Bitcoin Plaza

Wednesday, June 24, 2015

Barclays to Explore Financial Applications of Blockchain, Signs Deal with Bitcoin Company Safello

Of the 10 firms to take part in Barclays’ 13-week fintech accelerator program in London, seven are now “exploring opportunities” with the bank, Finextra reports.

The Barclays Accelerator program, offered in partnership with the Techstars global networks, includes mentorship and opportunities for financial technology startups to access industry experts, influencers and potential clients. The program, which will soon open also in New York, covers all areas of fintech, from cybersecurity and artificial intelligence to wealth management, investment banking, big data and cryptocurrencies.

“At Barclays, we’re embracing the digital revolution, exploring innovations early on so that we can help to shape their development and co-create the future of financial services with these startups,” said Barclays’ chief design and digital officer Derek White. “We’re leading the industry with new pioneering technologies, which will be paramount to helping us achieve our ambition of becoming the ‘Go-To’ bank.”

Some of the fintech startups that signed deals with Barclays operate in the emerging sector of blockchain-based fintech. Banks are interested in blockchain technology for many reasons, but the principal reasons are the speed, low cost and traceability of transactions.

A recent report co-authored by Santander Innoventures, the venture capital arm of the Spanish bank, estimated that blockchain technology could reduce banks’ infrastructure costs by up to $20 billion a year and argued that banks, financial institutions and fintech startups should work together to undertake a fundamental “reboot” of the core processes, systems and infrastructure of the banking industry.

In March, speaking at the Morgan Stanley European Financials Conference in London, Barclays’ CEO Antony Jenkins warned that the “banking sector has not yet felt the ‘full disruptive force’ of technology – but it will.” He elaborated on the growing concern among financial institutions that faster, cheaper payment systems will start to seduce their consumer and business customers in the coming years.

After the fintech accelerator program, Barclays has signed a deal with Safello, a Swedish company that participated in the fintech accelerator program in London, to explore how the blockchain could be used in traditional finance.

Marketing Magazine reports that a Barclays spokeswoman declined to reveal any detail at this stage, saying that the bank and Safello are still in confidential talks. But she added that the bank was making a “statement of intent” and said Barclays was generally interested in exploring what Bitcoin technologies could do for financial services.

“Safello and Barclays will be working together on creating a new payment platform that will support bitcoins,” Safello CEO and co-founder Frank Schuil said, as reported by NewsBTC. Schuil added that the partnership would begin with a test of a payment system for allowing donations to be sent to charities using bitcoin. CoinDesk reported that Schuil said the partnership with Safello could help the bank reach an important demographic.

Founded in 2013, Safello set out to bring greater compliance and security to the Bitcoin industry. According to the company’s website, Safello’s user-friendly approach has since attracted tens of thousands of customers throughout Europe with an easy way to get into Bitcoin. Today, Safello supports 32 countries in Europe with direct payments and other payments such as SEPA, Faster Payments, Bankgiro, Swish and International Wire, and processes tens of millions of SEK, Euro and GBP in and out of Bitcoin.

Photo Mtaylor848 / CC BY-SA 3.0

Case Raises the Stakes in the Hardware Wallet Marketplace with $1.5M Funding Round and New CTO

Bitcoin hardware wallet provider Case Wallet Inc. has raised USD $1.5 million in an equity seed funding round led by FuturePerfect Ventures, participated in by RRE Ventures, High Line Venture Partners and the Rochester Institute of Technology Fund.

The company launched its hardware wallet at TechCrunch NY on May 4, and has been receiving preorders for the first batch of the multisig, multi-factor and credit-card-size hardware bitcoin wallets set to be shipped this summer.

With the new financing, the company aims to search for other possible usages for its secure signing device that utilizes biometric data. According to the company, Case already has gained the interest of well-established financial institutions that hope to implement the system to handle sensitive user data.

The Case hardware wallet has several features and functionalities that complete a biometric data security and authorization system. Specifically, by using three main components of the device – a fingerprint scanner, a camera and a GSM chip in the hardware wallet – transactions are authorized or sent with fingerprint information, which are then processed on Case’s servers. Once the verification in its servers is complete, the transactions are signed by the Case servers and propagated to the Bitcoin network.

The Case wallet uses a multisig solution with three different private keys to ensure the security of bitcoin in case of a hacking attack or a data breach. One private key is kept by the user, the second is held by the company, and the third backup is controlled by a cryptographic key management solutions provider, Third Key Solutions, founded by Andreas Antonopoulos and Pamela Morgan.

