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Bitcoin Price Likely Heading Towards ¥2500newsBTC
There is an ascending channel pattern formed on the daily chart (price feed from BTCChina), which may act as a catalyst in the near term. Moreover, there is a bullish trend line formed on the hourly chart that can be seen as a buying area (price feed ...
Posted on 29 November 2015 | 12:36 am
Bitcoin Price Uptrend Hurdled By The 1 x 1 Gann AnglenewsBTCBitcoin
price dropped today to print a low of around $350. The bullish wave has slowed down after piercing the resistance level at $350. Today's trading volume wasn't as high as yesterday's. It seems that the bulls will not be able to keep bitcoin ...
Posted on 28 November 2015 | 12:01 pm
FonQ.nl now accepts bitcoinCoinReport
Report estimates nearly 5M Bitcoin
users by 2019 While bitcoin
users in the United States took advantage of Bitcoin
Black Friday, the online retailer FonQ.nl made it official to now accept bitcoin
payments, Ecommerce News reports. The Netherlands-based ...
Posted on 28 November 2015 | 11:45 am
Bitcoin Price Locomotive Runs out of SteamCryptoCoinsNewsBitcoin
price has failed to maintain advance after putting in a strong surge two days ago. While this does not yet look like a return to decline, price may correct deeply before returning to the upside. This analysis is provided by xbt.social with a 3 ...
Posted on 28 November 2015 | 9:48 am
Posted on 28 November 2015 | 9:17 am
Posted on 28 November 2015 | 6:19 am
Posted on 27 November 2015 | 4:08 pm
Is Bitcoin Volatility All In The Mind?CoinDesk
The good news is that bitcoin's
association with terrorism and Daesh played a somewhat smaller part in this week's coverage. Although some of the narrative spilled over from last week, and the news did travel far and wide, most mainstream outlets ...
Posted on 27 November 2015 | 10:30 am
Bitcoin Price Choppy; tread Carefully!newsBTC
Earlier on this morning, we published the first of our twice daily bitcoin
price watch analysis. In the piece, we suggested that – as a result of the width of our predefined range – we would bring both our intrarange and our standard breakout strategy ...and more »
Posted on 27 November 2015 | 8:35 am
In a new interview with CoinDesk, Russia's Ministry of Finance opened up about bitcoin and blockchain technology.
Posted on 28 November 2015 | 6:18 am
CoinDesk has rounded up some of the top bitcoin and blockchain-related headlines from across the globe.
Posted on 27 November 2015 | 10:30 am
Lloyd's held a seminar in London last week to highlight blockchain technology to insurance market participants as part of their modernisation plan.
Posted on 27 November 2015 | 9:00 am
Bitcoin compliance startup Polycoin was recently accepted into two incubators, one backed by Citi and the other by Nordea.
Posted on 27 November 2015 | 5:00 am
The price of bitcoin increased by 12% today, reaching a weekly high of $368.51 at 12:30 (UTC).
Posted on 26 November 2015 | 10:35 am
The Kenyan High Court heard a case brought by bitcoin startup BitPesa against mobile money giant Safaricom two days ago.
Posted on 26 November 2015 | 9:05 am
Get your bitcoin wallets at the ready and prepare yourself for a day of frenzied discounted online shopping. Bitcoin Black Friday is back!
Posted on 26 November 2015 | 5:00 am
The European Union (EU) is years away from implementing a consistent framework for cryptocurrency regulation, according to a new report by SWIFT.
Posted on 26 November 2015 | 4:30 am
New York bitcoin exchange Coinsetter has instituted a new $65-per-month account fee, a move it says is aimed at offsetting its compliance costs.
Posted on 25 November 2015 | 12:31 pm
West Virginia University’s Student Government Association is debating whether to use a blockchain-based voting platform for its upcoming election.
Posted on 25 November 2015 | 10:00 am
Visa Europe discusses why it is using the bitcoin blockchain as part of its new proof-of-concept for the remittance market.
Posted on 25 November 2015 | 7:00 am
Bitcoin industry startups are facing backlash over a new set of articles in which they have been portrayed as pivoting away from the cryptocurrency.
Posted on 24 November 2015 | 1:40 pm
CoinDesk is holding a public vote as part of its annual drive to select the most influential people in the bitcoin and blockchain industry.
Posted on 24 November 2015 | 10:00 am
Microsoft has added a new decentralized application to its Ethereum blockchain-as-a-service toolkit introduced in October.
Posted on 23 November 2015 | 3:04 pm
Digital currencies could disrupt the ability to central banks to oversee the economy or issue money should global adoption take place, says the BIS.
Posted on 23 November 2015 | 1:51 pm
Australian bitcoin firm Bitcoin Group is hiring a bitcoin expert after the country's top regulator raised concerns about its forthcoming IPO.
Posted on 23 November 2015 | 10:51 am
With Mike Hearn taking a step back from Bitcoin development to work for private blockchain startup R3, former Bitcoin Core lead developer Gavin Andresen indicated he might take over the lead of Bitcoin XT, the Bitcoin implementation programmed to increase the block-size limit through BIP (Bitcoin Improvement Proposal) 101.
Andresen, who shifted his efforts to Bitcoin XT earlier this year, told Bitcoin Magazine, reluctantly: “I might take over lead of XT, but I don't want to.”
