How Airbitz Hopes to Keeps Bitcoin Decentralized on Mobile Wallets

Airbitz’s New Features Allow Bitcoin to Remain Decentralized on Mobile Wallets

Airbitz is one of the more popular mobile bitcoin wallets among those who believe in the digital asset’s core tenet of decentralization. Recently, Bitcoin Magazine caught up with Airbitz CEO Paul Puey to get his thoughts on preserving Bitcoin’s decentralization in a smartphone environment.

“Decentralization has always been a key goal of our wallet, but of course balanced with usability,” Puey told Bitcoin Magazine. “While we present a login interface that mirrors a centralized, hosted solution, our wallet can still function even if Airbitz servers are 100% down. This is a unique proposition that is non-existent in the cryptocurrency or legacy technology space.”

Recently, Airbitz have added two features that point to the bitcoin wallet’s commitment to a decentralized economy: LibertyX integration and the ability to point one’s mobile wallet to a specific full node. Puey discussed these two features with Bitcoin Magazine, in addition to what Airbitz will be working on in the future.

LibertyX Integration

Earlier this year, a LibertyX plugin was added to the Airbitz wallet. This allows Airbitz users to find stores where they can buy bitcoin for cash from within their mobile wallet.

LibertyX is a service that allows people to purchase bitcoin with cash from a local store. A map of participating stores is available on their website, and amounts of up to $1000 worth of bitcoin can be purchased at these locations per day.

When purchasing $200 worth of bitcoin or less from LibertyX, a verified phone number is all that is needed to make a purchase. Amounts above $200 require further ID verification.

LibertyX users are able to receive their bitcoin after giving a cashier cash and a code generated from the LibertyX app on their phone in some locations, while other stores require that the user enter a PIN code found on their receipt on the LibertyX app after making a cash payment.

When asked if Airbitz may eventually roll out an integration with some form of P2P bitcoin exchange in a manner similar to Mycelium’s Local Trader functionality, Puey responded, ”At this point, we will continue to promote our integration with LibertyX. We believe they provide a great user experience and price for those looking to acquire bitcoin for cash, and it requires significantly less engineering to implement than a local trader type feature.”

Point to Your Own Full Node

Another feature that was recently added to Airbitz is the ability to point the bitcoin wallet to a full node of a user’s choice. Puey explained the importance of this feature to Bitcoin Magazine.

“Bitcoin democratizes access to financial services, but part of that democratization is choice — choice [as to] what services you use and support. The ability to choose your own node gives users the choice to connect to a node that implements the protocol they prefer, helping them put their vote on how they would like to define the future of Bitcoin.”

If a bitcoin user is not operating their own full node, then they are trusting someone else to make sure the rules of the network are being properly followed. By allowing users to choose a specific full node, Airbitz is making sure their users can choose who they trust with the job of the enforcement of Bitcoin’s consensus rules. Of course, users can also point their Airbitz wallets to their own full nodes.

The ability to choose a full node is also important when it comes to hard forks, as those who are not operating their own full nodes do not get a say in potential changes to the protocol rules.

What Else Is on the Way?

For now, Airbitz is mostly focused on their Edge Login SDK, which allows their Edge Security platform to be used for applications other than Bitcoin.

“You’ll see features and functionality really geared towards our Edge Login SDK and supporting our decentralized app partnerships like Augur and Wings,” said Puey. “We aim to significantly grow the list of partners utilizing Edge Login, and you’ll soon see new functionality that will help drive that effort.”

Puey added that Airbitz will continue to focus on the aspects of decentralization that they believe will extract the biggest value out of bitcoin and cryptocurrency.

“The concepts of decentralized ownership of value, decentralized private key security, decentralized access to the blockchain, and even decentralized development of the core protocol have been well promoted and supported by Airbitz,” said Puey.

The post How Airbitz Hopes to Keeps Bitcoin Decentralized on Mobile Wallets appeared first on Bitcoin Magazine.

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Four Visions for Scaling Bitcoin: A State of Digital Money Panel

Four Visions for Scaling Bitcoin: A State of Digital Money Panel

At the recent State of Digital Money event in Los Angeles, Bitcoin scaling was the topic of conversation for a panel consisting of Airbitz CEO Paul Puey, derivatives trader Tone Vays, Yours CEO Ryan X. Charles and Bitcoin Core contributor Eric Lombrozo. During the panel discussion, each participant was able to share his vision for how Bitcoin should be scaled to handle a much larger userbase.

Ciphrex CEO and Bitcoin Core Contributor Eric Lombrozo

For Lombrozo, scaling Bitcoin is about getting the greatest gains in terms of throughput increases while also limiting the amount of risk and security vulnerabilities involved in those improvements.

“Obviously, if you have just a few entities that are validating the transactions for everyone, then that creates a point of attack or a single point of failure,” said Lombrozo. “Part of the whole philosophy of Bitcoin is you should be able to validate your own transactions.”

Lombrozo added that scaling Bitcoin means users are able to validate their own transactions without necessarily being forced to validate everyone else’s transactions as well.

“That’s the trick,” said Lombrozo.

An example of this method of scaling Bitcoin is the Lightning Network, in addition to other Layer 2 protocols.

From Lombrozo’s perspective, using a blockchain for every transaction is like going to court every time a deal is made with a counterparty. The Lightning Network allows users to interact directly rather than dealing with the blockchain as a third party of sorts to process the transaction.

In the past, Joseph Poon, who is a co-author of the original Lightning Network white paper, has shared similar comments related to the use of Bitcoin’s underlying blockchain as a court for smart contracts.

“Instead of viewing [the blockchain] as simply a payment system, if you view it as a smart contracting system, which enables the blockchain to act as a dispute mediation system, viewing the blockchain as a judge is a lot more understandable and a lot more powerful,” said Poon at the 2016 MIT Bitcoin Expo.

Lombrozo added that second-layer protocols like the Lightning Network act as a sort of paper IOU to bitcoin’s gold — except in the case of the Lightning Network, the user knows they will always be able to redeem the paper for gold.

In addition to Layer 2 protocols, Lombrozo would also like to see different signature schemes implemented in Bitcoin to lower the resource requirements of operating a full node. Schnorr signatures are an example of such an improvement that has been in development for Bitcoin.

