Anonymous Currencies Might Limit Financial Access

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

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

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

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

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

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

Iran Warns Of Retaliation If U.S. Breaches Nuclear Deal

Washington -
Extending U.S. sanctions on Iran for 10 years would breach the Iranian nuclear agreement, Iran Supreme Leader Ayatollah Khamenei said on Wednesday, warning that Tehran would retaliate if the sanctions are approved.
The U.S. House of Representatives re-authorised last week the Iran Sanctions Act, or ISA, for 10 years. The law was first adopted in 1996 to punish investments in Iran’s energy industry and deter Iran’s pursuit of nuclear weapons.

The Iran measure will expire at the end of 2016 if it is not renewed. The House bill must still be passed by the Senate and signed by President Barack Obama to become law.
Iran and world powers concluded the nuclear agreement, also known as JCPOA, last year. It imposed curbs on Iran’s nuclear program in return for easing sanctions that have badly hurt its economy.
“The current U.S. government has breached the nuclear deal in many occasions,” Khamenei said, addressing a gathering of members of the Revolutionary Guards, according to his website.
“The latest is extension of sanctions for 10 years, that if it happens, would surely be against JCPOA, and the Islamic Republic would definitely react to it.”

The U.S. lawmakers passed the bill one week after Republican Donald Trump was elected U.S. president. Republicans in Congress unanimously opposed the agreement, along with about two dozen Democrats, and Trump has also criticized it.
Lawmakers from both parties said they hoped bipartisan support for a tough line against Iran would continue under the new president.
President-elect Trump once said during his campaign that he would “rip up” the agreement, drawing a harsh reaction from Khamenei, who said if that happens, Iran would “set fire” to the deal.
The House of Representatives also passed a bill last week that would block the sale of commercial aircraft by Boeing and Airbus to Iran.

The White House believes that the legislation would be a violation of the nuclear pact and has said Obama would veto the measure even if it did pass the Senate.

Ethereum Smart Contract Issues Frustrate Developers with Fatal Bugs

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

On November 1, the Ethereum development team and the founder of Solidity warned users and developers against a bug that allowed variables to be overwritten in storage.

Variables in a smart contract are agreements made between two or more parties. Thus, if an attacker can gain access to the storage and alters the variables, crucial agreements in decentralized applications can be affected and funds may be extracted, which may pressure developers to discard previous smart contract-based projects to recompile contracts.

Ethereum developers including Ansel Lindner stated that the development of an Ethereum application is failing to operate because of this bug.

"Imagine spending a year building an app for eth, just to find out the thing doesn't work," wrote Lindner.

He further noted that much like the memory bugs in Geth that continued to negatively affect the network for weeks, the recent smart contract bug will most likely lead to a series of other potentially fatal bugs.

"I could agree that it's a molehill on the side of a big mountain of other similar potentially fatal bugs," Lindner added.

Reitwiessner explains that luckily, Ethereum multi-signature wallet contracts are not affected. However, contracts containing two or more contracts will high likely be affected.

"The following contracts may be affected: Contracts containing two or more contiguous state variables where the sum of their sizes is less than 256 bits and the first state variable is not a signed integer and not of bytesNN type," Reitwiessner wrote.

Reitwiesnner recommended developers to deactivate and remove funds from already deployed smart contracts and compile new agreements using the Solidity release 0.4.4. Failure to do so may result in the loss of funds and may hugely impact decentralized applications that rely on these contracts.

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

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

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

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

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

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

Extending bitcoin's scripts

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

In particular, there are two new covenant scripts that Blockstream explored, each of which take parameters and outputs whether the script is valid, or whether or not the transaction is currently spendable based on its restrictions.

It's worth noting that bitcoin's scripting system is currently quite simple for security's sake. There aren't limitless rules in bitcoin right now because new additions can be potentially dangerous and developers note that they take time to test.

This is where sidechains may come in handy, although they are not yet pinned to the main blockchain.

Bitcoin startup Blockstream has been working on these interoperable blockchains for experimenting with new features that could potentially be added to bitcoin since June of last year, and this is an example of how these new chains can be used to test new features.

