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Internet entrepreneur Kim Dotcom can be extradited to the U.S. where he faces charges of money laundering, copyright infringement and racketeering, a New Zealand court has ruled, the BBC reported. Dotcom said he will appeal the ruling.

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An internal JPMorgan memo reveals that the lender plans to invest $9 billion in technology like robotics and the blockchain, according to Business Insider, which claims to have seen the memo. Daniel Pinto, the head of JPMorgan’s corporate and investment bank, sent the memo, which claims a major priority is to pursue innovative technologies in […]

The post JPMorgan Memo: $9 Billion Slated For Studying Blockchain And Robotics appeared first on CCN: Financial Bitcoin & Cryptocurrency News.

   The Australian Securities Exchange (ASX), the biggest stock exchange in the country-continent is keeping a close eye on blockchain technology, a recent report revealed. The CEO of Australia’s biggest stock exchange, the ASX, has revealed that the exchange is considering blockchain technology as the group is due to upgrade its current system for clearing […]

The post The Australian Securities Exchange Is Keen on Blockchain Technology appeared first on CCN: Financial Bitcoin & Cryptocurrency News.

Bitcoin price found support at $430 (Bitstamp) and 2875 CNY during the past two days. Price action remains directionless with eager profit taking on any move higher, and yet, buyers have prevented a new low in the chart. This analysis is provided by xbt.social with a 3-hour delay. Read the full analysis here. Not a […]

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  The Bitcoin Foundation has appointed 3 new members to the board with the creation of three new member seats. The new members are runners up from the previous industry election and the Bitcoin Foundation — with the new appointments – have also published a draft for a new mission statement. The press office of […]

The post Bitcoin Foundation Appoints 3 New Board Members with a New Mission Statement appeared first on CCN: Financial Bitcoin & Cryptocurrency News.

Bitcoin Press Release: NASCasino is pleased to announce new bonuses of up to 8.888 BTC for new players and promotions where anyone can get 25 free spins for sharing NasCasino on Facebook and Twitter. The niche online bitcoin casino gaming community recognizes NASCasino for providing its discerning players with a premium casino gaming experience, not […]

The post Exclusive Bitcoin Casino NASCasino Reveals Its Bitcoin-Based Bonuses and Promotions to The Public appeared first on CCN: Financial Bitcoin & Cryptocurrency News.

 In a Reuters article published today, bitcoin price is speculated to see a bullish spike in 2016 due to the upcoming halving of mining rewards, due to happen in July 2016. Bitcoin has had a memorable year. Wider adoption; increased trading; the Silk Road investigation with its corrupt agents and bitcoin auctions ; a Russian Ponzi […]

The post Reuters: Bitcoin Price Likely to Scale Record Highs in 2016 appeared first on CCN: Financial Bitcoin & Cryptocurrency News.

An art exhibit focused on money will take place in New York as part of the Partial Mystery Event series with a special focus on cryptocurrency. Emily Faber, founder of the Partial Mystery event series, started the exhibits in her apartment because she “had no idea how to find a gallery space in NYC.” Getting ready […]

The post Art Exhibit In NYC To Feature Pieces On Money, Bitcoin appeared first on CCN: Financial Bitcoin & Cryptocurrency News.

By Jemima Kelly

LONDON (Reuters) - 2016 could prove to be the year that the price of bitcoin surges again. Not because of any dark-web drug-dealing or Russian ponzi scheme, but for an altogether less sensational reason - slower growth in the money supply.

Bitcoin is a web-based "cryptocurrency" used to move money around quickly and anonymously with no need for a central authority. But despite being championed by some as the digital money of the future, it is often dismissed as a currency that is too volatile to invest in.

The reason 2016 looks set to be different is that bitcoin's price is likely to be driven in large part by similar factors to a traditional fiat currency, following the age-old principles of supply and demand.

Instead of being controlled by a central bank, bitcoin relies on so-called "mining" computers that validate blocks of transactions by competing to solve mathematical puzzles every 10 minutes. In return, the first to solve the puzzle and thereby clear the transactions is currently rewarded with 25 new bitcoins, worth around $11,000 .

But when it was invented in 2008 by the mysterious "Satoshi Nakamoto", who has yet to be identified, the bitcoin program was designed so that the reward would be halved roughly every four years, in order to keep a lid on inflation. The next time that is due to happen is July 2016.

Bitcoin was also designed to emulate a commodity by having a finite supply of 21 million bitcoins, which will be reached in around 125 years, up from around 15 million today. Hence, also, the use of the term "mining".

Daniel Masters, co-founder of Jersey-based Global Advisors' multi-million dollar bitcoin hedge fund, started his career as an oil trader at Shell in the mid-1980s and spent 30 years trading commodities before crossing over to bitcoin.

