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Former Federal Reserve chairman Ben Bernanke offered both muted praise and criticism when discussing bitcoin in a new interview.

Bitcoin is designed as a peer-to-peer network, where nodes randomly connect to other nodes. Transactions and blocks are transmitted over this network by these nodes, until each node receives all the latest transactions and blocks. This works quite well, as the distributed model makes Bitcoin relatively censorship-resistant; there is no central point of control to shut down or pressure into compliance.

But there are other, more centralized alternatives for transmitting transaction data, too. The best known of these is “the” relay network, introduced in 2014 and maintained by Bitcoin Core developer Matt Corallo: “It's centralizing, but, hopefully, democratizing.”

On propagation

Corallo's relay network serves two distinct purposes. First, it adds diversity to Bitcoin. Rather than just needing to rely on the peer-to-peer network, Bitcoin users can opt to receive transaction data and blocks through an alternative channel. This makes it harder to successfully attack the Bitcoin network; the relay network functions as a fallback. But the second, and more important reason, is a potential decrease of network latency.

Speaking to Bitcoin Magazine, Corallo explained:

The peer-to-peer code in Bitcoin Core is pretty gnarly. It's stable and it works, but it's not very efficient, and it's not very fast. The resulting network latency is a problem, especially for miners. It can sometimes take 10, 15 seconds before they receive newly mined blocks. If you're a miner, 10 seconds is like 1.5 percent loss in revenue. That is potentially a big deal. You don't want that.”

Some of the bigger miners (typically mining pools) have therefore come up with an alternative solution. Rather than using the peer-to-peer network to transmit new blocks, they have created an alternative – private – network. If one of these miners finds a new block, that miner immediately sends it over to the other miners on their private network, meaning all these miners can start mining on the new block immediately.

The problem, of course, is that this disadvantages all miners not using this private network. When a select group of miners starts mining on a new block faster than other miners this select group gets a head start every time one of them finds a block. This is especially worrisome because it is typically the bigger miners who have the time and resources to set up private networks. Smaller miners might, therefore, become less profitable and eventually drop off the network entirely, which centralizes mining even further.

A Leg Up

Corallo's relay network is essentially a hub-and-spoke network, which consists of servers set up in eight well-connected Internet traffic hubs: New York, Seattle, Amsterdam, Beijing, Tokyo, Singapore, Hong Kong and Novosibirsk (located in central Russia). Additionally, the relay network uses a fairly basic compression algorithm. Any Bitcoin node can connect to the nearest hub on Corallo's relay network, and send and receive transactions and blocks to and from other connected nodes.

But unlike Bitcoin's original peer-to-peer network, Corallo's relay network is centrally controlled: by Corallo. This means that users of the network need to rely on Corallo, most importantly for maintenance. (Though this doesn't stop the peer-to-peer network from propagating transactions and blocks in the mean time, of course.)

The relay network is not the most reliable thing,” Corallo acknowledged. “There is no service-level agreement ... once in a while servers go down and I don't fix it right away... sometimes I'm sleeping, or drunk.”

But absent better alternatives, the relay network can still save small miners on cost, meaning they can increase their profit, and remain competitive, Corallo hopes.

It's democratizing in the sense that larger miners do something like this already,” he said. “The relay network gives smaller miners a leg up, since they don't need to spend a proportionally large portion of their resources to establish these types of relay networks themselves. So it's centralizing in some ways, but, hopefully decentralizing, in others.”

The post How a Bitcoin Backbone Gives Small Miners a Leg Up: Matt Corrallo's Relay Network appeared first on Bitcoin Magazine.

In April, Bitcoin Magazine reported that global payment provider Align Commerce launched a public beta of its payments platform, the first in the industry to use the Bitcoin blockchain transparently to enable faster and cheaper global payments.

Transactions appear as traditional payments at both the sending and the receiving end, but Align Commerce pipes the transfer through the blockchain instead of using several intermediate banking relays, halving both time and cost of traditional international wire transfers.

Now Align Commerce announced that it has raised a $12.5 million Series A round led by Kleiner Perkins Caufield & Byers (KPCB), The Wall Street Journal reports . This is the first investment of the renowned venture capital firm in a blockchain-based fintech company.

Align estimates that small businesses currently pay $50 billion in wire and exchange fees. Forbes notes that, while wire transfers typically incur fees from the initiating bank, intermediaries and the recipient’s bank, plus the foreign exchange fee, Align charges only a low 1.9 percent foreign-exchange rate.

“We were looking for applications of the blockchain for the last couple of years in ways that could build real businesses and add real value that weren’t at the mercy of the currency valuation which will move up and down and all over the place,” said KPCB general partner Randy Komisar, who will join Align’s board, in a statement reported by Forbes . “And of those blockchain companies, we invested in Align, because we believe it’s a market that’s underserved, with a CEO who understood it well and early traction from customers who reinforced that value.”