Another key point made by Lombrozo during the panel discussion was that different players in the Bitcoin ecosystem desire different features in the protocol; for example, long-term holders may not care as much about $10 on-chain transaction fees as those who have built businesses around the use of the blockchain for coffee purchases or other low-value transactions.

In summary, Lombrozo referred to a user’s ability to only need to validate their own transactions (while still remaining secure) as the “low-hanging fruit” of scaling Bitcoin.

Yours CEO Ryan X. Charles

While Charles claimed he was happy to see progress made on the eventual activation of Segregated Witness (SegWit) via the activation of BIP 91, he also added, “SegWit doesn’t go far enough.”

From Charles’s perspective, SegWit will not sufficiently lower on-chain transaction fees, which he sees as the key issue for users at this time. In his view, much lower on-chain transaction fees are needed for mainstream adoption of Bitcoin to occur.

According to Charles, the main disagreement between various parties when it comes to the best way to scale Bitcoin has to do with how much transactional activity should happen on the blockchain, as opposed to secondary layers of the network.

“I am very much in favor of radical increases to the block size,” said Charles.

Charles added that it would take 30 years to send every person in the world a bitcoin transaction with the current 1MB block size limit.

“That just doesn’t work from the point of view of mainstream adoption of bitcoin,” said Charles.

Charles also noted that the Lightning Network white paper stated that a 130MB block size limit would be necessary for mainstream adoption to be possible, even with various Layer 2 scaling options.

According to Charles, the key question to answer is: How does Bitcoin get from 1MB to 10GB blocks?

“Computers get faster and cheaper,” said Charles. “It doesn’t just have to be technical software and cryptographic optimizations.”

Derivatives Trader Tone Vays

When Vays spoke about his vision for scaling Bitcoin, he first noted that the digital cash system may not be able to do all of the things that were promised in the early days. He specifically mentioned privacy, security, instant transactions and cheap payments as examples of features that were promised by Bitcoin enthusiasts back in 2013.

“In reality, having all of those things at once is almost impossible,” said Vays. “There’s a chance Bitcoin can’t do all that.”

Vays reiterated Lombrozo’s point about different users wanting different features in Bitcoin. In his view, the censorship-resistant properties of the system should be viewed with the highest level of priority.

“The reality is a censorship-resistant payment method is way more important,” said Vays. “You have so many other ways to pay for your cup of coffee, but you don’t have a lot of ways to donate to Wikileaks. You don’t have a lot of ways to buy “other” things…”

Last year, Vays published a post on his blog where he examined some of these use cases involving censorship resistance.

Vays added that he trusts the current group of contributors to Bitcoin Core, the reference implementation of the Bitcoin protocol, to focus on this priority of censorship-resistant digital cash.

For Vays, the next area of focus for developers after the activation of SegWit should be privacy-focused improvements, such as MimbleWimble and Confidential Transactions.

Airbitz CEO Paul Puey

Before talking about anything else, Puey stated that he is very much for the activation of SegWit. However, he then shared his belief that much more on-chain capacity is needed on the Bitcoin network, as Charles had previously stated.

“We’re not going to be able to live with a 1MB block, and it was an arbitrary number,” said Puey.

Puey added that computers are now four to five times more powerful than when the block size limit was originally added to Bitcoin by the system’s creator. He also indicated that the correct “magical number” to define the block size limit is hard to figure out, which is why he believes the free market should decide.

“I don’t think the developers should make that decision,” said Puey.

Puey did not elaborate on how the free market would be able to make this decision. It’s unclear if he was talking about Bitcoin Unlimited’s concept of emergent consensus or simply users choosing between different blockchains with different block size limits.

The Airbitz CEO then prefaced the rest of his comments with the fact that he still has a tremendous amount of respect for the people who have been contributing to Bitcoin Core over the years as they’re trying to solve an incredibly hard problem.

Puey noted that he, as a developer, knows his limitations when it comes to developing a proper user experience for software applications.

“How many of you people want the developers designing the user experience of your protocol, your application [or] your website?” Puey asked the audience.

In Puey’s view, the idea that every Bitcoin user is going to run their own full node, even at a 1MB block size limit, creates a flawed user experience and will prevent the technology from being adopted by the masses.

“Every party in this debate wants decentralization, but they all define it differently,” Puey added.

While Puey suggested that more users running their own full nodes is helpful, he also shared his belief that having greater adoption of bitcoin as a currency would also help the system become more resilient to attackers.

“The more people that are using it, the more that the economy is dependent on it, the harder it is to stomp out a technology,” said Puey.

Puey concluded his response to the scaling question by stating that he was happy to see BIP 91 help end the stagnation in the adoption of protocol improvements.

The full panel discussion was streamed on Periscope by Civic Business Development Manager Vivek Kasarabada and can be viewed in its entirety here.

The post Four Visions for Scaling Bitcoin: A State of Digital Money Panel appeared first on Bitcoin Magazine.

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Lamassu’s Zach Harvey Shares Data on the Growing Use of Bitcoin ATMs

Lamassu’s Zach Harvey Shares Data on the Growing Use of Bitcoin ATMs

Lamassu is a bitcoin ATM manufacturer that started in 2013 with the goal of making it “as simple as possible to get bitcoin.” There are now hundreds of these bitcoin ATMs around the world, and one of Lamassu’s co-founders, Zach Harvey, recently shared some data related to how these machines are used at a Bitcoin meetup in Milan.

While a recent article in the New York Post warned bodega owners against putting bitcoin ATMs in their stores due to potential use by darknet market customers, Harvey stated his belief that most of the bitcoin ATM users are using the devices for speculation on the bitcoin price, which he sees as the biggest use case for the digital asset right now.

According to Harvey, Lamassu set up their business in a decentralized, distributed manner where they manufacture the machines in Portugal and then sell them to operators around the world.

“The reason we did this in a way that is more distributed is because we felt the system would be a lot more robust if every one of these individual operators ran the machines themselves, had their own bitcoin wallets from which to send to the end user, had full control over their user data, there would be no single point of failure, and it would also be more in the spirit of Bitcoin,” said Harvey at the recent meetup.

