Tuesday, September 8, 2015
PayPal Pulls Out of Puerto Rico; Huge Opening for Bitcoin
Monday, September 7, 2015
South Korean Law Enforcement to Launch Investigations on Altcoin Pump-and-Dump Schemes
Chosun, the largest and most popular online news publisher in South Korea has reported that law enforcement is about to begin investigations on altcoin pump-and-dump and bitcoin Ponzi schemes.
The Bank of Korea will support local law enforcement and agencies with the investigation and will provide the necessary infrastructure and technology to search for scam bitcoin projects and programs.
The joint investigation will also focus on the trading of altcoins that have no value, or are suspected of being a pump-and-dump scheme.
“According to our sources, there are 676 altcoins, including bitcoin, listed on coinmarketcap.com. However, only 309 of them have a market cap of USD$10,000, and others are almost worth nothing. Furthermore, there are 550 altcoins that have extremely low daily trading volumes,” said the article.
The Bank of Korea and the local police already have started looking into several different altcoins that have been used over the last few months and are discussing with local enforcement whether to launch a full investigation on these altcoins and on the individuals or organizations that have been promoting the use and trading of altcoins that have recorded substantially low daily trading volumes over the past 48 hours.
Will Scaling Bitcoin Bring Us to Consensus on the Block Size Debate?
“There’s a deep rift amongst bitcoin core devs regarding what the purpose of Bitcoin should be,” said Eric Lombrozo, Bitcoin developer and CEO of Ciphrex. “Unfortunately, the fundamental underlying disagreements aren’t being properly addressed … and most of the discussion has instead focused on the differing conclusions rather than on the real causes of disagreement.”
On August 15, Bitcoin Magazine reported that the first of two Scaling Bitcoin workshops would be held in Montreal on September 12 and 13. This first phase of proposals and presentations is intent on setting the stage for further discussions in phase two, which is planned for December 6-7 in Hong Kong, all with the goal of generating the sort of discussion that Lombrozo is referring to.
“This conference represents a communitywide effort to understand and characterize the plethora of factors that must be considered before coming to any conclusion about how to best scale Bitcoin,” Eric Martindale told Bitcoin Magazine on behalf of Scaling Bitcoin. “Our goal with this first event is to increase awareness of the research that has gone into the scaling problem over the past few years, and encourage a more open dialogue across the entire community.”
The debate over the future of Bitcoin and scalability has ramped up over the past few weeks as proponents of one solution or another have taken to social media, discussion boards and blogs to argue various cases.
On September 1, in an open letter to the Bitcoin community, 32 developers collectively asked people “to not prejudge and instead work collaboratively to reach the best outcome through the existing process and the supporting workshops.”
“There are a lot of things we’ve learned about Bitcoin that were unknown a few years ago that change many of the underlying assumptions about how the network functions,” said Lombrozo, who has since become a signatory to the open letter. “There’s been a lot of progress in ideas … but, unfortunately, there’s also a lot of confusion surrounding how Bitcoin can evolve. I hope we can really take a step back and look at what we can do given what we know now … rather than focusing too much on the way we thought the system should have worked but doesn’t.”
Lombrozo argues that the larger underlying issue is “the lack of a process that allows us to make progress in situations where we lack near-unanimous agreement for hard forks. Until now, the policy has been to not make these kinds of changes unless everyone agrees.” He adds that while he is looking forward to attending the workshops and seeing what the engineers have to offer, he is also “working on some proposals to address the consensus-building process between developers more generally.”
Chinese mining pool BW, which provides approximately 8 percent of global mining power, will also be keeping a close eye on what comes out of the two workshops.
“We would like this to be an opportunity for everyone to get together and sit down to discuss this important issue,” representatives from the company told Bitcoin Magazine. “We are in agreement with the spirit of the open letter and look forward to meeting our colleagues from around the world.”
BW will be sending Mianhuan Li, the manager of their mining farm in Inner Mongolia, to the Montreal workshop. Qingchun Shentu, their resident expert on cryptography and Bitcoin, and doctoral candidate in Signal and Information Processing, will attend the second workshop in Hong Kong.