Now he reckons the price of bitcoin could test its 2013 highs of above $1,100 next year and then pick up speed to rise to $4,400 by the end of 2017.

That would be due to a number of factors, Masters said, including an increased acceptance of payments in bitcoin by big companies and authorities, rapidly growing interest and investment in the "blockchain" technology that underpins bitcoin transactions, and also more demand from China as its currency weakens and the economy slows.

But taken in isolation, the halving of the mining reward will increase the price of bitcoin by around 50 percent from where it is now, Masters reckons. That is despite the fact that the halving of the reward has always been inevitable - a factor that would already have been accounted for in pretty much every other market.

"If OPEC (Organization of the Petroleum Exporting Countries)came out tomorrow and said, 'in six months' time we're going to halve oil production', the oil price would instantaneously react. But the bitcoin market is still in its infancy, and I don't think that factor is discounted into the price fully," he said.

DECENTRALIZED DIGITAL ASSET

Bitcoin's price has already almost doubled in the last three months, putting it on track for its best quarter in two years. It hit $500 last month for the first time since August last year, with Chinese demand for a pyramid scheme set up by a Russian fraudster cited as a reason for the price surge.

But Bobby Lee, the chief executive of one of the leading bitcoin exchanges in China, BTCC, reckons there is scope for the cryptocurrency to go much further. He thinks the price could increase by as much as eight times in the time up to the reward halving, taking it as high as $3,500 by next summer.

"Today the worth of bitcoin is $1 per capita in the world (population)," Lee said, referring to the value of all the bitcoins in circulation, around $6.5 billion. "For such an innovative, decentralized digital asset, I say 'boy, are we undervaluing it'. But it takes a while for people to realize that."

The mining reward has already been halved once before, in November 2012, from 50 to 25 bitcoins. The stakes were much lower then, with one bitcoin worth around $12, but nevertheless the price increased by about 150 percent in the preceding seven months - roughly the time left before the next halving.

"It (the halving) dampens supply so, all other things being equal, that puts upwards pressure on price," said Jeremy Millar, partner at London-based financial technology specialists Magister Advisors, who expects demand to continue to increase.

"No one can argue with that fundamental economic principle."

(Editing by Greg Mahlich)

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If one proposal excited attendees at the recent Scaling Bitcoin workshop in Hong Kong, Bitcoin Core and Blockstream developer Dr. Pieter Wuille's Segregated Witness was it. Praised by many within the technical community, Segregated Witness is expected to improve Bitcoin's performance in a number of ways, while some even hope it might be the scaling solution that helps bring some peace back to the Bitcoin community.

The first part of our three-part Segregated Witness series covered how it works. In this second part: What it does.

Increasing the Effective Block Size Without Increasing the Block-size Limit

The benefit of Wuille's Segregated Witness proposal that has perhaps drawn most attention, is that the removal of signatures from 1 megabyte blocks could effectively increase Bitcoin’s block size. This means more transactions per second can be recorded on the blockchain, or in other words, it would allow for a higher transaction throughput. It could do so, moreover, without breaking any of the existing consensus rules - including the block size limit.

Wuille's proposal does introduce a new type of maximum block size. The formula used to calculate this limit is set somewhat arbitrarily: A block without the Segregated Witnesses, plus a quarter of the Segregated Witnesses, must not exceed 1 megabyte. As such, all blocks will seem smaller than 1 megabyte to old nodes, since a quarter of the Segregated Witness (which they don't see) needs to fit in that same 1 megabyte. New nodes will meanwhile see blocks that exceed 1 megabyte, since the actual size of the Segregated Witness is larger than the quarter accounted for.

The exact amount of additional space Segregated Witness opens up depends on the types of transactions new blocks include. If more transactions store more data in the Segregated Witness, as multisig transactions would do, the total size of new blocks increases. This adds up to a new maximum block size of about 1.75 megabyte for normal transactions, and 4 megabyte as a hard cap that’s impossible to exceed even if (almost) all data is squized into the Segregated Witness.

Say Goodbye to Transaction Malleability

But there's another, perhaps even greater advantage: Segregated Witness could take care of Bitcoin's transaction malleability. In fact, this was the original motivation for Wuille and others to explore the Segregated Witness concept.

Transaction malleability is caused by a cryptographic trick to change a signature, without changing what that signature stands for. This can be done, moreover, without the private key used to create the original signature. In Bitcoin's case, this means that anyone can pick any transaction from the peer-to-peer network, and alter the signature into an equally valid signature. This new signature still reflects the exact same data it originally signed, and it can still be verified using the same public key. It doesn't change what a transaction does at all. But because it looks different, it does completely change the transaction ID.

