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Bitcoin Price Analysis: Potential Wyckoff Distribution May Spring New All-Time Highs

6 hours 27 min ago

A potential Wyckoff Distribution phase is under way as bitcoin continues to climb on shaky ground. Days after having a strong $1,000 climb and nearly reaching $6,000 on most exchanges, we saw a strong rejection of the upper limits of the market as it plunged $600 over the course of a few short hours. Let’s take a look at the macro pattern and draw a few similarities to the Wyckoff Distribution schemes:


Figure 1: BTC-USD, 2-Hour Candles, Potential Wyckoff Distribution Phase

In order for the current distribution phase to be reliable, there are certain milestones the market must reach. As shown above, we previously established a point of Preliminary Supply, a strong Buying Climax, a knee-jerk reaction into an Automatic Reaction low, and a weak rally that ultimately led to a Sign of Weakness that pushed us down several hundred dollars. The rebound from this low was strong and occurred on very high volume. However, over the length of the rally post-sign-of-weakness, the volume has begun to taper as the momentum indicators are showing signs of bullish exhaustion as it finds its local high at around the $5,700 values.

One of the following milestones for the Wyckoff Distribution phase is one last dip as it tests the previous support around the Automatic Reaction low. As of the the time of this article, the current market trend is showing signs of bearish divergence on the 120-minute candles.  Zooming in closer, we can see clear signs of a potential small reversal:


Figure 2: BTC-USD, 30-Minute Candles, Waning Momentum

Both the RSI and MACD are showing signs of bullish exhaustion throughout the length of this rally. Any pullback will likely be supported by the Automatic Reaction support level. Historically, this has been a strong point of support and is made more evident on the 60-minute time frame:


Figure 3: BTC-USD, 60-Minute Candles, Strong Support Zone

The 200 EMA on the 1-hour candles is historically a great support level and provides traders a pulse on the market health. As of the time of this article, the 200 EMA is lining quite nicely with the support zone offered by the Automatic Reaction Zone. A test of these price levels would take a strong push to break and hold below. If the price continues through the Wyckoff Distribution, we can expect a test of the 200 EMA and a subsequent bounce triggering an Upthrust to new all-time highs. As mentioned in the last BTC-USD market analysis, we are trending along a macro channel:


Figure 4: BTC-USD, 1-Day Candles, Macro Ascending Channel

An Upthrust in this potential Distribution Phase would have a price target testing the upper channel in the $6,200–$6,300 price range.

Summary:
  1. A potential Wyckoff Distribution Phase is playing out.

  2. If the Distribution Phase plays as expected, we will see a test of the 200 EMA and a subsequent spring to new all-time highs.

  3. If an Upthrust to new all-time highs occurs, we can expect a price target in the $6,200s.

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

The post Bitcoin Price Analysis: Potential Wyckoff Distribution May Spring New All-Time Highs appeared first on Bitcoin Magazine.

This Blockchain-Powered Platform Aims to Disrupt the Esport Gambling Industry

9 hours 16 sec ago

Esports wagering is a large — and growing — global industry at the intersection between gambling, technology and entertainment. In their 2017 Global Esports Markets Report, Newzoo found that China and North America will generate $362 million during 2017, or 52 percent of global esports industry's revenue. If the esports industry continues on the same growth trajectory, the global industry is expected to generate $1.4 billion in 2020.

Unikrn’s blockchain-powered platform is tapping into this growth industry, offering services such as “skill and spectator betting applications, a tournament series, team ownership, a casino group and multimedia content for the esports fanbase.”

Along with launching an initial coin offering (ICO) in mid-September, the company has expanded its offerings to the European Union through a joint venture with RBP, a key player in the online horserace and sports betting market, and plans to launch a new skills-based product.

Expanding across the European Union comes after the platform was granted a much coveted gaming license from the Malta Gaming Authority (MGA). As one of the first European Territories to regulate online gambling, Malta has reportedly become a staunch regulatory supporter over the past several years. Today, over 100 companies currently hold a license issued by the MGA including software developers, online casinos and Remote iGaming operators.

Though obtaining a gaming license from the MGA took more than a year, for Unikrn, it has provided an opportunity to enhance their reputation as a legitimate esports wagering platform; something critical for their successful expansion and token sale. “They [MGA] are by every measure the gold standard and one of of the most respected authorities for responsible and ethical wagering,” said Unikrn founder and CEO Rahul Sood in a statement.

After creating the VoodooPC in 1991 then selling it to Hewlett-Packard, Sood spent 18 years as an entrepreneur. Next, he joined as general manager of Microsoft Ventures, Microsoft’s international startup accelerator and outreach program. Sood left Microsoft in 2014 to enter the world of live immersive esports betting by co-founding Unikrn.

Why Blockchain?

During its Series A round, Unikrn received funding from several notable investors including Mark Cuban, owner of the Dallas Mavericks, actor Ashton Kutcher’s venture firm, Sound Ventures, media executive Elisabeth Murdoch’s venture fund Freelands Ventures, media executive Shari Redstone’s Advancit Capital and the largest betting company in Australia, Tabcorp. The commonality between most of these venture funds is that they typically pick portfolio companies working in a mix of media, technology and entertainment.

Anthony Di Iorio, serial entrepreneur and CEO of Decentral, joined UnikoinGold as an advisory team member because he finds the project both intriguing and well-supported.

“I'm a big believer in the power of decentralized technologies, like blockchains, to empower entrepreneurs and individuals,” he told Bitcoin Magazine. “I'm motivated to support the entrepreneurs, the projects, and the communities that are pushing that technology forward by applying it in interesting and exciting ways to existing markets. Unikrn is a bit special.”

Unikrn’s Editor-in-Chief of content, Ryan Jurado, describes the platform’s journey toward the blockchain as a tool for product and community growth. In 2015, Unikrn released Unikoin, a free, internal, non-cryptographic token issued in 2014 that gives users the ability to bet on esports and win prizes in regulated markets where Unikrn is unlicensed to operate. However, Unikoin had no secondary market and customers persistently asked for more value or uses for the token.

Jurado explained that idea for Unikrn to use blockchain technology first came from Mark Cuban in early 2016. After investigating the technology, the team found using a blockchain-based currency would improve compliance and accountability, two activities paramount in bookkeeping.

“The distributed ledger makes Know Your Customer (KYC) and risk management easier and less costly,” Jurado said to Bitcoin Magazine. “It saves time and money used for converting currencies, and helps minimize engagement with banks.”

Along with a distributed ledger model, Jurado also pointed out that the blockchain “expands real-time betting, live betting and skill-based products that would be difficult, or impossible, using fiat currency.”

The blockchain’s ability to increase transaction options while decreasing the need for transactional trust was another value Unikrn sought, Jurado explained, resulting in “an Ethereum-based token with an open ledger that can be used to better rate risk and flag potential abuse.”

A gaming platform such as Unikrn which runs vast numbers of transactions per day manages a lot of risk benefits from “an Ethereum-based token with an open ledger that can be used to better rate risk and flag potential abuse.” Furthermore, as Jurado pointed out, “For users, it’s a home-run: Using blockchain is less expensive than using fiat, and less overhead means less expensive products.”

Tale of Two Koins

To run the token sale and crypto platform, Unikrn opened a subsidiary, Unikrn Bermuda Ltd. The token that Jurado hopes will become “the decentralized token of esports and gaming” is called UnikoinGold (UKG) and was made available in September.

Di Iorio described UnikoinGold as “the (decentralized) beating heart of the secure and seamless wagering ecosystem Unikrn has pioneered.”

As for the original non-cryptographic token, Unikoin, Sood has stated that Unikrn is undergoing a “forking” of their token system in which there will be two currencies: UnikoinGold and UnikoinSilver.

Anybody in the world can buy and use the Ethereum-based UnikoinGold utility token in non-betting applications, including jackpots and experiences, software, hardware, esports, teams and tournaments; however, only users in Unikrn-licensed regions will be able to use it to bet.

Though UnikoinSilver can only be earned, it can be used in most unregulated markets around the world. “The token will allow every non-minor esports and gaming fan to engage in all Unikrn betting products, regardless of where they live. It is a free, non-blockchain token, but will allow fans to unlock real prizes and non-betting operations including editorial, production studios, tournament organization and live broadcasting.” UnikoinSilver also appears to be an alternative “to unregulated skin betting for regions where real-money betting can’t be offered.”

ESPN Meets Esports Meets Vegas

Having already raised $30 million in ether, the UnikoinGold token sale is capped at $100 million. One advantage it has as a token sale is the ease of onboarding users who are already familiar with token transactions. Unikrn’s other advantages come from the fact that they already have an existing platform that is profitable and an online community that is engaged. “This isn’t an investment,” said Sood in a Medium post, “It’s a purchase for a product that we developed that has utility on our platform and our users love and demand.”

A clear caveat to UnikoinGold’s success is that its gaming/ICO combination is sure to keep them visible on every regulator’s radar, which is why earning a Maltese gaming license was such a significant step.

Even at such a unique intersection between media, gambling and gaming, Unikrn is not the only player. Other esports betting platforms using blockchain technology include FirstBlood.io, Eloplay, Gimli.io and Skincoin. And it has yet to crack the lists of top esport betting platforms on sites like OpenOdds and EsportsOnly.

Sood does not seem surprised by his company’s success, thus far. “UnikoinGold was designed and intended for use by our own esports community. It’s like ESPN meets Esports meets Las Vegas.”

The post This Blockchain-Powered Platform Aims to Disrupt the Esport Gambling Industry appeared first on Bitcoin Magazine.

What Lightning Will Look Like: Lightning Labs Has Announced Its User Interface Wallet

10 hours 14 min ago

Development of the lightning network, the lightning network, the highly-anticipated second-layer Bitcoin protocol for instant microtransactions, continues to inch forward.

Lightning Labs, major contributor to the lightning network daemon, lnd, announced its cross-platform Lightning Desktop App last week. The open-source lightning wallet is essentially a user interface (UI) built on top of lnd and powered by Lightning Labs’ new open-source Bitcoin light client, Neutrino.

“This is the first functioning user interface for both sending and receiving lightning transactions with a light client mode,” Lightning Labs CEO Elizabeth Stark told Bitcoin Magazine.

The lightning network is currently being developed by several teams working on different but interoperable implementations of the protocol. Several of these implementations are functional, though only on Bitcoin’s test network (“testnet”): a sort of copy of the Bitcoin network with valueless coins specifically designed for testing new applications and more.

But, while there are already several lightning daemons available for testnet, most are only usable via command line tools. Developers Olaoluwa Osuntokun, Bryan Vu and Case Sandberg collaborated to now extend lnd with the new Lightning Desktop App to provide a user interface.

“I think the big takeaway is being able to visualize this technology and see what an early UI might look like,” said Stark. “It's one thing to be using the command line, as our lnd testers and developers have been, but it's another to be able to download the app. Being able to see this kind of progress is important.”

As part of the announcement, Lightning Labs also introduced Neutrino, the new open-source Bitcoin implementation that powers the Lightning Desktop App. As a main benefit, Neutrino users don’t need to download the entire Bitcoin blockchain, which is currently over 140 gigabytes in size. This makes the desktop app much more accessible to regular users who transact small amounts, for which the lightning network is particularly suited. And because Neutrino uses a new method of transaction filtering (client side instead of bloom filters), it offers more privacy than most light clients, too.

