Friday, May 22, 2015
Breaking: BitFinex’ Hot Wallet Hacked, Bitcoins Stolen
6 Rising FinTech Startups
Bloomberg Report Points Finger at Hoarders for Bitcoin’s Low Price
Thursday, May 21, 2015
digitalBTC Raises $3.5 million AUD to Launch AirPocket
Digital BTC, an Australian Bitcoin company that is publicly traded on the Australian Securities Exchange (ASX) as Digital CC Limited has secured a $3.5 million AUD funding round by a group of institutional and individual investors to launch a remittance-focused product, AirPocket.
CEO and founder Zhenya Tsvetnenko specifically explained that the funds from the “investment will be used accelerate the rollout and commercialization of AirPocket in Latin America and Caribbean.”
The company was originally seeking for a $3 million AUD funding round, until the demand from local investors rose and the company had to enlarge the funding round with another $500,000 AUD. The increased funding round raised the company’s cash to over $6 million.
The product soon to be launched in Latin America and the Caribbean is a smartphone app which “effectively allows anyone to act as a small Western Union outlet.” Users are provided with a map interface which displays other agents called AirAgents in another country who passes the money to the recipient. Every transaction established on AirPocket will be recorded on the bitcoin blockchain, which allows the ledger to be viewed by anyone anywhere. This model is similar to Bitcoin remittance app Abra, which was unveiled earlier this year.
Tsvetnenko explained “Our platform is unique in that it makes remittances easier by leveraging the sharing economy pioneered by Uber and Airbnb.”
According to Proactive Investors Australia, the beta version of AirPocket will be launched in June of 2015 and the commercial version is set to be launched for the fourth quarter of 2015.
DigitalBTC holds a minimum 75 percent interest of AirPocket and the other 25 percent is divided within the investors including William Witenberg, Juan Carlos Barrera and Sanjay Santhanam.
Digital BTC CEO Zhenya Tsvetnenko stated “The quality of the joint venture team provides strong validation of the commercial potential for AirPocket and I’m confident they are the right people to execute the business strategy in Latin America and the Caribbean and capitalize on the huge potential to disrupt the multi-billion dollar remittance market.”
Company’s Loss in 2014
The Australian bitcoin company Digital BTC traded on the Australian Securities Exchange as Digital CC limited reported a total net loss of $2.3 million in the second half of 2014.
After a substantially large loss, digitalBTC still holds net assets worth $6.87 million, in which over $740,000 are bitcoins and the remaining are cash.
As the global adoption of digital currencies including bitcoin is increasing as a system of payment, digital BTC aims to target the remittance markets in regions with poor banking systems and financial infrastructure such as Latin America and the Caribbean.
Gem Partners with Elliptic for Insured Storage of the Third Key
Elliptic and Gem have announced a new partnership today that will involve Elliptic acting as a trusted and independent third party for the purposes of securely storing the third (backup) private key used on the Gem platform. In the past, multisig wallet users have been in control of their own backup private keys, but this new offering from Gem and Elliptic could offer a higher level of security for individuals who do not wish to take care of their own backup solutions. Up to this point, Elliptic has been an insured bitcoin storage provider for a variety of banks and exchanges who need to protect their private keys, so choosing them as the custodians of backup keys for multisig wallets seems like a wise move by Gem.
An explanation of the third key
Over the past year or two, it has become clear that multisig wallets are the wave of the future. Gem CEO Micah Winkelspecht clearly understands this point, which is why his company has been working to allow developers to create the most secure multisig wallets via Gem’s API. With this new setup involving Elliptic, Gem will not be in control of more than one private key. Instead, one private key each will be held by the user, Gem and Elliptic. Both Gem and Elliptic believe this solution provides a higher level of security than the traditional multi-signature wallets created through a single provider.
Insured third-key storage
Perhaps the most unique feature of Elliptic as a third-key custodian is the fact that they’re able to offer insurance against unauthorized use of that third key. When clarifying exactly what this insurance policy covers, Elliptic Analyst Nathan Jessop told Bitcoin Magazine, “We are insured against losses due to unauthorized use of the third, backup key that we hold – this covers both criminal and accidental loss.”
When speaking to the importance of insurance for the third key in a multi-signature wallet, Elliptic CEO Dr. James Smith explained:
“At Elliptic, our focus is on bringing bitcoin to the enterprise by developing secure and convenient products and processes. By combining Gem’s API platform with our insured and accredited key storage service, a new bar has been set for multi-signature wallet security and usability.”
A new standard for multisig wallets?
It’s clear that both Gem and Elliptic believe this is a huge leap forward for multi-signature wallets and bitcoin in general. As Gem’s Winkelspecht noted:
“Now clients can rest easy knowing that even if they lose their private key, they can rely on two independent parties to secure their assets. Elliptic is the most trusted name in private key storage and our tight integration means that there is no single point of failure for Gem’s multi-signature wallets.”
