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Prospects for Bitcoin in ChinaBloomberg
Jack Liu, head of international at OKCoin, discusses bitcoin
in China and as an alternative payment system. He speaks to Bloomberg's Angie Lau on "First Up." (Source: Bloomberg). Most Recent Videos. Prospects for Bitcoin
in China · Hacker Threat and ...
Posted on 4 October 2015 | 6:39 pm
Posted on 4 October 2015 | 5:03 pm
How Bitcoin is like the Housing MarketInside Bitcoins
Those of us who love, respect and deal in Bitcoin
know all too well that this mentality holds true. Nothing that goes down remains down permanently. Bitcoin
, in many ways, is a lot like the American housing market. It has experienced grand highs along ...and more »
Posted on 4 October 2015 | 3:27 pm
Posted on 4 October 2015 | 3:27 pm
The Ongoing Bitcoin Malleability AttackCoinTelegraph
Over the past 72 hours, the Bitcoin
protocol has been suffering from a malleability attack. The attack has been happening to quite a few users moving funds on the network. The transactions look like bitcoin
being sent twice or “double spent.” Typically ...
Posted on 4 October 2015 | 12:23 pm
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Are you up to date with the latest bitcoin and blockchain news? Test your knowledge with our quiz for the week of 28th September – 4th October.
Posted on 4 October 2015 | 7:49 am
Bitcoin law experts Brian Klein and Geoffrey Aronow explore recent rulings by the US CFTC and how they affect bitcoin traders across the world.
Posted on 3 October 2015 | 2:50 am
In a new interview, Fredrik Voss, head of blockchain strategy at Nasdaq, expands on his organization's developing thesis on the emerging technology.
Posted on 2 October 2015 | 1:50 pm
Anti-virus software pioneer John McAfee is now accepting bitcoin in his 2016 presidential campaign.
Posted on 2 October 2015 | 5:17 am
South Korean bitcoin services company Coinplug has closed a $5m Series B funding round.
Posted on 2 October 2015 | 4:49 am
Google search data can predict the price of bitcoin, new research has found.
Posted on 2 October 2015 | 3:15 am
Bitcoin exchange Gemini has received two key approvals from the NYDFS that move it closer to launching services in the US.
Posted on 1 October 2015 | 3:10 pm
The head of Level39, one of Europe's biggest FinTech hubs, is stepping down to lead the development of a blockchain lab.
Posted on 1 October 2015 | 6:30 am
Police have arrested six people in connection with an ongoing international money laundering investigation involving bitcoin. The authorities, which became suspicious following a series of large bitcoin trades, carried out various raids in and near Rotterdam – a city in the south of the Netherlands – leading to the arrests of four people in the […]
Posted on 1 October 2015 | 5:28 am
Coinbase has announced that customers across 26 countries can buy bitcoin "instantly" from today.
Posted on 1 October 2015 | 4:38 am
Boost VC has released new figures related to the success of its startup investments in the bitcoin and blockchain industry.
Posted on 30 September 2015 | 1:01 pm
SEB, a Stockholm-based financial services firm with 1.7bn SEK ($202m) in assets under management, discusses the potential of blockchain tech.
Posted on 30 September 2015 | 11:35 am
Catch all the highlights from CoinDesk's inaugural conference, Consensus 2015, right here.
Posted on 30 September 2015 | 6:54 am
Bitfilm, the worldwide bitcoin and blockchain film festival, has released its call for entries today.
Posted on 30 September 2015 | 6:21 am
The Dutch National Police have taken an interest in Blockchain-based cloud services. A presentation given over the summer reveals a new focus on Storj and Filecoin.
Members of the Dutch National Police and UNIJURIS gave a presentation in July titled “Technical and Legal Challenges of Criminal Law Enforcement in the Digital Age .” This is an update of a presentation given in 2013 titled “The merits & challenges of distributed least authority data storage .”
The presentations explain how cloud storage and file hosting "Data is cut up in a hundred pieces. Pieces are spread over a hundred servers, in dozens of countries, over a multitude of hosters.”
Both presentations explain how Mega (Mega Limited) replaced the controversial Megaupload cloud storage service. Megaupload was seized and shut down by the United States Department of Justice in January 2012 over copyright infringement claims.
Extradition hearings are currently underway for Megaupload founder Kim DotCom in New Zealand. When the original Megaupload site was seized, federal prosecutors stated, “This action is among the largest criminal copyright cases ever brought by the United States and directly targets the misuse of a public content storage and distribution site to commit and facilitate intellectual property crime.” However, Kim DotCom, founder of Megaupload and Mega, recently distanced himself from Mega, stating over the summer that he would not trust Mega with user data and that he intends to create a third version of the site.
How would you like a new Internet that can't be controlled, censored or destroyed by Governments or Corporations? I'm working on it #MegaNet— Kim Dotcom (@KimDotcom) February 16, 2015
As the Dutch presentation explains, next-generation technologies such as Mega make it more difficult for law enforcement to seize: “Never mind reading it. Data cannot even be located without the key.”
The presentation from this year was updated to include both Filecoin and Storj (pronounced “storage.”).Filecoin, according to its website, is a “data storage network and electronic currency based on Bitcoin. Users can “Earn Filecoin by renting disk space.” Filecoin was named by both Business Insider and Coindesk as Bitcoin projects to watch in 2015.
