This Lightning Network Designer Is Re-Inventing Bitcoin Smart Contracts Bitcoin is usually not considered the blockchain best suited for self-executing conditional payments, better known as smart contracts. While it does support basic programmability to enable features like time locks and multi-signature (multisig) schemes, competing projects like Ethereum, Ethereum Classic or Qtum are often expected to better support more advanced applications. However, a new wave of research is increasingly questioning this assumption. For example, Scriptless Scripts, a project spearheaded by Blockstream mathematician Andrew Poelstra, cleverly utilizes the magic of cryptography to move smart contracts off-chain, while leveraging Bitcoin’s security, but without requiring extensive smart-contract support on the Bitcoin protocol itself. Along similar conceptual lines, Discreet Log Contracts (DLCs) could deploy another class of smart contracts on top of Bitcoin. A project by one of the authors of the original Lightning Network white paper, Tadge Dryja, and recently presented at Scaling Bitcoin Stanford, DLCs could realize blockchain-enforced insurance companies, futures contracts, dollar-pegged coins and much more. Here’s how that works. Bets Many types of smart contracts essentially boil down to “bets.” Let’s say, for example, that someone wants to insure himself against being unable to travel due to a potential pilot strike. That person can then “bet” there will be a strike. If there is no strike, the “bet” is lost as if it were an insurance down payment. If there is a strike, on the other hand, the “bet” is won, like an insurance payout. As a more interesting example perhaps, people can also bet on the price of BTC relative to the US dollar: a futures market. If someone bets that the BTC price will go down, and the BTC price does go down, he “wins” more BTC; if the BTC price goes up, he “loses” some BTC. Interestingly, this can be structured to ensure that the person entering into these “bets” is practically guaranteed to end up with the same USD value in BTC regardless of what happens. This can, in turn, be used to realize a “stablecoin” with fixed USD value on Bitcoin’s blockchain. (It should be noted that there are extreme examples where this doesn’t hold up, like a scenario where Bitcoin fails completely and BTC drops to zero dollars — but, in most cases, it works.) However, while these types of smart contracts are interesting, they cannot be executed based on blockchain-based data alone. A blockchain cannot tell whether pilots are striking, nor what the USD/BTC exchange rate is. This requires data input from outside of the blockchain, and this is where “oracles” come in. Oracles Oracles are essentially trusted sources of information; they provide data that cannot itself be “read” by a blockchain. This data can be inserted into a smart contract, which will then execute based on the oracle’s input. Since the types of smart contracts described above need to rely on such external data sources anyway, it makes sense to leverage the trust in oracles in order to simplify a smart contract. Instead of more complex solutions, oracles can, for example, be “plugged into” a relatively basic multisig scheme. As a simple example, let’s say that next summer Alice and Bob want to bet a bitcoin on the FIFA World Cup final between Argentina and Brazil. Alice thinks Argentina will win; Bob thinks Brazil will. To make this bet blockchain-enforceable, Alice and Bob both send one bitcoin to a multisig address that requires two of three signatures to spend the coins. One of these three keys is held by Alice, another key is held by Bob and the third key is held by the oracle. If Argentina wins, Alice and Bob should both sign a transaction from this address that sends both bitcoins to Alice. Since this requires only two signatures, Alice and Bob’s signatures suffice, and the oracle never comes into play. (Needless to say, if Brazil wins it’s the other way around: Alice and Bob sign a transaction sending both coins to Bob.) A problem arises only when the losing party — Bob — refuses to sign the transaction. It’s in this scenario that the oracle would use its third key to help Alice claim the two bitcoins. Importantly, exactly because this is an option, Bob really has no reason not to sign. (This is even more true if Alice and Bob put up some collateral so Bob gets refunded some of his BTC if he signs.) Ideally, the oracle’s signature should hardly ever be needed at all; Alice and Bob can complete the bet on their own. Still, the basic multisig and oracle solution has its weaknesses. For example, the oracle would probably have to be involved with setting up the bet; or at least it should be available to act as a sort of judge whenever needed. This means that the oracle could potentially be corrupted, for example, if Bob offers the oracle a share of the coins if they collude to steal both. And Alice and Bob also have no privacy from the oracle: the oracle will know exactly what they are betting on and how much they are betting. Meanwhile, the rest of the world can tell that Alice and Bob used an oracle for their bet (and, therefore, that it was a bet). These are the problems that Discreet Log Contracts could solve. They maintain the benefits of the straightforward multisig and oracle solution — but eliminate most of its weaknesses. Payment Channels As mentioned, Dryja, who is currently working for MIT Media Lab’s Digital Currency Initiative, is one of the authors of the lightning network white paper. His DLC project is based on a similar concept. A key idea behind the lightning network is that two people can open a payment channel, allowing them to transact with each other. Such a payment channel utilizes Bitcoin’s basic programmability (like time locks and multisig addresses) and combines it with some clever tricks to commit transactions to other transactions, all without broadcasting them to the network unless needed. Over time, as the people in the channel transact with each other, these payment channels are updated with new balances or “channel states.” Either party