The Align Commerce platform is targeted at mainstream business-to-business (B2B) payments. The users on both ends don’t have to know that such things as Bitcoin or the blockchain exist; the only thing they have to know is that the platform processes payments faster and cheaper, with a single 1.9 percent fee paid by the party converting the currency.

“The Align Commerce platform is not only a creative and transformative use of the blockchain technology, but a fundamental reimagining of how global payments can and should be done,” said Komisar in an interview quoted by PYMNTS . “We see incredible potential in Align Commerce as a superior digital path to convenient, transparent cross-border transactions.”

If a company located in the United States buys from a seller located in the Eurozone, the seller invoices in Euros, and the buyer pays in U.S. dollars plus the currency conversion fee. The fact that Align Commerce can reduce transaction fees by as much as 50 percent while still making a profit is an indication of the radical change that the blockchain can bring to the financial industry.

Transparency is another important benefit of the Align Commerce platform, which permits real-time tracking of all operations.

“The $24 trillion cross-border payments market is growing at a breakneck pace, expected to eclipse $54 trillion by 2022, despite a highly inefficient and expensive system in which businesses spend over $50 billion on wire and foreign exchange fees, wait up to seven days for transactions to complete, and have no visibility into the process,” said former Western Union executive Marwan Forzley, now founder and CEO of Align Commerce, in April.

“The blockchain offers a ready alternative," Forzley said. "The Align Commerce Payments Platform is the first in the industry to use this global rail to help small and medium-sized businesses quickly collect and receive payments in their local currency while avoiding high wire fees and various hidden fees.”

TechCrunch notes that Align isn’t the only company looking to get into cross-border payments based on blockchain technology and Bitcoin. Uphold -- the re-branded Bitreserve covered by Bitcoin Magazine in October -- also plans to use the blockchain as a transparent layer for cross-border transactions.

The post Align Commerce Raises $12.5 Million, Launches Blockchain-based Cross-border B2B Payment System appeared first on Bitcoin Magazine.

 Hello friends, and welcome back to TCBTC, TechCrunch’s itinerant and sporadic podcast on all things bitcoin. This week my glorious comrade in arms, John Biggs, and I discussed two things: A recent Quora post discussing the current growth of bitcoin usage and the 21 bitcoin-mining computer. Read More

 Blockchain, blockchain, blockchain! It’s not the bitcoin anymore, right? Right (probably.) Join me at Disrupt London where I’ll be talking to Steve Waterhouse of Pantera Capital, Vitalik Buterin of Ethereum, and Austin Hill of BlockSteam. If anyone can make sense of the blockchain vs. bitcoin argument, it’s these guys. Waterhouse is an entrepreneur who is now partner at… Read More

Bitcoin payroll startup Bitwage has wrapped up a period of fundraising during which it brought in a total of $760,000.

This time last year, CEX.io and its Ghash.io were a force to be reckoned with. The company had achieved nearly 51% of Bitcoin mining, albeit not directly but through the use of a pool. While allegations never were too loudly amplified that the company would use the power to conduct 51% attacks against the Bitcoin network, many were concerned about the decentralization of mining. The company was also the target of DDoS attacks as a result of its unapologetic approach to centralizing hashing power. Over the course of this year, however, the company has dropped off in importance, at least […]

The post Ghash / CEX Scaling Back Mining Pool appeared first on CCN: Financial Bitcoin & Cryptocurrency News.

The investment banking world's infatuation with blockchain — the technology made famous by bitcoin — continues.

5 more banks have signed up the industry-wide group looking at how to use the technology in mainstream banking. They are: BNP Paribas, Canadian Imperial Bank of Commerce, ING Bank, Macquarie Bank, and Wells Fargo & Co.

That takes the total number of banks now backing the R3 initiative to 30. R3 is a startup in its own right, headed by a former Wall Street veteran, but it has done a hell of a job bringing all the rival banks together.

R3's CEO David Rutter told us the plan is to build the "fabric" of blockchain technology for banking and build out some use cases.

The blockchain is the software that both powers and regulates cryptocurrency bitcoin. In its most basic form, it records ownership of bitcoin — money — and transactions, one person paying another.

The software uses a distributed ledger to police the network, meaning a certain proportion of the vast network must sign off on any transaction before it can go through. The replaces the need for a "trusted middleman" to sit in between parties in a transaction.

While the original blockchain underpins bitcoin, banks are keen to create a similar network that can help it do things that settlement and international payments. More way-out possible uses include registering ownership assets and securities on the network.