Harvey went on to discuss data related to the use of bitcoin ATMs, problems associated with increased congestion on the Bitcoin network, and a specific example of why he thinks bitcoin is going mainstream.

Who Uses Bitcoin ATMs?

According to Harvey, the people who use bitcoin ATMs are mostly non-tech savvy users who want to get their first taste of digital currency. Harvey added that bitcoin ATMs tend to attract these types of users due to a focus on convenience and user experience. The Lamassu co-founder also claimed that a new user can complete a transaction in 20 to 30 seconds, while someone familiar with the machine can be done in less than ten seconds.

Two of the key selling points of bitcoin ATMs mentioned by Harvey were that users don’t have to go through the process of connecting a bank account with an exchange and the machines can feel like a safer option than meeting up with a random person found on a P2P bitcoin trading marketplace like LocalBitcoins.

According to Harvey, the selling points of bitcoin ATMs are so strong that many people are willing to pay the 10 to 15 percent exchange fees that come with them. He claimed that the more popular bitcoin ATMs get around 50 transactions per day and “sometimes you’ll even have queue at some of the machines.”

“If you’re around a bitcoin ATM, there really is no easier way of [getting some bitcoin],” Harvey later added.

Having said that, Harvey indicated that many of the bitcoin ATMs in the United States include some sort of identity verification due to Know Your Customer and anti-money laundering regulations. The level of identity verification required tends to vary, depending on the amounts involved and where the bitcoin ATM is located.

Harvey also shared data from one of their operators, who owns 14 machines, that indicated these bitcoin ATMs tend to be used for low-value transactions.

“These are people that just want to get the first experience — see what it’s like to get into bitcoin,” said Harvey. “If they really just want to see what it’s about — feel a little bit of the magic of bitcoin — they’re going to start with a low amount.”

“If you look at machine number 13, there’s almost 90 percent of transactions that are under $100,” Harvey added.

According to the data shared by Harvey, 20 to 30 percent of the transactions at these particular bitcoin ATMs are for less than $10.

Screenshot 2017-07-21 at 4.37.14 PM.png

Network Transaction Fees Have an Effect on Bitcoin ATMs

During his appearance at the Bitcoin meetup in Milan, Harvey also discussed the effect that increased congestion on the Bitcoin network has had on bitcoin ATMs. He noted that operators asked for the functionality to add a flat fee or the complete removal of the $5 and $10 transaction amounts when on-chain transaction fees get into the $1–$2 range.

Harvey also noted that roughly 90 percent of the transactions that are usually processed by bitcoin ATMs would become uneconomical if on-chain bitcoin transaction fees reached $10.

Due to demand from their operators, Lamassu plans to add altcoins, such as ether and zcash, to their machines in the coming weeks. These altcoins feature shorter confirmation times, which can be helpful in situations where a user wants to trade their cryptocurrency for physical cash.

“It’s not as secure as a bitcoin confirmation, but it’s more secure than a zero-confirmation of bitcoin,” Harvey said of confirmations on other cryptocurrency networks.

Due to Bitcoin network congestion and poorly implemented fee estimation software on users’ mobile wallets, Harvey noted that some users have had to wait over a day to get their cash out of a bitcoin ATM.

In terms of unconfirmed bitcoin transactions, Harvey stated that not many operators have had issues with accepting them.

Bitcoin Going Mainstream?

Although Lamassu also has machines in North America, Europe, Asia, Australia and New Zealand, Canada has become their most active userbase. According to data shared by Harvey, the Toronto area alone has around 50 Lamassu bitcoin ATMs.

“Several years ago, [this] would have seemed like way too many, and now it’s starting to be something that’s the norm as bitcoin goes more mainstream,” said Harvey of the density of bitcoin ATMs in Toronto.

When sharing data related to the proliferation of Lamassu’s bitcoin ATMs around the world, Harvey showed a screenshot of an email he received from a convenience store owner in Toronto.

Screenshot 2017-07-21 at 4.37.44 PM.png

“Customers are coming into my store, and they’re telling me, ‘Why don’t you have a bitcoin ATM?’” Harvey paraphrased from the email. “Can I please get one placed here?”

This is the same area that already has roughly 50 bitcoin ATMs around it.

Watch the full presentation here.

The post Lamassu’s Zach Harvey Shares Data on the Growing Use of Bitcoin ATMs appeared first on Bitcoin Magazine.

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The Bitcoin Block Clock Jr. Is Half Full Node, Half Work of Art

The Bitcoin Block Clock Jr. Is Half Full Node and Half Work of Art

Bitcoin is a decentralized system of digital cash in which users don’t need to trust anyone else with their money; however, the full benefits of this technology are only seen when users operate a full node on the network. The vast majority of Bitcoin users do not operate their own full nodes, but one man is trying to change that with a piece of hardware he calls the Bitcoin Block Clock Jr.

There are many good reasons for individual Bitcoiners to operate a full node. Full nodes are responsible for validating transactions and blocks on the Bitcoin network. Only by running full nodes can users know with full certainty that they received a valid payment. Additionally, the more users that run full nodes, the more decentralized the Bitcoin network is, making it harder to shut down or corrupt.

And as Sia Co-Founder David Vorick pointed out in a talk at this year’s MIT Bitcoin Expo, those who do not operate their own full nodes do not get a say in the matter when hard forks are deployed on the network. “If you’re not running a full node … your opinion on whether or not you like a hard fork is less relevant because, ultimately, if you’re not validating the rules and someone gives you a transaction following a different rule set, you don’t have a way to detect that,” he explained.

Running a full node, however, has been a rather expensive proposition. As a result, larger, economically invested entities that are better able to support full nodes have had more of a say.

According to Vorick, users can be dragged along with miners and large businesses if the cost of running a full node is too high: “If full nodes are expensive to run, only people who are capable of running nodes really have any say in what happens in a contentious upgrade.”

Matthew Zipkin is the man behind the Bitcoin Block Clock. A sound engineer by trade, he has been working in his spare time on creating full nodes that are both affordable and fun to use. During a recent discussion with Bitcoin Magazine, Zipkin revealed his desire to create a piece of hardware for operating a low-cost Bitcoin full node that isn’t boring.