Storj, according to its website, is “based on blockchain technology and peer-to-peer protocols to provide the most secure, private, and encrypted cloud storage.” It will allow users to rent out extra hard-drive space and bandwidth using MetaDisk . It is built on top of Bitcoin with the Storjcoin X “SJCX” Counterparty token. According to CoinMarketCap , SJCX has a market capitalization of approximately $735,000 at time of publication.
Bitcoin Magazine spoke with Storj founder Shawn Wilkinson, who said that the presentation did a good job on half the picture:
“Traditionally, law enforcement could knock on the door of a third-party provider for access to information. As this is abused and data becomes more and more abstract and distributed (for economic and reliability) this will become almost impossible. This should lead to a decrease in cybercrimes as well. If governments can't get access to it, neither can attackers.”
Further, he noted that it missed some of the benefits to law enforcement:
“[It] Misses the possible use cases with this type of system in law enforcement. For example, handling of digital evidence in a public and verifiable way. “[This was] Not possible before.”
For example, in a popular dashcam video of a phone theft on Youtube, the detective assigned to the case was eventually provided with a signed (with an indelible ink pen) DVD by the person who captured the video. This seems like an antiquated way to prove authorship.
The presentation offered the following “solutions”:
Regarding Jurisdiction: “Legal duty (based on a warrant, of course) for third parties (companies) to hand over data locally in countries they offer their services in.”
Regarding Enforcement: “Seizure and acquisition moves back to the [end user or] client (not the hoster [or company].) [This creates a] New legal paradigm regarding the ‘location’ of data.”
Wilkinson said that the “P ossible solutions portion won't work at all as these solutions become more and more distributed.” While he disagrees with solutions, he thought the presentation was very forward-thinking and they are “asking the right questions.”
The distributed platform such as that which Storj will provide is a paradigm shift away from traditional centralized services. The past year saw very high-profile hacks of SONY , the Office of Personnel Management and even Ashley Madison . The breadth and scale of these kinds of data breaches are made possible though centrally stored data. While decentralized solutions may make law enforcement’s job more difficult, there must be thoughtful regulation because it might be a service such as Storj’s that will prevent a “cyber Pearl Harbor ” from happening.
Indeed, the authors note that:
“When these technologies, and others like them, converge in the … not so distance future, cloud based security will take a large step forward towards the multi granular least authority approach required for true in-depth cloud security….When looking at the public-order and security aspects of law enforcement, these developments can only be seen as a blessing.”
They also note: “When looking at the same developments from the prosecution and forensics viewpoint however, we see major technological and legal obstacles and challenges arising …”
The Dutch Police have had their hands full lately with a Supermarket Bomber making ransom demands in bitcoin. Earlier this year, The National High Tech Crime Unit of the Netherlands’ police and Kaspersky Lab announced that they would help victims recover from CoinVault ransomware. Earlier this month they arrested two young adults believed to be involved in the CoinVault campaign. They have been playing whack-a-mole with several Silk Road copycats . The Dutch National Police Agency also created a fork on GitHub of John Ratcliff's blockchain: A minimal parser for the bitcoin blockchain .
UNIJURIS, also located in the Netherlands, is a research group on unilateralism and the protection of global interests and has a section on its website called “Extraterritorial jurisdiction on the Internet .” This includes a research paper “The end of territory. The re-emergence of community as a principle of jurisdictional order.”
The post Dutch National Police Set Sights on Blockchain-Based Cloud Services appeared first on Bitcoin Magazine.
A survey by the World Economic Forum says the tipping point for bitcoin and blockchain adoption will happen by the year 2025.
The majority of 800 executives and experts surveyed by the World Economic Forum (WEF) put the 6-year-old currency bitcoin, as well as the underlying blockchain technology, 10 percent of the world’s Gross Domestic Product (GDP) running through the two technologies by 2025. The WEF was a bit more cautious with its own prediction and put 2027 as year they would reach the “tipping point.”
The WEF described the use of apps such as Smartcontracts.com, a website that allows people to issue programmable contracts that pay out sums of bitcoin when certain factors (set by the creator of the contract) are reached and verified, without the involvement of any middleman, as a “Shift In Action” in society. “These contracts are secured in the blockchain as “self-executing contractual states,” which eliminate the risk of relying on others to follow through on their commitments.”
“[By 2025] 58% of respondents expected this tipping point to have occurred. Bitcoin and digital currencies are based on the idea of a distributed trust mechanism called the 'blockchain,' a way of keeping track of trusted transactions in a distributed fashion. Currently, the total worth of bitcoin in the blockchain is around $20 billion, or about 0.025% of global GDP of around $80 trillion,” read the report.
Positive impacts of bitcoin and blockchain technology reaching a critical tipping point listed by the WEF included: more direct financial transactions with less and less middleman; brand new assets that can be traded; better property records, and more financial inclusion in emerging markets; blockchain-based contacts and legal services used as unbreakable escrow or programmatically designed smart contracts; and increased transparency.
Technological Shifts that Will Change the Future
World Economic Forum’s Global Agenda Council on the Future of Software and Society gathered to identify 21 changes in society caused by software that would shape the future. They then survey business and technological leaders about when the “tipping point” for these technologies would happen and what the possible positive and negative effects of them would be, and published the results in a report titled Deep Shift: Technology Tipping Points and Societal Impact .
The committee featured 18 thought leaders and executives in the technology industry, which included several familiar, or involved, in the bitcoin/blockchain industry. Ron Cao, managing director of Lightspeed Venture Partners, a venture firm that invested in American bitcoin exchange CirclePay and Chinese exchange BTCC (formly BTC China); Primavera De Filippi, research fellow at Berkman Center for Internet & Society, France, and early explorer of bitcoin’s and blockchain’s effect on modern law, among others.