On the other hand, core developer Mike Hearn, who implemented the BitcoinXT fork along with Gavin Andreson, is skeptical about the Scaling Bitcoin workshops.
“If you look at how the Bitcoin Core devs and Blockstream have acted so far, this fits their modus operandi perfectly — stall for as long as possible whilst claiming that we just need more time for the ‘experts’ to think and debate. But don’t define any way to actually come to conclusions, thus ensuring the debate never ends.”
The workshops, which Hearn will sit out while Andresen attends, have explicitly stated that there will be academic and scientific presentations, but no debate. Furthermore, no decisions or pronouncements on scalability will be made during the workshops.
Core developer and one of the signatories on the open letter, Peter Todd, expressed some skepticism, in correspondence with Bitcoin Magazine, that the workshops will be able meet all the demands of the companies attending.
“If the data supports raising the blocksize to some level safely, and we can agree on what ‘safely’ means, that won’t be a hard thing to get consensus on. It’s just unlikely the amount we can safely raise it to will make people happy.”
He pointed out that what Andersen and Hearn appear to want — “zero or near zero fees forever with most transactions being on chain” — appears to be fundamentally impossible by simply changing a constant.
The Scaling Bitcoin workshops are hosted by CryptoMechanics and underwritten by Blockstream, Chaincode Labs, MIT Digital Currency Initiative and Chain, with further sponsorship support from other Bitcoin and blockchain companies.
UPS Exec Dreams of a Bitcoin Future on Corporate Blog
Exclusive Preview: ECUREX Research to Release Comprehensive Digital Currency Market Report
Today ECUREX, a digital finance marketplace for professional traders and financial institutions headquartered in Zurich, is publishing a comprehensive 110-page report on digital currencies – an ECUREX Research Working Paper titled “Digital Currencies: Principles, Trends, Opportunities, and Risks.”
In June, Bitcoin Magazine reported that ECUREX was the first digital currency exchange platform to be fully compliant with the Swiss Banking Act and Anti-Money Laundering (AML) Ordinance. Now, with the permission of ECUREX, Bitcoin Magazine is publishing some excerpts of the new report before it’s publicly released.
The report is authored by Paolo Tasca, research economist at Deutsche Bundesbank and founder of ECUREX, with the support of ECUREX researchers James B. Glattfelder and Nicolas Perony, who also work, respectively, at the University of Zurich and Tamedia Digital. The document represents the author’s personal opinions and does not necessarily reflect the views of the Deutsche Bundesbank or its staff.
“The report is very interdisciplinary and aims at talking to technologists who want to know more about economic and legal aspects of digital currencies or economists and lawyers who want to know more about technical aspects,” Tasca told Bitcoin Magazine. “We think that the report should arrive not only on the desks of executives, but instead it should arrive to the desks of everyone interested in the topic. Thus we decided to put it online available to be downloaded by everyone for free. …[I]t will be online on the ECUREX website.”
The report describes the ongoing innovations in the financial sector brought about by digital currencies from a multi-level perspective: systemic, technical, legal and industrial. The document extensively covers the current trends in the domain in order to give the reader a quantitative understanding of the potential opportunities and risks arising from the global adoption of digital currencies. The ECUREX report, which is the result of more than two years of work involving the collection and analysis of data from more than 30 different sources, is the first comprehensive study on digital currencies that provides a joint, deep quantitative analysis of their technological, entrepreneurial, economic and legal aspects.
“Our goal is to reach the broader possible audience of students and practitioners,” said Tasca. “We hope that the digital currency market report will become their guide and roadmap that will assist them to navigate the complex and evolving Bitcoin ecosystem. The idea of producing a digital currencies market report started already when I was working as Research Officer at the London School of Economics (around November 2013) before joining the Deutsche Bundesbank.
“At that time I was still mostly working on systemic risk in financial markets, but I perceived and understood the revolution that digital currencies and blockchain technologies would have brought to our socio-economic systems,” he said. “Thus, I felt the importance and the need to promote the knowledge of digital currencies and P2P financial systems (more in general) to the broader audience of students, academics and practitioners as much as possible.“
“After two years of work, now I am even more convinced that blockchain technologies will change forever the way we do business (not only in finance).”