According to the Case team, the same system that is used by Case bitcoin hardware wallet could be implemented to grant access to data and verify transactions in platforms of financial institutions, banks and organizations. The company is currently in the process of seeking partnerships with financial organizations to increase consumer adoption of its multi-layered biometric data security devices and system.

“As more important assets move to the blockchain (contracts, property and identity), having a completely secure way to store and transfer those assets becomes even more paramount,” Case CEO Melanie Shapiro told Bitcoin Magazine.

“We’re interested in not only servicing the consumer holding bitcoin, but also providing the banks using blockchain technology the power to manage who has the authority to execute transactions,” she said. “We’ve built something far more robust and institution-friendly than traditional 2FA tokens.”

As global financial organizations, banks and stock markets have begun to show interests in using the blockchain technology to optimize their systems, Case plans to continue searching for ways to integrate its biometric security system to settle transactions in many applications.

“The recent announcement that the Nasdaq is piloting blockchain technologies for different use cases underscores the promise of the technology, and Case is poised to provide trusted, decentralized and biometrically secure signing of those and similar transactions,” Shapiro said in a statement.

“We’re looking forward to providing uncompromised security and ease-of-use for bitcoin buyers, sellers and users, to unlock the potential of bitcoin and blockchain technologies,” Shapiro said. “Making highly secure signing and authentication available across a variety of applications is just the beginning.”

Case enters a market currently led by two popular hardware wallets commercially available, Ledger wallet and Trezor, both of which recently released multisig updates earlier this year. However, Case wallet is unique in the marketplace because of its simplicity and features that do not require users to link the wallet to another device, such as a smartphone or computer, in order to set up a secure multisig wallet.

The company has also appointed Stephen Schultz as CTO as part of the plans for the new investment and to increase market adoption of its bitcoin hardware wallets. With over 20 years of experience in different technological platforms, Schultz is set to oversee the development of the company’s biometric data based security system and solutions.

Elizabeth Ploshay: ‘The Majority of the Financially Excluded Happen to Be Women’

CoinTelegraph spoke to Elizabeth Ploshay about the Bitcoin companies and related projects she's involved with as well as crypto’s potential to bring in the world’s financially excluded population

EU Banks Forced to Report Bitcoin-Linked Accounts Transacting Over €1,000

An anonymous Dutch bank employee has revealed that major banks in the EU are applying new rules forcing banks

Chinese Mining Pools Call for Consensus; Refuse Switch to Bitcoin XT

Three of China's biggest mining pools – F2Pool, BTCChina Pool and Huobi Pool – maintain that the Bitcoin Core development team should strive for consensus, and will therefore not support a switch to B

JUN 24 DIGEST: BitLicense Gives Crypto Businesses 45 Days to Comply, Canadian Bank CIBC Studying Blockchain Tech

Businesses that are involved in virtual currencies have 45 days to comply with NY's BitLicense; Jeff Garzik's space firm releases preliminary design for Bitcoin satellite and more news

Cameroon Government Implements Centralized Altcoin Trest (Op-Ed)

The government of Cameroon has implemented a centralized, insecure and potentially dangerous blockchain protocol and currency Trest

Another US Secret Agent to Plead Guilty to Silk Road Bitcoin Theft

Carl Force, a member of Baltimore’s Silk Road task force and former U.S. Drug Enforcement Administration agent has finally plead for an agreement with prosecutors.

Tuesday, June 23, 2015

Blockstream Creates ‘Confidential Transactions’ to Boost Bitcoin Security

Using the latest cryptography, Blockstream has created Confidential Transactions de-signed to improve Bitcoin’s user security by keeping the amounts sent visible only to participants in the transactio

Roger Ver Backing Prediction Market Sidechain: ‘May Be the Most Important Invention Since Bitcoin’

In one of the more exciting developments in the Bitcoin space so far this year, noted Bitcoin angel investor and entrepreneur Roger Ver has given his blessing to a Bitcoin 2.0 application, and it’s one that some may have overlooked in the past. Truthcoin, a Bitcoin sidechain designed by Yale Department of Economics Researcher Paul Sztorc, is described as a “peer-to-peer oracle system and prediction marketplace.”

The platform is a decentralized method of bringing external data, such as the price of gold or the weather in a particular city, to the blockchain, which can then be used as the basis for complex smart contracts.