The report also included the “sharing economy,” 3D printing, smart cities, wearable devices, the Internet of Things (IoT), among the list of future-shaping technologies.
“Now comes the second machine age. Computers and other digital advances are doing for mental power – the ability to use our brains to understand and shape our environments – what the steam engine and its descendants did for muscle power,” wrote Council Vice-Chair and Director at MIT Initiative on the Digital Economy at Massachusetts Institute of Technology Erik Brynjolfsson in the report.
Blockchain use by governments was another trend that was included in the list. Possible uses by governments included recording land registries, tax collecting schemes, and other improvements in governmental processes. The tipping point decided by the WEF was the first time that tax is collected through a blockchain application and expected it to happen by 2023.
“[By 2025] 73% of respondents expected this tipping point to have occurred. The blockchain creates both opportunities and challenges for countries. On the one hand, it is unregulated and not overseen by any central bank, meaning less control over monetary policy. On the other hand, it creates the ability for new taxing mechanisms to be built into the blockchain itself (e.g. a small transaction tax).”
The WEF remained neutral on whether this would be a net positive or negative, citing corruption, real-time taxation, and unclear role for government in the process, including a state’s central bank, were reasons it could “cut both ways.”
An example given by the report as already underway was a 2016 mayoral candidate of London who has suggested implementing blockchain technology to upgrade the city’s’ ledger for land, as well as for its finances and budget. (Similar experiments are going on in Honduras and the Isle of Man.) “Because these records are kept permanently, there is a strong possibility (without the blockchain) for them to be altered or faulted.”
“The Internet is driving a shift towards networks and platform-based social and economic models. Assets can be shared, creating not just new efficiencies but also whole new business models and opportunities for social self-organization. The blockchain, an emerging technology, replaces the need for third-party institutions to provide trust for financial, contract and voting activities,” concluded the report.
Photo World Economic Forum
The post WEF Survey Predicts Bitcoin 'Tipping Point' Happening By 2027 appeared first on Bitcoin Magazine.
This is a guest post by Jesus Rodriguez.
Bitcoin has become one of the most intriguing and revolutionary technologies created in the last few years. From a functional standpoint, the cryptocurrency has challenged the most fundamental principles of the world’s financial systems by providing a decentralized, secured and trusted model to process financial transactions. To enable its magic, Bitcoin relies on an architecture powered by a groundbreaking technology known as the blockchain.
While bitcoin has clearly become the most important implementation, it is just one of many practical applications that can be powered by the blockchain. From the conceptual standpoint, the blockchain provides a series of capabilities that can change some of the well-established architectures in the enterprise digital world.
How can the blockchain redefine enterprise?
The decentralized, autonomous, trusted and secured capabilities of the blockchain can redefine the foundational patterns of enterprise applications. While the principles of the blockchain are well-understood patterns in enterprise solutions, until now we have lacked practical implementations that validate its functionality at an enterprise scale. The blockchain opens a new set of opportunities to enterprise scenarios that weren’t possible before. However, in order for blockchain solutions to be embraced in enterprise, they will have to develop a series of key capabilities to get past traditional IT compliance and regulatory practices.
What’s needed to adopt the blockchain in enterprise?
Despite its unique value, the process of adopting blockchain solutions in enterprise is far from trivial. Like many other technology trends, blockchain solutions will have to develop a series of enterprise-ready capabilities to be adopted in mainstream business scenarios. Those enterprise-ready capabilities are called to address many requirements in areas such as management, operational readiness, or compliance, which are essential to adopt solutions on different industries. The following list includes some of the key capabilities required to adopt the blockchain in mainstream enterprise scenarios.
- Development Platform: The blockchain is a very complex architecture modeled in terms of transactional exchanges. To mitigate that complexity, we need programming frameworks and languages that allow average developers to build general-purpose applications against the blockchain.
- Monitoring Tools: To be adopted in enterprise settings, the blockchain community should produce solutions that can actively monitor the health of a blockchain network and recover from unexpected failures. These capabilities will allow organizations to monitor the runtime behavior of blockchain solutions.
- Private Cloud Deployments: Facilitating the deployment of the blockchain in private cloud topologies using mainstream enterprise infrastructures is a key element to facilitate the wide adoption of blockchain solutions in the enterprise. In that sense, the blockchain should work seamlessly with technologies such as Docker, VMWare vCloud, Open Stack among other mainstream enterprise infrastructure platforms.
- Standards: As organizations start adopting blockchain solutions, the need to have standards will become increasingly relevant. Standards will facilitate the interoperability between different blockchain platforms while also enabling important security and compliance requirements of enterprise solutions.
- Interoperability with Well-Established Enterprise Platforms: Like any other enterprise software trend, blockchain solutions will be required to integrate with established enterprise platforms like databases, line of business systems, etc. Enabling that interoperability will be essential to power the adoption of blockchain solutions in the enterprise.
10 Enterprise Scenarios that can be Redefined by the Blockchain
The Internet of Things (IoT) is becoming one of the most important trends in modern enterprise software. While many IoT platforms are based on a centralized model in which a broker or hub control the interaction between devices, this model has proved to be impractical for many scenarios in which devices need to exchange data between themselves autonomously. That specific requirement has been the fundamental principle behind decentralized IoT platforms. Those decentralized models are fundamentally powered by a trusted ledger of exchanges between smart devices fundamental to power real-world IoT solutions.