can then “drop” the latest channel state on the blockchain at any time and claim their balance whenever they want to. And importantly — this is where Bitcoin’s basic programmability is leveraged — both parties can only safely broadcast the latest channel state. If they try to cheat by broadcasting an earlier channel state, their counterparty can actually claim every single coin in the channel. DLCs works similarly. But where a lightning network payment channel only lets the parties involved broadcast the most recent channel state, DLCs limit them to broadcasting only the channel state reflecting the correct outcome of a bet. This is where the oracle comes in — but this time combined with some fancy math tricks. The Oracle Signature As opposed to 2-of-3 multisig schemes where oracles act a bit like judges, oracles in DLCs more closely resemble broadcasters. For our World Cup bet, it would make sense that the oracle is a sports-betting service, a football news website, perhaps the FIFA or another entity that broadcasts the winner anyway and that is reasonably trusted not to lie about it. Let’s say the oracle in this case is a sports-betting service that regularly publishes the score and winner of the World Cup final on their website. To enable a DLC, the same sports-betting service only needs to add a minor additional step. Basically, this “broadcast oracle” has a public key and a private key. (A private key is really just a randomly generated number, while the public key is a seemingly random number derived from that private key.) This public key is published somewhere, most likely on the betting service’s website for anyone to find. The private key is, of course, kept private: This can be used by the oracle to sign a message. (Such a signature, too, is a seemingly random number but is derived from the private key in combination with the message.) The possible outcomes of the bet are known as well: either Argentina wins the World Cup final or Brazil wins. The sports-betting service, therefore, announces that it will broadcast one of two very specific messages: “Argentina won” or “Brazil won.” Now, what’s interesting about public key cryptography is that the sports-betting service’s public key can be used to figure out what a signature of the message — “Argentina won” or “Brazil won” — will mathematically “look like.” (“Look like,” in this case, doesn’t mean that Alice and Bob can produce the signature themselves, but they can calculate certain mathematical properties that it will have.) Because Alice and Bob can calculate what the potential oracle signatures will “look like,” they can use it in their DLC. The Discreet Log Contract First, before the World Cup final, Alice and Bob pay one bitcoin to a “funding transaction.” From this funding transaction, several potential transactions are constructed — but these are not yet broadcast over the network. Here’s where the cryptography gets a bit complex. What the sports-betting service signatures “look like” is cleverly embedded in these several potential transactions, where each potential signature enables a different transaction. (Specifically, and somewhat unconventionally, what the signatures “look like” is used as public keys in key-pairs for the different transactions.) In other words, knowing what the oracle’s potential signatures will “look like,” Alice and Bob can construct their payment channels such that the two different potential signatures can be used to validate two different channel states: one where Alice gets two bitcoins and one where Bob gets them. Then, the actual oracle signature, which is published after the World Cup final is played, is used as private key to validate the winning transaction — and only the winning transaction. If the sports-betting service broadcasts a signature for “Argentina won,” Alice can take this signature, use it as a private key (in combination with her own private key) and claim the two bitcoins from the channel. If the oracle signs a message for “Brazil won,” Bob can. Meanwhile, if either tries to claim the bitcoins without the oracle signature, they will fail, and their counterparty can instead claim both coins. Further, like lightning network payment channels, the outcome of the bet — two bitcoins for Alice if Argentina wins — can now also be broadcast by Alice and Bob as a fairly regular multisig transaction from the funding transaction. And indeed, exactly because Alice can enforce the outcome with the oracle signature anyway, there is little reason for Bob not to cooperate. As a result, the “bet” is fully blockchain-enforced through the sports-betting service’s signature, while this service doesn’t need to do anything for this specific bet; it doesn’t even need to know it ever took place. And, notably, while this bet is relatively simple (either Argentina wins or Brazil wins), in reality DLCs could allow for far more complex scenarios. Exactly because only a fairly regular multisig transaction is broadcasted in the end, it doesn’t really matter if a “bet” has two, 200, or 200,000 potential outcomes. For more details on DLCs, also see Dryja’s presentation at Scaling Bitcoin Stanford. The post This Lightning Network Designer Is Re-Inventing Bitcoin Smart Contracts appeared first on Bitcoin Magazine. from My Bitconnect Journey https://bitcoinmagazine.com/articles/lightning-network-designer-re-inventing-bitcoin-smart-contracts/ via Bitcoin News https://fs.bitcoinmagazine.com/img/images/DiscreetLogs.width-800.jpg REGISTER HERE: http://bit.ly/goN4bcc