The release of the new Lightning Desktop App kicks off a two-week “testing blitz,” as the company described it in their accompanying blog post. Developers are invited to experiment with the desktop app itself, as well as with Neutrino. Further, it makes it much easier for anyone to play around with lnd and the lightning network itself.

“The really cool thing about having our desktop app out there is now there's an easy way for people to interact with all of the apps that developers are building on Lightning, such as Yalls,” said Stark.

After the two-week testing period, the implementation will enter a regular release cycle. Releasing the wallet for Bitcoin mainnet, however, could take a while longer still, Stark explained:

“We're working toward testing and making the software more stable before releasing a beta. This is financial software and its a protocol dealing with money, so we want to ensure people can have a good user experience.”

There is no specific deadline for the beta release, but Stark added that, "The next step is for us to gather feedback from testers and develop it further, along with improvements in lnd and Neutrino."

The open-source Lightning Desktop App code is available on GitHub.

The post What Lightning Will Look Like: Lightning Labs Has Announced Its User Interface Wallet appeared first on Bitcoin Magazine.

Connecting the Luxury Fine Art Industry with the Modern Digital Economy

Wed, 10/18/2017 - 11:29

Latest figures from the Tetaf art market report, released by the European Fine Art Foundation, show that in 2016 global art market sales amounted to an estimated $45 billion, up 1.7 percent from 2015. The U.S. remains the largest country in the world art market, with 29.5 percent of the market share, followed by the U.K. and China with 24 percent and 18 percent, respectively.

Yet, while the industry remains a profitable one, it is slowly changing. One that is considered difficult to enter and resistant to change, a few sector players are aiming to bridge the modern digital world with the luxury arts sector.

Two art galleries are taking a blockchain and cryptocurrency approach. Eleesa Dadiani, is the founder and owner of Dadiani Fine Art in Mayfair, London. Marcelo Garcia Casil is the co-founder and CEO of Maecenas, a decentralized art gallery that aims to democratize access to fine art investment.

Dadiani & Partners

In July 2017, Dadiani’s modern fine art gallery became the first in the U.K. to accept seven different cryptocurrencies as payment: bitcoin, ethereum, ethereum classic, litecoin, ripple, dash and NEM.

Dadiani told Bitcoin Magazine that the decision to introduce cryptocurrencies wasn’t an instinctively demand-driven decision; rather, it stemmed from a desire to encourage demand and merge the two markets together.

“On a practical level, introducing cryptocurrency will broaden the market, bringing a new type of buyer to art and luxury,” she said.

Through her recently launched Dadiani & Partners — the U.K.’s first and only luxury asset and commodity exchange for cryptocurrencies — Dadiani is hoping to unlock the potential of the digital currency market for high net-worth (HNW) investors and consumers. Acting as an intermediary, Dadiani & Partners will enable HNWs a platform to purchase luxury goods in digital currency. Dadiani says that there has been an increase in demand with the number of people seeking the purchase of assets in cryptocurrency.

“Many bitcoin millionaires are unable to cash in their digital currency as the banks won’t convert large amounts of cryptocurrency for cash,” she added.

Passionate about cryptocurrencies, and the blockchain that underpins them, Dadiani believes that they will have a profound impact in every sphere of business and our everyday lives.

“The technology will allow us to reclaim power, paving the way for decentralized, peer-to-peer transactions without the intervention of an intermediary,” she added. “This is a revolution that goes far beyond the art market.”

Since introducing the acceptance of digital currencies the art gallery has sold a number of pieces. Going forward, all of the art, across all the exhibitions, will be available to purchase in the available digital currencies. Dadiani says that the artists are onboard and keen for their pieces to be sold this way.

“Any of the pieces we sell can still be purchased via conventional fiat currency, but purchasing via cryptocurrency enables buyers to purchase peer-to-peer, person-to-person, without the intervention of a centralized authority,” Dadiani said.

It’s hoped that by further globalizing the business and broadening their customer base, Dadiani Fine Art will appeal to bitcoin millionaires who are looking to purchase assets via cryptocurrencies.

“Digital currency is being embraced by people of all ages, creed and class, and as it’s happening in other sectors, there is no reason why the gap between the modern digital world with the luxury sector cannot be bridged.”

Maecenas

Investment in the art world can be an expensive proposition. Named after Gaius Maecenas, an ancient Roman patron of the arts, Maecenas, is attempting to remove this barrier by letting anyone buy shares of fine art. Through its blockchain-driven platform, Maecenas divides artwork ownership into fragments and connects art owners with investors where shares are bought and sold.

“By turning masterpieces into tokenized tradable assets, Maecenas democratizes access to fine art by letting a much wider audience invest in multi-million dollar artworks which would otherwise be out of reach,” Casil said to Bitcoin Magazine.

Buying access to the artwork’s investment value does not mean buying access to the actual artwork itself, however. According to Maecenas, art pieces are not put on display; rather, they are held in purpose-built art storage facilities, ensuring the work is safe and looked after. If there is a demand in the future, then they may introduce an art-leasing facility where art lovers can temporarily hold the piece of art for a fee. The fee would then be distributed among the shareholders as income.

By injecting liquidity and transparency into the fine art market, the platform claims to be adding aspects to the sector that have been missing. Determining a fair price of an illiquid asset is now made possible via the blockchain through the conversion of small and liquid tradable financial units, creating tamper-proof, digital certificates denoting ownership. These are similar to shares of a company and can be traded on an open exchange.

Through the implementation of a Dutch auction process, Maecenas permits investors to submit private bids stating how many shares of the artwork they want to own and what price they’re willing to pay for them.

“The Dutch auction smart contract then handles all the bids and uses a well-known algorithm to determine the optimal price for the artwork shares,” Casil added. “This process is transparent and discourages price manipulation.”

Maecenas’ ART utility token functions as a clearing and settlement mechanism for all transactions of artwork on the Maecenas ecosystem. Participating in Dutch auctions, leasing artwork or performing any other sensitive platform operation is handled via smart contracts that require ART tokens to operate, says Casil.

“In the case of the auctions themselves, the token represents the investor bid and commitment, and a dollar value equivalent of the tokens is escrowed in the contract for the duration of the auction.”

For instance, if an investor wants to bid $50,000 for an artwork, and ART is worth $2, then 25,000 ART tokens must be submitted to the smart contract to reflect the bid.

To ensure the work is authentic, Maecenas has an internal team that checks the full provenance of the artwork including certificates of authenticity, condition reports, insurance policies, certificates of storage and valuation reports. Independent reputable experts will also assess and appraise the artwork. The documents produced during the due-diligence process are then protected and stored securely on the blockchain.

Maecenas recently completed their token crowdsale which raised 50,744 ETH. They are aiming to launch their platform in the first quarter of 2018.

The post Connecting the Luxury Fine Art Industry with the Modern Digital Economy appeared first on Bitcoin Magazine.

Chaincode Labs to Host a Second Run of Its Month-Long Bitcoin Coding Class

Wed, 10/18/2017 - 10:05

Chaincode Labs, the New York–based development company and major contributor to Bitcoin Core, is organizing a second edition of its Bitcoin residency program in the first months of 2018. The program intends to help developers overcome the steep learning curve associated with becoming a protocol-level contributor to projects like Bitcoin Core. In doing so, Chaincode Labs hopes to help expand Bitcoin’s development community.

“Last year was the first run,” Chaincode Labs developer John Newbery told Bitcoin Magazine. “We’ve now taken the good stuff from that and tried to make it even more focused and useful for residents this year.”

The Residency Program

Chaincode Labs, in collaboration with Matt Corallo — who worked at Blockstream last year but joined Chaincode Labs since — organized the residency program for the first time in September and October of 2016. The next edition will start on January 29, 2018, and will last until February 23.

Newbery himself was one of the attendees of this first residency program. He was later hired by Chaincode Labs and has since been one of the most prolific contributors to the Bitcoin Core project.

Now, he is coordinating the second of two legs of the new program.

“Chaincode Labs exists to strengthen Bitcoin,” said Newbery. “We mostly do that by contributing to Bitcoin Core, but each of us has a lot of freedom to do what we think is important. And the main purpose of this residency program is to try to strengthen the developer community.”

Specifically, courses will cover protocol design, adversarial thinking, threat models and security considerations, as well as address some of Bitcoin’s biggest challenges, like scaling, fungibility and privacy. Attendees will mostly learn by doing and could even start contributing to the Bitcoin Core project during the residency. Throughout the program they will be assisted by the entire Chaincode Labs team — Alex Morcos, Suhas Daftuar, Matt Corallo, John Newbery and Russ Yanofsky. There may also be guest speakers.

Two Blocks

Whereas the first edition of the residency program lasted four straight weeks for all attendees, this time the coding classes will be cut into two two-week phases. Candidates can either pick one of two legs or join both, with room for five or six attendees per session.

The first leg is coordinated by Corallo, who has been contributing to Bitcoin development since 2011.

“Session A is all about getting people to think about the security trade-offs and implications of the technical decisions we make,” Newbery explained. “There’s a lot of thought that goes into all the decisions that are made in Bitcoin, but that nuance is often lost. If we can help people to understand those trade-offs better and be able to communicate them, then perhaps we can raise the level of the conversations we have about Bitcoin.”

The second session will be more focused on the Bitcoin Core project itself, Newbery said.

“Session B is all about getting smart, talented people to start making useful contributions to Bitcoin Core. There’s a steep learning curve to becoming a contributor and if I can help people who want to contribute but have felt daunted or don’t know where to start, then I’ll feel like I’ve succeeded.”

Additionally, Chaincode Labs will organize a series of Wednesday night meetups ahead of the residency program. Contents of these meetups will be similar to the residency program, but these meetups are for participants who live in (or near) New York who can’t dedicate two or four full weeks to attending the residency program itself.

For more information on Chaincode Labs’ 2018 Bitcoin residency program and to find out how to apply, see the company’s announcement and the program website.

The post Chaincode Labs to Host a Second Run of Its Month-Long Bitcoin Coding Class appeared first on Bitcoin Magazine.

Ether Price Analysis: Eve and Adam Could Be Turning Back the Bulls

Tue, 10/17/2017 - 17:45

Since bottoming out around $200, ether has spent several weeks bouncing back and forth inside an ascending channel:

Figure 1: ETH-USD, 4-Hour Candles, Ascending Channel

For the last month and a half, ether’s trend has been contained within the bounds of this ascending channel, where it has continued its bullish rally. However, today (as of the time of this article) it is starting to make moves to aggressively test the lower boundary. Specifically, as ether tests this channel, it is forming a potential reversal pattern called an Eve-and-Adam Double Top.

Figure 2: ETH-USD, 1-Hour Candles, Eve-and-Adam Double Top

At the time of this article, ether is attempting to break the neckline (the pink dashed line) of the massive reversal pattern. Should ether break this neckline, the measured move from this pattern is a $30 move downward, which would ultimately shove ether outside the bullish ascending channel it has been trending within. The price target of the Double Top breakout would bring the ETH-USD price into the upper $200s.

On a macro scale, ether has support along the following Fibonacci levels:

Figure 3: ETH-USD, 4-Hour Candles, Fibonacci Levels

Should the ascending channel break, the above Fibonacci levels will provide support and will need to be tested in order to prove a bearish continuation. As of the time of this article, the Double Top mentioned in Figure 2 is sitting right on the 23 percent retracement values where it is making attempts at breaking it. There is strong support at these values, so if ether can break and hold below $315, it will send a strong bearish signal to the market.