Section 1.3 of the paper, “Key Findings,” is reproduced below with the permission of ECUREX.
The most important key findings are summarised here. For the original research and details on the data sources, see the corresponding sections in the main text.
The average amount transferred per Bitcoin transaction is larger than in any other major payment network. During the period 2011–2015, the average amount (in USD equivalent) per transaction constantly increased, and remained larger than in the major payment networks such as Visa, Mastercard, Discover, or Western Union. Although the Bitcoin payment network is getting closer in total transaction volume to these large networks, its daily transaction volume of ca. USD 50 million (about one quarter of Western Union’s) is still the lowest one.
The relative capitalisation of Bitcoin with regard to other digital currencies is receding in favour of Ripple’s. Until mid-2014, Bitcoin dominated the digital currency market by covering up to 95% of its total volume. Since then, its dominant position has been eroded by Ripple, which now covers about 10% of the total market capitalisation. On average, the relative currency strength of Bitcoin has decreased compared to that of the other (almost) existing 500 digital currencies, even though Bitcoin remains dominant on the digital currency market.
China is the largest country in the world per: (1) number of active Bitcoin clients; (2) mining capacity (since the end of 2014, Chinese mining pools cover 50% of the total market share); (3) volume of Bitcoins exchanged via electronic trading platforms (since 2014, the traded CNY/BTC volume in is about 3 times larger than the USD/BTC volume, with peaks at BTC 4 million per week).
Bitcoin startups raised almost USD 1 billion in three years with an annual investment growth rate of about 150%. Capital investments in Bitcoin-related startups is a recent trend that started in the first quarter of 2012. Since then, the Bitcoin industry raised almost USD 1 billion and it represents the fastest growing sector for capital investment. Within the Bitcoin sector, the Mining and Payment & Remittance industries drove the funding race. Coinbase alone covered one third of the capital raised by the whole Payment & Remittance industry, and 21 Inc over half of the capital raised by the Mining industry.
In January 2015 the Bitcoin volume exchanged on electronic trading platforms reached 50% of the total number of Bitcoins ever mined at that time. At two points in mid-2014 and January 2015 the volume of Bitcoins exchanged via electronic trading platforms reached a historical high equivalent to over half of the number of Bitcoins that had been mined at that time. Since then, the volume of Bitcoins traded on electronic exchanges has remained stable at a higher value than the volume of transactions between users, recorded in the public Bitcoin blockchain.
During the year 2014, the transaction costs in digital currencies dropped significantly. Throughout 2014, the average fee per Bitcoin (Litecoin) transaction decreased from about USD 20 (7) cents to USD 10 (1) cents.
The year 2014 saw fewer incidences and less arbitrage opportunities than the previous years. In effect, the digital currency market is becoming more efficient. Since 2011, Bitcoin’s volatility has been constantly decreasing. In addition, the likelihood and intensity of arbitrage opportunities dramatically dropped to less than 1%, signalling that the digital currency exchange markets are becoming more efficient.
The wealth distribution in the Bitcoin ecosystem is highly unequal, and this inequality is growing. The inequality of the distribution of Bitcoins amongst addresses, summarized by the Gini coefficient (higher is more unequal), grew from 0.09 in 2010 to 0.99 in 2015: from quasi-perfect equality to quasi-perfect inequality. However, this is not a “rich get richer” phenomenon. During the period 2009–2015, the top 100 richest addresses kept a constant relative wealth, totalling about 20% of the total value of the Bitcoin economy. The increase in the inequality is the result of: (1) a socio-economic phenomenon, due to the growing popularity of Bitcoin, and (2) wallet fragmentation due to security practices such as single-use addresses and new addresses generated for change transactions.
The Mining industry is consolidating as an oligopoly. The Bitcoin mining market is currently under control by 5 to 7 major mining pools. During the period 2013-2015, the cumulative market share of the largest 10 pools relative to the total market hovered in the 70%–80% range.
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Sunday, September 6, 2015
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Saturday, September 5, 2015
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