective manner, as these solutions act more as software than services.

Second, the report also calls for increased AML and KYC compliance at European exchanges.

“Many large European Bitcoin exchanges do implement robust AML policies,” says the study. “However, this is out of choice rather than obligation, and there are some who choose not to, possibly to attract business from criminals.”

The study adds that the European Union is already moving in the right direction via an update of their 2015 Anti-Money Laundering Directive to include fiat-to-cryptocurrency exchanges, but in the view of the authors of the paper, crypto-to-crypto exchanges must also be regulated in this manner.

Again, it needs to be pointed out that more problematic technology — at least from law enforcement’s point of view — is on the horizon in the form of decentralized cryptoexchanges. Through the use of cross-chain atomic swaps via the lightning network, users will be able to instantly trade between different cryptoassets without the need for a trusted third party.

Third, the study calls for a sort of propaganda campaign against the use of darknet markets by criminals and the general public at large.

“Law enforcement should increase customer skepticism about [darknet market] sites’ integrity and reduce the perceived security of such platforms by exposing their vulnerabilities publicly,” says the study.

The report adds that law enforcement should make it well known that they’re lurking on these darknet markets to further shake confidence in them.

Darknet markets are another area of the Bitcoin ecosystem that are becoming more decentralized through platforms such as OpenBazaar. While illicit activity on the OpenBazaar network appears to be limited at this time, it could potentially explode in popularity as a reaction to law enforcement’s hypothetical campaigns against the centralized darknet markets.

Fourth, the report praises the decision by financial authorities in the United States to regulate exchanges as Money Service Businesses. The authors of the paper would like to see this sort of policy rolled out worldwide.

Last, the study notes the need to prevent the illicit use of bitcoin and other cryptocurrencies to get around economic sanctions imposed by the United States or other nations.

“In addition to mitigating illicit finance risks like criminal money laundering, there will likely be a need to develop strategies to counter state actors aiming to use cryptocurrencies to circumvent U.S., EU, and UN sanctions.”

Recently, there have been reports of North Korea, Russia and Venezuela all looking into separate mechanisms for avoiding economic sanctions through the use of cryptocurrencies.

This article originally appeared on Bitcoin Magazine.

Posted on 18 January 2018 | 2:52 am

Halong Mining and MyRig Announce Partnership

dragonmint.png

Halong Mining and MyRig are working together to bring the new DragonMint miner from Halong to market.

First announced in November 2017, the new Halong Mining DragonMint 16T miner is the result of 12 months of R&D and a $30 million investment in development. It has a hashrate of 16th/s with a power consumption of 1440–1480 watts optimized for 240v operation. The DM8575 ASIC runs at 85 GH per chip with a power efficiency of 0.075 J/GH. No special modifications are needed in a data center to use the DragonMint if it is already configured to support a typical Chinese-manufactured ASIC miner.

MyRig (formerly BitmainWarranty) has been providing hosting and retail sales of miners and accessories, PCB design and manufacturing, software engineering and factory approved warranty and repair services since 2013. The partnership with Halong means that MyRig will take care of retail-side distribution, support and warranty services for the DragonMint 16T.

Halong will be manufacturing the DragonMint and continue to sell direct, albeit with a five-unit minimum. Halong told Bitcoin Magazine that the five-unit minimum per order on their site will remain when ordering direct from Halong, but when ordering from MyRig, customers will be able to order single units. They indicated that lead time for shipping at the moment is April 15–30, 2018, and they expect the first batch to go out in March 2018.

According to a MyRig representative, they will ship to any country that either UPS or DHL can deliver to, provided it is not on a sanctions list.

This article originally appeared on Bitcoin Magazine.

Posted on 17 January 2018 | 3:37 pm

Hyperledger’s Behlendorf: 2018 Will Bring Breakthrough Blockchain Developments

hyperledger_behlendorf.png

Brian Behlendorf is confident that 2018 will be a peak year, not only for Hyperledger — the international consortium of companies and organizations developing open source, permissioned blockchain technology — but also for blockchain technology in general as businesses and governments recognize the potential power of distributed ledgers and smart contracts.

“2018 will be the year that Hyperledger and blockchain come into their own. Projects demonstrating real world solutions, like Change Healthcare, that will enable healthcare systems to better and more efficiently process claims and payments, will launch this year.”

Hyperledger, founded in 2015, incubates and promotes blockchain technologies for business, including distributed ledgers, client libraries, graphical interfaces and smart contract engines.