Should the Double Top complete, we can expect a test of the 38 percent retracement values following the break of the ascending channel. At this time, the 4-hour MACD is showing strong bearish momentum on a macro scale, and the market is picking up sell volume.

Summary:
  1. For weeks, ether has been trending within an ascending channel.

  2. Ether is currently in the process of making a strong test of the ascending channel via an Eve-and-Adam Double Top reversal pattern.

  3. If the Double Top breaks downward, we can expect a break of the multi-week bullish channel and a test of the 38 percent Fibonacci Retracement values.

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


The post Ether Price Analysis: Eve and Adam Could Be Turning Back the Bulls appeared first on Bitcoin Magazine.

Blockchain-Focused Presentations to Watch at Money 20/20 in Las Vegas

Tue, 10/17/2017 - 13:13

Money 20/20 Las Vegas is only a few days away. The event, to be held on October 22–25, 2017, at the Venetian, will be packed with people from the top tiers of banking and finance looking to learn more about the future of money.

One thing is for sure, blockchain technology will play a key role in that future. Since 2014, the financial event, which will attract more than 11,000 visitors this year, has devoted an entire track to blockchain topics. Originally, the track was called “Bit(coin) World,” but that changed as conversations shifted to Bitcoin’s underlying ledger technology.  

For blockchain enthusiasts struggling to sort through the 450 presentations at Money 20/20, the following is a breakdown of the blockchain track and other blockchain-related talks at the event.

Blockchain Tuesday

Tuesday is the main day for blockchain programming at Money 20/20. Kicking off the blockchain track will be Adam Ludwin, CEO and co-founder of Chain, a company that provides blockchain solutions to banks. Ludwin’s talk will center on whether crypto-assets are in a sort of ‘90s bubble or if something real and substantial is happening beneath the hype.

To give a sense of how fast things are moving, bitcoin was around $650 at last year’s Money 20/20, when one panelist at the event, then Blockstream developer Eric Martindale, predicted bitcoin would increase 10x in value over the next 12 months. His prediction was nearly spot on. Bitcoin reached more than $5,800 just last week.

With crypto-assets hitting all time highs across the board, the new funding model known as initial coin offerings (ICOs) have raised $2.2 billion this year alone. Yet, amidst the enthusiasm, the threat of increased regulations hover like a dark cloud. Last month, the SEC brought the first charges against two so-called ICOs in what may be just the beginning of a long-anticipated crackdown.   

Four more panels on Tuesday will focus on issues like: What problems are private blockchains solving? Are ICOs here to stay or are they just a passing fad? What threats do regulatory agencies pose to ICOs? And, how will blockchain technology potentially transform stock exchanges? These panels will include experts from companies like Bloq, Kik, Fenbushi Capital, AngelList, Pantera, JP Morgan Chase, R3, Hyperledger, Nasdaq, and the London Stock Exchange Group. 

In between those, Arthur and Kathleen Breitman will talk about their new smart contract platform Tezos. The project raised $230 million in an ICO in July.

Tezos is a proof-of-stake cryptocurrency and smart contract platform built in the functional language OCaml. Eventually, Tezos’ goal is to compete with the likes of Ethereum and Cardano, another emerging platform. A primary feature of Tezos is its formal governance scheme, where coin holders get a say in how the protocol evolves.

It will be interesting to see how Tezos plans to differentiate itself in an increasingly competitive landscape.

Finally, Bobby Lee, CEO and co-founder of BTCC, China’s longest running bitcoin exchange, will share war stories on what it has been like operating an exchange in the biggest payments market in the world.

He should have a good story to tell, given that China’s central bank recently cracked down on digital currency exchanges, causing BTCC to halt all China-facing trading last month.  

Other Talks

Two other blockchain-related talks will take place at Money 20/20 on Monday. Bridget van Kralingen, who leads a group called “Industry Platforms” at IBM will talk about how AI, blockchain and cloud computing are converging to create better customer experiences.  

Bill Barhydt, co-founder and CEO of Abra, a cryptocurrency wallet, will give a keynote announcement on Abra’s “next chapter.” Barhydt attracted some attention recently when he chose actress Gwyneth Paltrow as an advisor for Abra in “Planet of the Apps,” a kind of “Shark Tank” for iOS apps.  

Also on Tuesday, BitGive Foundation, a nonprofit that receives bitcoin donations for charitable causes, will be giving a presentation on GiveTrack, its blockchain-based system for tracking donations in real time.

The topic of blockchain applications is sure to come up in plenty of other talks and discussions at Money 20/20, such as this one on financial inclusion on Sunday and those centered around pressing issues like security (the event comes on the heels of the Equifax breach), identity and more.  

The post Blockchain-Focused Presentations to Watch at Money 20/20 in Las Vegas appeared first on Bitcoin Magazine.

GoldMint and the Future of the Gold Trade

Tue, 10/17/2017 - 11:06

As a precious metal, gold is often associated with wealth, prestige and power. And as a commodity it has long been considered a prized asset for scores of investors throughout the world.

Beginning with bitcoin in 2009, cryptocurrencies have also seen their prominence rise due to some of the qualities that they share with gold, the most prominent of which is their scarcity.

One of the big issues that has continued to hamper gold as a physical asset is that it can often be difficult to transfer from one place to another. Moreover, the managing and handling of gold can be quite logistically challenging and laborious.

With the emergence of today’s digital age, a startup called GoldMint is seeking to alter this trend with a new means of exchange for physical gold, with transactions occurring over a blockchain-based platform.

This gold-based venture aims to assist investors and traders in managing volatility risks and gaining competitive commissions on commodities sold via GoldMint to financial institutions, pawn shops, and other business and individual stakeholders.

GoldMint’s platform will leverage the private and individual gold trading market, including potentially the management of larger physical stocks such as those in central banks. It will also deliver an electronic payment solution tethered to physical gold, as well as a gold-backed peer-to-peer lending system.

The GoldMint ecosystem is fueled by two types of tokens, GOLD and MNT.

The GOLD cryptoasset is an investment tool that is 100 percent backed by physical gold and/or an exchange-traded fund (ETF). One GOLD token represents one ounce of gold on the London Bullion Market Association (LBMA).

MNT  is GoldMint’s native cryptocurrency, which is used to confirm GOLD cryptoasset transactions. For GoldMint miners, the amount of MNTs reflects how many assignments, or transaction blocks, they can accept.

Fostering Digital Gold Trading

There are two options for trading GOLD for fiat or cryptocurrencies. First, there is a method for seeking a GoldMint-guaranteed buyback. And second, a loan can be requested. For either option, the process is as follows:

●      Through the use of a special app which is not yet available, GOLD can be transferred as collateral to a designated GoldMint account.

●      GoldMint utilizes the current price of gold, as set by the LBMA, to fix the rate of a loan.

●      GoldMint requires the customer to undergo its know-your-customer (KYC) process as well as consent to GoldMint’s loan terms to receive the loan. Various repayment options for the loan amount and the means of repaying it are then offered.

●      If a customer defaults on repayment, their GOLD cryptoassets are transferred to GoldMint.

GoldMint also has a process for converting gold into GOLD tokens and reconverting these tokens into gold for cross-border passages. This is designed to alleviate the hassles associated with carrying gold from one country to another, often resulting in untold expense and aggravation. By converting gold into GOLD, this hassle can not only be avoided, but a person can retrieve 100 percent of the value of their gold at the end of their travels.

“Custody Bot” is GoldMint’s decentralized storage unit, which computationally identifies and stores gold jewelry, small ingots (up to 100 grams) and coins. In this case, it functions as a DApp, a decentralized application that runs rapidly and efficiently without the need for a third-party intermediary to control it. Through the use of cutting-edge technology, Custody Bot inspects and assesses the value of incoming gold to ensure its purity and quality.

GoldMint ICO Accelerates Ahead

On September 20, GoldMint launched its initial coin offering (ICO), allowing users to send bitcoin or ether and receive MNTP (MNT pre-launch) tokens, issued on the Ethereum blockchain at a price of $7 per token.

The value of these tokens is expected to grow, because MNT is limited in its supply and is used in the Proof-of-Stake (PoS) consensus algorithm. Participation in the GoldMint crowdsale involves more than the purchase of cryptocurrencies. It involves a stake in the consensus algorithm that will be utilized by the GoldMint blockchain post-launch.

Owning MNT allows users to achieve 75 percent from commissions earned when transactions are validated through the GoldMint blockchain. The number of MNT tokens owned determines the number of transactions that can be validated.

 

The post GoldMint and the Future of the Gold Trade appeared first on Bitcoin Magazine.

Scaling Bitcoin Releases This Year’s Program and a New Developer Bootcamp

Fri, 10/13/2017 - 16:46

Today, Scaling Bitcoin, the international engineering conference focused on Bitcoin and blockchain research, released its program for the 2017 edition. The conference, to be held in Stanford, California, in the first weekend of November, will also introduce a new side event this year: Bitcoin Edge, a bootcamp for starting Bitcoin developers.

“The program is extremely interesting because it delivers cutting edge research on different blockchain scalability approaches, fungibility, consensus, data propagation, alternative techniques for handling blockchains and many other topics,” said Anton Yemelyanov, chair of the Scaling Bitcoin Planning Committee.

Scaling Bitcoin Stanford

After events in Montreal, Hong Kong and Milan, the fourth edition of the Scaling Bitcoin conference is taking place at Stanford University on November 4 and 5 of this year.

Where the first two editions of Scaling Bitcoin were mainly focused on scaling and scalability, the third edition broadened the scope of the conference to include a more diverse set of topics. This trend will continue in Stanford, where talks will range from highly technical topics concerning privacy and fungibility, to fee markets and fee estimation, censorship resistance and more.

“Bitcoin is the origin of all distributed ledger technology,” said Yemelyanov. “Scaling Bitcoin has been fortunate to act as a vehicle for bringing the audience technologies such as Segregated Witness and MimbleWimble, all of which have been adopted or incorporated into various blockchain projects. We hope that other material presented by our participants will be of similar value and help the industry advance the research and development of blockchains.”

Yemelyanov added that another key goal for Scaling Bitcoin conferences is to bring engineers and other technical minds together in a physical space where they can discuss their work in person.

“It is through collaboration where a lot of ideas are born and have potential of becoming reality,” he said.

Bitcoin Edge Dev++

In addition to the conference itself, Scaling Bitcoin is also introducing a two-day technical bootcamp for experienced developers getting into Bitcoin: Bitcoin Edge.

This nonprofit initiative is an effort to help scale the development capacity of the industry, Yemelyanov explained:

“One of the approaches of helping the industry scale is to scale the much needed development capacity of the industry. There is a clear talent deficit and we are trying to help all industry participants by running a nonprofit workshop that will allow developers to gain complete understanding of primitives that comprise Bitcoin and blockchains in general and be able to start working in this field.”

Bitcoin Edge will be led by well-known Bitcoin developers and academics Anditto Heristyo, Ethan Heilman, John Newbery, Karl-Johan Alm, Nicolas Dorier, Thaddeus Dryja and Jimmy Song. They’ll introduce participants to a range of technical Bitcoin-related topics, including Elliptic Curve cryptography, transaction structures, difficulty calculation and adjustments, and much more.