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Vaultbank Forges New Path to Value Creation There was a time back in 2016 when the price of bitcoin was worth less than $1,000. During that year, a number of digital assets saw a significant rise in value. Few really knew what Bitcoin was, let alone how to make a purchase. Those that did steered clear of cryptocurrencies fearing their volatile nature as well as the complexities of entering into the market. This scenario still prevails, serving as a major barrier in efforts to boost mainstream adoption. Addressing this issue has been a perpetual challenge. One company that believes that they have a viable solution is Vaultbank. With the goal of reducing these barriers while intending to offer a more stable investment, Vaultbank, a global investment firm committed to sound financial investment and technological advancement, is in development on a platform called Vaultbank Exchange. This revolutionary technology hopes to improve the world of cryptocurrency by making investments in security tokens and utility token trading easier, faster and more cost efficient with some of the lowest fees in the market. Austin Trombley, Chief Technology Officer and company visionary, states, “We are excited about the prospect of reducing the fees on platforms like Coinbase by more than 50 percent all the while leveraging an extremely user-friendly interface and offering access to security token investments, which we believe will take up much more significant share of the cryptocurrency market with additional SEC regulations coming.” Vaultbank’s aim is to deliver quarterly dividends through their tokens (VB). VB tokens are backed by secured credit assets overseen by an experienced investment and portfolio management team. Addressing the Market Entry Conundrum Purchasing cryptocurrencies can be a trying process filled with multiple steps, online navigation challenges and long deposit times. Myriad exchanges now fill the crypto space with hundreds of different coins, most of which are unfamiliar to the investor. Through the use of distributed ledger technology, Vaultbank will provide a debit card that allows the investor immediate access to their invested funds. Here blockchain enhances the overall efficiency of portfolio management with the effect of lowering fees common in the investment world. Vaultbank achieves this through a joint venture with U.K. debit card and FX Currency exchange platform Volopa. Volopa allows the end user to trade up to 17 FX Currencies at highly competitive exchange rates, while giving Vaultbank account holders the ability to pay with Ether, Bitcoin and VB tokens. Augmented by artificial intelligence and machine learning from Random Forest Capital, Vaultbank’s team of experienced portfolio managers intends to create attractive yields for its users. The value creation comes from a quant approach to portfolio management, coupled by ensured security and solvency to rival traditional financial institutions. Vaultbank and its token system stand to reduce the complexity in cryptocurrency banking by tackling these five obstacles in the securities distribution market: Inability to use tokens as a fungible form of payment Delayed liquidity in executing a token transaction High transaction costs entry and execution costs (as high as 5 to 7 percent) Volatility, various cryptocurrencies have exhibited 20 percent to 50 percent swings in valuation within days Lack of transparency and integrity tied to­ most cryptocurrencies having no audit, compliance or oversight practice. Vaultbank Token Sale Vaultbank’s token sale, the presale of which is now live and the public on sale which will commence on January 18, 2018, will feature the new Vaultbank Token, which will act as an investment in their entire business and funds. 80 percent of the token sale funds raised will be invested in a secured loan portfolio, as the main fuel early on with quarterly dividends, making it the first asset-backed token to pay dividends in this manner. Vaultbank is clear to note that dividends cannot be guaranteed. Says Trombley: “Vaultbank is different from 99 percent of ICOs that have taken place thus far because we are filing as a Reg D 506c private security. Our tokens are a security because they actually represent equity, although non-voting, in Vaultbank.” When asked about the long-term vision of Vaultbank and where he hopes the company will be in terms of its development in the next 12–18 months, Trombley concludes: “Our goal is to be the leading firm for investment strategy and expected investment liquidity. We believe that value creation is achieved through a quant approach to portfolio management as well as our debit cards and Vaultbank Exchange platform. With an executive team and advisory board with decades of combined experience in managing trillions of dollars for the largest investment institutions around the world, we are confident in the roadmap we have in place to achieve these goals.” Follow the conversation on Facebook, Twitter and Telegram. The post Vaultbank Forges New Path to Value Creation appeared first on Bitcoin Magazine. from My Bitconnect Journey https://bitcoinmagazine.com/articles/vaultbank-forges-new-path-value/ via Bitcoin News https://fs.bitcoinmagazine.com/img/images/vaultbank-thumb-990x550.width-800.png REGISTER HERE: http://bit.ly/goN4bcc

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Op Ed: Bitcoin’s Scaling Challenge Brings the Battle for Liberation of Cyberspace This year brought a climax in the prolonged Bitcoin block size debate. Heated disputes over scaling that have become toxic in the ecosystem have overshadowed the technology. The cancelation of SegWit2x, the most controversial proposal in this cryptocurrency’s history, averted a potential catastrophe. Innovation moves on and the community is finding some time for reflection. What did this latest crisis teach us? The political battle that came to the forefront in the last several months challenges all to examine a prevailing notion of Bitcoin as apolitical money and can help us explore the deeper vision behind this technology. The trilogy of Wachowski’s science fiction film became a popular meme in the Bitcoin battle on social media. The Matrix is a story of a computer programmer played by Keanu Reeves who is said to become the One who can free people from a machine-controlled system. Neo’s struggle to liberate humanity from oppression seems to have resonated with many Bitcoiners who found a similar passion in the potential of Bitcoin to bring financial sovereignty to the common man in the world of central banks. In The Matrix Reloaded, Neo confronts the man who designed the system. The Architect, who