Coin News

Hong Kong-based bitcoin exchange Gatecoin has joined a startup accelerator backed by Standard Chartered and Chinese Web services giant Baidu.

Australian businessman Craig Wright has been missing since Gizmodo and Wired published parallel investigations into his potential involvement with the creation of Bitcoin—and police raided his home . While the news cycle has moved on, the Australian Taxation Office certainly hasn’t.

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R3 CEV is a New York-based financial innovation firm that Mike Hearn joined as the chief platform officer after his announcement that Bitcoin was a “failed experiment.” R3 focuses on distributed ledger technology and has partnered with 42 banks around the world, such as Goldman Sachs, HSBC and Toronto Dominion, over the past year to create a blockchain consortium of financial institutions.

R3 CEV believes in the value of a private “permissioned” blockchain, rather than a public “permissionless” blockchain. The entire world has access to a permissionless ledger, and it requires a digital asset, such as bitcoin, to operate as a financial incentive to encourage people and businesses to contribute their computing power to secure the network. This also deters fraud as the network grows larger. Only a select group of trusted parties is required to maintain a permissioned blockchain.

Since its foundation, R3 has operated mostly outside of public scrutiny. In an interview with Coindesk this past summer, founder David Rutter and partner Todd McDonald explained that “R3 CEV has been playing a quiet yet concerted game to bring blockchain technology to the world’s largest banks and financial institutions.”

Recently though, R3 has emerged from the shadows, and company leaders have begun to discuss their plan publically and how it affects bitcoin and the financial services industry. Rutter announced in a press release that “partnering with a broad range of institutions has always been central to our strategy [and] securing the backing of 42 of the world’s leading banks demonstrates the level of interest in our initiative, and we now look forward to exploring collaboration with non-bank institutions and expanding our already diverse group.”

On January 14th The Hutchins Center on Fiscal and Monetary Policy at the Brookings Institution hosted a livecast with a group that included Charley Cooper, the managing partner of business development and marketing at R3 CEV, in what was probably the most thorough explanation of their perspective on the market.

Cooper explained that the focus at R3 has shifted over the past couple years to distributed ledger technology after discussions with both Wall Street bankers as well as technologists. Wall Street bankers have become interested in understanding blockchain technology, and technologists, the ones building the software, need to familiarize themselves with the financial services market anti-money laundering laws and know-your-customer regulations.

Put simply by Cooper in the webcast, “there are amazing technology companies who are making really cool stuff that is totally irrelevant to what the financial services market is doing.” Financial services employees operate in one of the most highly regulated markets in the world, regulations that technologists must understand to ensure their technology has a real-life application.

Cooper adds that there are several instances in history where banking consortiums have come together to successfully improve the banking experience, such as Market Trade Web, FXall and E Speed Broker Tech. In an interview with American Banker, he explains that R3 CEV is building technology to custom fit the needs of the banking consortium, rather than many financial technology companies that are building software before showing banks, only to find their model doesn’t comply with regulations.

The belief at R3 is that innovation is more possible once all the market players are on the same team, rather than the decentralized and open source nature of innovation in the bitcoin blockchain community. In addition, both Cooper and Rutter believe the bitcoin blockchain is not suitable for use on the scale of the financial services market due to its limited block size, the complexity of transactions and regulators not approving of anonymous nodes varying the network. Cooper admitted, though, he might change his mind if regulators began to agree with a permissionless blockchain system.

On January 20th, R3 announced the launch of a private distributed ledger that connects 11 member banks using Ethereum technology and hosted on a virtual private network in Microsoft Azure’s Blockchain as a Service.According to International Business Times, the banks to join the peer-to-peer network first include Barclays, BMO Financial Group, Credit Suisse, Commonwealth Bank of Australia, HSBC, Natixis, Royal Bank of Scotland, TD Bank, UBS, UniCredit and Wells Fargo. The successful completion of this network marks an important step for blockchain technology; it is now being used by the world’s premier financial institutions.

Even if the R3 team is right in that a private network is the best way to stimulate innovation in the financial services industry, there are many applications for Bitcoin and the Bitcoin blockchain in industries outside of financial services. If either Bitcoins’ permissionless blockchain or the permissioned blockchain of the banking consortium picks up more traction in 2016, it will likely have a positive effect on the entire financial technology sector.

The post R3 CEV Takes on Bitcoin with Launch of Private Distributed Ledger Pilot appeared first on Bitcoin Magazine.