Roger Ver’s backing of Truthcoin

Ver is excited about what may become possible through the use of a working implementation of Truthcoin, and shared the following statement via email: “I really do think that decentralized prediction markets may be the most important invention since Bitcoin, and will certainly change the way our world works.”

The perpetual Bitcoin angel investor has been silently funding a C++ programmer who is building a working Truthcoin implementation using a fork of the original Bitcoin codebase. Some of this early code is now available on GitHub. Ver also shared some complimentary remarks in regard to Truthcoin Creator Paul Sztorc’s understanding of the technical challenges ahead.

“Compared to Paul, I don’t think there are many people on the planet” who could have created something like Truthcoin, Ver said. “Before meeting him, I already understood some of the benefits and exciting things that distributed prediction markets will bring to the world, so upon meeting Paul, he seemed like the right person to help make it a reality, so I agreed to get involved.”

No empty promises

Sztorc has made it a point to avoid any sort of Truthcoin crowdsale without an actual product to back the offering, and he has noted his discontent with other Bitcoin 2.0 crowdsales in the past. The Truthcoin creator plans to insist that a crowdsale does not take place until the software has been built, tested and operational for “at least three months” without any need for a hard fork.

It should be noted that anyone who wishes to place a bet on the Truthcoin network will be able to do so with their bitcoin-denominated sidechain tokens. Any crowdsale for this project would likely involve the sale of votecoins, which are used by individuals who wish to vote on the outcomes of real life events. Holders of votecoins who honestly report the outcome of an event are then rewarded with fees generated from the participants in a particular prediction market.

In addition to a possible crowdsale, the monetization model for this project also includes the expected growth in the bitcoin price for holders of the digital money.

When will Truthcoin be available?

In an email to Bitcoin Magazine, Sztorc noted that Truthcoin is currently a testnet “altcoin” with only two people running nodes. “In fact, it really isn’t much of anything yet,” he added.

The votecoin in this current setup are not intended to have any value and should be viewed in a manner similar to testnet bitcoin. Sztorc also wrote about how Truthcoin might earliest become a Bitcoin sidechain.

“What would (obviously) be really cool is if, at some point, someone from Blockstream would rip it open and graft in something to make this version a ‘testnet sidechain’ so that testnet coins could hop over,” he said.

The Truthcoin team doesn’t have the time to deal with sidechain compatibility right now, and Sztorc even mentioned it “might interfere with early testing.”

Sztorc also did not want to reveal any kind of release date as he “[doesn’t] endorse that type of forecasting.” In the past, Sztorc has poked fun at Ethereum’s Frontier release due to prediction markets at Fairlay.com that seem to indicate that the release won’t happen until after August 1. This is far off from the project’s original launch date.

For now, anyone interested in the project can visit the Truthcoin forums, read the latest version (1.4) of the Truthcoin whitepaper, or follow Sztorc’s blog.

Elliptic Launches Anti-money Laundering Visualization Tool

London-based bitcoin analytics and security firm Elliptic announced that it has launched “The Bitcoin Big Bang,” an interactive visualization that plots the emergence and interconnectivity of the key players in Bitcoin since its genesis in 2009.

Elliptic describes The Bitcoin Big Bang as a breakthrough in bitcoin transaction monitoring and compliance that will help “Bitcoin startups thoughout the UK gain banking services” according to Elliptic COO Dr. Tim Robinson. Elliptic has harnessed the underlying technology supporting the visualization to deliver a full suite of anti-money laundering (AML) services. The API will enable real-time compliance, by alerting recipients of bitcoin payments linked to known thefts, illicit marketplaces and other criminal activity.

The visualization identifies more than 250 of the largest entities and the historical transactions between them. Illicit marketplaces and money laundering services are identified by name, while standard entities are described purely by their primary business to protect privacy.

“If digital currency is to take its legitimate place in the enterprise it inevitably must step out of the shadows of the dark web,” said Elliptic CEO James Smith. “Our technology allows us to trace historic and real-time flow, and represents the tipping point for enterprise adoption of Bitcoin. We have developed this technology not to incriminate nor to pry; but to support businesses’ anti-money laundering obligations. Compliance officers can finally have peace of mind, knowing that they have performed real, defensible diligence to ascertain that their bitcoin holdings are not derived from the proceeds of crime.”

The Elliptic AML suite will be available in July to a select group of early customers.

Elliptic is the founding member of the U.K. Digital Currency Association (UKDCA), working with the U.K. government and financial regulators to help shape a regulatory framework for digital currencies.