represents scientific reason and logic, tells Neo: “Your life is the sum of a remainder of an unbalanced equation inherent to the programming of the matrix. You are the eventuality of an anomaly, which despite my sincerest efforts I have been unable to eliminate from what is otherwise a harmony of mathematical precision …” To this, Neo responds saying, “Choice. The problem is choice.” Neo’s choice represents an irregularity that disrupts order and eventually threatens the system. This irregularity, in the eyes of the Architect, is a kind of bug that needs to be removed, yet he is unable to do so. Bitcoin is an architecture that contains this anomaly. If we look back at the past nine years of its existence, the development of this network relied on the individual’s choice. In the white paper published in the midst of a financial crisis, the mysterious author put forward a blueprint of a decentralized network and set up its basic design. What created the network was participation of people who, of their own volition, followed the white rabbit. Yet at the same time as the network grew, this uncontrollable anomaly began to bring hostile forces to the network and create fluctuations in equations. Clash of Two Visions From Bitcoin XT to Bitcoin Classic to Bitcoin Unlimited, the proposals to change Bitcoin’s consensus emerged over time, which stirred up disagreements. The crux of the conflict can be found in opposing visions of Bitcoin. One camp views it as a payment system, wanting cheaper, faster on-chain transactions, while the other sees censorship resistance and permissionlessness as its defining feature and value proposition. The friction of these two visions can be metaphorically depicted as a battle between Agent Smith and Neo involving their different ideas of freedom. Agent Smith represents the Adam Smith of the world, advocating a “free market” economy born in the Industrial Revolution. On the other hand, Neo is a symbol of civil liberty in the Digital Age, representing free speech and privacy enabled by asymmetric encryption. The growing schism between two visions of Bitcoin seemed to have reached the point of no return in May with the announcement of the “Bitcoin Scaling Agreement.” SegWit2x, or the New York Agreement, was born in the heat of the scaling dispute. This proposal was put forward by opponents of the Core development team’s proposed protocol upgrade (a way to increase a new capacity without having to change consensus rules, while fixing a long-standing malleability bug). Most signers of the agreement saw SegWit2x as a compromise between Core’s planned SegWit implementation (BIP141) and Bitcoin Unlimited’s threat of a contentious hard fork alternative. They saw it as a way to keep the network together. SegWit2x, a plan to double the block size through a hard fork, was developed in an invite-only meeting in a New York hotel by major actors in the industry. Unlike Bitcoin Cash, which was launched by supporters of a block size increase in response to the SegWit lock-in, SegWit2x lacked the replay protection needed to prevent potential loss of users’ funds through accidental replay spending and replay attacks. Concerns were raised about this proposal, specifically its rushed preparation done in a closed development process. Some perceived it as a dangerous and reckless hard fork, which is not a software upgrade as proponents claim, but an attack on Bitcoin. Beginning of Resistance In the Matrix series, aside from the Architect, who presents himself as the father of the system, there is another crucial character: the Oracle, who is the mother of the system. Morpheus speaks of how the Oracle, who made a prophecy, has been with the common people since the beginning of the resistance. He tells Neo just before he mets the Oracle, “Try not to think of it in terms of right and wrong. She is a guide. She can help you find the path.” In a sense, the creator of Bitcoin was like a prophet who set up a path for a new future for others to find. What is contained in the white paper is a vision that has set everything in motion: a vision that existed from the very beginning. Before the architecture of 1s and 0s, whether numbers were used to calculate profit margins or to program software, there was a vision to guide human action. The rabbit hole that took many of us to the Wonderland of this crypto-world goes much deeper. In a speech in Zurich titled “Call for a Revolutionary Hacker Movement,” Amir Taaki, who was one of the first developers to start working on Bitcoin, described the battle that has long been engaged since the dawn of the internet. He reminded the audience how Bitcoin is a political movement that was built on an earlier struggle. Taaki spoke about another prophet who inspired him to engage in Bitcoin development. His name is Richard Stallman, the founder of the free software movement, who brought about the idea of free software. This godfather of the GNU/Linux operating system described free software as “the first battle of liberation of cyberspace.” Stallman explained that free software is “controlled by its users, rather than the reverse.” He defined “free” as freedom, libre in French, and not in terms of price. This vision of technology to empower individuals and change the world formed hacker ethics, which inspired a group known as the cypherpunks, an electric mailing list of activists who advocate free speech and privacy with the use of strong cryptography. Amir noted how commercial interests co-opted Stallman’s vision by renaming free software as “open source” and rebranding it with an open-market idea focused on efficiency, profit and growth. Networks of committed individuals, who out of their own free resolution dedicated themselves to shared ideals greater than themselves, were slowly overtaken by business interests and people who were overly driven by self-interests. He then pointed out how the debacle of the block size debate was a hijacking of Bitcoin’s original vision, rooted in these ethics. Resurgence of Free Software Bitcoin is a breakthrough of computer science as free software, which ensures individual