While presenting a new report about virtual currencies at the World Economic Forum, Christine Lagarde, the director of the International Monetary Fund (IMF) speaks for virtual currencies and their underlying technology’s potential to become a powerful tool. A new report by the International Monetary Fund praised the benefits and innovation that comes with virtual currencies. […]

The post The IMF Is Talking & Vouching for Virtual Currencies and Blockchain Tech appeared first on CCN: Financial Bitcoin & Cryptocurrency News.

Finance Insider is Business Insider's midday summary of the top stories of the past 24 hours.

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Global stocks are officially in a bear market.

The MSCI World Index fell 20% from its recent peak. The Dow was down 500 points just after noon. WTI Crude Oil fell below $27, its lowest level since 2003. 

In other news, Goldman Sachs reported fourth-quarter earnings that were a beat if you exclude a big one-off settlement. 

Goldman Sachs's CFO Harvey Schwartz later laid out the bull case for the fixed-income business ― which has taken a battering ― on an earnings call. 

And in China news, Wall Streeters are starting to discuss a nasty narrative about China and deflation, and a hedge fund manager who nailed subprime is betting on a huge drop in the yuan.

Here are the top Wall Street headlines at midday -

Investors are no longer in 'denial' - Investors are moving into defensive investments like bonds, cash, and healthcare stocks and away from equities, energy, and banks.

Barclays is slashing its bonus pool by 10% - Barclays is cutting investment bank jobs across its global offices and slashing the bonus pool by up to 10%.

GEORGE SOROS: 'It's always darkest before dawn' - Billionaire George Soros is the best-known, most successful hedge fund manager of all time.

The technology behind bitcoin is coming to high finance faster than anyone predicted - 11 top investment banks have used blockchain technology to do mock trades with each other, signaling a big step towards adopting the technology first developed for bitcoin into mainstream finance.

This is what a stock market crash looks like - When stock bubbles come to a head, they tend to make wild swings in both directions. In other words, they don't just suddenly burst — it's more of a drawn-out, up-and-down process.

Meet the big shot residents of 15 Central Park West - The ultra luxury condominium at 15 Central Park West is home to New York City's most powerful bankers, hedge funders, business tycoons and foreign billionaires.

'Billions,' the new drama Wall Street will be obsessed with, just became Showtime's best-performing premiere ever - "Showtime's new series about high-power Wall Street executives and hedge fund managers, just premiered to 3 million viewers, making it the network's most successful pilot of all time.

Everything a modern gentleman needs to know about how a perfect suit fits - Print this out, tape it to your cubicle.

How 3 stocks decimated David Einhorn's investment performance - The founder of Greenlight Capital had a year to forget in 2015.

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The cryptocurrency, still in testing, could be the closest thing yet to truly anonymous digital money.

The post Zcash, an Untraceable Bitcoin Alternative, Launches in Alpha appeared first on WIRED.

Australian tax authorities are reportedly beefing up their investigation of Craig Wright, who last year was alleged to be bitcoin’s creator.

The U.K.’s chief scientific adviser has urged the government to adopt the blockchain technology that powers Bitcoin to run various public services, BBC News reports.

The recommendation comes in the form of a new report produced by the U.K. Government Office for Science, edited by Sir Mark Walport, chief scientific adviser, which looks at the future of distributed ledger (or blockchain) technology and advocates the use of blockchains for a variety of services.

The report, titled “Distributed ledger technology: beyond block chain,” explores how distributed ledger technology can revolutionize services, both in government and the private sector, and recommends government actions to maximize the opportunities and reduce the risks of this new technology. The stated aim of the report is to decrypt blockchain technology for policy audiences and provide policymakers with the vision and evidence to help them to decide where action is necessary, and how best to deploy it.

In the foreword, Parliament members Matthew Hancock, minister for the Cabinet Office and paymaster general, and Ed Vaizey, minister of state for Culture and the digital economy, say that distributed ledgers will disrupt how we think about and store data, and propose that Great Britain should take a leadership role.

The MPs refer to key national technology assets, including the Alan Turing Institute, the Open Data Institute and Digital Catapult, which are to be put to work to achieve technology leadership and support governmental initiatives.

In March, Bitcoin Magazine reported that the U.K. government would launch a new research initiative to bring together the Research Councils, Alan Turing Institute and Digital Catapult with industry in order to address the research opportunities and challenges for digital currency technology and increase research funding in this area by £10 million (U.S. $14.6 million). Now, the Office for Science proposes new steps to start using distributed ledger technology for public services.