A Bitcoin Full Node That Isn’t Boring

When commenting on his reasoning for creating the Bitcoin Block Clock, Zipkin pointed to the full node devices made by Bitnodes before they were acquired by 21.

“I always wanted one, but they disappeared when they got bought out, so I decided to build my own,” said Zipkin.

While there are other full node options out there, such as Bitseed, Zipkin wanted to make something that was more than a piece of computer hardware that would sit on the floor next to a router. Zipkin wanted to turn a Bitcoin full node into a work of art, and that’s exactly what he did.

Zipkin built the first version of the Bitcoin Block Clock last year, and it was on display at the SF Bitcoin Meetup’s “Proof of Art” event in May of 2016. After receiving positive feedback at the event and on Reddit, Zipkin decided to make a smaller version of the full node hardware to sell.

The Bitcoin Block Clock included a screen that displayed various live information about the Bitcoin network. Zipkin put the original version of the Bitcoin Block Clock for sale on OpenBazaar and Purse.io, but it hasn’t sold.

“I priced it pretty high because it’s art and I love it and kind of want to keep it,” explained Zipkin. “So of course it still has not sold.”

Creating the Bitcoin Block Clock Jr. With Bcoin

In an effort to create a version of the Bitcoin Block Clock that could be produced at a lower price, Zipkin turned to Raspberry Pi Zero and Bcoin, which is an implementation of the Bitcoin protocol written in Node.js.

“I discovered Bcoin was super easy to install and use, and the codebase was easier for me to review because it’s in Javascript instead of C++, and was built from scratch by a small group of developers (basically just two guys), so everything is really well labeled and consistent,” explained Zipkin.

Of course, the problem with using SPV mode is that it’s not a full node and the device won’t receive all of the information related to a new Bitcoin block as it’s mined on the network. Zipkin opted for the pruned full node option in Bcoin in an effort to lower the system resources required to operate the node on Raspberry Pi Zero.

“With pruning, I get all the fun block details I wanted to display,” said Zipkin. “I even submitted a pull request (which got merged!) to Bcoin to make my application work even easier.”

Zipkin described the LED displays on the Bitcoin Block Clock Jr. as follows:

“The Bitcoin Block Clock Jr. has two LED rings. The outer ring of 24 LEDs indicates recent blocks. Each LED represents 2 minutes, and they “tick” clockwise around the ring. The color of the LED is determined by the block’s version (BIP 9 version bits combined with keywords from the Coinbase scriptSig like “/EXTBLK” or “/EB1/AD6/”). The inner 16-LED ring indicates the progress of the current difficulty period (2,016 blocks, or about two weeks). It starts blue and gradually turns more and more red as the meter fills up. The tiny little display screen indicates some details about the latest block: height, size, version (and extra scriptSig version) and the adjustment period progress. I added a little web interface so I could turn the lights off at night without having to SSH into the Pi every time.”

front-back

An Economical Way to Contribute to the Network

While Zipkin noted that the original Bitcoin Block Clock displays much more information and also comes with full wallet functionality, he also pointed out that the latest model proves that Bitcoin users only need about $20 to run their own full nodes (at least in pruned mode).

Having said that, Zipkin admitted that the Bitcoin Block Clock Jr. can struggle to keep up with the network at times.

“Bcoin plus my Python script and all the GPIO display output just barely hangs in there on this tiny underpowered computer,” said Zipkin. “The Python script has a method to restart Bcoin when it crashes and monitor it as it catches up to the network.”

All of the technical details of the Bitcoin Block Clock Jr. are open source and can be found on GitHub.

Zipkin has now placed the Bitcoin Block Clock Jr. for sale on OpenBazaar and Purse.io.

The post The Bitcoin Block Clock Jr. Is Half Full Node, Half Work of Art appeared first on Bitcoin Magazine.

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The Bitcoin Block Clock Jr. Is Half Full Node, Half Work of Art

The Bitcoin Block Clock Jr. Is Half Full Node and Half Work of Art

Bitcoin is a decentralized system of digital cash in which users don’t need to trust anyone else with their money; however, the full benefits of this technology are only seen when users operate a full node on the network. The vast majority of Bitcoin users do not operate their own full nodes, but one man is trying to change that with a piece of hardware he calls the Bitcoin Block Clock Jr.

There are many good reasons for individual Bitcoiners to operate a full node. Full nodes are responsible for validating transactions and blocks on the Bitcoin network. Only by running full nodes can users know with full certainty that they received a valid payment. Additionally, the more users that run full nodes, the more decentralized the Bitcoin network is, making it harder to shut down or corrupt.

And as Sia Co-Founder David Vorick pointed out in a talk at this year’s MIT Bitcoin Expo, those who do not operate their own full nodes do not get a say in the matter when hard forks are deployed on the network. “If you’re not running a full node … your opinion on whether or not you like a hard fork is less relevant because, ultimately, if you’re not validating the rules and someone gives you a transaction following a different rule set, you don’t have a way to detect that,” he explained.

Running a full node, however, has been a rather expensive proposition. As a result, larger, economically invested entities that are better able to support full nodes have had more of a say.

According to Vorick, users can be dragged along with miners and large businesses if the cost of running a full node is too high: “If full nodes are expensive to run, only people who are capable of running nodes really have any say in what happens in a contentious upgrade.”

Matthew Zipkin is the man behind the Bitcoin Block Clock. A sound engineer by trade, he has been working in his spare time on creating full nodes that are both affordable and fun to use. During a recent discussion with Bitcoin Magazine, Zipkin revealed his desire to create a piece of hardware for operating a low-cost Bitcoin full node that isn’t boring.

A Bitcoin Full Node That Isn’t Boring

When commenting on his reasoning for creating the Bitcoin Block Clock, Zipkin pointed to the full node devices made by Bitnodes before they were acquired by 21.

“I always wanted one, but they disappeared when they got bought out, so I decided to build my own,” said Zipkin.

While there are other full node options out there, such as Bitseed, Zipkin wanted to make something that was more than a piece of computer hardware that would sit on the floor next to a router. Zipkin wanted to turn a Bitcoin full node into a work of art, and that’s exactly what he did.