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

Walt Disney Company Goes Big On Blockchain With Dragonchain

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

 

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

 

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

 

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

 

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

 

Blockchain of Blockchains

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

 

 

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

 

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

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

 

Privacy

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

 

Encrypted Messaging

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

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

 

ShadowCash

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

 

Marketplaces

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

 

Conclusion

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

 

ShadowCash Specifications

Block time: 60's

Difficulty re-target: every block

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

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

P2P port: 51737

RPC port: 51736

 

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

A few reasons why you should invet in bitcoin

During the last couple of months, bitcoin has had numerous ups and downs, yet the number of total investors has increased exponentially. Judging by this practice, it seems like there is a clear demand for the digital currency. In fact, the year of 2015 represented the year of venture capitalists, especially on the blockchain, after the number of investments in both bitcoin and its underlying technology has increased. As there is clearly some risk associated with the practice of trading and investing in bitcoin, numerous potential investors are staying away from it.

 

The supply of bitcoin is fixed

Since the currency was first released back in 2009, its value has increased from next to nothing, up to 1,100 and its current value of around $600 at the time of writing. However, not many people are aware of the fact that the digital currency has a strict, limited maximum supply, of 21 million coins. Judging by this aspect, once all of the coins will have been mined, the coin will have the potential to increase in value a lot. While it will surely go through numerous more price fluctuations until the limit is reached, if the number of investors and adopters of the digital currency continues to increase, then this will likely bring the value of one bitcoin to astronomical numbers.

 

A larger number of individuals and businesses are turning to bitcoin

While the digital currency was still fairly new, numerous businesses had started accepting bitcoin as a form of payment. As time passed, however, other companies began paying their salaries in the digital currency, whereas others simply stopped using fiat and just moved to bitcoin altogether.

 

Bitcoin is entering a trend where it’s being adopted for more and more practical reasons

Using the digital currency as a form of payment only is surely beneficial. Yet, adopting it for its practical reasons can yield much better results over the years to come. To put things better into perspective, with each day, bitcoin is getting more ingrained in our society. Thanks to this, it’s also being built within the back bone of numerous products and services. Judging by this trend, companies and individuals will need more of the digital currency to take part in the online and offline markets with ease.

 

When it comes down to moving to a digital currency, most people choose bitcoin

As it is by far the most popular cryptocurrency available on the market, it yields an impressive advantage to new-comers. Based on this, people who are just getting started with the world of digital currencies are much more likely to invest in bitcoin, rather than other altcoins such as Ethereum, Litecoin, Dogecoin etc.

 

Higher prices increase transaction volumes, which in turn boost prices even more

This is an interesting trend in the world of bitcoin, thus creating a circle of benefits for its adopters. With this in mind, as soon as the price increases, trading data has shown that the number of transactions increase as well, which in turn, act as a catalyst for higher prices. In case no event shakes the world of bitcoin, then this could lead to a continuous price increase, which would further be boosted after reaching the limit of coins, as mentioned above.

 

Governments take it lightly

While there have been a couple of government talks on regularizing bitcoin and the use of the blockchain alongside with other digital currencies, no harsh practice has been imposed so far, apart from 2-4 countries. Most governmental agencies are open to the use of the digital currency, whereas others even encourage it (the United Kingdom, for example). Taxes have been imposed on both individuals and businesses in the past, yet many of these regions decided to remove the taxing, and regard bitcoin as a commodity, asset, whereas others talked about it as real money.

 

It’s easy

Chances are that the most pragmatic reason on why you should consider investing in bitcoin, is that doing so, is extremely easy. To put things better into perspective, it could be as easy as simply buying a number of coins, and holding onto them through the price fluctuations. Of course, there are also slightly more difficult practices that you could get into, such as trading, which can turn out to be extremely profitable, especially if you have some experience as a trader. Practices such as margin trading, lending bitcoin, and simply speculating on the price can result in higher profits for those who do this constantly, and have a good judgment of the short and long-term future.

 

Based on everything that has been outlined so far, the 6 reasons mentioned above, should have convinced you about the profit potential that bitcoin offers, and should have encouraged you to consider the idea of investing. There are of course, also a couple of disadvantages, which we will cover in the next articles to come. Based on everything that has been outlined so far, what do you personally think about the reasons mentioned above? Let us know your thoughts in the comment section below.

Can payments firms monetise data and meet new privacy laws?

The EU’s General Data Protection Regulation (GDPR) represents a watershed moment for the payments industry. This is not simply another data compliance headache. GDPR enshrines a new idea: that consumers have ultimate control of their data.

 

This concept will lead to a new model for the payments industry; one centred on the empowered customer and based on informed consent.

 

The impact on the payments industry

Payments industry businesses – from merchants to the financial services organisations that support them – are increasingly looking at how they can monetise their customer data.

Some adopt direct monetisation models, selling their customer data to third parties, whereas others indirectly monetise customer data through analysing payments history to drive up- and cross-sell of new services.