The blockchain provides foundational capabilities of decentralized IoT platforms such as secured and trusted data exchange as well as record-keeping. In this type of IoT architecture, the blockchain will serve as the general ledger, keeping a trusted record of all the messages exchanged between smart devices in an IoT topology.
Public Key Infrastructure (PKI) has been one of the fundamental technologies powering data signatures. PKI models rely on a central authority to stamp and validate signatures on a data payload. While PKI models have been incredibly successful, the dependency on a central authority presents serious limitations for large-scale scenarios and is also vulnerable to attacks involving quantum computation.
The characteristics of the blockchain can help to overcome some of the limitations of PKI models with a keyless security infrastructure (KSI). A KSI model uses only hash-function cryptography, allowing verification to rely only on the security of hash functions and the availability of a public ledger commonly referred to as a blockchain.
Archiving historical data in a secure and trusted manner has been a permanent challenge of enterprise IT. Companies like EMC have become one of the most iconic enterprise software companies in history by providing robust storage and archiving solutions. More recently, cloud platform vendors such as Amazon have provided alternative data archiving solutions. However, in both cases, data archiving solutions rely on a centralized storage model, which has well-known limitations in enterprise scenarios in areas such as security and privacy.
Decentralized and autonomous data archives models, such as the ones provided by the blockchain, can be an interesting alternative to centralized data storage solutions. This model will eliminate the dependency on a centralized authority and will allow distributed and trusted storage across nodes in a blockchain network. More importantly, using the blockchain as a data archive will allow any nodes to validate the authenticity of the archived data without relying on central hub.
Decentralized B2B Auditing
Business-to-business (B2B) exchange models are one of the foundations of modern commerce. In those scenarios, transaction tracking, auditing and reconciliation processes are essential capabilities of B2B processes. Traditional B2B platforms enable these capabilities by providing centralized transaction tracking models that will be used by the different B2B endpoints to log relevant events of a specific transaction. These centralized tracking models have proved to be impractical to address many of the typical challenges of B2B transaction tracking processes in areas such as auditing and reconciliation.
Leveraging the blockchain as a decentralized, secured and trusted transaction ledger could be a more effective model to address the challenges of B2B transaction tracking solutions. Using the blockchain, each party in a B2B process could autonomously track the events related to a B2B transaction without the need to rely on a centralized authority. Additionally, the security capabilities of the blockchain will facilitate the implementation of more sophisticated reconciliation and auditing processes.
Legal Proof of Existence or Proof of Possession
Validating the existence or the possession of signed documents is an incredibly relevant element of legal solutions. The challenge of traditional document validation models is that they relied on central authorities for storing and validating the documents, which presents some obvious security challenges, but also becomes more difficult as the documents become older.
The blockchain provides an alternative model to proof-of-existence and possession of legal documents. By leveraging the blockchain, a user can simply store the signature and timestamp associated with a document in the blockchain and validate it at any point using the native blockchain mechanisms.
Distributed File Storage
Cloud file storage solutions such as Box, Dropbox or One Drive are becoming regular citizens of modern enterprise environments. Despite its popularity, cloud file storage solutions typically face challenges in areas such as security, compliance and privacy in order to be adopted in enterprise environments. Those concerns are all rooted behind the fact that enterprises need to trust a third-party cloud system with their confidential documents.
Security Trade Settlement
Central Security Depositaries (CSDs) have been an essential element of modern equity and bond trading. In the U.S. equity market, following frequent bottlenecks during the late 1960s in the settlement of securities trades, CSDs smoothed the post-trade process for transferring share ownership by eliminating the exchange of paper certificates and recording transactions in central, computerized book-entry systems. The international CSDs Euroclear and Cedel (now Clearstream) played a similar role in the Eurobond market from the 1970s onward.
The centralized nature of CSDs is essential to successful bond and equity trades. However, the settlement process via CSDs is incredibly expensive and slow, averaging two or three days per trade settlement.
The blockchain offers an interesting alternative to traditional CSDs as a decentralized ledger that can keep records of transactions without relying on a central authority. The query capabilities of the blockchain will allow the settlement of trades in minutes or even seconds and at a fraction of the cost of the current CSD solutions.
Counterfeiting remains as one of the biggest challenges in modern commerce. Segments like luxury goods, pharmaceutical or electronics are constantly affected by counterfeiting. As a result, the demand for anti-counterfeiting remains one of the hottest topics in the digital commerce world. Unfortunately, most solutions in the market require a trust in the third-party authority, which introduces a logical friction between merchants and consumers.
The decentralized and security capabilities of the blockchain can enable an interesting alternative to traditional anti-counterfeiting platforms. In that sense, we can envision a model in which brands, merchants and marketplaces are part of a blockchain network with nodes storing information to validate the authenticity of specific products. In this model, brands don’t have to trust a central authority with their product authenticity information and can rely on the security and decentralized trust models of the blockchain.
Governments all over the world are investing deep resources to digitize many of their existing processes. Many of these processes deal with sensitive information that require sophisticated levels of traceability, privacy and security. Inevitably, the digital collaboration process relies on trust on centralized authorities.
The blockchain capabilities provide a robust option to enable the digital collaboration between government agencies and citizens. In this model, different government agencies can store records in blockchain nodes so that it can be accessed and verified by other government parties and citizens in a secure and trusted way.