This workshop will take place on the November 2 and 3. For more information on the Bitcoin Edge initiative, visit bitcoinedge.org.

See here for the full Scaling Bitcoin Stanford program.

The post Scaling Bitcoin Releases This Year’s Program and a New Developer Bootcamp appeared first on Bitcoin Magazine.

Yes, Bitcoin Can Do Smart Contracts and Particl Demonstrates How

Fri, 10/13/2017 - 11:18

The Bitcoin blockchain is not known for its ability to enable smart contracts. In fact, most developers creating smart contracts use a different blockchain, like Ethereum.

 

But the truth is that the Bitcoin protocol can be used to create smart contracts. Particl.io, the blockchain eCommerce platform, is doing just that by using Bitcoin-based smart contracts to manage funds in their trustless escrow: Mutually Assured Destruction (MAD) escrow.

 

For Particl, Bitcoin provides the ideal mix of smart contract functionality — enough to make smart contracts easy to implement but without the security and privacy risks of a more complicated platform like Ethereum.

Smart Contracts Overview

A smart contract is an agreement that can be enforced through a blockchain. Rather than relying on trust or a legal framework to ensure that each party that enters into a contract will adhere to its terms, you can use the blockchain to create a contract that is automatically enforced, between two people, in a decentralized fashion.

 

Ethereum has become the most popular blockchain for creating smart contracts. One of the major design goals of the Ethereum platform was to support smart contracts. From the start, this set Ethereum apart from Bitcoin, which was created first and foremost as a digital currency platform.

Smart Contracts on Bitcoin Codebase

As the Bitcoin protocol has evolved, it has gained support for smart contracts. Smart contract functionality is not as programmable and extensible on Bitcoin as it is on Ethereum. However, using features added to Bitcoin through improvement proposals, certain smart contract functionality can be achieved through Bitcoin scripting.

 

For Particl, the most important smart contract feature in Bitcoin is the OP_CHECKLOCKTIMEVERIFY opcode, which was introduced by Peter Todd as Bitcoin Improvement Proposal (BIP) 65. The opcode makes it possible to write scripts that prevent funds in a multi-signature wallet from being spent until a certain signature pattern is implemented or a certain amount of time passes.

Particl, Smart Contracts and MAD Escrow

MAD escrow is a technique that effectively prevents fraud in a transaction without requiring the oversight of a third party. In a MAD escrow contract, a buyer and seller both place funds into escrow. The seller starts by depositing an amount they want the buyer to match to symbolize a virtual handshake. This could be between 0 and 100 percent of the item’s purchase price. The buyer then deposits an amount equal to the handshake amount plus the price of the item they are buying. The escrowed funds are not released to anyone until both parties confirm that the transaction has been completed satisfactorily. The technique prevents either party from profiting through cheating in a transaction.

 

Particl uses the BIP 65 opcode to enable MAD escrow contracts by locking funds in a multi-signature wallet until all of the parties sign off on the transaction. With this approach, buyers and sellers on Particl’s ecommerce platform can operate without worrying about fraud or paying unnecessary fees.

 

They also don’t have to sacrifice privacy because no third party is involved in the transaction. Furthermore, and perhaps most significantly, because there is only basic scripting involved, security concerns are minimal.

 

Particl’s approach to MAD escrow smart contracts is arguably better than building smart contracts on a platform like Ethereum. While Ethereum provides more extensible support for smart contracts, that flexibility comes with a higher risk of security and privacy threats. The more code that goes into a smart contract, the greater the risk of introducing a vulnerability that could enable an intrusion.

 

Ethereum might be a strong foundation for writing very complex smart contracts, or ones in which security and privacy are not priorities, but Bitcoin provides a simpler and more reliable scripting framework for the private escrows that Particl requires.

Contributing to Bitcoin’s Future

 

Particl’s choice of Bitcoin as the backbone for its smart contracts is also a reflection of the team’s efforts to build a completely private platform on top of the Bitcoin codebase, arguably the most secure, battle tested and contributed to protocol on the market.

 

There are many dozens of Bitcoin-based blockchain projects out there, but most are simply building cryptocurrencies forked from Bitcoin. They’re not taking advantage of Bitcoin’s potential to create the foundation for a completely decentralized platform that supports a multitude of DApps and programmable functionality.

 

In this sense, Particl is helping to ensure that Bitcoin’s future will evolve more than just creating another cryptocurrency. Privacy enhancements Particl has already implemented onto the latest Bitcoin codebase such as Confidential Transactions and RingCT can just as easily be one day adopted upstream to further harden Bitcoin.

 

The post Yes, Bitcoin Can Do Smart Contracts and Particl Demonstrates How appeared first on Bitcoin Magazine.

A Bitcoin Beginner’s Guide to Surviving the Bgold and SegWit2x Forks

Fri, 10/13/2017 - 09:22

This is an updated version of A Bitcoin Beginner's Guide to Surviving a Coin-Split specifically addressing issues associated with the upcoming Bitcoin Gold and SegWit2x forks.

It looks as if Bitcoin will experience at least two more “coin-splits” soon, which (more accurately) will result in the creation of new coins. On October 25, Bitcoin Gold (Bgold) will split off from Bitcoin to create an ASIC-resistant cryptocurrency. A few weeks later, a significant group of Bitcoin companies wants to hard fork according to the SegWit2x plan as defined in the “New York Agreement” (NYA), which will probably result in yet another new coin.

If this all plays out, there could be three distinct blockchains and three types of tokens within about a month of publication of this article. One blockchain would follow the current Bitcoin protocol; for the purpose of this article, that token will be referred to as “BTC.” The second blockchain will follow the Bgold protocol; in this article, that token will be referred to as “BTG.” The third blockchain will follow the SegWit2x protocol; that token will be referred to as “B2X.”

The good news is that each BTC token will effectively be copied onto both the Bgold and the SegWit2x blockchains. If you hold Bitcoin private keys at the time of the forks, you should be able to access your BTG and B2X tokens as well.

The bad news is that such forks can be somewhat messy and risky. If you’re not careful, it’s easy to lose your BTC or B2X, and maybe your BTG.

This guide will provide you with the basics to keep your funds safe during the upcoming forks and help to ensure you make it to the end of next month with your BTC, BTG and B2X intact.

Author’s note: If you want to play the markets as soon as possible and you are fine with taking risks, and/or you really know what you are doing, this article is probably not for you. If you mostly just want to make sure not to lose any coins, read on …

Before the Forks (That’s Now)

First of all, be aware that coin-splits can be somewhat risky — especially controversial ones like the SegWit2x fork. While it seems unlikely for now, there is a chance some kind of cyber-battle will break out, perhaps even escalating to the point where all exchange rates drop sharply. If you want to make sure not to be caught in any crossfire, it’s best to not hold more value in bitcoin than you are willing to lose.

If you do decide to hold on to your bitcoin, make sure you are prepared before October 25, and preferably sooner. This is the day the BTG equivalent will be distributed to all BTC balances. B2X will follow a couple of weeks later, around mid-November (the exact date is not yet known).

If you are storing your bitcoins on an exchange, in a custodial service like Coinbase, Circle or Xapo, or on any other service that holds your private keys for you, you may or may not eventually receive BTC, BTG and B2X. This is not yet very clear yet, and if you want to keep storing your coins on such services, you should at least see if your exchange or custodial service of choice has published a blog post on the forks. If not, contact them to ask.

That said, if you want to be absolutely sure to be able to access your BTC, BTG and B2X, you should really control your private keys yourself. That way you don’t need to rely on any third party.

If you’re currently using a custodial service to store your bitcoins, you need to create your own wallet instead. Send or withdraw your bitcoins from the custodial service to this new wallet; this wallet then holds your private keys.

What kind of wallet you want to use is up to you. For this specific purpose it’s best to use a wallet that lets you easily access your private keys directly. (Some wallets make this easier for you than others.) But technically, any wallet that lets you control your private keys should be fine.

With that in mind, here are some basic solutions:

If you don’t care about transacting with BTC, BTG or B2X anytime soon, and really just want to keep all of them as long-term investments, a paper wallet is a good option. It should be noted, however, that this option is only really secure if you follow strict security precautions, which you can find here.

Regular wallets are about as secure as your computer (or phone). Since most computers and phones are not all that secure, these are not ideal for large amounts. With that in mind, all mobile and desktop wallets listed on bitcoin.org will store your private keys. Electrum is a good pick if you want easy access to your private keys directly.

A full-node wallet like Bitcoin Core or Bitcoin Knots is also a good pick, as it’s not too hard to access your private keys with these wallets either. As a bonus, these wallets give you a little extra security (shortly) after the SegWit2X fork, as you’ll see below. However, these types of wallets are more resource-intensive to use, compared to most other wallets.

Another option is to get a hardware wallet. Any of the hardware wallets listed on bitcoin.org will keep your private keys secure. However, these wallets typically don’t let you easily access your private keys directly. It’s not clear that all these wallets will let you access BTG in particular, and not all of them have given a guarantee for B2X either. So while these wallets will safely store your private keys, it could be a bit more tricky (but probably not impossible) to get ahold of all three coins later.

In any case: Be sure to make backups of your keys! Most wallets require you to do this when installing; don’t skip this step.

Shortly After the Bitcoin Gold Fork (and Before the SegWit2x Fork)

The Bitcoin Gold fork is sometimes referred to as a “friendly fork.” This is mainly because it has no intention of claiming to be the “real” Bitcoin, and it plans to implement strong replay protection.

In short, this replay protection means that you won’t accidentally send your BTG when you mean to send BTC (or the other way around). Your BTG will be accessible with your private keys if you insert them in a Bgold wallet anytime after October 25th. So even after you’ve spent your BTC, you can still access your BTG.

If you want to transact with your BTC before the SegWit2x fork, it could come in handy later to write down which of your Bitcoin addresses and/or private keys had BTG attributed to them — in other words, which of your Bitcoin addresses had any BTC on them at the time of the Bgold fork on October 25th.

But there’s no rush to actually access your BTG. In fact, it will probably take at least a week before this is even possible, and maybe longer. It’s therefore probably best to ignore this fork until after the SegWit2x fork. That way you’ll only need to go through the process of claiming all your new coins once.

After the SegWit2x Fork

Unfortunately, the SegWit2x fork could play out a bit more messily.

For one, it currently seems SegWit2x will fork without strong replay protection. This means that post-fork, BTC transactions and B2X transactions will look identical and could both be valid on both blockchains.

Therefore, spending coins on the BTC blockchain could make you accidentally spend the “equivalent” B2X on the SegWit2x blockchain, and the other way around. Instead of paying someone only BTC, you may unintentionally send B2X as well — or vice versa. The BTCs and B2Xs are initially “stuck together.”

The best way to prevent replay attacks is simple: Do not send any BTC or B2X transactions, at least not until it is clearer to everyone what the post-fork situation looks like.

Additionally, some light wallets will display whichever blockchain has more hash power attributed to it. This means that the balance on your screen could be a BTC balance or a B2X balance, and there will be no way to tell the difference. (Even if the wallet says it’s a BTC balance).

As such, to be on the safe side, you should probably not accept any payments with these kinds of wallets at all, since you could receive B2X when you’re expecting BTC, or the other way around. At the very least, you should make absolutely sure that your wallet displays what you think it displays. (Wallets like Electrum and GreenAddress should display BTC as BTC regardless of hashpower distribution.)