users’ rights to control its program. The first essential condition of freedom in the principle of free software that Stallman articulated is “freedom to run the program as you wish.” Stallman explained that if you are not a programmer and don’t know how to program, you can pay someone to do it for you and then, through them, you can exercise your freedom. Bitcoin is a global project of free software, in which changes to the protocol are made through a broad consensus of the network. What maintains the integrity of this collective free software are full nodes run by individual users who enforce Bitcoin consensus rules, often referred to as the economic majority. By running codes of their own choice and using the nodes to receive transactions, users create economic activity. This way, they can support the developers who work on their behalf. The proposed large block size violates this first premise of freedom, for it would increase the cost for individual users to run full nodes, making it impossible for them to use the free-market forces to exercise their own freedom. Thus, this idea for a bigger block size was rejected on technical grounds, with consideration of the security trade-off that centralization brings. A new solution has been put forward by core developers to preserve this essential condition of freedom on the first layer, with specialization to be built into other layers. Responding to the SegWit2x initiative, CEO and co-founder of Prasos, Henry Brade, noted, “We are seeing the removal of #Bitcoin cypherpunk roots and the insertion of an industrial oligopoly to control all Bitcoin development.” Some articulated how the real story behind this scaling drama is all about control and noted how these were efforts partially driven by the desire to remove the influence of Bitcoin Core contributors and lock down development within their own vested interests. Hash Power Supremacy Like Agent Smith, who tried to keep Neo under his control, the world of IOU with laissez-faire economics collides with cypherpunks’ hacker ethics of free and open software. With ICOs and new BIPs filled with empty promises, corporate and Wall Street profiteers disguised as prophets try to infiltrate the cryptosphere. Big business players, like wild cowboys, plunder knowledge in the Bitcoin source code repository that is carefully maintained through rigorous testing and peer review. Under the banner of “open source,” those driven by greed and commercial interests try to copy, modify and create their own versions of this currency and put the whole network under their proprietary control. Here, the industrial infrastructure of power came in full force to resist the ascent of a new Digital Era. Ideology of hash power supremacy was taken up by SegWit2x proponents, who argued that miners can decide or should dictate the future of the Bitcoin protocol. This ideology is based on the belief (perhaps held by some out of lack of knowledge and by others more intentionally) that a blockchain with more hashing power dedicated to it becomes Bitcoin. Some criticized these miners’ attitudes to put themselves above the protocol rules enforced by users. They saw it as a dangerous, slippery slope toward changing all other rules, including the 21 million coin limit. The community’s concern about this seemingly overarching power of miners reached another level last spring when the controversy over Bitmain’s AsicBoost technology emerged. The allegation was made that Chinese hardware maker Bitmain was secretly exploiting a previously known weakness in Bitcoin’s algorithm and engaging in unfair mining practices. If this was true, it was like a malicious malware in software that was released into the network. Monopoly through a patent on mining chip technology can be used as a weapon to disable fair market competition and restrict users’ access to participate in the network fully. #UASF, Proof-of-Hats Consensus While proponents of SegWit2x tried to command economically rational miners and intensify the threat of a hard fork, resistance had emerged. The attempted hashing power takeover was met by Twitter hashtag activism. Around this consensus algorithm, a human network of solidarity was quickly formed, and a spontaneous, self-directing organism emerged within the ecosystem. A seed of this movement was planted when pseudonymous Bitcoin and Litecoin developer Shaolinfry proposed his User Activated Soft Forks (UASF). The vision of UASF is said to be inspired by game theory put forward by the author Nassim Nicholas Taleb, namely a concept of the “intolerant minority.” This idea of an activation mechanism enforced by users began to grow when it kindled in the spirit of others. Samson Mow, the CSO of the blockchain technology company Blockstream, set up a bounty to fund the development of a UASF software implementation designed to trigger BIP141. The UASF cap distributed by Mow became a Proof-of-Hat consensus, a torch of freedom that unites those whose hearts beat to keep the original vision of Bitcoin immutable. Linux software engineer Warren Togami reminded Bitcoiners that users are in charge: “Stop begging developers to decide. Users have the real power, and they need to step up their advocacy game. #BIP148.” The previously silenced majority had found an avenue to exercise their own power. #NO2X, the Rise of Hashtag Activism With his gift for social engineering, Mow created Twitter moments. Titled “Bitcoin vs. CorporateBitcoin (corporate takeover),” his “moment” called on users to rise up in this “battle for Bitcoin’s soul.” Dubbed as Bitcoin Independence Day, activation for Bitcoin Improvement Proposal 148 (BIP148) was se from My Bitconnect Journey https://bitcoinmagazine.com/articles/op-ed-bitcoins-scaling-challenge-brings-battle-liberation-cyberspace/ via Bitcoin News https://fs.bitcoinmagazine.com/img/images/gpscaling.width-800.jpg REGISTER HERE: http://bit.ly/goN4bcc

