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In adding to the recent stance taken by Russian regulators and official authorities, Russian president Putin’s counselor has reportedly stated that accepting bitcoin in Russia is “a crime”. Newly appointed counsel and advisor on the internet German Klimenko, has reportedly claimed that accepting bitcoin as a payment instead of Russian rubles, is unacceptable and is […]

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 Chalk it up to the Snowden Effect. Although it has been nearly three years since Edward Snowden turned the world on its head by releasing a trove of highly sensitive documents, the ripples of his decision are still being felt broadly. To that end, the European Union recently finalized the text of what looks to be the world’s single most significant — and severe — data privacy… Read More

An advisor to Russian president Vladimir Putin has reportedly spoken out against bitcoin.

The long-lasting block size dispute has catapulted into the center of attention again. One of the most talked about developments is Segregated Witness, of which a public testnet iteration – SegNet – was launched in January. The innovation as recently proposed by Blockstream co-founder and Bitcoin Core developer Dr. Pieter Wuille is a centerpiece of a scalability “roadmap” set out by Bitcoin Core.

To find out where the broader development community stands on Segregated Witness, Bitcoin Magazine reached out to library and wallet developers, those who will need to do the heavy lifting in order to utilize the innovation once rolled out.

In part 8 of this series: NBitcoin developer Nicolas Dorier.

Segregated Witness

Nicolas Dorier is the CTO of Metaco, an open asset (colored coin) company that helps financial institutions emit fiat currency on the blockchain. Dorier is also lead developer of NBitcoin, the main .NET library for Bitcoin development, and he wrote a free ebook on Blockchain Programming: Blockchain Programming in C#.

Dorier already implemented full Segregated Witness support into NBitcoin, and launched a basic block explorer and transaction parser and checker on Segnet. He also briefly contributed to Segregated Witness development itself.

“Segregated Witness is a net win, there is not any downside to adopt it at all,” Dorier said. “It is one of the two pieces of the puzzle – the other being OP_CSV – to make Bitcoin scale to millions of users, by making LN highly effective. I am also very excited by the new method to sign transactions, which now includes the value of outputs being spent. This is huge from a security perspective for webwallets and hardware wallets, as it prevents [the] user from adding too much fees by mistake. And last but not least, it increases the capacity of Bitcoin. I expect Segregated Witness adoption to follow an ‘S-curve’; wallets will jump on it very quickly.”

While Segregated Witness has been criticized as being a complicated solution, Dorier’s experience suggests otherwise. According to Dorier:

“From an implementation perspective it was relatively easy. I would say it took a little more than two or three days for NBitcoin support. I had to re-factor internal stuff to make it easier for NBitcoin’s users. Once implemented in NBitcoin, adding Segregated Witness to my block explorer was just a matter of updating the relevant package and redeploying it. Smartbit, another block explorer, has already done this as well, and can attest to the simplicity.”

Soft Fork

Roll-out of Segregated Witness on the Bitcoin network is currently scheduled for April. Once a super-majority of miners agrees on the solution, Segregated Witness will be activated, and it can be used by wallet and app software.

Among other benefits, this means that anyone using the new possibilities will use only about two-thirds to half the space in the available 1 megabyte blocks. These transactions get to pay a lower fee, and more transactions can be processed on the Bitcoin network.

But this strategy is being contended by the recently launched Bitcoin Core fork Bitcoin Classic. Bitcoin Classic most likely plans to deploy a block size increase to 2 megabyte blocks through a hard fork once 75 percent of hash power agrees, and a four-week “grace period” for all full nodes on the network to switch to the new rules.

Bitcoin Classic’s strategy has not gathered much support among library and wallet developers, however.

“Let’s be clear: Segragated Witness is the fatest way to bump the block size,” Dorier explained. “The migration to Segregated Witness does not need to be synchronized between service and wallet providers. In other words, anyone can receive Segregated Witness transactions even if their wallet did not upgrade – though in that case you’d have to trust on miners for validation.”

Hard Fork

Dorier does believe the block size limit will need to be increased through a hard fork a bit further down the road.

“Even with 1 megabyte blocks, Segregated Witness, and the Lightning Network deployed, Bitcoin will only be able to cater some 14 million users,” Dorier said. “Thanks to Segregated Witness, such an increase is not strictly needed for another year. But if there is consensus about raising the block size limit – and it’s clear it won’t hurt the network – it should be done nevertheless.”

But Dorier does hope this change will eventually come from the Bitcoin Core development team, rather than Bitcoin Classic, explaining:

“Core has proven to be reliable over the past years. All of their contributions to Bitcoin reached the highest standard of software development. Their commits speak for themselves. So I don’t support any ‘change of governance.’ In my opinion, Bitcoin Classic was pushed for political reasons; to try to get the power out of Bitcoin Core’s hands by some unproven team for unknown purposes. I will personally only support a 2 megabyte hard fork with 90 percent hash power vote, and a grace period of a year. This would make it clear the goal is not to raise a war against Bitcoin’s best contributors.