Senior experts from business, government and academia were brought together to assess the opportunities for distributed ledgers to be used within government and the private sector, and to determine what actions government and others need to take to facilitate the beneficial use of distributed ledger technology and to avoid possible harms. The report includes a chapter on the possible government applications in the U.K. – the eventual impact of distributed ledger technology on British society may be “as significant as foundational events such as the creation of Magna Carta” – and a chapter on global perspectives.

“Algorithms that enable the creation of distributed ledgers are powerful, disruptive innovations that could transform the delivery of public and private services and enhance productivity through a wide range of applications,” says Walport in the executive summary. “The electronic distribution of digital cash offers potential efficiencies and, unlike physical cash, it brings with it a ledger of transactions that is absent from physical cash.”

However, Walport notes that the strong association of blockchain technology with Bitcoin represents an important problem when it comes to communicating the potential benefits of distributed ledgers to politicians and the public.

“Bitcoin creates suspicion amongst citizens and government policymakers because of its association with criminal transactions and ‘dark web’ trading sites, such as the now defunct Silk Road,” he says.

According to the report, distributed ledger technologies have the potential to help governments to collect taxes, deliver benefits, issue passports, record land registries, assure the supply chain of goods and generally ensure the integrity of government records and services. In the National Health Service (NHS), the technology offers the potential to improve health care by improving and authenticating the delivery of services and by sharing records securely according to exact rules.

See the report, which is freely downloadable, for the full text of the eight recommendations to the British government. Taken together, the recommendations outline an integrated action plan aimed at achieving a systematic understanding of the technical and regulatory aspects of distributed ledgers, and developing a roadmap.

The Alan Turing Institute, established in 2015 as the U.K.’s national institute for data science and officially launched in November 2015, is expected to play an important role. The report urges the private sector to consider investing in the Institute to support the pre-competitive research that will ultimately facilitate new commercial applications that are robust and secure. This includes work on obvious areas such as cryptography and cybersecurity but also extends to the development of new types of algorithms.

Most recommendations call for further study and road-mapping in a typical bureaucratic language of government documents, but two recommendations outline specific implementation steps:

Recommendation 7: Understanding the true potential of distributed ledgers requires not only research but also using the technology for real life applications. Government should establish trials of distributed ledgers in order to assess the technology’s usability within the public sector.

Recommendation 3: Government could support the creation of distributed ledger demonstrators for local government that will bring together all the elements necessary to test the technology and its application. A demonstrator at a city level could provide important opportunities for trialling and implementing distributed ledger technologies. Innovate UK could use its work with cities in the development of “city deals” to implement the development of a city demonstrator.

The post UK Chief Science Adviser Urges Government to Start Deploying Blockchains for Public Services appeared first on Bitcoin Magazine.

11 top investment banks have used blockchain technology to do mock trades with each other, signalling a big step towards adopting the technology first developed for bitcoin into mainstream finance.

R3, an industry-wide consortium of 42 investment banks looking at the technology, announced in an email that banks "simulated exchanging value, represented by tokenized assets on the distributed ledger without the need for a centralized third party."

In plain English: banks traded toy money and tokens representing shares and commodities with each other over this new, decentralized network that meant they didn't need to go through third party settlement or clearing house. The trades were carried out in R3's lab environment — a safe sandbox for them to experiment in.

'A major step forward'

R3 CEO David Rutter says in an emailed statement: "This is a very exciting development, both for R3 and our member banks, as well as the global financial services industry as a whole."

The 11 banks involved in the proof of concept were: Barclays, BMO Financial Group, Credit Suisse, Commonwealth Bank of Australia, HSBC, Natixis, Royal Bank of Scotland, TD Bank, UBS, UniCredit, and Wells Fargo.

R3 says the "transition from vision to execution" represents "a major step forward for the application of distributed ledger technology across the entire industry."

Distributed ledger technology is a more general name for blockchain technology. The blockchain was developed as part of cryptocurrency bitcoin as a way for it to circumvent central banks. The technology uses complex cryptography and the wisdom of the "crowd" to verify transactions, rather than a traditional middle man. Records are shared across multiple servers and must be checked against each other, rather than a central ledger.

It essentially allows cash transactions on the web — rather than telling your bank to put money in your friends bank account, you just deal directly with your friend.