Traditional ecommerce business models are based on the presence of a centralized entity that control activities such as order processing, inventory management, catalog access, etc. In order to buy and sell goods, ecommerce marketplaces need access to sensitive user information such as credit card information, user profile data etc. This information often becomes the target of cybersecurity attacks and many other security and regulatory challenges.
The architecture of the blockchain can enable the first effective peer-to-peer (P2P) ecommerce network in which buyers and sellers can interact directly without the need of a central authority. The absence of a central marketplace eliminates many of the restrictions of ecommerce models such as fees, regulated transactions, etc.
The blockchain represents one of the most important advancements in computer science of the last few years. The ability to enable decentralized, secure, trusted and highly scalable architectures opens the door to a new group of enterprise software solutions on a large number of industries. Blockchain-powered solutions have the opportunity to challenge some of the fundamental architecture principles of enterprise solutions in areas such as security, data storage, trust, etc. Similar to Bitcoin, we should expect to see spectacular platforms in the enterprise software space powered by the blockchain.
The post Beyond Bitcoin: How the Blockchain Can Power a New Generation of Enterprise Software appeared first on Bitcoin Magazine.
Over the past year, bitcoin startups in the Philippines and Australia have begun to target day-to-day expenses and remittances; markets that are in desperate need of instantaneous, secure and cost-effective payment systems.
Startups including Australia-based Living Room of Satoshi and Manila-based Rebit.ph, also known as the parent company of Bills Ninja, have been trying to educate the global population to use bitcoin in day-to-day expenses, such as paying utility bills and settling bank payments.
Paying Bills with Ease
Earlier this year, Rebit.ph acquired bitcoin bills payment platform Bills Ninja, to allow its users to settle rental, tuition, and electricity and credit card bills abroad. The service has been used by Filipino expats working in countries including Canada, UAE, Singapore, Hong Kong, Austrailia and Canada.
“Using Bitcoin, we've made it easier for Rebit users to send targeted remittances. A good number of remittances coming from overseas Filipino workers are intended for bills payments anyway. By enabling our users with this service, we've made it more convenient by eliminating that second step for them,” Rebit.ph CEO John Bailon told Bitcoin Magazine.
An official with Satoshi Citadel, the parent company and investor of Rebit.ph told Bitcoin Magazine that the Philippines-to-Canada, -Hong Kong and -Singapore remittance markets are huge, and that there are hundreds of thousands of Filipino employees working in these countries to support their families in their homeland.
Quite often, these expat workers pay utility bills such as water and electricity and credit card bills directly from these countries, using the Rebit.ph platform or the Coins.ph platform, which is currently ranked among the top 300 most popular websites in the Philippines.
Coins.ph, a competitor of Rebit.ph has seen a huge success through its partnerships with local banks, remittance outlets and financial institutions. The platform enables users to pay utility bills and cash out bitcoin at any of its supported outlets, including thousands of ATMs from the nationwide Security Bank and remittance outlets from Lhuiller and Palawan Pawn Shop.
However, Bailon told Bitcoin Magazine that its platform is different from services such as Coins.ph, because of its over-the-counter transactions for remittances and bills payments.
“Coins.ph allows people to load funds into and draw from their mobile money wallet, while Rebit is closer to the current user experience of an electronic over-the-counter transactions for remittances and bills payments,” Bailon explained.
Currently, many local residents and employees prefer to pay bills at local establishments and institutions. However, the Rebit.ph team says that the local residents are starting to recognize the advantages of bitcoin and bitcoin bills payment systems.
“There needs to be a paradigm shift in consumer behavior when it comes to electronic bills payments. Most Filipinos still pay their bills in-person at establishments even though they actually have access to more convenient methods. We're getting there, and when more and more people start to realize the convenience of electronic bills payments, Rebit is here to allow them to do it over the blockchain,” said Bailon.
Living Room of Satoshi
Living Room of Satoshi, Australia-based bills payment platform allows anyone to pay any Australian bill using bitcoin. The platform has been providing bitcoin bills payment service in all sectors, including shopping, entertainment, banking, Internet, electricity/gas, rent, tax, insurance and water.
The platform has been welcomed and used by Australian residents across the country. In a recent interview with Bitcoin Magazine, Australian farm Buda Foods founder and CEO Mark Burgunder said:
“We currently have a great service available here called Living Room of Satoshi that allows us to make bill payments and electronic transfers to almost any bank account in Australia using bitcoins. We've been using this service on a number of occasions already with the largest purchases so far having been for chicken feed and for mobile electric fencing.”
Many bitcoin enthusiasts and startups in the Philippines and Australia believe that the key to mainstream success for bitcoin is to educate the general population about its advantages, and encourage people to use bitcoin for day-to-day expenses.
The post Bitcoin Used to Pay Utility and Credit Card Bills in the Philippines and Australia appeared first on Bitcoin Magazine.
This is a guest post by Michael Folkson.
The Internet was originally developed as a network for information exchange. Now, a multitude of entrepreneurs and software developers are building the Internet for value exchange. The next logical progression is to build the Internet for risk exchange.
Just as units of currency can be transferred to a third party, insurance contracts transfer risk exposures to a third party. Blockchain technology has the potential to radically transform how the insurance industry operates and how risk exposures are shared and distributed.
While Bitcoin offers a protocol for peer-to-peer value transmission bypassing the traditional banking system, an insurance industry leveraging a public blockchain presents an opportunity for individuals and entities to retain, share or transfer risk exposures without the requirement for risk exposures to sit on an insurance company’s balance sheet.