Alternatively, if you use a full-node wallet like Bitcoin Core or Bitcoin Knots and you want to accept BTC, that should still be fine. (Someone who didn’t read this article may accidentally send you the equivalent in B2X, though.)

Depending on how much hash power is dedicated to each chain, it is possible that transactions will confirm (significantly) slower than usual for some time and will require higher fees to confirm at all.

Claiming Your Coins

If all three chains survive, and you control your private keys, you should be able to access BTC, BTG and B2X tokens.

Claiming your BTG should be relatively easy, assuming there are wallets available for it. Most likely, you’d simply need to insert your private keys (or private key seed) into such a wallet.

However, there are some security and privacy risks in doing so. It’s too soon to tell exactly what these risks will look like as it’s unclear which wallets will support BTG. (It’s not even certain that any wallets will.) But in general, you’ll first want to move your BTC (and B2X) to new addresses or whole new wallets before accessing your BTG.

Since there’s no need to rush, it’s probably best just to wait on claiming your BTG until there is more clarity. By that time, Bitcoin Magazine will publish a follow-up article explaining how to do this.

Securely accessing and using your B2X (and BTC) might prove a bit more tricky, mostly because of the risk of replay attacks. This requires that the BTC and B2X are split from each other, which will be possible but could prove a bit complex.

Some wallets might split the coins for you, but it's too soon to know which wallets will. Additionally, exchanges will likely set up coin-splitting services and take care of most of this complexity behind the screens. You’d then just need to send your BTC or B2X to an exchange, and the exchange will credit your account with both BTC and B2X. (They should even replay the transaction for you to make sure they indeed receive both your coins and can split them for you.) There may also be other solutions to split your coins, but that remains to be seen.

At this point, there will probably also be dedicated wallets for both BTC and B2X. Of course, you may need to upgrade your existing wallet or download a new wallet. This also remains to be seen.

Further specifics on what to do after the forks will be announced on Bitcoin Magazine once the forks have occurred and we have a better understanding of the post-fork situation.

So, to Recap ...

1. It’s best to control your private keys yourself before October 25.

2. To be on the safe side, avoid any transactions shortly after the forks, especially after the SegWit2x fork.

3. As the dust settles after the SegWit2x fork, access and split your coins. (How to do this will be explained on Bitcoin Magazine once there is more clarity.)

This article will be updated as the news develops.

The post A Bitcoin Beginner’s Guide to Surviving the Bgold and SegWit2x Forks appeared first on Bitcoin Magazine.

Bitcoin Price Analysis: Bitcoin Rally Shows Strength for Continued Growth

Thu, 10/12/2017 - 18:09

Today, bitcoin reached a new all time high as it rose by $500 in just a few short hours. At the time of this article, bitcoin is sitting in the $5300s as it looks ready, once again, to spring for a new all time high:

Figure 1: BTC-USD, 4-Hour Candles, GDAX, Macro Trend

On a macro level, BTC is showing signs of upward strength as the RSI and MACD are showing bullish strength. There are no clear signs of bearish divergence yet and the market is starting to pick up in volume as the price climbs, thus indicating that a healthy bullish continuation is likely. Looking at the 50 and 200 EMAs, we can see the slope is pointing upward and the market is trending well above both EMAs, showing us that the market is pushing upward in a sustainable manner.

On a micro level, there are slight signs of bullish exhaustion that may indicate the need to either consolidate sideways or pull back slightly before continuing upward:

Figure 2: BTC-USD, 30-Minute Candles, GDAX, Micro Trend

The MACD and RSI are showing clear signs of bearish divergence on the smaller timescales (shown via the red arrows on the indicators). Also, the current growth is decreasing in volume which usually indicates a lack of buyer interest at the current price levels as the trend continues upward. It’s important to note that the trend can remain healthy on a macro scale, while simultaneously remaining divergent on a smaller timescale. The divergence doesn’t imply a macro reversal — it simply means the current trend is lacking momentum to continue upward in the immediate future and likely needs to cool off before continuing any further.

On the higher timescales, bitcoin appears to be adhering to the ascending channel shown below:

Figure 3: BTC-USD, 1 Day Candles, GDAX, Ascending Channel

Since the beginning of the year, bitcoin has adhered to very nicely to this channel where it routinely tests the top, then tests the bottom, then tests the top, and so on and so forth. If we continue this pattern we can expect to see bitcoin test the $6000s before we see any major correction. However, it is important to note that, compared to Bitcoin’s last bull run to the $5000s, the volume is considerably lower. This may affect bitcoin’s ability to push toward the upper bounds of the channel. On the other hand, the indicators discussed in Figure 1 are showing healthy bullish signals, so we will have to see how the market responds to tests of new highs.

Summary:

  1. Bitcoin found new all time highs in the $5300s after having a sudden $500 rally.

  2. The macro momentum indicators are showing signs of bullish continuation which may push further new all time highs.

  3. The smaller time frames are showing signs of bullish exhaustion so we may see some consolidation before any bullish continuation is seen.

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

The post Bitcoin Price Analysis: Bitcoin Rally Shows Strength for Continued Growth appeared first on Bitcoin Magazine.

Op Ed: European Blockchain Business is Booming, Even Among Regulatory Concerns

Thu, 10/12/2017 - 15:46

As cryptocurrencies become increasingly mainstream, governments worldwide are exploring methods for regulating blockchain projects and their methods of funding. While China and South Korea have recently cracked down on ICOs and cryptocurrency exchanges, some nations in the European Economic Area (EEA) have become among the world’s most progressive in embracing this nascent technology. Still, the lack of standards in regulation will prove to be a challenge as blockchain startups seek to develop and mature.Since consensus is easier to realize with a smaller representative body, smaller autonomous territories are more fit to effect rapid change in promoting the establishment of crypto and blockchain companies in their legal jurisdictions. For example, the cantonal laws in Switzerland allow for increased agility when introducing amendments, disclosure and transparency.

Switzerland has emerged as a European hub for cryptocurrency and blockchain development. These efforts have been led by the Crypto Valley Association, a nonprofit dedicated to the research and development of blockchain technologies, has also started to develop an ICO Code of Conduct in light of China’s recent ban. This would establish a clear set of guidelines for companies planning token crowdsales and provide clear, yet versatile, rules surrounding their legality. Anchored by the city of Zug, which has been nicknamed “Crypto Valley” after the numerous blockchain startups based there, Switzerland has remained a friendly environment for burgeoning blockchain and digital currency companies.

Estonia has also proven to be open to blockchain development; it recently expressed interest in creating a national cryptocurrency to be used within its borders. If this materialized, it would rank among the most significant milestones for cryptocurrency to date. In addition, members of Finland’s central bank wrote a paper discussing the outstanding characteristics of Bitcoin.

While Bitcoin is the largest cryptocurrency by trading volume, its leading position among digital currencies does not behave like a traditional monopoly in economic terms. In fact, these economists argue that there’s no need for governments to regulate Bitcoin due to its decentralized infrastructure. This is an interesting stance in comparison to other European nations that have expressed their support for the development of government policies surrounding digital currencies.

In contrast, other countries may either feel that the blockchain space is still too underdeveloped to regulate in earnest or that an appropriate level of research has not been provided on the topic. Despite this, blockchain adoption will continue to become more mainstream than one might expect. Deloitte has reported more than 90 central banks are engaged in discussions about blockchain technology, and that 80 percent of those banks are expected to commence digital ledger projects by the end of the year. The International Monetary Fund has even expressed positive sentiment about the potential applications of blockchain and cryptocurrencies. Their willingness to explore this technology means that regulations in the jurisdictions they serve are likely in the near future.

The EEA’s interest in considering blockchain regulation promises that the future will be bright for startups hoping to do business in these countries. However, gathering consensus around a technology that’s still not widely used or applied will prove difficult. It will require these nations to adopt policies that feature the needed flexibility for the long term. Despite these challenges, the countries that are able to do so will reap significant economic rewards.

This is a guest post by David Henderson. The views expressed are his own and do not necessarily reflect those of BTC Media or Bitcoin Magazine.

The post Op Ed: European Blockchain Business is Booming, Even Among Regulatory Concerns appeared first on Bitcoin Magazine.

Bitcoin Gold Is About to Trial an ASIC-Resistant Bitcoin Fork

Wed, 10/11/2017 - 14:20

It’s forking season.

After Bitcoin Cash (Bcash) forked from the Bitcoin blockchain to create a new cryptocurrency (BCH), and ahead of the SegWit2X fork that may do the same thing, a third Bitcoin fork is in the making: Bitcoin Gold (Bgold; BTG). But where Bcash and SegWit2X are scaling-related forks — both mainly increase Bitcoin's block size limit — Bgold wants to re-decentralize mining by implementing a new proof-of-work algorithm.

“What was born as decentralized is now centralized,” Bitcoin Gold contributor J. Alejandro Regojo told Bitcoin Magazine, referring to the current state of Bitcoin mining. “With this fork, we want to show how Bitcoin can be as ‘Satoshi’ as possible, as social as possible, and as decentralized as possible.”

Mining Centralization

Bitcoin Gold was initiated by Jack Liao, CEO of Hong Kong–based mining hardware producer LightningASIC, and was first announced in late August. The open project has been gaining traction and support in the wider cryptocurrency space since, with a dedicated Slack as a main hub for discussion and organization. Bgold is currently being developed by the pseudonymous developer “h4x3rotab” along with a small group of volunteers contributing to the project in other ways.

The attention Bgold has attracted is probably in part because anyone who owns bitcoin (BTC) on October 25th will receive the equivalent amount of BTG. While this model has been criticized, particularly because it presents a burden on service providers and users, it has also proven successful. With the launch of Bitcoin Cash in particular, users eagerly accepted their batch of “free money,” while exchanges, wallets and other service providers proved relatively willing to integrate the new coin.

Further, the Bgold team believes that this distribution method should also benefit Bitcoin over altcoins as it provides an extra incentive to hold BTC on particular dates.

“But the key goal that we are trying to achieve with this fork is to build a perpetually ASIC-resistant version of Bitcoin,” said Robert Kuhne, another Bitcoin Gold contributor, in explaining the purpose of the project to Bitcoin Magazine.

Bgold contributors like Regojo and Kuhne think that Bitcoin’s proof-of-work hashing algorithm was essentially broken by the introduction of specialized ASIC (application-specific integrated circuit) mining hardware. In the early years of Bitcoin’s existence, individual users were often also miners; this has since become concentrated into relatively centralized data centers operated by professionals.

“And we’re now in a situation where 65 percent of hash power comes from a country that doesn’t like Bitcoin,” Regojo noted, referring to China’s recent clamp down on cryptocurrencies.

An Uneven Playing Field

And while mining is centralized, ASIC production is even more centralized, the Bgold contributors pointed out. Only a handful of companies currently produce such specialized chips.

This means that anyone who wants to be a miner in any meaningful way is beholden to these companies, Kuhne argued.

“The way the monopoly manufacturer currently operates is abusive to its customers — individual miners — and the industry at large,” he said, referring to major Chinese ASIC producer Bitmain. “Manufacturers can produce ASICs at a tiny cost, but miners have to buy at a high price. This violates the one-CPU-one-vote ethos as described in the Bitcoin white paper, because while everyone can buy CPU at the same price, the same is not true for ASIC hardware.”