Ironically, while bitcoin was developed by anarcho-libertarian developers who wanted to circumvent traditional finance, big investment banks are now going crazy for the technology.

Just like people, banks still have to go through "trusted middlemen" when dealing with each other. Settlement and clearing houses make sure everyone gets paid the right amount and no one is screwed over.

But blockchain's technology and its inbuilt security and trust checks mean they can cut out this process and deal directly. This, in turn, cuts down costs. Santander estimated last year that the technology could save banks as much as $20 billion.

UBS says in a white paper released this week:

When money is transferred between banks, each institution needs to engage in a labor-intensive process of ledger reconciliation to confirm that the correct sums have been processed. A blockchain system, by eliminating the need for such a process, could allow banks to cut middle-skill administrative labor.

The technology also has the potential to make everything a lot quicker. UBS' whitepaper says transactions processing times could be cut from as much as 4 days to as little as 15 seconds. That frees up for capacity to do other things.

Not just a 'talking shop'

We've known for a while that banks were excited about blockchain, or distributed ledger technology. But the speed of this proof of concept is a bit of a shock.

R3 only just closed its doors to new members in mid-December and last week the CEO of a European blockchain startup told me he thought R3 would just be a "talking shop" where banks engage in blue-sky thinking about how to use the technology. Clearly they're prioritizing actions over words.

But while banks are quick off the mark when it comes to experiments, real world adoption is likely still a long way off. Banks face two big hurdles: the sheer size and complexity of their networks; and regulation. Stephen Pair, CEO of BitPay, told BI last year he thinks it will take banks at least 5 years to adopt blockchain technology.

R3's "sandbox" environment used Ethereum technology, an open source blockchain that's an alternative to bitcoin's blockchain, and was hosted on Microsoft's cloud platform Azure.

The trading proof of concept is just "the first in a series of projects" looking at uses for blockchain technology, R3 says.

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NOW WATCH: 5 of the most successful 'Shark Tank' stories of all time

Ciphrex CEO and Bitcoin Core Contributor Eric Lombrozo gave what was perhaps the most in-depth talk at the recent Blockchain Agenda Conference in San Diego. While most of the other presentations and panel discussions focused on topics such as regulation and disruption of traditional financial institutions, Lombrozo’s talk mainly focused on the technical side of things. In particular, the highly-experienced information security specialist spoke about the possibilities for scaling Bitcoin to many more users in the near future.

During his presentation, Lombrozo covered three key options for scalability that could eventually allow the network to handle much wider adoption of the digital cash system. Although all of the attention has been on a potential increase in the block-size limit over the past year, Lombrozo did not discuss this potential change to the Bitcoin protocol.

More Efficient Cryptographic Proofs

Cryptographic proofs are not something usually discussed in the wider Bitcoin community, but Lombrozo believes that finding more efficient methods of proving some piece of knowledge via cryptography could be helpful for scalability. He explained:

“We need to think in terms of scripting systems which are optimized for efficient proofs. A lot of the computational problems are not really easily amenable to this kind of stuff, but luckily, a lot of the kinds of problems we’re interested in for these kinds of things do offer efficient proofs, which means it’s much easier to verify the proof than to construct the proof.”

It’s possible that this option for creating a more efficient Bitcoin network is not often discussed because it is quite technical, but MIT’s Madars Virza gave a talk on the topic at Scaling Bitcoin Hong Kong. In his talk, Virza talked about the role of zero-knowledge proofs for Bitcoin scalability.

In Lombrozo’s presentation, he noted that some of the new breakthroughs in cryptography still need some time before it would make sense to incorporate them into Bitcoin:
“Some of the more cutting-edge crypto stuff, like zk-SNARKs, are still too fresh to apply to these financial networks, but there are potential ways in which we could generalize them to solve all kinds of different problems.”

Zerocash, a system for truly anonymous digital payments, leverages zk-SNARKs to fix many of the privacy issues in Bitcoin.

More Options for Transaction Validation

Another opportunity for better Bitcoin scalability comes in the form of more options for transaction validation. Lombrozo explained that not every transaction needs to be completely validated before someone may feel comfortable with accepting it as real:

“Since it doesn’t make sense to have every single node validate every single transaction by every single other node (because this will never scale), we need to have a way to have more of a spectrum where we can allow nodes to have partial validation where they may not be 100 percent sure, but if they’re 99.999 percent sure that things are correct, then it can cut down on a lot of the validation costs. That might be worth it.”