Transaction malleability causes two main problems. First, it messes up the accounting of Bitcoin software that uses transaction IDs to verify whether transactions are confirmed. But perhaps more importantly, transaction malleability severely limits the potential of all sorts of advanced Bitcoin tricks that build on unconfirmed transactions (using their IDs), such as payments channels and the Lightning Network.

Of course, Segregated Witness pulls signatures out of the part of the transaction used to create the transaction ID. So while the signatures in the Segregated Witness could still be changed, this would not affect Bitcoin software using transaction IDs, nor would it matter for payments channels or the Lightning Network, thus setting the stage for the roll-out of additional scaling layers.

Script Versions, or How Bitcoin Can Learn to do Almost Anything

A third advantage of Wuille's Segregated Witness proposal has Bitcoin programmers just as excited as the first two – if not more-so: script versions.

As explained in the previous article, Segregated Witnesses carry scriptSigs that unlock bitcoin. But they carry something else, too: version bytes. These version bytes preface scriptSigs in Segregated Witnesses, indicating what kind of scriptSig it is. If a node reading the version byte recognizes the type, it can tell what requirements must be met to unlock bitcoin in the scriptSig. If a node reading the version byte does not recognize the type, it interprets the scriptSig as an “Anyone can spend.”

This opens up all sorts of new ways to lock bitcoin up in transactions. In fact, it can be used to lock bitcoin up in any way developers come up with. As such, it's impossible to explain how this will be used in the future, since much of this still needs to be invented. But initial ideas include Schnorr signatures, which are much faster to verify than signatures currently in use, and more complicated types of multisig transactions; perhaps even Ethereum-like scripts.

And importantly: Like Segregated Witness itself, these types of upgrades will not break Bitcoin's existing consensus rules. Rather than every single Bitcoin node, only a majority of miners needs to adapt, making them much easier to deploy.

Fraud proofs: the Completion of Satoshi's Vision for SPV

We're not done yet. Segregated Witness could also introduce something called fraud proofs. Originally envisioned by Satoshi Nakamoto, fraud proofs could significantly improve the security of SPV-nodes (or: “light wallets”); Bitcoin nodes that do not verify all transactions on the network or store the complete blockchain.

To check whether a transaction has taken place, SPV-nodes merely scan the blockchain for the relevant transaction ID. If they find it, that means a miner included the transaction in a block. But SPV-nodes do not validate whether the transaction adhered to Bitcoin’s consensus rules. As such, SPV-nodes trust miners to play fair, rather than verify they do. In a worst case scenario, this could even mean that miners pay SPV-nodes with bitcoin created out of nothing, for instance by creating transactions with no inputs, or by awarding themselves excess fees in the coinbase transaction.

These types of problems could be solved by requiring miners to include extra data in the Segregated Witness Merkle Tree, specifying where the bitcoin locked up in all transactions came from, exactly. That way, if a block contains invalid transactions, a short and easy-to-check fraud proof can be constructed by any full node. This full node can send the fraud proof to SPV-nodes, so they know to reject the block.

That said, even with fraud proofs, SPV-nodes would not quite offer the same level of security as full nodes. Most importantly, the fraud proof solution requires that SPV-nodes can communicate with the network free from censorship. (For instance: censorship from government-sanctioned ISPs.) Additionally, SPV-nodes need at least one full node on the network to actually produce the fraud proofs.

Storage

Finally, Segregated Witness could decrease the amount of data Bitcoin nodes need to store on their hard drives. This, again, reduces the burden of running a full node, and brings down the time it takes to sync a node with the network when first installed.

While full nodes typically store all transaction data for all of Bitcoin's history, signatures are reasonably considered expendable after a certain amount of time has passed. Once a transaction is considered valid, confirmed into a block, and secured in the blockchain with proof of work for – say – a year, it could only have been fraudulent if miners were collectively mining on an invalid chain for all that time, and presumably without anyone noticing.

Of course, ridding the blockchain of older signatures is not a purist's ideal, as he might want to verify old transaction data regardless. Fortunately, that's not likely to become a problem either. All it requires is one such purist to seed the Segregated Witness data for everyone else to download.

The third part of this three-part story, to be published tomorrow, will explore exactly what Segregated Witness means for the long-lasting block-size dispute. Thanks go out to Blockstream developers Pieter Wuille and Mark Friedenbach and Ciphrex CEO Eric Lombrozo for provided information and added feedback – not to mention a lot of patience.

The post Segregated Witness, Part 2: Why You Should Care About a Nitty-Gritty Technical Trick appeared first on Bitcoin Magazine.