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Meet “Pine,” the Bitcoin Philanthropist Who Set Up the $85 Million Pineapple Fund Yesterday, one post set the Bitcoin subreddit on fire: An anonymous Bitcoiner who goes by the name of “Pine” announced that they are establishing the Pineapple Fund to donate 5,057 BTC, worth about $86 million at today’s exchange rate, to charitable causes. “I’m very happy that I have held on to most of my bitcoins until today,” Pine told Bitcoin Magazine. “Most early adopters of bitcoin actually don’t have much. They’ve sold to pay bills and expenses.” Indeed, last week it was revealed that Bitcoin evangelist Andreas Antonopoulos was one of those who had not been in a position to hold his early coins long enough to reap the rewards. In a subsequent outpouring of appreciation, Bitcoin enthusiasts sent him donations of more than 100 BTC, equivalent to more than $1.7 million. In this same spirit of giving back, Pine is sharing their own newfound wealth. “Sometime around the early days of bitcoin, I saw the promise of decentralized money and decided to mine/buy/trade some magical internet tokens,” states the Pineapple Fund website. “The expectation shattering returns of bitcoin over many years has [led] to an amount far more than I can spend. What do you do when you have more money than you can ever possibly spend? Donating most of it to charity is what I’m doing.” Some charities that are already receiving donations from the Pineapple Fund include Watsi, The Water Project, EFF, MAPS, SENS Research Foundation, charity: water ($1 million each), BitGive ($500,000) and OpenBSD ($50,000). Have you heard?! Yes, it's TRUE! We received an extremely generous donation of $500K from the Pineapple Fund!! HUGE THANKS!! Pineapple Fund has announced the most significant #philanthropic gesture EVER in #bitcoin to donate over 5,000 BTC! from My Bitconnect Journey https://bitcoinmagazine.com/articles/meet-pine-bitcoin-philanthropist-who-set-85-million-pineapple-fund/ via Bitcoin News https://fs.bitcoinmagazine.com/img/images/pineapple_1ozm7lL.width-800.jpg REGISTER HERE: http://bit.ly/goN4bcc

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Garzik Forks UnitedBitcoin Away from “Maximalists” to Support Altcoin Communities A new project called UnitedBitcoin (warning: the site autoplays audio) promises to add smart contract features using the UTXO model, support for the lightning network and SegWit, and eight-megabyte blocks. Headed up by Jeff Garzik, the lead developer behind the failed SegWit2x hard fork, along with Matthew Roszak and SongXiu Hua, this UnitedBitcoin (UB) hard fork will offer replay protection to prevent people from accidentally spending their coins on both the Bitcoin and the UnitedBitcoin blockchains. Garzik told Bitcoin Magazine that “10% of the total worldwide SHA-256 hash power” has moved to the new UB network, with much of the support coming from China and older mining equipment that was no longer profitable due to the escalating difficulty in mining bitcoin. He noted that UB is already supported on the ZB and EXX exchanges. The UB white paper outlines how lost bitcoins have created deflationary pressure that has pushed the price up. Because those bitcoins are out of circulation, the supply is further decreased. One of the issues that UB seeks to address is to find a purpose both for those lost bitcoins and for “inactive” wallets by creating a stable cryptocurrency linked to their addresses. All active Bitcoin addresses will receive the same balance on the UB chain, much like previous forks. The balances of UB on inactive addresses, however, will be confiscated by the UB Foundation and used to “serve the community.” Inactive addresses are defined in the white paper as “addresses without activity since block height #494000 (November 11, 2017) and as a result didn’t automatically receive UBTC during phase 1 of the asset allocation procedure.” UB does not distinguish between an “inactive” address and one which is simply being used by a long-time “hodler.” “There is no difference. An inactive account is an inactive account,” said Garzik. “Like during [the] Ethereum new coin creation, you had to take a proactive step, otherwise you got zero [ether]. This is normal for new token creation — new chain, new ERC20, but different from all other Bitcoin Forks. We are trying to do something new and different.” Anyone with a prior balance of 0.01 BTC in an “inactive” address at the time of the November 11 fork can still get UB tokens, so long as they are willing to take such a “proactive step”: that is, they make at least one transfer to their own Bitcoin address between Block 498,777 and Block 501,878 (December 12, 2017, to 12:00 GMT on January 3, 2018, GMT). Only the original address can make the transfer to itself, and the receiving address must be used as one of the sending (input) addresses. One privacy issue to consider is that in order to “proactively” claim BU tokens, the protocol forces users to reuse their Bitcoin addresses; this action puts privacy at risk and, unless it is done carefully, may link many of the users’ coins together. It's a gold mine for blockchain deanonymization, merging up UTXOs and reusing addresses. Can't help but think such an artificial qualification is deliberate. — Johnathan Corgan (@jmcorgan) December 13, 2017 https://platform.twitter.com/widgets.js User privacy protection is not the only part of the protocol that is drawing criticism, however. “The code contains a god mode; it’s literally called that,” Blockchain developer Sjors Provoost said to Bitcoin Magazine. He said that it appears as if this “god mode” will create a multisignature address that belongs to a (yet-to-be-defined) UnitedBitcoin Foundation. “Unlike previous airdrops, the initial coin distribution is not determined by a consensus rule,” he added. “This means that even if you were to run the full UB node software (which you should not), you will have no way of knowing for sure how many coins you get. Conversely, if you already had bitcoin, you won’t know how many of ‘your’ coins will be confiscated. You simply have to trust their promise to take and redistribute coins as their marketing promises.” According to Provoost, the new consensus rule allows the owner of this foundation address to spend any UTXO they