Science fiction frequently offers inspiration for what an industry could look like in the future. The short speculative fiction titled "Know When to Hold ’Em" by K.G. Jewell is a somewhat dystopian vision of futuristic insurance, but it does explain how the user interface of a peer-to-peer insurance market could operate.
In the story, the lead character, Jonas, acts as an insurer on the platform MicroRisk. Among the microrisks he chooses to provide insurance coverage for are vacation sickness, exam results, fashion (two individuals wearing the same outfit at an event) and being stood up on a first date. He is required to post collateral into his MicroRisk account before insuring a risk and is able to audit claims before paying out on them. The policyholder’s premium and the insurer’s collateral are frozen in escrow until the contract closed.
Some of these risks may be difficult to price due to limited data and increased moral hazard. However, the story does stir the imagination when envisaging what personal risks could be insured if the requirement to go through a conventional insurance company was lifted.
The transfer and distribution of risk dates back to at least to the second millennium B.C. In approximately 1750 B.C. Mediterranean sailing merchants paid their lender an additional sum to agree to terminate their liability conditional on the shipment being stolen or lost at sea.
There are a number of participants in today’s insurance industry. Brokers act as intermediaries to connect insurance buyers and sellers. Underwriters determine the premiums that should be charged in conjunction with the actuaries who also estimate the reserves required to meet future claims on an ongoing basis. Claims adjusters verify the legitimacy of insurance claims and assess the size of the payout.
There are many parallels between the banking and insurance industries with both sectors rewarded for accepting risk exposures. Rather than lending out funds and (hopefully) receiving them back at a future point in time, insurance companies receive funds in advance and return them contingent on future events.
The peer-to-peer lending model has thrived in recent years with companies such as Lending Club, Prosper and Zopa facilitating more than $1 billion of loans between individuals.
Its success is at least partly explained by re-establishing a direct link between investors and specific credit risk exposures at a time of economic uncertainty, sovereign debt crises and complex too-big-to-fail banking institutions. These direct credit risk exposures allow an investor to diversify her overall portfolio, and there are minimal infrastructure costs in comparison to traditional retail banks.
Similarly, a peer-to-peer insurance platform re-establishes a direct link between investors and specific insurance risk exposures. Today’s insurance companies are so large, complex and heavily regulated that the direct link between an investor and specific insurance risks has eroded. If an investor wants exposure to insurance risk to diversify her portfolio, she has little option but to invest in the shares of an insurance group and be exposed to multiple insurance risks in addition to asset risks such as sovereign bonds.
It is extremely difficult to match an investor’s risk appetite with specific insurance risks such as personal or commercial, home, car, health or travel. Moreover, it is impossible for an investor to opt out of specific risk exposures. The only insurance risks investors can get direct exposure to are credit and catastrophe risk through the issue of catastrophe bonds.
The peer-to-peer insurance model offers investors an opportunity to generate higher investment returns, transparency with regards to risk exposures and the satisfaction of directly insuring individuals or businesses rather than investing in a faceless insurance company. It offers policyholders access to cheaper premiums, faster claim payments and insurance coverage that might not be available through traditional channels.
Satoshi Nakamoto’s primary achievement of preventing users spending the same bitcoin on multiple occasions ("double spending") without a reliance on a trusted third party is a historic feat. However, it is worth emphasizing the obvious that the protocol does not wholly eradicate reliance on trusted third parties for all financial contracts.
For example, escrow mechanisms that are easily built using the Bitcoin protocol may still require dispute resolution if there is a disagreement over whether the goods or services delivered are of sufficient quality.
Nevertheless an escrow transaction built on a Bitcoin-like blockchain could be a template for how future insurance contracts are constructed. The insurance buyer and the insurance seller could transfer the premium and the collateral respectively into a multi-signature (2-of-3) Bitcoin wallet. The third signatory to the wallet would be the arbiter. Funds would be released from the wallet conditional on two parties signing the transaction, preventing the buyer, seller or arbiter from fraudulently seizing the funds.
Just as the execution of a standard escrow contract will rely on an arbiter to resolve disputes between the buyer and the seller, the execution of an insurance contract relies on claims adjusters to verify that incoming claims are valid and if necessary estimate the monetary value of the claim.
This service will vary from reviewing evidence submitted by the claimant to physically inspecting the scene of the insured event depending on the magnitude of the claim. It is currently difficult to automate this function, and artificial intelligence is not yet advanced enough to rebuff all human attempts of fraudulent submissions.
Decentralized platforms heavily rely on the efficacy and dependability of reputation systems. The upside of bypassing centralized services such as eBay, Kickstarter or Uber is that no third party can charge excessive fees, impose restrictive policies, prohibit bitcoin payments or present a single point of failure in the storing of users’ personal data.
However, the downside is that no organization is responsible for maintaining the integrity of the system. Instead a mixture of user feedback, reputation scoring and financial incentives must be combined to construct robust reputation systems. The alternative is to build quasi-decentralized systems that may be an improvement on centralized systems but don’t accrue all the benefits of purely decentralized systems.
For example, the various activities of an insurance company could be unbundled so that some activities are automated while others are outsourced to external providers. It may be the case that quasi-decentralized systems will need to be built as an intermediate step or that optimal systems will never be purely decentralized. However, it makes sense to fully explore all the options and capabilities of this technology before falling back on how current systems already operate.