Zipkin built the first version of the Bitcoin Block Clock last year, and it was on display at the SF Bitcoin Meetup’s “Proof of Art” event in May of 2016. After receiving positive feedback at the event and on Reddit, Zipkin decided to make a smaller version of the full node hardware to sell.

The Bitcoin Block Clock included a screen that displayed various live information about the Bitcoin network. Zipkin put the original version of the Bitcoin Block Clock for sale on OpenBazaar and Purse.io, but it hasn’t sold.

“I priced it pretty high because it’s art and I love it and kind of want to keep it,” explained Zipkin. “So of course it still has not sold.”

Creating the Bitcoin Block Clock Jr. With Bcoin

In an effort to create a version of the Bitcoin Block Clock that could be produced at a lower price, Zipkin turned to Raspberry Pi Zero and Bcoin, which is an implementation of the Bitcoin protocol written in Node.js.

“I discovered Bcoin was super easy to install and use, and the codebase was easier for me to review because it’s in Javascript instead of C++, and was built from scratch by a small group of developers (basically just two guys), so everything is really well labeled and consistent,” explained Zipkin.

Of course, the problem with using SPV mode is that it’s not a full node and the device won’t receive all of the information related to a new Bitcoin block as it’s mined on the network. Zipkin opted for the pruned full node option in Bcoin in an effort to lower the system resources required to operate the node on Raspberry Pi Zero.

“With pruning, I get all the fun block details I wanted to display,” said Zipkin. “I even submitted a pull request (which got merged!) to Bcoin to make my application work even easier.”

Zipkin described the LED displays on the Bitcoin Block Clock Jr. as follows:

“The Bitcoin Block Clock Jr. has two LED rings. The outer ring of 24 LEDs indicates recent blocks. Each LED represents 2 minutes, and they “tick” clockwise around the ring. The color of the LED is determined by the block’s version (BIP 9 version bits combined with keywords from the Coinbase scriptSig like “/EXTBLK” or “/EB1/AD6/”). The inner 16-LED ring indicates the progress of the current difficulty period (2,016 blocks, or about two weeks). It starts blue and gradually turns more and more red as the meter fills up. The tiny little display screen indicates some details about the latest block: height, size, version (and extra scriptSig version) and the adjustment period progress. I added a little web interface so I could turn the lights off at night without having to SSH into the Pi every time.”

front-back

An Economical Way to Contribute to the Network

While Zipkin noted that the original Bitcoin Block Clock displays much more information and also comes with full wallet functionality, he also pointed out that the latest model proves that Bitcoin users only need about $20 to run their own full nodes (at least in pruned mode).

Having said that, Zipkin admitted that the Bitcoin Block Clock Jr. can struggle to keep up with the network at times.

“Bcoin plus my Python script and all the GPIO display output just barely hangs in there on this tiny underpowered computer,” said Zipkin. “The Python script has a method to restart Bcoin when it crashes and monitor it as it catches up to the network.”

All of the technical details of the Bitcoin Block Clock Jr. are open source and can be found on GitHub.

Zipkin has now placed the Bitcoin Block Clock Jr. for sale on OpenBazaar and Purse.io.

The post The Bitcoin Block Clock Jr. Is Half Full Node, Half Work of Art appeared first on Bitcoin Magazine.

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This New Tool Can Help Bitcoin Users Deal With Stuck Transactions

This New Tool Can Help Bitcoin Users Deal With Stuck Transactions

Samourai Wallet is becoming increasingly popular as a wallet that focuses on privacy and security for its users above all else, but a recent tool released by this wallet’s team of developers has a focus on user experience. The new app, called Bitcoin Afterburner, allows users of many different bitcoin wallets to boost transactions that have become stuck due to low fees.

The app works for transactions that have been sent or received, and it is compatible with all BIP 39 and BIP 44 wallets. Examples of compatible wallets include Mycelium, Blockchain.info, Airbitz and Electrum.

To get more details about Bitcoin Afterburner and the concept of fee bumping in general, Bitcoin Magazine reached out to the anonymous CEO of Samourai Wallet.

“Afterburner is one more example of how we are experimenting and developing ways of monetizing our business without resorting to accepting fiat or exposing our users to harmful KYC/AML collection,” said the CEO.

Samourai Wallet monetizes the Bitcoin Afterburner app by adding a $5.99 fee for helping users with their stuck transactions. This fee is added to the child-pays-for-parent (CPFP) transaction that is used to bump the user’s bitcoin transaction fee. CPFP is a process by which the recipient of a transaction can spend the inputs of an unconfirmed transaction by using them in a new transaction that has a higher fee (and incentivizes miners to mine both transactions at once).

The full question and answer session with the CEO of Samourai Wallet can be read below.


Bitcoin Magazine: Will fee bumping eventually become the norm on Bitcoin?

Samourai Wallet: We believe that over time as legitimate transactions start to fill block space, and a fee market begins to mature, wallets that have implemented sophisticated fee management mechanisms such as fee bumping will provide their users with the most competitive transaction fees and confirmation times. The tech is there today, the challenge — and it isn’t a small challenge — is entirely UX. We’re working on this today while others are playing catch-up.

BM: Could you compare and contrast this app with the transaction accelerators offered by ViaBTC and BTC.com?

SW: The difference between the miner operated TX Accelerators is that Afterburner is not an off-chain 1-to-1 with a specific miner. Instead, Afterburner broadcasts a bitcoin transaction to all miners using the standard bitcoin p2p network. All the miners on the network compete for the new transaction with the higher fee, meaning it often works much quicker than the miner operated TX Accelerators. Afterburner was very much a defensive response to the miners who have been blocking SegWit activation and broadcasting empty blocks, some of those same miners are the ones who run the TX Accelerators.

BM: Is Bitcoin Afterburner getting much use so far?

SW: Afterburner has a good number of installs, but not many paid ‘Boosts.’ A few days after we released Afterburner the transaction backlog that was driving up fees and confirmation times completely dried up. The fees required for next block confirmation dropped from 300 sat/b to 25 sat/b. Once the mempool gets saturated again, we will have a much better idea of the potential utility of the app.

BM: Why do you think more wallet providers don’t offer this sort of service?