want. “These confiscations will be included in holy blocks, which can be created during the first 500 blocks after the fork. This is how they implement the redistribution as I just described, but they can do much more.” Furthermore, Provoost is concerned about the quality of the code itself. “Garzik’s previous project SegWit2x tried to keep its changes relative to Core to a bare minimum. Although at the time of the planned fork their code base was about a year behind Bitcoin Core, it didn’t introduce many changes,” he pointed out. “UnitedBitcoin on the other hand has introduced far more changes, making the task of tracking Bitcoin Core far more difficult. It’s not as many changes as Bitcoin Unlimited and Bitcoin Cash, and the problem is somewhat mitigated by them sunsetting the more complicated consensus changes like god mode. However, even the small change in SegWit2x had a widely publicized serious bug in it and there are rumors of more.” What Happens to Those “Reclaimed” Tokens? Garzik has plans to “build a better Tether” by using the UB reserve, funded by coins reclaimed from “inactive” addresses. According to the project, 70 percent of confiscated UB coins will be held as collateral to issue stable tokens pegged to a fiat currency. “The UB reserve can be used as a backing asset for a stable, non-volatile currency,” said Garzik. “This is auditable and transparent and on the blockchain. It will be over-collateralized, 200–300% to maintain the stability even in the face of a volatile price of the reserve.” The remaining 30 percent of the confiscated coins will support another new feature: owners of QTUM, H-shares and ether will receive a share of the remaining redistributed UB. UB is experimenting with a new model: engage multiple communities — ETH, Qtum — rather than following the tired model of rewarding Bitcoin maximalists with a coin they dislike and will just dump on day 1. According to Garzik, the specific claim process for the redistribution of UB has yet to be determined. “The UB board is still being put in place — things are moving very fast — and this will include more specifics on governance and community allocations.” The scheduled timeline of what has been released and what is coming breaks down as follows: December 12, 2017: Fork of Bitcoin to UnitedBitcoin (at block height #498,777) with support for: Increased block size to 8 MB SegWit support Replay Protection Asset Allocation January 3, 2018: End of Asset Allocation phase #2 Pegged currency based on color currency February 28, 2018: Launch of smart contract support April 28, 2018: Launch of lightning network support The post Garzik Forks UnitedBitcoin Away from "Maximalists" to Support Altcoin Communities appeared first on Bitcoin Magazine. from My Bitconnect Journey https://bitcoinmagazine.com/articles/garzik-forks-unitedbitcoin-away-maximalists-support-altcoin-communities/ via Bitcoin News https://fs.bitcoinmagazine.com/img/images/UBfork.width-800.jpg REGISTER HERE: http://bit.ly/goN4bcc

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South Korea Moves to Regulate Domestic Bitcoin Trading, Exchanges Since late November 2017, South Korea has looked to regulate cryptocurrency trading in domestic exchanges, including Bithumb, Coinone and Korbit, The Korea Herald reports. Now, trying to tame the wave of wild cryptocurrency speculation in the country, South Korea is imposing trade bans for minors and looking for ways to impose taxes on investment returns. South Korea is the world’s third largest market in bitcoin trading, after Japan and the U.S., and the largest exchange market for ether, accounting for more than 33 percent of its market share, according to a recent MIT Technology Review report. The country is also home to two of the top 15 global digital-currency exchanges (Bithumb and Coinone) and believed to have about one million registered daily traders in virtual currencies, which is equivalent to about one out of every 50 citizens. This is worrying the South Korean government. In September 2017, the country’s Financial Services Commission (FSC) ordered a ban on Initial Coin Offerings (ICOs). In November 2017, the head of South Korea’s Financial Supervisory Service said that the agency was monitoring cryptocurrency trading inside the country, and the country’s National Tax Agency revealed that it was considering a value-added tax, a capital gains tax or both on cryptocurrency trades. If the plan is implemented, South Korea will become one of the few countries to tax cryptocurrency-to-cash exchanges. The government’s concern is also motivated by the risk of cyberattacks from the country’s rogue neighbor, North Korea. According to South Korea’s National Police Agency, North Korean hackers could be targeting South Korean bitcoin exchanges. With these newest measures, North Korean banks that offer accounts for cryptocurrency trading will have to verify the identification of new account holders and prohibit minors from opening accounts. Woori Bank and Korea Development Bank will shut down virtual accounts offered to cryptocurrency exchanges before year-end, according to the banks. The regulators will also bar financial institutions from investing in or obtaining cryptocurrencies, and is considering ways to oblige cryptocurrency exchange operators to verify users’ real names, strengthen storage security of encryption keys, and disclose purchase price and order volumes. The authorities will also take strong-handed punitive actions against the perpetrators of cryptocurrency-related scams. In a press release, the government said that the new regulations were necessary “to prevent a general public without expertise from suffering losses by participating in virtual currency investments that have massive fluctuations.” These issues were discussed on Wednesday, December 13, 2017, in a meeting presided over by Hong Nam-ki, minister of the Office for Government Policy coordination, and attended by officials from the ministries of justice, finance, and science and ICT, as well as from the Financial Services Commission, the Korea Communications Commission, the Fair Trade Commission and the National Tax Service. While some news headlines are presenting this as a catastrophic development that will shut down the cryptocurrency industry in South Korea, the initiative of the South Korean authorities is in line with current trends toward stronger cryptocurrency regulations in China, Europe and the U.S. “A right set of regulations will rather nurture the (virtual currency) market, and we would welcome that,” Bithumb representatives told Reuters, adding that such a code of conduct could add legitimacy to the market. The post South Korea Moves to Regulate Domestic Bitcoin Trading, Exchanges appeared first on Bitcoin Magazine. from My Bitconnect Journey https://bitcoinmagazine.com/articles/south-korea-moves-regulate-domestic-bitcoin-trading-exchanges/ via Bitcoin News https://fs.bitcoinmagazine.com/img/images/skoreaexchange.width-800.jpg REGISTER HERE: http://bit.ly/goN4bcc