Even if Bitcoin Core doesn’t commit to a specific date, saying something like, ‘We will propose to do it sometime next year’ would fix a lot of the drama. It would also prevent a disastrous hard fork which could result into a split. What Bitcoin Classic proposes is the most dangerous thing that can happen to Bitcoin right now.”

For more information on Segregated Witness, see Bitcoin Magazine’s three -part series on the subject, or part 1 , part 2 , part 3 , part 4 , part 5 , part 6 and part 7 of this development series.

The post NBitcoin's Nicolas Dorier: Segregated Witness Fastest Way to Bump Block Size appeared first on Bitcoin Magazine.

Although scalability (the block size limit) has been the main topic of conversation in the Bitcoin community over the past year, this controversy has also brought up another important subject for the peer-to-peer digital cash system: governance. Bitcoin Core Contributor Peter Todd is no fan of Bitcoin XT, but he does like the fact that Mike Hearn’s alternative implementation of the Bitcoin protocol brought the topic of governance to a wider audience.

So how does Bitcoin governance work? Blockchain Capital Managing Partner Brock Pierce was recently asked this question by Jason Calacanis on This Week in Startups, and he described the checks and balances that exist between different participants in the Bitcoin ecosystem.

A Developer Has to Write the Code

Pierce described Bitcoin governance in layers, noting that a developer must first write code that becomes an option for users of the system:

“The system actually has multiple layers. One, a developer has to write the code and put it forward. It really goes through a peer-review type of process where it gets vetted because it’s a very public process. It’s an open-source project; that’s what it is.”

Some are worried about the perceived centralization currently found in the Bitcoin development process, but in reality, developers have no power over what code Bitcoin users decide to run on their computers. Although Bitcoin Core is currently the reference implementation of the Bitcoin protocol, the five developers with commit access to that particular software client do not have any sort of tyrannical power over the system.

The Consensus of Miners

Once a developer has written some code, it is then up to miners to decide whether they should switch to that new software or stick with the code they’re currently running. Miners even have the ability to not upgrade their software if they do not agree with a change made by the development team behind the current reference implementation of the protocol.

During his interview, Pierce noted much more than 51 percent of miners need to agree on any proposed changes to Bitcoin’s consensus rules:

“The people that are running the infrastructure have to come to an agreement. The miners have to say yes, and then they need to run it, process a certain number of blocks, and you actually need more than 51 percent. You really need – call it 90 percent. You need [social] consensus of those miners.”

The level of social consensus among miners needed to implement a change that would cause a hard fork differs depending on whom you talk to. Bitcoin Foundation Chief Scientist Gavin Andresen would say 75 percent of miners is enough for a hard fork, while the developers behind Bitcoin Core would like to see “near-universal agreement” before implementing such a change. The Chinese Bitcoin community has also decided it will only accept a hard fork to a 2-megabyte block size limit if 90 percent of the network hashrate agrees to it. Having said that, it’s unclear whether they would be willing to switch to Bitcoin Classic in order to make that change.

Users Choose Which Coin Has Value

The last level of Bitcoin governance is the user base. After all, bitcoin miners are only going to mine on a blockchain that actually has value. Pierce explained the role of Bitcoin holders and Bitcoin companies in Bitcoin governance:

“The miners are also influenced by the other parties, which would be the companies: the Bitcoin exchanges, the wallets, [and] the payment process. What happens is you go through this process of a hard fork where you get two versions of the software running, which means now everyone’s coins have been replicated into two wallets. Now, whichever one the payment processors accept as real – they start to have an influence.”

This Week in Startups host Calacanis noted the similarities between the participants in the Bitcoin network and the three branches of government in the United States:

“It’s almost like the government where you have the executive branch, the legislative branch [and the judicial branch].”

The recent launches of Bitcoin XT and Bitcoin Classic have been the first serious tests of this governance model. Bitcoin Core has been able to avoid a hard fork for the time being by implementing Segregated Witness via a soft fork , but there is near-universal consensus on the need for an eventual hard fork to a larger block size limit in Bitcoin.

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.

Photo Hans Splinter / Flickr(CC)

The post The Checks and Balances of Bitcoin Governance appeared first on Bitcoin Magazine.