The Swiss company Chainalysis offers a similar service that provides financial institutions with the means to obtain regulatory compliance through real-time analysis of the blockchain, including an API for sophisticated in-depth real-time blockchain transaction analysis. Chainalysis customers – including regulatory entities, law enforcement and financial service providers – can obtain insight on all transactions recorded in the Bitcoin blockchain and use tools to determine the origin of the bitcoin held by any address. Unlike Chainalysis however, Elliptic has strict privacy controls in places, only reporting a users risk profile to customers but not the specific parties transacted with.

It is evident that Bitcoin is moving toward mainstreaming and regulations, and the services offered by Elliptic and Chainalysis are here to stay, but such services meet opposition from an important part of the Bitcoin community. In April, a leaked Chainalysis roadmap was received with anger and hostile comments, and it seems likely that the Elliptic announcement will cause similar reactions.

“Elliptic’s founding principle is to bring confidence and certainty to enterprises working with bitcoin,” said Smith. “We were the first bitcoin custodian to provide comprehensive insurance, the first to be Big Four-accredited and now the first to visualize the flows of bitcoin and explode the anonymity myth of the blockchain.”

Indeed, every transaction and the full transaction history of any bitcoin address are permanently recorded in the blockchain and open to analysis. The illusion of anonymity stems from the pseudonymous nature of Bitcoin addresses, which are not explicitly associated to their owners, but sophisticated blockchain analysis tools such as those provided by Chainalysis and Elliptic can often de-anonymize bitcoin users.

BitTorrent Creator Criticizes Increased Block Size Proposals

In May, Bitcoin Magazine reported that lead Bitcoin developer Gavin Andresen is persuaded that the best solution to the limited Bitcoin transactions rate – the Bitcoin network can currently process only a few transactions per second — is to increase the maximum block size.

Andresen argued that if the proposed solution is not urgently implemented the Bitcoin network will become oversaturated, and 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.

However, not everyone agrees that Andresen’s proposal is the best path forward. The MIT Technology Review published a review, titled “Leaderless Bitcoin Struggles to Make Its Most Crucial Decision,” of the pros and cons of the proposed hard fork.

Recently several of the larger mining pools, amounting to around 60 percent of the total mining capacity, have agreed to a compromise: The maximum block size would be increased to 8 megabytes instead of 20. NewsBTC reported that, even though the 8 megabyte block size is smaller than the initially 20 megabyte block size proposed, Andresen is happy about the proposal and there seems to be a consensus.

Now BitTorrent creator Bram Cohen has weighed in on the debate. In a Medium post titled “Bitcoin’s Ironic Crisis,” Cohen criticizes the proposals to increase the block size and warns, in very blunt terms, that Bitcoin is heading toward an unexpected crisis “of being undermined by a developer who’s gone rogue, using his political influence to convince vendors that an upcoming minor problem will be a major crisis, getting them to accept his own extraordinarily bad pet solution to that problem, and as a result hurtling the whole ecosystem towards potential disaster.”

The rogue developer is, according to Cohen, Gavin Andresen.

“Gavin didn’t invent Bitcoin,” says Cohen. ”He isn’t even a Bitcoin developer anymore. He resigned his position as lead developer a year ago, and has been largely inactive since. Using a voting process, or even a system of rough consensus among core developers would cause his proposal to be quickly rejected. It’s only the exertion of outside political force which has forced it to be taken seriously.”

The political influence that Cohen is denouncing could be the MIT Digital Currency Initiative, which Andresen and other Bitcoin developers joined as soon as it was launched and is positioning itself as a de-facto governance body for Bitcoin technical development.

Cohen thinks that proposed extensions to Bitcoin should go through a sort of voting process where miners indicate that they’re willing to accept them. Concerning the specific case of the block size limit, he thinks there are no problems, let alone urgent problems, that must be solved. The only thing that would happen when the block size limit – which is a limit on the bitcoin transactions rate – is reached is that the transaction fees would go up.

That, according to Cohen, is not a bad thing. On the contrary, he thinks that high transaction fees would be the first clear evidence of Bitcoin providing real value instead of just being a vehicle for speculation, and it would also lead to miners directly earning more money.

Cohen’s article will certainly put even more steam in the Bitcoin block size debate. Cohen may have been too blunt in his criticism of Anderson, but the opinion of the creator of BitTorrent, the first building block of the developing P2P Internet and a Bitcoin precursor, certainly deserves full consideration.

Photo Abstract blocks / Photopin