 

Much of this data is unfortunately anonymized given it is personally identifiable information (Pii) and there is a lack of customer knowledge and/or permission for use. As such it has essentially been stripped of a fair amount of its utility to directly personalise and make offers more customized and relevant.

Either in aggregated form or linked to an individual, how can firms continue to monetise data and also meet the privacy demands of GDPR?

 

Putting the customer in control

The challenge can be met through informed consent. Firms must take a customer-driven approach to information sharing, empowering the consumer to share and rescind their consent.

It is not enough to simply ‘ask’ for consent. Organisations must capture gained consent in an auditable workflow. This requires a sophisticated information management platform; one which enables an automated and secure digital communication link with the customer.

 

Once consent is secured, payments industry businesses then need a flexible, secure platform to store and manage the data in customer-driven way. One way firms are looking to build this framework is through digital rights management services that create a digital ‘vault’ for customers to store personal data.

 

This approach enables simplified and streamlined Data Portability and the Right to be Forgotten; empowering customers and meeting the stipulations of GDPR.

 

A new model for a changed world

While GDPR is a significant enabling event for the rollout of consent-driven data management, it is a symptom of a wider change. The sharing, and peer-to-peer economies are already shaking up the world of commerce and changing the payments landscape for good. At the same time people are becoming more aware of their personal rights over their own data.

 

Payments businesses can’t take anything for granted any more. They must proactively enable a customer-driven and customer-centric data framework and provide customers with the tools they need to view and manage their own data. The result will be GDPR compliance, a much better customer experience and a new method for building customer loyalty. It will also mean they can continue to monetise their data.

Understanding Privacy: How Anonymous Can Bitcoin Payments Be?

An Untraceable Payment System, the Dream for Privacy Advocates
Pantera Capital's Ronald A. Glantz describes Bitcoin as, "A consensus network that enables a new payment system and completely digital currency. It is the first decentralized peer-to-peer payment network that is powered by its users with no central authority or middlemen. From a user perspective, Bitcoin can be considered to be cash for the Internet."

In his definition, Glantz explains how a network of people agree by mutual consent to exchange a digital currency without physical form. The currency, as the definition explains, is unregulated and no financial institution has control over its price, supply, risks, valuation methods and distribution. The remarkable aspect of Bitcoin is that it has no trust because of its decentralized nature, and yet that's what makes it so trusted.

Sounds like the perfect candidate for a completely anonymous payment method, right? Not exactly.

Just How Private Are Your Bitcoin Transactions, Really?
Every single bitcoin payment is recorded in a digital public ledger known as the blockchain. This blockchain records the transfer of bitcoin from user to user and links them to transactions. Although bitcoin wallets have uniquely-coded identifiers, which usually don't point towards the identity of parties involved, there have been incidents where peoples' identities were accurately linked to their wallets.

The transparency of bitcoin transactions are the reason there is no privacy when using the system. Once a transaction is recorded, it is available for anyone to see and can be easily traced back to an IP address. While Moser only looked at the concept theoretically, 3 researchers went a step ahead and tested the hypotheses. In their research paper, "Deanonymisation of Clients in Bitcoin P2P Network," Alex Biryukov, Dmitry Khovratovic & Ivan Pustogarov (researchers at the University of Luxembourg) concluded that linking bitcoin transactions to personally identifiable information of users (IP address, name, financial details etc.) has a success rate between 11% and 60%, if done with great stealth.

Using a generic method, the 3 researchers managed to bypass NAT Firewall protection of Bitcoin users, identifying their transactions made over the network. But they didn't stop there, the researchers also demonstrated that  "a natural countermeasure of using Tor or other anonymity services can be cut-off by abusing anti-DoS countermeasures of the Bitcoin network."

This abuse of the Bitcoin network's anti-DoS security that the researchers mention is usually accomplished by making a large number of small value transactions crowding the entire blockchain, hence, disabling other users from conducting transactions. Similarly, a moderator on the Bitcointalk.org forum established the same, noting that:

"Bitcoin is often promoted as a tool for privacy but the only privacy that exists in Bitcoin comes from pseudonymous addresses which are fragile and easily compromised through reuse, "taint" analysis, tracking payments, IP address monitoring nodes, web-spidering, and many other mechanisms. Once broken this privacy is difficult and sometimes costly to recover." Even the staunchest advocates and experts of the cryptocurrency dismiss the idea of it being an anonymous method of transacting online. Adam Ludwin, Co-Founder of Chain.com, concluded in his 2015 article, "How Anonymous is Bitcoin," that "Average users should be aware that [Bitcoin] is certainly less anonymous than cash."