R3 on Thursday also unveiled the team who will be working on bringing blockchain technology to mainstream banking:

• CTO Richard Gendal Brown, formerly the executive architect for banking innovation at IBM;
• Chief engineer James Carlyle, the former chief engineer for personal and corporate banking architecture at Barclays;
• Lead platform engineer Mike Hearn, an ex-senior software engineer at Google and one of the first bitcoin users;
• Architecture consultant Ian Grigg, inventor of the Ricardian Contract and co-inventor of triple entry accounting;
• and head of research Tim Swanson, market researcher who has authored a study on bitcoin.

Rutter says in an emailed statement: "The combined strength of our technology team and the diverse global footprint of our member banks — now including five more members — clearly differentiates us and puts us in a unique and exciting position within the distributed ledger space.

"The R3 collaborative model is the best way to quickly, efficiently and cost effectively deliver these new technologies to global financial markets. We look forward to welcoming more players to our growing team as the initiative continues to develop and evolve."

Here's the full list of the dream team of banks signed up to the R3 blockchain working group:

Bank of America, Barclays, BBVA, BNP Paribas, BNY Mellon, Commonwealth Bank of Australia, CIBC, Citi, Commerzbank, Credit Suisse, Deutsche Bank, Goldman Sachs, HSBC, ING Bank, J.P. Morgan, Macquarie Bank, Mitsubishi UFJ Financial Group, Mizuho Financial Group, Morgan Stanley, National Australia Bank, Nordea, Royal Bank of Canada, Royal Bank of Scotland, SEB, Societe Generale, State Street, Toronto-Dominion Bank, UBS, UniCredit, and Wells Fargo.

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EU interior and justice ministers will gather in Brussels on Friday for a crisis meeting in the wake of the Paris attacks

Bitcoin Press Release: Bitcoin Gambling Guide becomes every Bitcoin player’s one-stop shop with the set of upgraded features available around the clock to users across the globe. With the recent website revamp, the industry leader launches with the much improved functions and services directed at a dynamic, harmonious, and revolutionary Bitcoin gambling experience. Bitcoin Gambling Guide continues to be the premier source of information about Bitcoin gambling websites, games, software, and many more. More than being a resource website when it first launched, it gives players the power to be in control by enabling them to sign up for an […]

The post Bitcoin Gambling Guide Delivers Dynamic, Upgraded Features appeared first on CCN: Financial Bitcoin & Cryptocurrency News.

Cryptocurrency exchange CCEDK has officially launched Obits, a new currency, that aims to reward holders with a share of its revenues from transactions, referrals plus income from new bourse initiatives. Whilst at the pre-sale stage until a full public launch next month, Obits can be bought with Bitcoin and fiat currencies like US dollars.

Bitcoin trading has kept within a narrow range for the past three days, swinging price between $314 and $345. Intermittent sell-offs are followed by slower periods of buying, and for now there is no clear end in sight for this cautious cycle. This analysis is provided by xbt.social with a 3-hour delay. Read the full analysis here. Not a member? Join now and receive a $29 discount using the code CCN29. Bitcoin Trading and Price Analysis Time of analysis: 13h02 UTC OKCoin-3Mth 1-Hour Chart From the analysis pages of xbt.social, earlier today: Slow price action, and the outlook for the […]

The post Bitcoin Trading Remains Cautious appeared first on CCN: Financial Bitcoin & Cryptocurrency News.

Interior and justice ministers from the European Union have organized a crisis meeting this Friday to plan an effective crackdown of anonymous payment method and virtual currencies to curb terrorism funding. In a direct reaction to the recent Paris terror attacks, European Union countries have planned an emergency meeting this Friday in Brussels, Belgium, to convene and collaborate on ideas to implement and strengthen controls over electronic and anonymous payment methods. A draft conclusion obtained by Reuters notes that EU ministers will urge EU’s executive arm – the European Commission to enforce new measures. An excerpt from the draft read […]

The post Breaking: European Union Crisis Meeting Planned to Call for Control of Virtual Currencies after Paris Attacks appeared first on CCN: Financial Bitcoin & Cryptocurrency News.

Countries in the EU are reportedly planning to crack down on virtual currencies such as bitcoin in an attempt to tackle the financing of terrorism.

R3, a  bank consortium working to create industry standards for using block chain technology in banking, has released a paper claiming efforts to modify public block chains to secure off-chain assets using colored coins and metacoins do not provide secure, legal settlement finality of those assets. Titled “Watermarked Tokens and Pseudonymity on Public Block Chains,” the paper argues that a distributed public ledger that secures off-chain assets cannot be both legally authoritative and censorship-resistant. Written by R3 researcher Tim Swanson, the 78-page paper goes into a lot of detail on this very complex subject. To achieve the goal of issuing, […]

The post R3 Group Paper: Colored-Coin Watermarking Won’t Secure Off-Chain Assets appeared first on CCN: Financial Bitcoin & Cryptocurrency News.