Regojo and Kuhne see this as a fundamental problem — not something that free market dynamics can realistically resolve. They suggest that the barrier of entry to the ASIC market to compete with existing manufacturers is fundamentally too high to allow for open competition.

“You can't build a factory without approval from the government and banking system. So there are really only a handful of entities in the world that have total authority over who can and can't manufacture ASIC machines. And all this could potentially get much worse if and when those institution really start feeling the disruption from Bitcoin, which hasn't begun in earnest yet,” Kuhne said.

Bitcoin Gold

As opposed to the Bitcoin Cash and (especially) the upcoming SegWit2X forks, Bitcoin Gold very specifically does not make a claim to be the “real” Bitcoin. Instead, the Bgold project hopes it can prove a valuable exercise for Bitcoin; a sort of test case for a hard fork that Bitcoin itself may one day require.

Concretely, Bitcoin Gold is now implementing the Equihash proof-of-work algorithm. This is already used by Zcash and is relatively ASIC-resistant.

Full ASIC-resistance, however, is thought to be impossible: Any mining algorithm could be subject to specialized chips. Like Vertcoin, the Bgold community therefore plans to re-deploy a new proof-of-work algorithm hard fork if it is found out that ASIC-chips for Equihash are being produced. (This plan alone, of course, could be a deterrent for any potential ASIC-producer.)

For security, the project plans to implement strong replay protection to avoid loss of funds for unsuspecting or non-technical users. It will also adopt a new difficulty re-target algorithm to prevent the blockchain from stalling: Difficulty is re-adjusted at every block instead of once every two weeks.

While the coin is set to launch two weeks from now, the Bgold codebase is not yet fully developed and ready to be deployed. Implementation of the new proof-of-work algorithm and replay protection, as well as the new difficulty re-adjustment scheme, are yet to be finished.

Nor are all the details for the project even ironed out.

Early announcements indicated that Bitcoin Gold would have a closed launch and a presale of coins. A new batch of BTG was to be mined in the first week after the fork and subsequently distributed to designated investors, not unlike an ICO. Proceeds of this “ICO” were then to be used for development and other Bgold-related purposes.

However, as interest in the project grew, this idea became more controversial. Not everyone involved with Bitcoin Gold likes the idea of an additional founders reward — something Bcash, for example, did not have.

Kuhne addressed the issue by stating: “We have heard a lot of feedback from the community, so this proposal will be replaced with an updated and improved plan. But we will not completely rule out the possibility of a modest pre-mine to provide a basic level of funding for the project.”

Disclaimer: The author of this article holds BTC and will therefore also own BTG at launch.


The post Bitcoin Gold Is About to Trial an ASIC-Resistant Bitcoin Fork appeared first on Bitcoin Magazine.

Op Ed: Is There a Future for Banking in a Cryptocurrency-Dominated World?

Wed, 10/11/2017 - 09:42

What is the future of banking, central banking and financial intermediation in a world in which cryptocurrency is dominant? Let’s speculate a bit, with the proviso that no one can fully anticipate how these markets will evolve.

We can find hints in the speech by IMF head Christine Lagarde at a Bank of England conference in September 2017. She dropped some words that likely sent some chills down a few spines in the audience. She explained that cryptocurrency is not a passing fad but a genuine innovation in money. The only remaining barriers to widespread adoption are technical, fixable and likely to be overcome as the sector develops. This, she argued, has profound implications for the future of financial intermediation and central banks.

“In the future,” she explained, “we might keep minimal balances for payment services on electronic wallets. The remaining balances may be kept in mutual funds, or invested in peer-to-peer lending platforms with an edge in big data and artificial intelligence for automatic credit scoring … Some would argue that this puts a question mark on the fractional banking model we know today, if there are fewer bank deposits and money flows into the economy through new channels.”

She continued to press the point, as it relates directly to the Bank of England and the Federal Reserve.

“How would monetary policy be set in this context? Today’s central banks typically affect asset prices through primary dealers, or big banks, to which they provide liquidity at fixed prices — so-called open-market operations. But if these banks were to become less relevant in the new financial world, and demand for central bank balances were to diminish, could monetary policy transmission remain as effective?”

She put a question mark after that last sentence, but she might as well have made the statement: Monetary policy cannot be effective in this world. In fact, it is worse. It might not matter at all.

It’s an astonishing thing to consider. For more than a century, academics, regulators, captains of finance and high-level government officials have worked to find the perfect monetary policy to stabilize the macroeconomy, provide liquidity for growth without inflation and otherwise become masters of economic planning.

But this entire machinery is premised on two important conditions. First, the government must have the monopoly on money. It has held this for more than a century. Government prints the money, controls its supply, imposes legal tender and regulates against the enforcement of contracts denominated in unofficial currency. And second, most of this money has to be held in some way in the banking system. If you take away both of those, the cause of central banking has a serious problem pursuing any form of monetary planning at all.

That is indeed a very different world. And it is no wonder that the ruling class is concerned.

Today, banks like JPMorgan and Goldman Sachs are experimenting with blockchain technology and cryptoassets. And Lagarde’s own statement might be seen to portend the issuance of a new global cryptocurrency to replace the Special Drawing Right. The core problem of these large-scale attempts to reproduce the power of the distributed ledger is that it might be too little, too late. The model of a new world of banking and credit is already revealing itself.

Would Banks Exist?

How is conventional banking affected by cryptocurrency? Lagarde offers that it raises questions about fractional-reserve banking, the practice of keeping fewer deposits on hand than can be immediately paid out to customers at any one time. The practice has been well established for hundreds of years, and yet it can lead to unwarranted expansions of credit and fuel system-wide instability.

Consider the history of banking. What was the purpose of the bank? There have been traditionally three primary functions that banks have provided since the ancient world.

The first has been to provide safe storage for money itself. This is the warehousing function. It is essential and worth paying for. People need a safe place to store their money.

The second is the loan function. The more credible the warehousing function becomes, the more the bank is in the position to leverage its specie holdings for its credit-granting functions. This is the origin of fractional-reserve banking. The bank cannot pay all depositors on demand. Instead, it relies on its financial soundness and a rate of return for depositors who entrust the bank with the responsibility of maintaining its balance sheet.

The third is the clearing system. Because there is always counterparty risk in such transactions — the bank and the depositor must trust each other to tell the truth and make good on promises — the system settles transactions and certifies that all promises to pay have been kept. In the period between the transaction and the clearing, money becomes a credit issued and accepted based on trust.

What happens to these three functions in a crypto-based monetary economy? Let’s go through them.

Warehousing

That money needed a warehouse has always been taken for granted. This was a technological limitation of salt, gold, silver and so on. Specie takes up space. You need a secure space for it. It is also weighty and impractical for moving from space to space by a single individual. Murray Rothbard, in his book “Mystery of Banking,” regrets that these factors even exist and pointedly says that if people had carried coins rather than relying on paper money from banks, we could have avoided a century of financial panic and inflation. That’s a theoretically sound point that runs into practical limitations. The reason for notes to represent specie is to facilitate trade in a way that meets the needs of consumers.

However, thanks to Bitcoin, we can now see that this warehousing service was in demand due to physical factors and not fundamental ones. Bitcoin has all the attributes of traditional money but adds two advantages: it is weightless and takes up no physical space.

The money is “stored” in the cloud on the blockchain. The personal wallet serves the function of providing access via double-key cryptography. If you have your private key — and this can be on physical paper or on a device not even connected to the internet — you have all you need to set up your own private banking empire. Anyone in the world can do it without trust relationships, personal identification or credit history. The institutions that seem like banks — services like Coinbase that hold your key for you — maintain a full-reserve policy or risk losing the trust of their customers.

It is impossible to anticipate what kinds of crypto-derivatives will end up being securitized and traded in the future. Surely, the last nine years of the previously impossible should cause everyone to be humble in their predictive outlook. That said, there is good reason to believe that the diminution of counterparty risk inherent in every non-cash transaction will drive markets toward greater accountability in every sense. And this alone might solve the age-old debate about fractional versus full reserves with the best possible resolution.

The question does not have to be resolved by intellectuals and policies. It is settled by the market, so long as technology permits people to pay for goods and services with a spaceless and weightless money that requires no warehousing.

Clearing

As for clearing, the single most difficult-to-grasp feature of Bitcoin is the manner in which it reduces or eliminates counterparty risk associated with monetary exchange. Transactions are cleared as they are made. This has never before been possible in the history of money and finance on a geographically noncontiguous basis. With traditional money, for clearing to occur instantly, you have to actually be there, trading physical dollars for goods and services.

Cryptocurrency reproduces this exact financial arrangement on a peer-to-peer basis between any two individuals anywhere in the world. You are literally trading your stuff for his or her stuff. Ownership titles are rearranged when the transaction is confirmed in the ledger.

What role is then here for traditional banks to be the guardians of settlement? When it comes to clearing services, so far as I can tell, that role is eliminated for all transactions that are settled in the instant of their confirmation (the time delay involved in moving crypto is nothing more than a delay; it creates no credits).

What About Credit?

We are habituated into thinking that the whole world runs on credit. That’s because it does. This isn’t because we are financially irresponsible, are unable to say no, absolutely adore large financial institutions or are willing to pay high rates of interest. It’s because the sophistication of modern financial technology has been hobbled by old-fashioned payment technology that still operates today the way it did in the time of the Medicis.

In any case, the fundamentals are the same in conventional finance today as compared with the Medicis. It still relies on trust relationships, credit instruments that represent property but do not embody it, and a time delay for transactions to clear. As a result, every transaction that is not conducted in person via cash depends on some extension of credit and thus involves intermediating third parties, and that in turn necessarily involves some counterparty risk.

It is fascinating how little we understand this today, but the truth becomes obvious on close examination: Every transaction today is either based on cash (instant title exchange and clearing) or credit (which involves trust relationships and counterparty risk). Services like Venmo, Google Payments, PayPal or dozens of others are no different in this respect from Visa, Mastercard or American Express. They can be more or less expensive, charge different user fees, and employ different interfaces and security protocols. But in the end, these services all rely on credit terms and do not offer instant clearing. They simply cannot because the decrepit technology of national monies does not allow it.

Cryptocurrency as a means of facilitating exchange is different in another respect. Its value is not tied to a nationalized currency at all. Not only that, it has no value as a commodity or asset at all. Its value is based on the use value of services provided by the cloud-based distributed ledger.

The massive use of credit-based exchanges as we see in national monies would not exist in Bitcoin precisely because the technology disintermediates the financial industry, removing both the need for trust relationships as well as clearing services. Might there emerge a market for crypto-substitute monetary derivatives? Only the evolution of these markets can reveal this for sure, but this much remains true. It will not be about creating new money being allowed by the protocol. The distinction between money and money substitutes will be clear and not obscured by retrograde documentation technology.

At the same time, the scaling problem of prevailing blockchain solutions will likely necessitate a convention of using off-chain platforms for smaller transactions, as Nick Szabo has suggested. Such transactions do involve counterparty risk but not credit creation as such; such networks operate more like debit cards. The main blockchains will likely be used for final settlements while “lightning networks” become trust-based credit tools (money substitutes) — by choice but not by necessity.

Additionally, the massive industry associated with credit-based transactions includes a vast machinery of fraud prevention and prevention of identity theft. This is also made unnecessary because identity is cryptographic and not personal.