An often-used example here is that one’s purchase of a morning coffee at Starbucks doesn’t necessarily need to be broadcast and validated by every Bitcoin node in the world.

Lombrozo also added that opt-in models for trusting others could also be useful:

“We can have opt-in trust models where you could trust a server with the task of validation, but you choose to do that. It’s not something where you’re forced to do it.”

The key point here is simply giving users more options when it comes to transaction validation. If less validation is needed on a particular transaction, then accepting a lower trust model can help unclog blocks.

Off-Chain Protocols

The third way to scale Bitcoin discussed by Lombrozo was off-chain protocols. These are the sorts of options that take transactions off the blockchain and onto federated servers or other low-trust networks. Lombrozo seemed extremely bullish on this option for scaling Bitcoin during his talk. He stated:

“One of the most exciting developments this year is the development of off-chain protocols. I think this is one of the most exciting areas that we’ve seen. I think this is probably the most interesting development that has occurred since Bitcoin was created.”

Examples of off-chain bitcoin transactions include: transactions between Coinbase users, the Lightning Network, Open Transactions, and micropayment channels (best illustration being Streamium).

Although the focus of Bitcoin’s scalability debate is still on the block-size limit right now, it’s clear there are still many options out there to consider. Bitcoin Core and the increasingly-popular Bitcoin Classic will both continue to make cases for their scalability solutions in the coming months.

Kyle Torpey is a freelance journalist who has been following Bitcoin since 2011. His work has been featured on VICE Motherboard, Business Insider, RT’s Keiser Report, and many other media outlets. You can follow @kyletorpey on Twitter.

The post Eric Lombrozo on 3 Ways to Scale Bitcoin That Don’t Involve the Block Size appeared first on Bitcoin Magazine.

Bitcoin price caught a fire today and is pushing a green candle to the skies. 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 Price Analysis Time of analysis: 15h00 UTC Bitfinex 4-Hour Chart […]

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The 10 men, all in their 20s and with Dutch nationality, were arrested in coordinated raids at 15 locations across the Netherlands

Blockchain startup R3 has revealed the completion of a new test that involved a total of 11 banks connected to a peer-to-peer decentralized distributed ledger. The experiment is likely to figure among the earliest examples of multiple banks using a distributed ledger to exchange value, successfully. In a press release today, R3 co-founder Todd McDonald […]

The post An Early Blockchain Experiment by Global Banks Is Revealed appeared first on CCN: Financial Bitcoin & Cryptocurrency News.

First Global Credit, a Switzerland.-based financial services company that allows bitcoin to be used as collateral margin to trade stocks, has expanded its range of equities to include shares traded on the London Stock Exchange, according to Finance Magnates. A trading and financial services company that focuses on bitcoin, First Global Credit allows bitcoin holders to […]

The post First Global Credit Adds London Stock Exchange To Bitcoin Margin Trades appeared first on CCN: Financial Bitcoin & Cryptocurrency News.

Dutch prosecutors have announced the arrest of ten men suspected of using Bitcoin to launder up to 20 million euros (approx. $21.8 million). A major international investigation that reportedly involved officials from countries including the United States, Australia, Lithuania and Morocco has resulted in the apprehending of ten men in Netherlands, Dutch prosecutors announced today. […]

The post International Investigation Sees Dutch Nab Bitcoin-Euro Launderers appeared first on CCN: Financial Bitcoin & Cryptocurrency News.

BitFury is moving ahead with development on a previously announced prototype for a bitcoin-enabled Internet of Things device.

Although not a completely new idea, Wayforpay.com has announced that it will begin allowing bitcoin payments for food delivery. Wayforpay is a Ukrainian payment platform with online shopping carts for websites. The company is growing with the announcement that it will add Bitcoin as a payment option to the EcoPizza website. The site does not accept bitcoin […]

The post Wayforpay.com to Begin Accepting Bitcoin for Pizza appeared first on CCN: Financial Bitcoin & Cryptocurrency News.

Although Bitcoin has been operating and expanding its clout since 2009, it is only the leaps and bounds taken in the last two years that confirm the belief (additionally, for some, the fear) that the cryptocurrency will indeed become a mammoth force to be reckoned with in the ecommerce industry. And not in a matter […]

The post Ecommerce at Large Coming Around to the Idea of Bitcoin appeared first on CCN: Financial Bitcoin & Cryptocurrency News.