SW: Many wallet providers — inexplicably the most well-funded ones are the most guilty — haven’t invested any time into proper fee estimation and management until very recently. A misguided industry-driven quest to make the bitcoin wallet for “grandma” resulted in an unusable bitcoin wallet for actual users. Samourai has focused from inception on actual bitcoin users first.

BM: Do you think this sort of fee bumping will eventually be free? Does Samourai Wallet offer fee bumping like this natively or do they need to use this separate app?

SW: Samourai Wallet provides the exact same functionality as Afterburner natively. Afterburner was designed to allow users of any other BIP 44 HD wallet to boost their stuck transaction using CPFP (Child-Pays-for-Parent) under the hood. Hopefully they move over to Samourai Wallet if they are satisfied with the service. In addition to CPFP-based boosting more advanced users may opt-in to RBF-based boosting which is also available in the wallet. Both options are available to Samourai Wallet users free of charge.

The post This New Tool Can Help Bitcoin Users Deal With Stuck Transactions appeared first on Bitcoin Magazine.

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BitPay CEO Stephen Pair Talks Bitcoin Hard Forks, SegWit2x and Sidechains

BitPay CEO Stephen Pair Talks Bitcoin Hard Forks, SegWit2x and Sidechains

BitPay has been very much focused on the issues around transaction capacity on the Bitcoin network lately, which eventually led them to support the New York Agreement (also known as SegWit2x). In comments shared with Bitcoin Magazine, BitPay CEO Stephen Pair clarified the company’s view on the SegWit2x proposal and hard forks more generally.

While Pair has indicated that BitPay is working on off-chain payment solutions unrelated to the often-touted lightning network, BitPay would also like to see on-chain capacity increase by way of a hard fork during this “critical stage” of the technology’s adoption by more users.

In the interview, Pair noted that BitPay understands the concerns around implementing a hard-forking increase to the block size limit, but he also added that SegWit2x is the best option for scaling available right now.

You can read all of Pair’s responses to questions from Bitcoin Magazine below.

Bitcoin Magazine: When you were on Let’s Talk Bitcoin a few months ago, you said you didn’t think a hard fork would be a good idea at the time and Bitcoin would still be fine if it never forked, but now you are pushing SegWit2x. So, what changed?

Stephen Pair: Actually, I said that I didn’t think a contentious hard fork to Bitcoin Unlimited was the best way of increasing on-chain capacity.

Our view is that you need balance between the cost of putting a transaction in the blockchain and the cost of running a full node. Both will get increasingly expensive as Bitcoin adoption grows, but the system doesn’t make any sense to us if either one is substantially more expensive than the other.

At the moment we are in favor of SegWit2x because it is the least contentious option for activating SegWit (which will enable layer 2 payments innovation) while simultaneously alleviating congestion in the short term. Our view might be different if Bitcoin wasn’t at a critical stage of adoption (it is), or 2 MB blocks were a risk to the system (it isn’t), or layer 2 payments were production ready (they aren’t). At some point even layer 2 payments are going to put an immense amount of capacity pressure on layer 1.

The debate in the community is no longer primarily big block vs. small block; it is extremists on either side vs. moderates. SegWit2x allows most of the community to remain on the same chain for at least a little while longer. If SegWit2x fails, then we will likely have a chain split sooner rather than later, which, by the way, isn’t necessarily all bad. It would allow more freedom for people to pursue their vision of scaling. In many ways a split would make Bitcoin twice as likely to succeed.

BM: In a perfect world, would you prefer to activate SegWit now and then take a wait-and-see approach on a hard-forking increase to the block size limit?

SP: No, we believe a modest on-chain capacity increase is important as well. The concerns that many people have about doing so are related to increasing the cost of running a full node, the governance precedent it might set, and that increasing on-chain capacity becomes the path of least resistance and will reduce the incentive for layer 2 innovations. We fully understand and share these concerns, as I believe most supporters of SegWit2x do, but we still believe it’s the best of the available options.

BM: What are your thoughts on implementing a big block sidechain (federated or Drivechain) as a way to increase capacity while not affecting system requirements for running a main chain full node? Or would you prefer an extension block?

SP: There are many fans of Drivechain at BitPay and we are very optimistic about it. In fact, as we were working with the bcoin team on extension blocks, the topic of Drivechain came up quite a bit. I really wanted to figure out if there was an opportunity to enhance the extension block work into Drivechain (and there may yet be). The extension block implementation was simply a way of achieving a block size increase without requiring a hard fork, but we don’t view it as a long-term capacity solution.

I also want to mention UASF. While we like the idea of miners making informed decisions related to consensus rules based on the needs of their users (like us), we think an activist-led deployment of a soft fork is extremely dangerous. The plan for deploying extension blocks would likely have taken a very similar approach. We believe that the only appropriate and peaceful response to a failure to gain the support of the hashrate majority would be to create a safe hard fork with re-org and replay protection. In order to protect itself, we think the community should unambiguously reject the notion of an activist-led soft fork deployment.

Lastly, BitPay is going to follow the hashrate majority in the immediate and foreseeable future. That means that whatever consensus changes the hashrate majority adopts, we will as well. That is really the only option for us and our customers. In the longer term, if a fork of Bitcoin emerges that we think might better serve our needs and the needs of our customers, we may evaluate a transition to that fork. But at the present time, we believe the consensus changes embodied in SegWit2x are acceptable.

The post BitPay CEO Stephen Pair Talks Bitcoin Hard Forks, SegWit2x and Sidechains appeared first on Bitcoin Magazine.

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Dubious Bitcoin Scheme Uses Ethereum ICO to Keep the Game Going

Dubious Bitcoin Scheme Uses Ethereum ICO to Keep the Game Going

There has been an interesting turn of events in the case of the alleged India-based Ponzi scheme known as GainBitcoin. Recently, after a Change.org petition from an outraged GainBitcoin investor surfaced, the group behind the scheme launched an Ethereum ICO (initial coin offering) in an effort to keep the probable scam going.

For those who haven’t heard of GainBitcoin, it purports to be a Bitcoin cloud-mining operation; the operation, in turn, is connected to Amit Bhardwaj, founder of Bitcoin mining pool GBMiners. Some Bitcoin companies based in India, such as Zebpay, have warned their customers about schemes like GainBitcoin due to the unrealistic profits for potential investors that are included in their marketing materials.