Credit Markets

All this said, there is still a role for credit markets in cryptocurrency. They emerge precisely as they would in a purely specie-based monetary regime in which everyone carried around their own coins or stored them in the home. If you have excess monetary reserves in your own possession, you may be willing to loan them for others to use and do so at a profit. In order to reduce the risk of default and guarantee your investment, you need collateral; this can take any form. You also need to establish a trust relationship, same as with any other loan market.  

The difference is subtle but foundational. When you loan virtual money, you lose title to that money, just as if you had transferred physical property. Contractual terms would specify the ways in which a later exchange would occur in accordance with the terms of use. Again, the way to think about this is how it works in a cash economy: You loan a friend $20 and hand him cash. You cannot get it back by force. As the lender you rely on establishing a contractual relationship that creates expectations for future payment, along with some measure of risk.

These markets have already developed. Companies like Bitbond and BTCPOP offer services both for lending money and borrowing money, with the terms of exchange favoring both parties. For now, such standalone services are risky simply because the upstart sector is replete with sketchy schemes and fraud (“Lend your BTC to me and I will pay you back, I promise.”).

Much more promising is a simple margin lender service provided by dollar/Bitcoin exchanges themselves. The borrower does not take direct possession of the coins but is rather extended by the exchange at the behest of the customer who wants to earn a regular rate of return. An example is the lending service provided by Poloniex. The trouble these markets have so far encountered is that holding crypto is more profitable than lending it at prevailing rates. This might not always be true.

As these markets develop, it would not be a surprise to discover that the rate of return for the lender would be above the rate one would earn from nationalized money. The risk of default would not be guaranteed in any way as with government-backed financial institutions, much less a central bank that is capable of printing unlimited amounts of money. On the other hand, this would also eliminate the moral hazard of making unwise loans or securitizing debt obligations without proper documentation, such as happened during the housing bubble.

In the century of central banking, we’ve seen interest rates decline inexorably and the terms of credit issuance shifting dramatically to favor longer terms, ever less collateral and ever more confusing titles for ownership. In cryptocurrency-based credit markets, we are likely to see the opposite trend: shorter terms, higher collateral requirements, very clear titles demarcating indisputable rights of ownership and enforcement of terms built into lending protocols.

The Future of Sound Money

Christine Lagarde is right: There are dramatic challenges to the status quo that are being offered up by the advent of cryptocurrency. Monetary exchange will operate the same as cash exchange, and the sophistication of our payment and settlement technologies will sync up with the sophistication of our financial tools.

In some respects, cryptocurrency might appear to be more stingy than our current highly leveraged, unstable and centrally regulated systems. In contrast, the new world will be financially sound, stable, radically disintermediated, decentralized and democratized because anyone, of any financial means and access to financial institutions, can participate within it.

We’ve only begun to think about what a radical change it would be if our money actually gained value over time (as crypto has for nine years, and the dollar did in the late 19th century), so that you actually grow more wealthy merely by not spending. Such a change would be huge, not only for finance but also for the culture at large.

For more than a century, the banking system has been used to fund the state, destabilize the economy, loot private savings, exclude people who don’t have access, promote financial dependency and even make violence possible on an unprecedented scale, all because we didn’t have a different technology for making possible monetary exchange. That monopoly is now being shattered. Sound money is born. The panic of the ruling class has just begun.

This is a guest post by Jeffrey Tucker. Opinions expressed are his own and do not necessarily reflect those of BTC Media or Bitcoin Magazine.

The post Op Ed: Is There a Future for Banking in a Cryptocurrency-Dominated World? appeared first on Bitcoin Magazine.

Hyperledger and Linux to Offer a Massive Open Online Blockchain Course

Tue, 10/10/2017 - 15:35

Hyperledger, the international blockchain collaboration of corporate giants and young startups in partnership with the Linux Foundation, is launching a new free Massive Open Online Course (MOOC) to meet the rapidly accelerating worldwide demand for blockchain education.

The pace at which the “red hot” blockchain technology market is evolving and increasing in popularity makes it difficult for the established education system to keep up with the demand.

In an announcement, Brian Behlendorf, Executive Director of Hyperledger said:

"Interest in blockchain technology is exploding. Software developers, product teams, and business managers are all desperately eager to figure out how this technology can solve real-world problems.

"This first introductory-level course is carefully designed for both non-technical and technical audiences, to bring everyone further up the learning curve and get started with it on their own business needs.”

The Linux Foundation, responsible for training and certifying more developers in open source software than any organization in the world, together with the worldwide open source community, is aiming to solve the hardest technology problems by creating the largest shared technology community in history.  

The MOOC will be on the edX.org website, a free online education platform started by MIT and Harvard University in 2012. The site is now a collaborative effort of more than 50 top-rated universities and colleges including Cornell, University of California Berkeley, the Sorbonne, McGill, Juilliard, the University of Hong Kong, Oxford, Notre Dame, the University of Tokyo and the University of Toronto.

MOOC is Designed for Technical and Non-Technical Audiences

Some universities, like the University of Edinburgh, MIT, Stanford, University of California Berkeley and Princeton University, have already begun to offer courses in blockchain technology and cryptocurrencies at the college level, while a new Blockchain University is tailoring its courses to professionals looking to upgrade their knowledge. The University of Nicosia in Cyprus offers the world’s first MSc in Digital Currency. But these courses are designed for the post-secondary and graduate knowledge level markets.

In contrast, Hyperledger’s MOOC is set up for both beginners and trained developers, and includes an introduction to the Hyperledger organization and its key business blockchain platforms, including Hyperledger Fabric and Sawtooth.

It covers key features of blockchain and distributed ledger technologies, current Hyperledger projects and common use cases, and the differences between various types of Hyperledger projects in the fields of finance, banking, Internet of Things, supply chains and manufacturing technologies.

The course includes how to install Hyperledger Fabric and Sawtooth frameworks and how to build simple applications on top of the Fabric and Sawtooth frameworks.

In a statement, edX CEO and MIT professor Anant Agarwal noted:

“Hyperledger and blockchain are two key skillsets that are increasingly in demand in today’s digital world. Our global community of learners have told us that they are seeking courses to help them gain the career-relevant skills they need for the modern workplace. We are thrilled to once again partner with the Linux Foundation to offer a course on this popular, in-demand subject that will provide the building blocks needed for success within the exciting and rapidly expanding field of blockchain technologies.”

Recent job numbers show that the demand for cryptocurrency jobs has doubled in the past six months and are soon to triple from 2016. The job board AngelList reports that cryptocurrency job postings remain one of the largest non-corporate startup opportunities..

Pre-registration is now open. The free Hyperledger course will become fully available on October 25, 2017 (with the option to add a verified certificate of completion for $99).

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India Trials a Power Grid on the Blockchain to Incentivize Sustainable Energy

Tue, 10/10/2017 - 15:27

Access to reliable energy is the foundation of economic development and human society. Yet reliable energy can come at a steep environmental cost.

Today’s energy systems are being rapidly reexamined and transformed by both private businesses and public organizations. Innovation coupled with changing policy and consumer demands has prompted The World Economic Forum’s System Initiative On Shaping the Future of Energy. The WEF noted that four out of five of the Initiative's goals can be addressed in some way through the application of blockchain technology:

  1. Enable innovation to accelerate opportunities towards smarter and more efficient energy use;

  2. Enable the cost-effective reduction of energy’s environmental footprint;

  3. Enable universal access to affordable reliable energy; and

  4. Improve system resilience and security.

One area of application that has been of interest for its utility, efficiency and sustainability is the blockchain application to microgrids.

MaaS in India

Multinational IT provider, Tech Mahindra, and the peer-to-peer based energy trading platform, Power Ledger, have created a new service for clientele specifically interested in microgrids. Microgrids are distributed energy systems that act as a single controllable entity with respect to a larger energy grid network.

A microgrid’s key feature is that it can connect and disconnect from a larger grid network, enabling it to operate both as a part of a larger grid or in “islandmode” as its own grid. The new service offering includes a package of technical services and a platform for customers to set up and operate their own microgrid called “Microgrid-as-a-Service” (MaaS).

The MaaS platform integrates multiple energy assets such as solar, battery storage, electric vehicle chargers and analytics to measure energy efficiency. MaaS is intended to offer resilient and reliable electricity that is also local and less carbon reliant.

While the MaaS product provides technical control over a microgrid, Power Ledger’s blockchain-based platform acts as an added transactional layer that reimburses users for excess clean energy produced by allowing peers to store and trade it at a local level. The blockchain also manages all energy debits and credits of accounts, automates trading and measures each participant’s ongoing financial statements. The blockchain does this by tracking the data flow from smart electricity meters — an Internet of Things application for the energy sector.

The Power Ledger blockchain-based software platform will begin in late 2017 as a virtual trial run on those Tech Mahindra campuses in India that are already hooked up to microgrids.  

Location proves to be a key factor for the project’s success based on two reasons. Data from urban microgrids are typically more complex due to population density; they can, therefore, better demonstrate the strengths of using a blockchain-based platform for microgrids. Also, urban microgrids are much more common in India as opposed to OCED countries where they are mostly employed in rural settings.

“Trialing in India is a major opportunity to change the way communities source the energy required to take part in a modern global economy,” said Power Ledger’s Managing Director, David Martin.

An Economic Environment Ready for Disruption

The fact that India’s economy has been declining since the beginning of 2017 enhances the project’s case for using a blockchain to improve the country’s bottom line. In the first six months of 2017, the country’s gross domestic product fell from 7 percent to 5.7 percent. This may be due in part to reform efforts by Prime Minister Narendra Modi in the last year.

In June, Modi announced a complete overhaul of India’s tax system. Back in November 2016, he banned the 500 rupee ($7.50) and 1,000 rupee ($15) paper notes, calling them “worthless pieces of paper,” as a way to limit fraud and corruption. These banned notes were said to make up about 86 percent of all cash in circulation, according to CNN Money.

Opportunities for digitization using blockchain technology, and especially for cryptocurrencies like bitcoin, are a much needed alternative to several of their systems that do not already have effective nodes of trust built in.

Power Ledger has already proved that its platform can work for both homeowners and businesses. In Busselton, Australia, their peer-to-peer trial showed households can save about $470 ($600 AUD) per year on electricity bills. The forward vision for using blockchain-based platforms to trade energy within microgrids is to enable building owners, campuses, and even “smart cities” and other communities to produce and manage their own affordable electricity and then trade any excess generation.


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GoldMint Brings the Blockchain to Global Gold Markets

Tue, 10/10/2017 - 10:16

Buying, selling and trading gold is about to become easier, safer and more efficient than ever thanks to GoldMint’s innovative new blockchain models.

Gold has a long history with investors as a revered store of value. As an asset, it provides a reputable alternative amid the instability of fiat money and can serve as a safe haven during a global financial crisis. More recently, gold has served as a viable hedge for the growing markets of cryptocurrencies and their tendency toward hyper-volatility.

GoldMint aims to make a mark in today’s evolving markets by backing its virtual token, GOLD, with actual gold from prevailing precious metals ecosystems. The company’s goal is to drive the future of gold markets using an automated vending machine model — one where individuals can purchase, sell and trade gold with ease and efficiency using the GOLD crypto asset.