Bitcoin price pushed to $392 (Bitstamp) and, today, attempted the high again but failed. Once again in tandem with gold, bitcoin price fell away from the high and now approaches support. Will it break or will it bounce? This analysis is provided by xbt.social with a 3-hour delay. Read the full analysis here. Not a […]

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Bitcoin does not need to scale. While Satoshi Nakamoto might have arbitrarily designed a 1MB  block size into the Bitcoin protocol with little explanation, many industry people forget that, just because that amount was arbitrary, does not mean the protocol must scale now or ever. The people who feel this way – in what essentially […]

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Bitcoin Press Release: With almost 5000 users, Bitcoin mining platform Bitminer.eu offers the markets easiest mining system. While still allowing access to cutting-edge technology, 99.9% up time and a generous referral program. Bitminer.eu enables users worldwide to mine Bitcoin fast and secure and has since launch in November 2015 gained almost 5000 users. In order […]

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It’s early days in February, following a volatile January for the price of Bitcoin. In recent days, the cryptocurrency has swelled again, with a high pushing beyond $390, gaining over $20 in the space of a day. The Bistamp Price Index started yesterday, February 4th at $368.55 to rise through the day, leading to a […]

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Go anywhere near the upper echelons of a bank or finance firm right now and there's one buzzword you'll hear over and over again — blockchain.

First invented to underpin bitcoin, blockchain technology uses decentralized record keeping and the scrutiny of the "crowd" to allow people to trade bitcoin on a public network without working through a trusted middle man like a bank or clearing house. Complex cryptography keeps the records from being tampered with once they're signed off on.

The world of finance has worked itself up into a frenzy over how much money this technology could save if adapted to mainstream banking. Banks could trade assets directly with each other instead of waiting for up to two days for a third party to settle the transaction.

But, says itBit CEO Chad Cascarilla, there's more to blockchain than just budgetary hype. Not only does the technology have the potential to cut costs, it could also solve one of the biggest problems the financial system faced during the 2008 crash.

"One of the big failings that [the crash] exposed was in the books and records system — who owns what when," says Cascarilla.

Part of the reason credit dried up in the crash was because banks and other financial institutions struggled to say exactly who owned what and as a result it was hard to judge their exact credit-worthiness. Without knowing that, people were reluctant to lend.

Cascarilla says: "In the financial system you don’t actually know because it’s all moving around and there’s many days of settlement risk and it’s very hard to track the actual beneficial ownership of an asset — a stock, a bond, whatever."

"You can’t tell where the risk lies — that’s really an accounting problem, a databasing problem. We still have the same level of access depth now, nothing’s changed since then. Now the government has just said we can’t allow anyone to fail."

He adds: "That’s what we saw blockchain potentially solving, because we had come from that area and that’s what led us to create itBit."

Blockchain digitally records who owns what and can be inspected by everyone who has access to it — both are crucial in allowing bitcoin to function as a digital currency.

If the technology were adapted to, say, securities or gold, a bank could simply query the blockchain to make sure a trading partner owns what it says it does.

Transactions over the blockchain are also much faster than working through existing systems, so counterparty risk — the risk that the person you're trading with goes bust before you complete a deal — is reduced too. That's another bonus for financial stability.

New York-based itBit, founded in 2012, runs a bitcoin exchange but has also developed Bankchain, an off-the-shelf blockchain solution for banks and other financial institutions that can be adapted for everything from gold trading to clearing securities.

Cascarilla is currently in conversation with around a dozen banks and financial firms, with several partnerships and proof of concepts under way. "We’ve got to the point where the rubber hits the road," Cascarilla says. He declined to name the partners itBit is working.

Check back on Sunday to read a full interview with itBit's Chad Cascarilla on Business Insider.

Join the conversation about this story »

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Factom, a company intending to put land rights on the blockchain, has taken a considerable amount of flak for their recent failed attempts to establish a blockchain based land rights regiment. The company highlighted in a statement the difficulty of making progress in an industry has followed the same process for centuries. “Every land title […]

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The invitation-only Satoshi Roundtable is set to convene for its second year, this time playing host to discussions on bitcoin scaling.

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The post Bitcoin Casino BetCoin Launches Tor Enabled Anonymous E-Gambling on Darknet appeared first on CCN: Financial Bitcoin & Cryptocurrency News.

Bitcoin Press Release: Bitcoin PR platform Bitcoin PR Buzz and Bitcoin marketing agency Coinpoint are pleased to announce a strategic partnership. To better serve the needs of Bitcoin and digital currency tech start-ups worldwide, Bitcoin PR Buzz and Coinpoint are pleased to announce a strategic partnership. Bitcoin PR Buzz will handle the press release needs […]

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Economic sanctions against Iran have been lifted, but some sanctions still apply. A pair of attorneys at the global Pillsbury law firm claim that screening rules still exist when trading with Iran, which means complications for anyone in the U.S. and European Union (EU) doing bitcoin transactions with parties in Iran, according to City A.M., […]

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According to authorities in China, a peer-to-peer lending company Ezubao defrauded investors of more than $7.6 billion, using the funds on gifts and salaries. The executives at the company are accused of destroying evidence in a business now determined to be a Ponzi scheme. The charges come as China’s stock market faces steep declines. Authorities […]

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An Israeli bitcoin startup focused on enabling bitcoin purchases with credit cards has recently closed a $7m Series A funding round.