Elliptic’s Jessop agrees with Winkelspecht’s assessment of the new partnership, and he also added:
“I believe this model will become more common, although it’s important to point out that it’s not just about the multisig scheme – the security and controls of the parties holding keys are still important. Elliptic combines insurance with accreditation by KPMG to the same standards as a custodian bank.”
In the future, Elliptic also plans to provide this sort of private key storage for alternative assets that are tracked via the blockchain. Over the long term, Jessop noted that the company plans to focus on secure storage, asset transfer and an auditable chain of ownership. Jessop also mentioned that the combination of their accreditation from KPMG with their insurance offering has led to “significant institutional interest.”
Photo: DSC02405 / CC BY 2.0
Bitcoin Core Developers Disagree on Proposed Block Size Increase to 20MB
With the current one-megabyte-per-block limit, the Bitcoin network can process only a few transactions per second, which could strongly limit the ability of the network to handle high transaction volumes if the adoption of bitcoin payments grows.
Lead Bitcoin developer Gavin Andresen is persuaded that the best solution to the problem is to increase the maximum block size, and has developed code for a proposed Bitcoin hard fork that would allow any block with a timestamp on or after March 1, 2016 to be up to 20 megabytes. “I believe this is the simplest possible set of changes that will work,” Andresen says.
In a post titled “Why increasing the max block size is urgent,” he argues that if the proposed solution is not urgently implemented the Bitcoin network will become oversaturated, and people might just stop using bitcoin because transaction confirmation would become increasingly unreliable. “Limit the number of transactions that can happen on the Bitcoin blockchain, and instead of paying higher fees people will perform their transactions somewhere else,” Andresen says in another post.
The MIT Technology Review just weighed in on the debate with a review, titled “Leaderless Bitcoin Struggles to Make Its Most Crucial Decision,” of the pros and cons of the proposed hard fork. Author Mike Orcutt notes that not everyone in the community of users of the Bitcoin software – which includes miners, developers, and a growing number of startups – agrees that Andresen’s proposal is the best path forward.
For example, some critics argue that Andresen’s solution could lead to a dangerous “centralization” within the mining community, which would favor bigger, richer mining operations. A counter-argument is that it’s already too late: Bitcoin mining is already centralized and dominated by large, professional mining operations, and totally out of reach of individual miners and grassroots pools. This debate reflects the tension between two increasingly conflicting aspects of Bitcoin – the DIY, grassroots spirit of the early adopters, and the mainstream need for much more streamlined and efficient operations.
Other critics, including Bitcoin core developer Pieter Wuille, argue that right now there are just too many unknowns about the consequences of increasing the block size to 20 megabytes. Wuille hints at “things we don’t even know of that could break,” and says that a smaller increase at first would be less risky.
As for all important choices in technology development, there is no clear-cut ideal solution that fits all needs. On the contrary, different requirements must be prioritized and an optimal trade-off must be found. An interesting issue is who gets to make the decision. Princeton computer science professor Arvind Narayanan observes that the core developers are the only ones with the power to change the code, and therefore they will probably make the decision themselves if they can reach consensus – which is not the case at the moment, since at least one of them is against the proposed hard fork.
The global issue is governance and leadership in Bitcoin technical development, which has been mostly “leaderless” as the title of the MIT Technology Review article emphasizes, with the Bitcoin Foundation unable to provide effective governance. Recently, Andresen and other Bitcoin Core developers joined the MIT Digital Currency Initiative, which is now beginning to assume leadership in the Bitcoin development space.
Brian Forde, director of the MIT Digital Currency Initiative, is offering to co-host an open forum for discussions aimed arriving at a rough consensus, The Wall Street Journal reports. “How this decision is made will be a good example of how the open and active community of developers, entrepreneurs, miners, researchers and users will continue to collaborate on major changes to Bitcoin core,” he said.
Photo background by Freepik.
MasterCard Introduces Fast Bitcoin-like Global Payments to Consumers
MasterCard has launched MasterCard Send, a personal payments service that enables funds to be sent quickly and securely to consumers domestically and internationally.
Now live for users in the United States, MasterCard Send permits sending secure real-time payments to consumers, both banked and unbanked. The recipients get the funds immediately on their MasterCard or other cards, into mobile money and bank accounts or via cash agent outlets.
“This unique platform will enable disbursements and person-to-person (P2P) payments to and from virtually any U.S. debit card account, including non-MasterCard debit cards,” notes the MasterCard announcement. “MasterCard Send is the only personal payments service that can reach virtually all U.S. debit card accounts and enable funds to be sent and received typically within seconds – far superior to existing solutions that either limit transfers within a closed-loop network or involve ACH [Automated Clearing House], which can take several days for funds to be received.”