Ludwin's conclusions can be verified by looking at the use of cash in daily life compared to Bitcoin. If I buy anti-depressants from a medic, there is no proof but the doctor's prescription that I am mentally ill (information that should be highly confidential). In case I buy the same medicine with Bitcoin the transaction is available in the blockchain (ready for abuse) for the world to know that I am indeed crazy.

Securing Bitcoin Network Transactions
PrivacyTBiryukov & Co. may have done everyone a favor and convinced us with evidence that bitcoin transactions are not private or anonymous, but the confusion still remains: how do we get anonymity while on the Bitcoin network? The solution that most researchers, advocates, and Bitcoin users' suggest is to change your bitcoin address or pseudonym for every transaction. There are Windows, Mac and mobile based apps such as Mycelium, Bitcoin Wallet, CoPay, Bitcoin Core and Armory that allow managing multiple pseudos on their interfaces. Alternatively, you can choose to do so manually.

A crucial aspect that none of the research papers discussed was using a VPN together with Bitcoin network. A Virtual Private Network — or VPN — is an anonymity and privacy tool designed to ensure that not even the ISP would know about my online activities. VPN tunneling ensures that I will be invisible to all parties listening in on my network connection while encryption will secure all online data passing between me and the VPN server. DoS will not work since the hacker(s) will be unable to get a fix on my location & network.

The way it works is that a VPN also changes your location virtually to the server region you have connected to. So if I connect to a VPN server in London, my IP address appearing to anyone online will be one located in the UK. Let's assume that I am connected to a UK based VPN server (a country I most definitely don't live in), create a fake (even temporary) email address, then open up a TOR browser and create a Bitcoin Wallet (encrypted digital currency with Pseudonyms). After all this, I add funds to said Bitcoin Wallet using a prepaid credit card that I purchased with hard cash.

What does anyone have on me now?
Considering the strategy above my personal data & network is now secure behind the VPN (I'm anonymous), the fake email is registered to Victor Von Lichtenstein of Llanbradach, Caerphilly, South Wales, UK and I used TOR to buy stolen credit card information from hackers and scammers. Now, technically I can empty these credit cards to purchase the entire game library from a site like GoG.com, download the games and be on my merry way without a care for chargebacks or traceability.

You may hate him for that but you will never be able to catch Mr. Lichtenstein doing naughty business online, at least in theory. The same although cannot be said when buying tangible goods with Bitcoin, since the delivery address cancels out all the hullabaloo of the cryptocurrency being anonymous. Even with TOR, a VPN and Bitcoin's encryption the wrong purchase can get you some legal worries.
Verdict: Anonymous Or Not?

It's certainly possible to jump through hoops and avoid entities from tracking your Bitcoin transactions and somehow lose them on your trail, still bitcoin can not technically be considered anonymous. Yes, Bitcoin is pseudonymous and allows vast freedom to conduct transactions quickly and without revealing too much personal information. But, eventually the digital world or the "felons" of the digital world eventually catch up to you.

Bitcoin is a great way to purchase digital commodities like software, books, white papers, reports, databases and even illegal intangibles like credit card information, but the second you give it a physical mailing address it's probably time for you to move.

Could Bitcoin Be the Future of Blockchain Post Trade?

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

The argument was put forward by Professor David Yermack, chairman of the finance department at New York University, this week at Imperial College London's first FinTech-focused academic conference.

There, Yermack presented an unpublished report that argues blockchains will evolve differently in capital markets than widely expected. For example, according to Yermack, functions such as stock settlements will one day be carried out on public blockchains like bitcoin, as opposed to private or premissioned alternatives.

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

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

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

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

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

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

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

Pros and Cons of Blockchain

 

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

 

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

 

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

 

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

 

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

 

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

Blockchain Surveillance is Accelerating Privacy Tool Development

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

 

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

 

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

 

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

FW: Ways to stay anonymous and protect your online privacy

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

 

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

 

The Onion Router (Tor)

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

 

 

Justified paranoia

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

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

Zcash, an Untraceable Bitcoin Alternative, Launches in Alpha

BITCOIN MAY HAVE become the currency of choice for the anonymity-loving Internet underground. But it’s never been anonymous enough for Zooko Wilcox. As he’ll remind anyone who’ll listen, the blockchain, bitcoin’s very public ledger of all transactions in its crypto-economy, means that unless bitcoin’s users funnel it through intermediaries or special software, their transactions can easily be traced.