Their 200 members include leading companies in finance, banking, Internet of Things, supply chains, manufacturing and technology development.  

“2017 was a milestone year for Hyperledger both for new members and for new technical breakthroughs. In 2017 we doubled our membership, gaining companies like American Express, Cisco, Daimler and Baidu, and we’re expecting more companies and organizations to join in 2018,” said Behlendorf.

“On the technical side, 30 companies and more than 100 developers contributed to the launch of the first production ready Hyperledger blockchain framework called Hyperledger Fabric,” he added.

According to Behlendorf, an important part of Hyperledger’s mandate is to also help educate and train the workforce for the many new blockchain opportunities coming in 2018.

“We’re happy to have launched our new Resource Center, and our online blockchain course is a great success with more than 45,000 enrolled and an average of 2,500 new enrollments per week.”

Hyperledger Blockchain Frameworks

In 2018, Hyperledger will start launching a number of frameworks and platforms that are currently in incubation.

“Interoperability in a multi-blockchain world will be the major focus in 2018. A number of Hyperledger projects are exploring integrations among one another including Hyperledger Sawtooth and Burrow and Indy, Composer and Quilt.”

Behlendorf expects that 2018 will also see some experimentation with different levels of permissioned access to blockchain networks.

He noted that permissioned and permissionless is more of a spectrum than a binary notion, and an important question is what the cost to join a node to a network is in any blockchain platform.

By reducing the cost of joining a networked ledger, Hyperledger hopes to enable new use cases and ways to solve problems.

“Hyperledger was started by a set of developers very focused on modest-sized permissioned ledgers, so that’s where the initial work has been, but there’s no hard limit to that. So we’re happy to look at options that make it easier, perhaps even to full permissionless frameworks,” said Behlendorf.

“I should note that our projects including Hyperledger Indy (for identity), Hyperledger Burrow (for smart contracts), Hyperledger Quilt (for interoperability) and Hyperledger Composer and Cello (developer tools) are agnostic about consensus mechanisms and would work fine with permissionless approaches,” he added.

Expect to see the following Hyperledger launches in 2018:

Quilt will offer interoperability between ledger systems by implementing ILP, which is a payments protocol designed to transfer value across distributed and non-distributed ledgers.

Sawtooth is a blockchain platform for creating and managing distributed ledgers. Sawtooth includes Proof of Elapsed Time (PoET) and a new consensus algorithm that is maintained without a central authority. It was originally proposed by Intel.

Iroha is a business blockchain framework for infrastructure projects that require the use of distributed ledger technology. It includes a chain-based Byzantine Fault Tolerant consensus algorithm. Soramitsu, Hitachi, NTT DATA and Colu originally proposed this framework.

Burrow is a smart-contract creator with a permissioned smart-contract interpreter included.

Indy is a distributed ledger with a decentralized identity designed to create independent digital identities between blockchains.

Composer is an open development tool set designed to make it easier to integrate existing business systems with the blockchain.

This article originally appeared on Bitcoin Magazine.

Posted on 17 January 2018 | 3:21 pm

Cryptocurrency’s Red Tuesday Firesale Leaves Everyone Speculating

cryptomarket_sell-off.png

The cryptocurrency sky fell yesterday as 49 of the top 50 coins (by Market Cap) were down with only Tether (USDT) posting a gain. In fact, only two coins, KuCoin Shares and VeChain, showed losses less than 10 percent and only 12 of the top 50 have lost less than 20 percent of their value.

The effects of the market-wide shock are clear, but explanations vary based on where you get your news. In an effort to make sense of the situation, here are the stories and rationales explaining the systemic drop.

South Korea

Korean leadership this week has been fragmented on the subject of cryptocurrencies, causing a public backlash in a country that has enthusiastically embraced the new asset class.

On January 16, 2018, Yonhap News reported that the Prime Minister Lee Nak-yon stated, “What the justice ministry is going to do is not immediately shut down (exchanges) ... As this is a legislative issue, it is not possible to shut them down without going through the National Assembly.”

This seemingly contradicts a radio interview given earlier in the day by Korea’s finance minister, Kim Dong-yeon, who stated in a radio interview with TBS Radio, “The government stance is that it needs to regulate cryptocurrency investment as it is a largely speculative investment … The shutdown of virtual currency exchanges is still one of the options (that the government has).”