The company aims to make its native GOLD tokens the unit of trade for these transactions, exchangeable for real gold via a process that verifies the quality of the metal traded by small sellers using the blockchain. Because of the importance of ensuring that gold on exchanges be of a certain quality, GoldMint has rated its crypto assets against the London Bullion market (LBMA). In other words, one GOLD crypto asset equates to one ounce of gold on the LBMA, which is rated 999 in purity. Therefore, any gold that becomes a part of GoldMint’s ecosystem must possess that pure or derived level of gold content from weight.

Of practical significance is the company’s comprehensive peer-to-peer (P2P) solution that allows businesses such as pawnshops to raise credit. Moreover, GoldMint seeks to deliver on a feature called “vending gold,” introducing something it calls the “Custody Bot.”

When asked about the roadmap ahead, founder and CEO Dmitry Pluschevsky had this to say:

“We plan to build a global P2P system of crediting secured by gold so that some people would be able to help others regardless of politics and without risk for both sides.”

Custody Bot and the Future of Gold Vending

Gold vending reflects a new approach to an old concept: The Custody Bot buys gold and then a person can purchase the GOLD crypto asset, which is equivalent to a given amount of physical gold. 

Custody Bot is the solution that GoldMint utilizes to ensure that the collateral offered by a business such as a pawnshop can be audited and verified. It provides a means of offering a temporary hold, purity inspection and long-term storage vessel of physical gold on the GoldMint blockchain. Once the Custody Bot has completed the assessment process for the gold, it can be safely stored until it is retrieved via a special code unique to each item stored. This process not only affords a higher level of verifiability, but facilitates the trustworthy delivery of information to the blockchain.

Using this innovative approach, lenders profit when the owner reclaims the stored gold in Custody Bot, or in the case of an unclaimed pledge, when it is sold off by the pawnshop. GoldMint thus serves as a valuable tool for investors seeking to add gold to the blockchain for speed and security, with the added benefit that they can independently verify the purity of their gold.

“One of the next generations of Custody Bot will operate in retail, on the street,” said Pluschevsky. “A new generation of pawnshops in the form of vending machines will appear at each gas station. And the next step will be the home Custody Bot, which will allow you to evaluate the gold items while storing them at home.

GoldMint Crowdsale Ongoing Now

GoldMint’s crowdsale, which commenced on September 20, allows participants the opportunity to purchase MNTP token. This token will eventually migrate over to the blockchain under the name MNT, and will be used to verify the GOLD transactions on GoldMint’s blockchain.

Note: Trading and investing in digital assets is speculative. Based on the shifting business and regulatory environment of such a new industry, this content should not be considered investment or legal advice.

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Interview: Cryptographer Silvio Micali on Bitcoin, Ethereum and Proof of Stake

Mon, 10/09/2017 - 12:48

Silvio Micali is an MIT professor and Turing Award–winning cryptographer known for his work in technologies that form the bedrock of blockchains today: public-key cryptosystems, digital signatures, pseudorandomness and multiparty computations. He is also the co-inventor of the zero-knowledge proof.

In the ’90s, he worked on Byzantine agreement, a protocol for getting nodes in a distributed system to agree on a state change. And in 2012, he and long-time collaborator Shafi Goldwasser were co-recipients of the A.M. Turing Award, essentially, the “Nobel Prize in computing.”

Upon learning about Bitcoin three years ago, Micali turned his attention from mechanism design, which had consumed him for the previous seven years, and dove headlong into creating a proof-of-stake algorithm. His project is called Algorand.

Put simply, Algorand relies on a novel form of Byzantine agreement with only nine expected steps. In each step, committee members, chosen at random in a private lottery, are replaced. The result is a high-security system with a negligible risk of forks.

According to Micali, recent tests show Algorand can process 2 MB blocks in 17 seconds, compared to Bitcoin, which produces a 1 MB block every 10 minutes. (A paper on these results will be presented at SOSP, the biennial ACM Symposium on Operating Systems Principles, later this month.)

In an interview with Bitcoin Magazine, Micali explained why he thinks proof of stake is superior to proof of work, the consensus algorithm that underlies most cryptocurrencies today, including Bitcoin and Ethereum. Although Ethereum, more often viewed as a smart contract platform, aims to transition to proof of stake next year.

Unnecessary Evil

Micali thinks proof of work was a great idea when it first came out, but now that we have seen the consequences, he calls it an “unnecessary evil” for several reasons.

“The first time I heard about Bitcoin, I saw all the difficulties. To me, the main difficulty is the waste of computational resources. That is really appalling,” he said. “It drives up prices and depletes the planet of resources.”

Second, he sees miners as “a new center of power” and an orthogonal force to the real users of the system: the coin holders.

“If five mining pools can control what goes in or does not go in a block, in what sense is the ledger decentralized? You don’t want miners having control over the ledger, particularly when they have low margins, are far away and accountable to no one. I think it is a recipe for disaster,” he said.

Finally, transaction ambiguity does not sit well with him. In Bitcoin, occasionally two blocks are found at roughly the same time, creating a temporary fork in the chain. When that happens, the branch with the greater hash power is elongated, while the other and its blocks “disappear.” If your transactions happened to be in an orphaned block, it will eventually get picked up again in the main chain, but for Micali, the idea is unsettling.

“Every time I see my transaction is in a block, I worry the block may disappear. But never mind anxious people like me; banks may not be willing to take on the additional risk,” he said. “Can you imagine a financial world where wire transfers could be taken back?”  

Natural Democracy

Micali thinks proof of stake is a better option. In proof of stake, there are no miners, just the coin holders. Further, a coin holder’s ability to create or validate a block is based on how many coins in the system he or she owns.

“This is a natural interpretation of democracy,” Micali said. “Your influence in maintaining the integrity of the system is based on how much you are really invested in the system.”  

But there is a catch: creating a proof-of-stake algorithm is hard to do. While several projects claim to have come up with a secure protocol, Micali thinks some of those claims are questionable. “The fact is, people can claim anything they want,” he said.

One of the biggest challenges in proof of stake is the “nothing at stake” problem. If the chain forks, the optimal strategy for any coin holder is to extend both chains to earn additional block rewards or to double spend. That goes against the central design goal of all blockchains: getting users to converge on a single chain.

Some projects are looking at ways to sculpt their proof-of-stake protocols by adding perks or punishments to get coin holders to abide by the rules. As part of that, some proof-of-stake systems require users to put up a type of security deposit or bond.

Micali feels a well-designed proof-of-stake cryptocurrency should stand on its own, however, without extra measures. He thinks bonding opens doors to bad actors.

“Let me ask you, what fraction of your disposable income can you put on the table and not touch?” he said and suggested that honest people will put up only a small amount, ceding control to bad actors with big pockets.

“The danger is that only bad people will give up control over a large amount of money to manipulate the system. And if they earn much more money by misbehaving, they will be happy to lose what they put on the table,” he said.

He also disagrees with the idea of using punishment to get users to fall in line.

“A weak state rules through threats and fear,” he said, comparing the practice to barbaric punishments used by some nations to fight crime. Why do they do it? Because criminals are so rarely caught, he said. “So once they catch one, they disembowel the poor guy.”

He continued, “Do you want to oust somebody who misbehaves? Of course. But a well organized system is one in which you don’t need to punish people.”

Bitcoin and Ethereum

Most people view Bitcoin solely as a cryptocurrency, but Micali thinks the greatest value of Bitcoin and Ethereum are as enablers of smart contracts, in which users can stipulate if-then conditions around payments.  

“At the end of the day, doing only payments is easy,” he said, adding that he did not want to trivialize the problem. “Of course, decentralized payments are better than centralized payments, but what really differentiates a cryptocurrency from any other form of money is that you can actually do a smart contract.”

Based on that, he thinks that both Bitcoin and Ethereum would benefit from implementing the best consensus algorithm available. Currently, both systems are “huffing and puffing,” he said. Bitcoin is constrained to 7 transactions per second, while Ethereum can process only 15 per second, compared to Visa’s 2,000 per second.

“If the blockchain scales, isn’t it better for Bitcoin and Ethereum? If the blockchain has a [mathematical] proof of security, isn’t it better for its users?” he said. “If the blockchain cannot be hijacked by miners who are accountable to nobody and live in some faraway jurisdiction, isn’t that a plus for all users?” Micali thinks so.


The post Interview: Cryptographer Silvio Micali on Bitcoin, Ethereum and Proof of Stake appeared first on Bitcoin Magazine.

China’s ICO Ban Puts GigaWatt In Unique Territory

Mon, 10/09/2017 - 11:00


China has long been a dominant player on the global Bitcoin map. By 2016 over 90% of Bitcoin’s global trading volume took place there. Moreover, mining operations were in abundance due to China’s cheap electricity. It is no coincidence that Bitmain, the world’s largest Bitcoin mining equipment manufacturer, is a Chinese company.


While China still dominates crypto mining and mining equipment manufacturing, the country’s Bitcoin trading volume has fallen. When regulations led to bans on no-fee trading and restrictions on Chinese Bitcoin exchanges in early 2017, Bitcoin trading volumes in China plummeted. Bitcoin trading activity diverted to countries like Japan.

 

At the beginning of September, China issued a ban on Initial Coin Offerings (ICOs), an unregulated cryptocurrency-based crowdfunding practice that attract capital for new startup companies and projects. This regulatory act sent shock waves through the global Bitcoin community.  

 

As part of the ban, authorities requested that ICO participants be refunded for their contributions. Moreover, the People’s Bank of China and China’s central bank demanded that Bitcoin exchanges be closed.


Mining Resilience 

 

As an emerging presence in the global crypto-mining industry, U.S.-based mining solution provider, Giga Watt, stands in unique territory given theses recent developments. Located in America’s Pacific Northwest—in close proximity to a number of power-producing hydroelectric dams—the Giga Watt Project is proving to be North America’s new major crypto mining player.


The Giga Watt Project’s founder and CEO, Dave Carlson, has little concern over China’s ICO ban: “I don't see the ban having a large impact on Bitcoin. I'm not convinced that ICOs are inherently linked to the ecosystem.”


While Carlson believes that Chinese authorities still see value in the rapid growth of cryptocurrency, he thinks that this value has been trumped by their will for regulatory control. However, China’s regulatory developments haven’t affected the the Giga Watt Project’s strategic direction. “Because there are many other blockchain processing opportunities outside of Bitcoin, it’s not even a blip on our radar,” noted Carlson. He added, “Personally, I predict that ICOs will return to China, but only on their terms.”


In the meantime, Carlson will continue to lead the Giga Watt Project’s aim of building a mining network unlike anything before it. Currently, the project has three operating units, with 2.25 megawatts ready for tokenization. In addition, three of Giga Watt’s state-of-the-art Giga Pods are now complete. Access to Giga Watt services will be allocated to token holders on a first come, first served basis.


Blockchain-based Computing


A key takeaway in Carlson’s response to China’s ICO ban is what he envisions for the future. Bitcoin mining will likely pale in comparison to new forms of blockchain-based computing methods, and Carlson sees this as one way the industry will mature and stabilize. “As Bitcoin's value rises, the ability for miners to drive difficulty by adding hashpower becomes harder and harder as much more computing is required.” In this matured industry, Carlson anticipates that Bitcoin’s blockchain will be leveraged, pointing to RSK's smart contract as an example. “I am hopeful that blockchain-based computing will boost revenue and provide new opportunities.”

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