Although private blockchains (or ‘permissioned distributed ledger systems’) are useful for keeping databases in sync in a more trusted environment, they are an incremental innovation when compared to the potential of public blockchains. Just as Bitcoin opens the floodgates for peer-to-peer transactions and permissionless innovation, peer-to-peer insurance leveraging a smart contracts protocol could provide a platform for matching insurance buyers and insurance sellers for any risk they agree to exchange.
This marketplace would be a radical paradigm shift from today’s centralized and spatially anchored insurance industry. The blockchain provides the opportunity to build a more innovative, expansive and transparent industry that evolves to the needs and requirements of its users.
Photo Pictures of Money / Flickr (CC)
The post Building a Risk Market for the Digital Age Using Bitcoin appeared first on Bitcoin Magazine.
The international R3 blockchain project to develop blockchain commercial applications and standards for the financial world just got a whole lot weightier as 13 new global banks joined the distributed or “shared” ledger initiative.
R3, the international financial innovation firm, based in New York, London and San Francisco, is a multidisciplinary team including experts from the worlds of electronic banking, new tech startups, and cryptography and digital currencies development, aiming to “define, design and deliver the next generation of financial technology.”
The 13 new banks joining the project are:
- Bank of America
- BNY Mellon
- Mitsubishi UFJ Financial Group
- Deutsche Bank
- Morgan Stanley
- National Australia Bank
- Royal Bank of Canada
- Societe Generale
- Toronto-Dominion Bank
These banks join current project members Barclays, BBVA, Commonwealth Bank of Australia, Credit Suisse, Goldman Sachs, J.P. Morgan, Royal Bank of Scotland, State Street and UBS.
“The addition of this new group of banks demonstrates widespread support for innovative distributed ledger solutions across the global financial services community, and we're delighted to have them on board," R3 CEO and former ICAP Electronic Broking CEO David Rutter said in a press release.
"We have placed an emphasis on working with the market from day one, and our partners recognize that a collaborative model is the best way to quickly, efficiently and cost-effectively deliver these new technologies to global financial markets," Rutter said.
As Bitcoin Magazine previously reported , Rutter has recruited Nichola Hunter, former ICAP trading executive; Richard Brown, a technology expert formerly with IBM UK; and Tim Swanson, a U.S.-based cryptocurrencies consultant, to work in a collaborative lab environment or "sandbox" to test and validate blockchain applications, prototypes and protocols.
This major project brings together not only the experts, but also the considerable resources of 22 big banks to collaborate on “research, experimentation, design and engineering to help advance state-of-the-art enterprise-scale shared ledger solutions to meet banking requirements for security, reliability, performance, scalability and audit.”
Photo Clément Bardot / Wikimedia(CC)
The post R3 Blockchain Development Initiative Grows to 22 Banks Worldwide appeared first on Bitcoin Magazine.
It’s well known that bitcoin transactions are not anonymous. Every transaction and the full transaction history of any bitcoin address are permanently recorded in the tamper-proof public blockchain and open to analysis. A bitcoin addresses isn’t explicitly associated to its owner, but blockchain network analysis can often de-anonymize bitcoin users.
Bitcoin Magazine recently reported that two companies, Chainalysis and Elliptic , sell sophisticated blockchain network analysis tools and services to trace bitcoin transactions back to their participants, and de-anonymize users. Such services often anger libertarian early adopters, but the direction of the evolutionary trend in the Bitcoin space is clear – governments and financial institutions are gradually warming up to blockchain technology as a means to achieve faster, cheaper and better recorded transactions, but consider privacy and anonymity as bugs that need to be fixed.
Recommended privacy practices, from simple measures such as using fresh Bitcoin addresses for new transactions to strong privacy measures such as dark wallets and mixing services, reduce the risk of being de-anonymized, but there are documented attack strategies that often permit identifying bitcoin users by IP. Using the Tor network provides additional privacy protection by masking the user’s IP, but ways to work around Tor privacy have been found.
Now two researchers from the ATR Defense Science & Technology Lab at Shenzhen University, in China, have published a white paper titled “Transaction Remote Release (TRR): A New Anonymization Technology for Bitcoin .” The researchers propose a new anonymization technology called Transaction Remote Release (TRR). Inspired by Tor, TRR is able to render several typical attack strategies ineffective. “Furthermore, the performance of encryption and decryption of TRR is good and the growth rate of the cipher is very limited,” say the researchers. “Hence, TRR is suited for practical applications.”
“In the Bitcoin protocol, the only way that the attackers can connect the Bitcoin address with an IP address is in the process of releasing and spreading a new transaction,” note the researchers. Therefore, they propose to encrypt the new transaction and obfuscate the source IP of the sender.
TRR is inspired by the idea of encryption and decryption layer by layer as used in Tor. A client encrypts a new transaction, layer by layer, using the public key from different TRR nodes. Then it establishes an independent connection to other TRR nodes, one by one, without using the spreading mechanism of the Bitcoin network.
When a TRR node receives data, it will decrypt it using its private key. Then it transmits the remaining data to the next node. When the last TRR node is reached, it will release the transaction to the Bitcoin network. Every node knows its previous node and next node. Only the client and the last node know the content of the transaction but the last node does not know the IP address of the client.
The researchers analyze several possible de-anonymization attack strategies, including Bitcoin protocol sniffers, the Sybil attack, Sybil attack plus entry nodes, fake Bitcoin nodes and fake TRR nodes attack, and conclude that TRR can help clients gain strong anonymity.