Bitcoin Press Release: mBit Casino noticed an increase in demand for their sportsbook service on mBitCasino.com since the New York Attorney General announced restrictions on US bookmakers. As the New York Attorney General announced that the state would be shutting down the “illegal gambling operators” DraftKings and FanDuel, New York bettors have been left behind pondering their next move. With both organizations filing law suits seeking injunction against the order, this appears to be a long, drawn out battle over rights to operate in one of the most populated regions of the world leaving bettors around the state in limbo. […]

The post Leading Bitcoin Sportsbook mBit Casino Report An Increase In Bitcoin Bettors After Restrictions On US Bookmakers appeared first on CCN: Financial Bitcoin & Cryptocurrency News.

The digital propaganda machine of ISIS has run into trouble staying afloat on the clear net, and so like most other banned information, they're heading to the deep web. While this may severely limit the ability of the group to dutifully indoctrinate new members who aren't skilled in the arts of Tor, the group hopes the sites will at least stay online.

The post ISIS' Digital Caliphate Going Dark - Darknet, That Is appeared first on CCN: Financial Bitcoin & Cryptocurrency News.

In 2014, Indian prime minister Narendra Modi outlined a vision for a “Digital India,” a place in which all citizens in all parts of the country are connected, informed and part of a global economy.

Other hallmarks of this new India would be a transparent government with strong ties to its citizens where government services could be accessed from mobile devices.

EPaisa, a free point-of-sale app, has become India’s first mobile point-of-sale provider to integrate bitcoin as a payment option, becoming a part of this new, Digital India.

“To digitize India, you need to digitize the point of sale,” says ePaisa’s CEO and co-founder Siddharth Arora. EPaisa was founded in 2012.

“Bitcoin is currently becoming more and more popular in India because there is no need to provide any payment information,” says Arora. “However, the issue of accepting it has become a timely question for Indian merchants.”

The ePaisa app comes with a credit-card sized card reader to securely accept chip-and-PIN card payments and has now integrated Bitcoin, prepaid wallet and invoice payments for businesses. Merchants can request a bitcoin payment by letting their customers scan a QR code and receive the funds in their bank account the next day, free of charge. EPaisa works on any smartphone or tablet in India.

In 2013, ePaisa was awarded TechCrunch’s “Most Disruptive Company” and made it to the 2014 Global Red Herring Top 100 as well as Asia’s Top 100 awards.

The app works in 32 languages, it is free and works on all smartphones and tablets running on Android and iOS. They plan on introducing Apple Pay, Android Pay and other forms of payments for the Indian business owner.

With options like contactless payments, Apple Pay and bitcoin,” says Arora, “customers expect to pay however they want. Given this trend towards cashless shopping, not able to accept these modes of payments means lost sales for Indian merchants. We do not want that. We want to empower them to conduct any form of transaction and give the buyers a satisfying experience of making a purchase. With this new feature, we hope to offer our merchants more ways to accept payments and stand true to our commitment of enabling commerce.”

EPaisa expects that the user experience will be no different for the sellers. It works as follows:

At the point of sale, when the customer wants to pay for a product with bitcoin, the ePaisa merchant taps the bitcoin icon in the ePaisa POS application. As a result, a QR code pops up with the due amount, and the customer will scan that code using his or her bitcoin wallet app.

Prime Minister Modi’s vision for a seamless digital economy is materializing because of companies like ePaisa, which continues driving bitcoin adoption in the East.

“India has had huge success with prepaid wallets for online transactions,” Arora said. “We are enabling businesses to accept these wallets even for offline in store sales. Walk into an ePaisa-enabled store and you can make a payment with one of the top 10 wallets in India. We hope to power 25,000 businesses across all major metro cities in India by end of this year.”

The post ePaisa Brings Bitcoin Payments to Merchants Across India appeared first on Bitcoin Magazine.

A bitcoin vending machine in front of a store in Keene, N.H. turned a year old last week, drawing people from throughout the region, according to the Concord Monitor in Concord, N.H. The machine, which could be the only public bitcoin vending machine in New England, draws attention from its association with the libertarian Free State Movement. Ian Freeman, a member of the Free State Project who hosts a live talk show, says people drive up from Boston, Mass. and New York City since the machine is the only pubic bitcoin machine anywhere in New Hampshire, Massachusetts, Vermont, Maine or […]

The post Bitcoin Machine Turns One Year Old In New Hampshire, Symbolizing The Libertarian Free State Movement appeared first on CCN: Financial Bitcoin & Cryptocurrency News.