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Japan’s GMO Internet Group Will Pay Thousands of Workers in Bitcoin Blockchain development companies and the cryptocurrency press have been paying their workers in cryptocurrencies for years, but one realizes that the times are truly changing when mainstream companies start paying their workers in bitcoin. GMO Internet Group, a Japanese provider of a full spectrum of internet services for both the consumer and enterprise markets, is introducing a system for employees to receive part of their salary in bitcoin. Headquartered in Tokyo, GMO Internet Group comprises more than 60 companies in 10 countries. In view of the group’s size and financial muscle, this initiative is likely to boost the mainstream adoption of the practice of paying salaries in cryptocurrencies. The move is partly motivated by the desire to promote the adoption of Bitcoin, which is a strategic priority for GMO. In fact, the group is vigorously active in bitcoin trading and mining services, as well as mining hardware development. Therefore, anything that is good for Bitcoin is also good for GMO. In May 2017, GMO launched a cryptocurrency exchange, initially dubbed Z.com Coin and later rebranded as GMO Coin, which features cryptocurrency FX and trading on both computers and smartphones. The exchange offers two types of services: cryptocurrency FX, which is an over-the-counter (OTC) bitcoin margin trading and cryptocurrency trading, which enables buying and selling of virtual currency in JPY in addition to basic features allowing customers to send and receive bitcoins. In September 2017, GMO announced the upcoming launch of a new bitcoin mining business. “We will operate a next-generation mining center utilizing renewable energy and cutting-edge semiconductor chips in Northern Europe,” GMO stated, emphasizing that they will invest in R&D and manufacturing of hardware including the next-generation mining chip. “We will use cutting-edge 7 nm process technology for chips to be used in the mining process, and jointly work on its research and development and manufacturing with our alliance partner having semiconductor design technology.” The mining business is scheduled to start in January 2018. GMO expressed its belief that cryptocurrencies will develop into “new universal currencies” available to anyone from any country or region who wants to freely exchange value, “creating a new borderless economic zone.” The option to receive part of the salary in bitcoin will initially only be available to employees of one GMO company — GMO Internet Co. Ltd. — starting in March 2018, but it will be gradually extended to more than 4,000 employees in other GMO companies based in Japan. The minimum bitcoin payment will initially be 10,000 yen (~$88) and the upper limit will be 100,000 yen (~$881). Each salary payment in yen will be reduced by the amount of bitcoin paid, using the exchange rate at the GMO Coin exchange. Mainichi Japan notes that Japan’s labor code stipulates that businesses must pay employees in a recognized currency such as the yen, but, according to GMO, the move is in accordance with the law because any payments in bitcoin would be consensual, with a chosen amount to be deducted from paychecks and put toward purchasing bitcoin. The cryptocurrency is rising in popularity in Japan with an increasing number of retailers accepting it as a form of payment. GMO Internet Group wants to contribute to the development of cryptocurrencies in the world by promoting cryptocurrency-related initiatives throughout the group. In particular, GMO wants to promote ownership of bitcoin among its employees — who can be the best evangelists for the group’s products and services related to the digital currency — to improve the employees’ exposure to and understanding of Bitcoin. “Employers can now pay employees a portion of their net earnings in bitcoin by collaborating with niche payroll solution providers such as Bitwage, Wagepoint, or Bitpay, who manage the back-end mechanics, eliminate exposure to price volatility, and reduce compliance and governance risks,” noted Deloitte principal Eric Piscini. A recent overview of cryptocurrency payroll processors and early adopting clients notes that offering salaries in bitcoin could make it easier for companies to retain and attract talent. Besides compensating current employees, “[cryptocurrencies] could help businesses more effectively tap into the open talent economy, where individual contributors may be drawn to business partners that offer payout features only cryptocurrency makes possible: fast peer-to-peer payments across country borders with minimal friction (or total freedom) from traditional banking systems,” said Piscini. For now, the GMO press release is available only in Japanese. The post Japan's GMO Internet Group Will Pay Thousands of Workers in Bitcoin appeared first on Bitcoin Magazine. from My Bitconnect Journey https://bitcoinmagazine.com/articles/japans-gmo-internet-group-will-pay-thousands-workers-bitcoin/ via Bitcoin News https://fs.bitcoinmagazine.com/img/images/JapanPay.width-800.jpg REGISTER HERE: http://bit.ly/goN4bcc

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