 

Today Wilcox and his startup Zcash are launching the first public alpha release of the cryptography world’s best shot yet at perfectly untraceable digital money. Using a mathematical sleight-of-hand known as a “zero-knowledge proof,” Zcash (until recently known as Zerocoin or Zerocash) offers the same anti-forgery assurances as bitcoin: No one can counterfeit Zcash, or spend the same Zcash “coin” twice. But thanks to its zero-knowledge feature, any spender or receiver can also choose to keep their Zcash payment entirely secret.

 

The company holds the potential to empower a new form of near-perfect financial privacy—or, put in the terms of less friendly financial regulators, to enable a new form of airtight money laundering. “Consumers want to buy and sell things over the Internet and need privacy from snoops who might use the knowledge of their transactions against them,” says Wilcox, a 41-year-old cryptographer who’s also known in the crypto community for creating Tahoe LAFS, a decentralized, encrypted file-storage system. “This is the first time you can transact with anyone on the Internet, and control over who gets to find out about those transactions is solely in your hands.”

 

On Wednesday morning Zcash published its source code on Github, and is now allowing anyone to test out the software in what Wilcox calls a “preview.” But in an interview with WIRED he warns that the data moving on the Zcash network doesn’t yet represent actual money, only a “test net” that’s designed to give Zcash a chance to iron out its bugs before anyone makes investments in the cryptocurrency. Wilcox estimates the “real money” launch of Zcash is likely still close to six months away. The prototype version of Zcash that WIRED downloaded still lacked a user interface and instead required figuring out a tough-to-navigate set of command line functions.

 

Like bitcoin, Zcash’s currency will be created by “mining” computers that compete to solve mathematical problems. But unlike bitcoin and other attempts to create an alternative cryptocurrency or “altcoin,” Zcash is launching as a for-profit company. For its first four years online, a portion of every mined Zcash coin will go directly to Wilcox’s Zcash company and a smaller portion to a non-profit he’s creating to oversee the Zcash code and community longterm. Wilcox says that he plans for 1 percent of Zcash’s currency to ultimately go towards that non-profit, and 10 percent to be paid to the for-profit startup.

 

That for-profit strategy, Wilcox says, was designed to raise money to fund the project: Much of the 10 percent it earns will repay Wilcox’s investors, who as of November had put more than $715,000 into Zcash. Those investors include Naval Ravikant, an investor in Twitter and Uber, Barry Silbert, the founder of startup equity-trading platform SecondMarket, and Roger Ver, a staunch libertarian who’s invested in bitcoin startups Blockchain.info and Bitpay, and who also bankrolled much of the legal defense of now-convicted Silk Road creator Ross Ulbricht. (Wilcox says that Zcash remains on the sidelines of the schism over bitcoin’s scalability and speed that’s currently splitting the cryptocurrency community, though he hopes it will be able to integrate any upgrades to bitcoin’s code that solve those issues.)

 

Plenty of cryptocurrencies that have boasted features bitcoin lacks have launched and languished over the years, without seeing even a fraction of bitcoin’s adoption. But Wilcox argues that Zcash’s incognito properties, when the currency finally does launch for public consumption and real financial applications, will be crucial for those who need a more privacy-preserving form of digital money. That includes anyone from a medical startup trying to comply with healthcare privacy laws to a businesswoman in Afghanistan dodging corrupt cops and tyrannical male family members. “Privacy makes whole societies safer, stronger and more prosperous,” says Wilcox. “Ubiquitous privacy helps prevent corruption and abuse and oppression.”

 

Of course, the sort of “ubiquitous privacy” that Zcash is designed to allow will no doubt find fans within black markets, too, like the dark web’s $100 million-a-year drug trade. Until now, bitcoin’s lack of connection to banks or registered services has made it a convenient tool to spend money online without necessarily tying that money to the user’s identity. But the blockchain’s privacy problems have remained a nagging threat to anyone who makes a drug deal using bitcoin’s digital cash. Prosecutors proved bitcoin’s shortcomings for narco-money-laundering applications last year, for instance, when they traced $13.4 million from the drug site Silk Road to Ross Ulbricht’s laptop.