With the launch of a new token on Ethereum, combined with a marketing campaign that includes support from major Indian newspapers and Bollywood celebrities, it appears this dubious scheme has new life.

According to Bitsonline, GAW Miners Founder Josh Garza used a similar method when inventing Paycoin to continue making payments related to his Ponzi scheme.

The Launch of a New Token

The new token launched by Bhardwaj is known as MCAP, and it was officially launched by the Bitcoin Growth Fund, which is another one of Bhardwaj’s creations. According to the website, the MCAP ICO raised over $19 million at a sale price of $5 per token. The website also claims nearly five million MCAP tokens were sold, some at a discounted rate.

A video posted on the Bitcoin Growth Fund website has similarities to videos associated with the notorious OneCoin scam. For example, the video projects that, according to “various estimates,” the MCAP price could go as high as $100 by May 2018. The video goes as far as to recommend purchasing the token as the price declines as a way to generate even higher returns.

The MCAP token is said to derive its value from investments in cryptocurrency mining, but the connection between the token and cryptocurrency mining profits is never explained.

Although CoinMarketCap indicates MCAP is ranked 35th out of all digital assets by market cap, the cryptocurrency price site indicates a circulating supply of over 30 million tokens. According to Ethplorer, 100 million MCAP tokens exist, but it’s unclear how many of them are in circulation.

The token is currently trading at a little under $4 on cryptocurrency exchange C-CEX. Veteran cryptocurrency trader Jeremy Ross told Bitcoin Magazine that C-CEX is “one of those exchanges you go to to buy the trash.”

At this time, C-CEX and EtherDelta are the only two exchanges where MCAP is listed other than an exchange on the Bitcoin Growth Fund website. It’s unclear how reliable the trading data on the Bitcoin Growth Fund website is since it is also connected to Bhardwaj. OneCoin also hosted an exchange for their own coin at one time, but the exchange, Xcoinx, is currently offline.

A Cryptocurrency Book for Beginners

Like many scams in the Bitcoin space, MCAP is targeted at beginners who do not know the first thing about these sorts of digital assets. Indeed, Amit Bhardwaj has a new book out, titled “Cryptocurrency for Beginners.”

The book is priced at 1,499 Indian rupees (around $23 USD), but those who purchase the book also receive 1,200 Indian rupees’ worth of MCAP for free, as a way to get started with cryptocurrencies.

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In addition to peddling his new book to Bitcoin-related news outlets, such as The Cointelegraph and NewsBTC, Bhardwaj was also able to get full, front-page ads for the book in two of India’s largest newspapers: Times of India and Hindustan Times.

Multiple Bollywood celebrities with millions of followers on Twitter have also sent out supportive tweets about the book over the past couple of weeks.

So, with the creation of this new token, GainBitcoin now has the ability to make more payouts to their investors because they can only receive their payouts via MCAP. With the Ethereum ICO, GainBitcoin has effectively created more money out of thin air to keep the scheme going.

The post Dubious Bitcoin Scheme Uses Ethereum ICO to Keep the Game Going appeared first on Bitcoin Magazine.

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Op Ed: Drivechains Could Kill Off the Altcoin Market

Op-ed: Drivechains Will Kill off the Altcoin Market

Sidechains have been viewed as Bitcoin’s way of dealing the altcoin market since 2014, when a proposal for a two-way peg between two different blockchains was first proposed in a public setting. Three years later, it appears that drivechains, which are a specific way of implementing sidechains, will be the way in which extensions for Bitcoin are rolled out.

Sidechains remove the need for altcoins by allowing bitcoins to be effectively transferred from one blockchain to another. This means the bitcoin token can be used on any type of blockchain that bitcoin holders demand into existence.

Drivechains Should Be Good Enough

Drivechains were designed by Bloq Economist Paul Sztorc, who started working on the idea after the lack of progress on sidechains slowed down his own project, a decentralized prediction market known as Bitcoin Hivemind.

In Sztorc’s view, the security model for drivechains is not much different than that of the main Bitcoin blockchain because the funds on the drivechain are held in escrow by bitcoin miners. Some developers, such as Peter Todd, have shared technical concerns with merge-mined sidechains in the past, but this concept is likely going to be tried out in the wild, whether the contributors to Bitcoin Core like it or not. Sztorc has also attempted to address these technical concerns through the use of blind merged mining.

In terms of the risk of miners stealing the funds held in escrow, Sztorc has pointed out that a similar risk already exists in Bitcoin: A cartel of miners could theoretically defraud a bitcoin exchange by selling bitcoins on the exchange and then later rewriting the chain history in a way obscures or erases the original deposit so that it appears it never took place.

Drivechains can be added to Bitcoin via soft forks, which means they are backward compatible. If there is sufficient demand for a specific type of drivechain, miners should be happy to mine on the additional chain in order to generate more revenue by way of transaction fees.

Features of popular drivechains could theoretically be soft-forked into Bitcoin by way of an extension block or some other measure, but it’s unclear if this would even be necessary.

What Types of Drivechains Are in Development?

The three main niches that have gained interest from altcoin speculators are microtransactions (lower transaction fees), smart contracts and privacy.

Both Ethereum and Litecoin are said to be useful alternatives to Bitcoin because they have lower transaction fees. One of the first intended drivechains is one with bigger blocks which would allow users to transact with lower fees in a manner that does not negatively affect the decentralization of Bitcoin’s main chain.

Although it’s still unclear if there is much substance behind the drastic rise in Ethereum’s market cap, RSK has built a sidechain focused on complex smart contracts that is a hybrid between a drivechain and a federated sidechain. The RSK platform is currently pegged to Bitcoin’s testnet, and it is expected to launch on mainnet later this year.

In terms of privacy, there are intentions to add a MimbleWimble sidechain to Bitcoin, although the mechanism that will be used to peg the sidechain to Bitcoin is unclear at this time. In addition to MimbleWimble, it’s also possible that a Monero, Zcash or other privacy-focused sidechains could be released if there is enough demand.

There is a full list of sidechain projects available on the Drivechain website.