MasterCard Send payments are routed through the MasterCard network. Some news outlets quickly remarked that a centralized payment solution can’t be P2P. In fact, MasterCard is using “P2P” in the sense of person-to-person, not peer-to-peer, so the claim seems technically correct. However, MasterCard Send is not P2P in the sense of BitTorrent or Bitcoin.
“Through MasterCard Send, we have enabled a breakthrough solution that takes the pain out of the system, provides faster clearing of payments, and delivers a better user experience for senders and receivers alike,” said MasterCard chief emerging payments officer Ed McLaughlin. “MasterCard Send is addressing a real need that exists in today’s digital world to enable consumers, businesses, governments and more to have a safe, simple and secure way to transfer and receive funds quickly.”
Barb King, a group head in the MasterCard Payment Systems Integrity Group, described the service to PYMNTS as “a breakthrough platform in the industry.” She said that that the service is being marketed to companies and institutions, rather than directly to consumers, and mentioned B2C (business-to-consumer) and G2C (government-to-consumer) use cases. The MasterCard announcement notes that insurance claims, rebates, e-marketplace payouts, social benefits and tax refunds can now be sent in real-time. However, nothing seems to prevent individuals from using the platform to send payments and remittances to other consumers.
MasterCard Send emulates one of the two main advantages of bitcoin payments – fast transactions that take minutes instead of days. Details on the business model and economics were not disclosed, so it isn’t clear if MasterCard plans to emulate the other mainstream advantage of bitcoin payments – cheap transactions.
The MasterCard announcement doesn’t mention Bitcoin, but King told PYMNTS that “consumers are much more comfortable giving their personal details to their financial institution than they are to many other types of entities,” and that is a big reason why she believes MasterCard Send is more appealing than the bitcoin protocol.
It’s clear that traditional payment processors won’t let bitcoin payments eat their lunch without a fight. Currently, MasterCard Send seems a strong competitor to centralized operators such as PayPal and Venmo, but not a competitor to peer-to-peer, decentralized bitcoin payments.
Photo: Credit card of future / CC BY 2.0
Mintsy Launches Cloud Mining Service with Cryptographic Proof-of-Hashrate
Mintsy recently announced a launch of its new cloud mining service as the first digital currency cloud mining company to use proof-of-reserves, accomplished through cryptographic proof-of-hashrate.
Bitcoin Magazine sat down with Marshall Long, who is the CTO of Cryptsy, and more recently CTO and board member at Mintsy, to discuss what he says is unprecedented innovation in the realm of cloud mining.
Mintsy provides users with malleable contracts, which assuages any worries on being locked into a contract they no longer need. Long says users are “able to sell their remaining contract time on the Mintsy marketplace where other folks may want a shorter contract and can bid on contracts that are up for sale by the user.”
Mining the Future
At the time of this post, Mintsy is made up of 20 people, and is the result of a joint venture between Terraboss Inc. and digitalBTC. The development team is spread out between the United States and London, while the majority of the accounting takes place in Australia. DigitalBTC is an Australian company that is publicly traded on the Australian Securities Exchange under the ticker DCC.
With a bitcoin mining pool going strong at more than 5 PH/s, Mintsy offers SHA-256 and Scrypt contracts ranging with flexible three-month and six-month contracts, although “more exotic algorithm contracts will be online soon.”
Thinking Outside The Box: Cryptographic Proof of Hashrate
Long, a serial entrepreneur in the fields of Bitcoin, drones and manufacturing, explains that previously, many cloud-based mining services “got away with lots of bitcoin in the beginning because nobody demanded proof of what they were selling.”
He explains that Mintsy will circumvent all of the problems relating to the auditing that their accounting staff may have to deal with, since all of their hashrate information will be transparent.
Naysayers are given proof that the cloud mining company is not double-selling hashrates, instead running a 100 percent full reserve by having all of their information accessible on the blockchain. Long has been working with Bitcoin core developer Peter Todd to implement the cryptographic proof-of-hashrate for Mintsy. This feature is still in development with a planned release in mid- June.
Another feature that Mintsy will have is the ability for users to use the website’s service and rent out their rigs to other users for a fee, much like Betarigs.
In the meantime, users can limit their luck variance by allowing their customer base to “take their contract and point it to any pool.” When users don’t put all of their eggs in one basket, the choice in picking their mining pools is “not only transparent, it’s more efficient since your [one] pool is not lucky all the time.”
But is Cloud Mining still profitable?
It’s no surprise that conventional mining is not as easy as it used to be.
“If your electricity bill is very high, then there is no way you can make money mining even with the most advanced of chips,” explains Marshall. To him, cloud mining not only helps those who don’t have access to cheap power, but also provides new users with a way to ease into mining for a very small fee. The company’s smallest contract costs a little under $20, and users can always trade contracts on the Mintsy marketplace.
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