 

Zcash’s untraceability features promise to remove that sort of blockchain analysis as a tool for law enforcement surveillance. That notion has created controversy around the currency since it was first proposed by a team of cryptographers at Johns Hopkins University Back then, the anti-money-laundering think tank Global Financial Integrity published an op-ed in the Baltimore Sun describing the idea as a boon to black markets of all kinds, from human trafficking to wildlife poaching. “More girls will be sold as sex slaves, more rhinos will be poached, and every other large-scale transnational crime that you can name is going to become a lot easier if criminals have a way to transfer very large amounts of money completely anonymously,” wrote the group’s spokesperson E.J. Fagan.

 

Wilcox maintains his stealthy digital cash startup isn’t intended to facilitate crime, but also notes that the company isn’t liable for any criminal applications for which Zcash is used. “The people who built the first cars weren’t held responsible for car accidents or bank robberies,” he says. “The people who use these tools for good or ill are held responsible for that.”

 

But Wilcox also insists that Zcash’s legitimate applications will outweigh its shady ones. He compares Zerocoin’s ambiguous potential to that of the Internet itself. “Can the internet be used for crime? Yes, it can be, but that’s not what’s important about it.” Wilcox says. “I’m focused on the trillions of dollars of legitimate commerce that flow around the world.”

Umbra Buy, Trade and Chat while ensuring your privacy

Almost all the people who communicate or do transactions via the internet are concerned about their privacy. In fact, it is extremely important to ensure your privacy if you don’t want to run into any trouble in the future. Several methods are available for you to communicate or do transactions via internet while ensuring your privacy. Umbra can be considered as a perfect example for such a method.

What exactly is Umbra? Umbra can simply be defined as a complete solution for privacy. It was developed by Shadow Project after conducting an extensive research about the online privacy requirements of people. A lot of people are concerned about their online privacy, but they don’t have a clear understanding on the necessary measures that they need to take in order to ensure it. That’s the main reason why the developers of Umbra wanted to make it user friendly as much as possible.

Umbra comes along with a wide array of impressive features as well. These features range from communication to commerce. The entire platform is based on Shadow Network. As a result, it uses the private and untraceable currency offered by Shadow, which is known as Shadow Cash. People who use Shadow Cash are provided with the freedom and privacy to transfer cash according to the way they want. In other words, people who use Shadow Cash don’t need to worry about anything when doing transactions.

Another impressive feature about Umbra is its anonymous chat system. This messaging system is based on Shadow Chat. Shadow Chat is an encrypted and decentralized instant messaging system, which has the ability to keep all conversations private. In fact, all the messages that are sent through this system are encrypted by AES-256-CBC algorithm. Moreover, all the messages are transferred in between nodes in such a way to keep away all the recipients from being inferred by assailants. This chat system can be used to send direct messages to anyone completely secure and private. Or else, the users are provided with the freedom to organize team conversations through channels. In fact, the users can create a channel for a specific team or a topic. If you are planning to communicate sensitive information within a group, you can create a private channel while inviting the trusted team members.

As mentioned earlier, Umbra has been designed to deliver the best possible user experience to all the users. Therefore, any person will be able to access it and use available functionalities without much hassle. The setting up process is convenient as well and the users can easily get connected to I2P or Tor within a short period of time.

Umbra is compatible with Windows, Linux and Mac OS operating systems. Moreover, it is backed up by an excellent community forum, which can be used to clarify all the doubts in your mind. Therefore, Umbra can be considered as the best system designed for people who are looking to do transactions and communications in a secure manner.

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

Bitcoin Price Increases 30% In Venezuela Due to Currency Devaluation

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

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

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

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

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

How Bots Are Fueling High-Speed Bitcoin Trading

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

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

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

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

He told CoinDesk:

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

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

Arbitrage trading

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

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

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

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

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

Market making

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

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

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

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

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

Getting started

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

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

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

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

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

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

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

Why Weight? Bitcoin Scaling is Moving Beyond Block Size

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

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

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

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

Bitcoin Core developer Eric Lomborozo told CoinDesk:

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

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

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

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

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

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

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

'Social fork'

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

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

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

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

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

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

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

Incremental changes

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

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

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

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

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

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

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

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

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

Academic mindshare

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

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

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

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

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

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

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

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

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

Nasdaq Wants to Patent Blockchain Backups for Exchanges

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

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

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

As the application details:

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

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

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

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

So, Ethereum's Blockchain is Still Under Attack…

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

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

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

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

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

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

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

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

Anatomy of an attack

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

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

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

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

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

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

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

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

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

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

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

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

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

Impact on users

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

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

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

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

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

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

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

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

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

Finding a fix

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

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

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

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

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

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

Role of the foundation

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

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

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

Others remain uncertain what to take away just yet.

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

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

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

"I think it's hard to predict."