"In addition, the experiments show that the performance of the TRR multi-layered encryption and decryption algorithm is satisfactory in practice and the growth rate of cipher text is very limited,” note the researchers in the conclusion.
The researchers acknowledge that the current TRR proposal is vulnerable to DoS attacks based on fake TRR requests, and state that further research to eliminate this weakness is ongoing.
But another weakness is that implementing TRR would require changes to the Bitcoin protocol. That is a serious weakness, because it seems evident that, in the privacy-as-bug climate that is developing around Bitcoin, there is just no way modifications to Bitcoin Core explicitly aimed at anonymity could ever be accepted.
Therefore, it might make more sense to consider implementing TRR in a privacy-enhanced sidechain. The modifications to Bitcoin Core required for implementing sidechains are justified by general considerations much more acceptable from a mainstream perspective. Sidechain Elements , the first experimental code base for sidechains released by Blockstream, includes confidential transactions, and a sidechain implementation of TRR could be a workable way to sneak privacy in.
The popular website Daily Dot covered the TRR white paper and noted that TRR first emerged in 2014 during the development of DarkNetCoin, a niche cryptocurrency focused on anonymity. Unfortunately the conclusion of the Daily Dot article, “Bitcoin did not respond to a request for comment about TRR,” reveals that the mainstream press still has basic things to learn about Bitcoin.
The post Transaction Remote Release, a Tor-Inspired Proposed Change to Bitcoin Protocol for Anonymous Transactions appeared first on Bitcoin Magazine.
Previously reported by Bitcoin Magazine , bitcoin and gold exchange Vaultoro has reached $1 million in gold trading volume, recording an average monthly trading growth rate of 91 percent and rapid increase of its user base. Following its milestone, Vaultoro plans to expand its team and services internationally, to become the “key ingredient for the 2.6 billon under-banked” individuals all around the globe.
Gold has been the international store of value for thousands of years. Unlike bitcoin or fiat money, gold has proved to be a stable universal currency with very low volatility. Based on the five-year gold chart taken from Infomine.com , the gold price in January 1, 2010 stood at around $1,100. At this time of writing, the price of gold is around $1,130, recording a mere $30 difference over the last five years.
Brothers Joshua and Philip Scigala developed Vaultoro to allow the underbanked population to escape the volatility of bitcoin and store their wealth in physical gold.
“We built Vaultoro so people anywhere in the world can hedge the bitcoin price volatility without going back to fiat but by instantly parking any value in gold. Gold gets its value from the markets and not by government dictate. It is also globally recognized as a store of value. It has lasted more than 3,000 years, whereas no paper fiat currency has lasted more than 200 without collapsing with terrible consequences for the holder,” Joshua Scigala told Bitcoin Magazine.
“We see Vaultoro being a key ingredient for the 2.5 billion underbanked in the world to be able to accept payment from all around the world with bitcoin, hold that value in assigned gold and then spend it within seconds using bitcoin again,” added Scigala.
Currently, Vaultoro stores all of its physical gold in a Swiss high-security vault, 100 percent insured against theft, fire and other eventualities. Unlike most of fiat-to-gold bitcoin exchanges, Vaultoro will deliver gold bars in physical form to their users at any time.
Vaultoro to Launch a Point of Sales App
Online merchants, especially in Latin America and Southeast Asia have fallen victim to the highly volatile nature of bitcoin and time and time again. Today, there are very few platforms that enable users to hedge the value of bitcoin to another asset.
With an aim to serve small and medium-sized bitcoin merchants in underbanked regions, Vaultoro plans to launch a point of sales application that “will allow merchants to choose their hedge, meaning a 50/50 split or a 10/90 split between bitcoin they get in and gold they hold. We are looking at possible partnerships with ATMs and mobile payment providers in these regions so they can hook up to our system via API and use gold and bitcoin directly or indirectly through us,” Scigala told Bitcoin Magazine.
A few bitcoin platforms such as Coinapult offer a bitcoin “lock-in” service that allows users to lock in the price of bitcoin to the price of another asset has been popular in the United States and Latin America. The Vaultoro team found the idea of a gold-to-bitcoin lock-in service interesting, but they believe that the lock-in feature would contradict the fundamental philosophy that wealth is backed by real physical assets.
“When someone trades into gold on Vaultoro they actually buy physical gold that is secured as their property in their name. The gold is held in what’s called a bailment contract meaning we secure someone else’s property (just like self-storage facilities hold your furniture). By offering to lock in someone’s bitcoin to a certain price we would be moving away from the fundamental philosophy that wealth is backed by real physical assets and not by a promise to lock a price and deliver on that,” said Scigala.
Instead, the Vaultoro team may look into diamonds or other physical assets that are even more stable than gold.
Currently, Vaultoro is considering a funding round to maintain its services and expand its team. The Vaultoro team is exploring a few options including crowdfunding campaigns and venture capital investments.
“Any other investment we would take on would not only be to raise money but also to gain expertise and knowledge by bringing onboard people that will help us grow our vision long term,” Scigala said. “A vision of open markets, a vision where we stop taking money from poor people in rich countries and giving it to rich people in poor countries, but rather give poor people in poor countries the tools to lift themselves out of poverty by enabling them to join a global market of goods and services through a bank and state independent monetary system we all know and love as Bitcoin.”
The post Vaultoro Seeks to Provide a Store of Value to the Underbanked World Using Gold and Bitcoin appeared first on Bitcoin Magazine.