Alternative Tokens May Still Exist

While drivechains are likely to drive out the need for altcoins, it’s still possible that alternative digital assets that are not attempts at creating a new form of money will exist.

Sztorc’s own project creates a new token, votecoin, which is required for the decentralized prediction market to work. With this setup, bitcoin is used as the transactional currency while votecoins are used as a sort of stake in the network to get the incentives to work properly.

To me, it’s unclear how often these sorts of new tokens will be needed, but there should be no reason for competitors to bitcoin as a form of digital money to exist.

A Chain Split Could Still Cause Problems

One last thing to keep in mind is that a chain split in Bitcoin could invalidate the hypothesis laid out in this article. If there is a split, then the network effects around Bitcoin could be weakened, which would open the door for an alternative cryptocurrency to take Bitcoin’s place.

The supporters of the SegWit2x proposal intend to activate a hard-forking increase to Bitcoin’s block size limit later this year, but it is extremely unlikely that this change will be implemented in Bitcoin Core, which means a chain split is a possibility.

The negative effects of such a situation would depend on the severity of the split and how the market reacts.

If a big block drivechain is prepared in time, it may be able to decrease the attraction some in the Bitcoin ecosystem have toward a hard fork.

Thank you to drivechain developer Patrick Murphy for answering a few questions during the writing of this article.

The post Op Ed: Drivechains Could Kill Off the Altcoin Market appeared first on Bitcoin Magazine.

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Study: Late 2013 Bitcoin Bubble Fueled by Suspicious Trading Activity on Mt. Gox

Study: Late 2013 Bitcoin Bubble Caused by Suspicious Trading Activity on Mt. Gox

According to a recent study by researchers from the University of Tulsa and Tel Aviv University, the massive increase in the bitcoin price in late 2013 was caused by suspicious trading activity on the now-defunct Mt. Gox Bitcoin exchange. The study, which is titled “Price Manipulation in the Bitcoin Ecosystem,” indicates that 600,000 bitcoins were acquired by agents who did not pay for them, and the bitcoin price rose by an average of $20 on days when the suspicious trading activity took place.

“Based on rigorous analysis with extensive robustness checks, we conclude that the suspicious trading activity caused the unprecedented spike in the USD-BTC exchange rate in late 2013, when the rate jumped from around $150 to more than $1,000 in two months,” the study states.

At the center of the study is the infamous Willy bot that was first publicized on a Wordpress blog back in May of 2014.

The paper details the data used for the study, identifies the suspicious trading activity and notes that these sorts of manipulative practices may still be possible today, especially in the altcoin markets.

The Data Used for the Study

This study regarding price manipulation in the Bitcoin markets is based on a data leak of CSV files that included the trading activity on Mt. Gox from April 2011 to November 2013. The researchers behind the study then supplemented that data with more information from bitcoincharts.com.

“We performed additional sanity checks of the data utilizing publicly available historical Mt. Gox trading data from bitcoincharts.[com],” reads the report. “We are confident that the data are high-quality.”

Suspicious Trading Activity

In the leaked data, the report notes that there are suspicious accounts in which the country and state fields are filled in as “??” Many red flags are then found upon further inspection of these accounts.

In the case of one account dubbed “Markus,” the report states that no trading fees are paid and the prices on trades are seemingly random.

“In the end, we have concluded that Markus did not actually pay for the bitcoins he acquired; rather, his account was fraudulently credited with claimed bitcoins that almost certainly were not backed by real coins,” states the report. “Furthermore, because transactions were duplicated, no legitimate Mt. Gox customer received the fiat currency Markus supposedly paid to acquire the coins.”

According to the study, Markus acquired a total of 335,898 bitcoins in the 225 days the account was active.

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Another entity noted by the study is known as “Willy”; however, Willy controlled many different accounts. According to the study, Willy appeared roughly seven hours after Markus became inactive.

The data cited by the report indicates that Willy would purchase 10–19 bitcoins at a time until an amount equal to $2.5 million worth of bitcoins had been purchased. Willy would then make a new account and repeat the process.

The study notes that there are indications that the owner of the Willy accounts was a Mt. Gox insider. For example, Willy was able to trade while the Mt. Gox API was offline, and the user ID numbers used by Willy were high for the time period they existed.

The study on price manipulation in the Bitcoin ecosystem indicates that Willy acquired 268,132 bitcoins in exchange for $112 million. Much like Markus, Willy did not actually pay for his bitcoins.

“Hence, together, these unauthorized traders ‘acquired’ around 600,000 bitcoins by November 2013,” says the study. “Perhaps unsurprisingly, this is very close to the number of bitcoins (650,000) that Mt. Gox claimed to have lost when it folded in early 2014.”

According to the study, Markus accounts for 12 percent and Willy accounts for 6 percent of the total trade volume on the four major Bitcoin exchanges on the days they were active.

In addition to the possibility of an inside job, the study also notes that an early Bitcoin adopter could have artificially driven up the bitcoin price via a security vulnerability on the exchange in an effort to increase the value of his or her own holdings.

“We do not know for sure which, if either, of these scenarios reflect what actually happened,” says the report. “But that is largely beside the point. Our goal is to demonstrate that these fraudulent trades did in fact significantly impact the price of bitcoin.”

According to the New York Times, former Mt. Gox CEO Mark Karpeles admitted to operating the Willy bot in a Japanese court on Tuesday.

Altcoins Open to Manipulation

The researchers behind the study indicate that the importance of price manipulation in digital asset markets will increase as this technology continues to go mainstream. The study indicates that many altcoins are open to this same kind of price manipulation right now.

“Similar to the bitcoin market in 2013 (the period we examine), markets for these other crytocurrencies are very thin,” says the report. “Our analysis suggests that manipulation is quite feasible in such settings.”

Civic CEO Vinny Lingham shared a similar sentiment during a recent talk where he compared altcoins to pump-and-dump penny stocks. “With altcoins, [pump-and-dump schemes] are super easy,” said Lingham.

“Regulators may want to begin taking an active oversight role as the Bitcoin ecosystem becomes more integrated into international finance and payment systems,” concludes the study.

The post Study: Late 2013 Bitcoin Bubble Fueled by Suspicious Trading Activity on Mt. Gox appeared first on Bitcoin Magazine.

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