The perceived discord from top Korean officials is a carry over from January 11, 2018, reports where Justice Minister Park Sang-ki stated regulators were preparing legislation to halt cryptocurrency trading. Those statements were walked back by the presidential office (The Blue House) later in the day, when a spokesperson relayed that the government has not yet decided on shutting down cryptocurrency exchanges. This statement came a mere seven hours after the Justice Minister’s statements and after a petition to the presidential office gained viral support. This communicative disharmony doesn’t even address the raids on Korean exchanges Coinone and Bithump last week.

Bloomberg (which also cites China as a causal factor), New York Post, MarketWatch, and others have cited the latest actions today by South Korea as an inciting reason for the digital currency market-wide bloodbath.

China Threatens More Bans

Korean Leadership may not be the only source of consternation for the cryptocurrency market. Some media outlets, such as Quartz have pointed towards Korea’s much larger neighbor to the West, China.

China has had a tumultuous history with cryptocurrencies. In the past few months alone, the Central Bank of China banned ICOs in September 2017, followed by a January 2, 2018, leaked memo where the leading internet-finance regulator in the country, the Leading Group of Internet Financial Risks Remediation, called for an orderly exit of crypto-mining operations. The forced exodus of crypto-mining operations, according to TechCrunch, will slowly extinguish a group that is estimated to produce three-quarters of the world’s supply of bitcoin.

The final straw for the China thesis were reports on Monday, January 15, 2018, that the Chinese government is escalating its crackdown to include domestic cryptocurrency trading by planning to block access to online platforms, exchanges, market-makers and mobile application platforms that cater to Chinese citizens.

While Chinese citizens have in the past used VPNs to work around similar blocks to sites such as Google and Facebook, China has been determined to stem capital outflows from the country (and the government has ordered a crackdown of VPN usage starting next month).

Cryptocurrencies have provided the potential for unregulated outflows of capital from the mainland, so it seems that the cryptocurrency facilitators in China may face a different fate than their internet counterparts.

The U.S., Brazilian, Indian, French, German Regulator Effect

Regulation is the name of 2018. If the regulatory issues out of South Korea and China were standalone examples, that may be enough to explain the sell-off. But other regulatory fears may have been increased by a flurry of announcements over the past week:

On January 12, 2018, U.S. Treasury Secretary Steven Mnuchin mentioned a working group comprised of multiple federal agencies had been formed to look into how to regulate cryptocurrencies.

That same day, Brazilian regulator CVM banned funds from buying cryptocurrencies.

On January 14, 2018, The Hindustan Times reported the Indian government has formed a committee to fast-track the country toward regulating the domestic cryptocurrency marketplace. In line with previous efforts by Indian Prime Minister Narendra Modi to demonetize lower denominated rupees last year, the committee was formed, according to The Financial Express, based on Indian authorities’ apprehension of illicit money being used to trade cryptocurrencies (colloquially referred to as “black money”).

On January 15, 2018, French Minister of the Economy Bruno Le Maire announced the creation of a working group with the purpose of regulating cryptocurrencies and appointed Jean-Pierre Landau, the former deputy governor of the Banque de France, to lead the group. Landau wrote an editorial piece for the Financial Times in 2014 titled “Beware the mania for Bitcoin, the tulip of the 21st century.”

Also on January 15, 2018, a board member for Germany’s Central Bank (Bundesbank), Joachim Wuermeling, called for effective regulation of virtual currencies on a global scale.

The Post-FOMO FUD Factor

The cause for the market wide plummet yesterday in cryptocurrencies could simply be a case of FUD (“Fear, Uncertainty, Doubt”) among new investors panic selling in the face of all of these regulatory actions or initiations by major world economies. Or perhaps it is entrenched investors taking regulatory actions as their signal to sell before regulations negatively impact their unrealized profits.

It may be a combination of events and speculation. The news reports differ on what events are emphasized depending on what coverage you look at (and if you look to John McAfee for causation, you’ll note the market drop was all because of J.P. Morgan spiking fears about potential government bans).

Regardless of the cause, the effects are clear. It now remains to be seen whether there will be a rebound or whether the sell-off will gain momentum as we look ahead to a future where regulatory impacts potentially curtail the bull-run the industry blossomed under in 2017.

This article originally appeared on Bitcoin Magazine.

Posted on 17 January 2018 | 12:40 pm

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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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airBaltic - World’s First Airline To Accept Bitcoin

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January 22, 2018 -
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