It was announced last week that Hearn recently joined R3 as lead platform engineer, where the Google veteran and Bitcoin XT lead developer will work with some of the world's largest banks on distributed ledger-based protocols for global financial markets. Hearn confirmed to Bitcoin Magazine that he will do the minimum required to keep Bitcoin XT running, but won't actively develop or advocate the implementation any longer.
Hearn, a staunch advocate of a block-size increase in order to allow for more transactions on Bitcoin's network,implemented BIP 101 into Bitcoin XT this summer. With this patch, designed by Andresen, Bitcoin XT is set to increase the maximum block size to 8 megabytes if a threshold of 75 percent of mining power accepts the change. Once activated, this limit is set to double every two years.
On Reddit, Hearn detailed:
The implementation of BIP 101 in Bitcoin XT without industrywide consensus was considered controversial by many, in particular among the Bitcoin development community. Shortly after Hearn implemented the patch, however, several prominent Bitcoin companies stated their intent to upgrade their code to support BIP 101 by December of this year. As such, the timing of Hearn's departure could have been experienced as unfortunate by supporters of a rapid block-size increase. While the Bitcoin industry could still adopt Bitcoin XT, this seems unlikely with no active lead development.
Success of Bitcoin XT might therefore depend on Andresen taking over as lead developer, Hearn acknowledged when asked by Bitcoin Magazine. This idea – which was previously advocated by Coinbase CEO Brian Armstrong – was not dismissed by Andresen, though he is not keen to take such a step. Andresen, who is currently on MIT's payroll, explained:
“I might take over lead of XT, but I don't want to. I stepped back from lead of Core because I got tired of the constant trivial decision-making needed to lead an active open source software project. I want to spend my time thinking about and working on bigger, longer-term issues; like: 'What are the benefits and risks of increasing the maximum block size?'”
BIP 101 itself currently garners little support among the Bitcoin development community, and seems very unlikely to be implemented in Bitcoin Core. Regardless, Andresen does expect that BIP 101 might be adopted by the industry at large. Either through Bitcoin XT, or by miners, companies and other users implementing the patch in their own software.
“It depends on what comes out of the big Hong Kong meeting,” Andresen explained. “If the other developers can't make up their minds and reach consensus on a solution, then we'll have a messy, chaotic couple of months where companies and big mining pools or miners pick sides until a solution emerges. Though, in that case, I do expect that the most likely solution will be BIP 101, since it is the only solution with well-tested code they can download and run.”
Photo Web Summit / Flickr(CC)
The post Gavin Andresen: I Might Take Over Lead of Bitcoin XT appeared first on Bitcoin Magazine.
As the bitcoin price has risen out of the $200’s over the past month, the price increase has driven another important event: more mining hardware is being brought online.
Miners earn revenue two ways. The first is with the block reward, which is 25BTC approximately every 10 minutes. The other way is with transaction fees. The block reward also acts as the mechanism in which new supply of bitcoin is generated. Because mining tends to reward those that can do the most work, miners deploy increasing amounts of hardware to try to be the first to mine each block. To keep a steady block creation rate, Bitcoin creator Satoshi Nakamoto put in place a rule that updates the network difficulty every 2016 blocks, or approximately two weeks.
According to Bitcoin Wisdom, the difficulty increase that took place today rose by 10.44%. The last time the difficulty increased by more than 10 percent was on November 5, 2014, when the difficulty increased by 10.05 percent. Further, Bitcoin Wisdom is predicting that the next bitcoin difficulty increase in 2 weeks will be 10.25%. The last time there were two double digit percentage increases in difficulty was August 19, 2014 and August 31, 2014.
But the increase in difficulty makes sense.
The next generation of bitcoin miners have been released by three of the top companies in the space. In August, Bitmain announced the launch of the Antminer S7, which contains the BM1385 ASIC. Each S7 can generate upwards of 4,850 GH/s while only using 0.25 J/GH of power.
In October, the Chinese mining firm BW announced that it was releasing its next stage bitcoin miner, which would contain a 14nm chip. Virgilio Lizardo Jr., head of international at Bitbank, told Bitcoin Magazine that the first batch of servers released would be 48 petahash total. For context, the current network has a hash rate of 550.5 PH/s.
Finally, the original creator of the ASIC miner, Avalon, announced that it was releasing its latest miner, the Avalon6, which would contain the new A3218 mining chip. Each miner would be able to generate 3.65 TH/s of hashing power. While these new miners have just hit the market, it is additional hardware that should come online over the coming weeks.
The reality is simple: As the price of bitcoin increases, the number of people who can make a profit mining increases. That encourages more participation in securing the network, which results in the need for a difficulty increase. As these next generation of bitcoin miners come online, it is expected that the difficulty will continue to counteract the additional hash rate in the network.
Jacob Donnelly is a freelance journalist and a consultant in the bitcoin/blockchain space. He runs a weekly digital currency and blockchain newsletter called Crypto Brief.
The post Mining Difficulty Increases by over 10% Due to Bitcoin Price Increase and next-Generation Chips appeared first on Bitcoin Magazine.
In September Bitcoin Magazine reported that nine global banks were pooling resources to fund R3, a next-generation global financial services company focused on applications of cryptographic technology and distributed ledger-based protocols within global financial markets.
R3 will seek to establish consistent standards and protocols for this emerging technology across the financial industry in order to facilitate broader adoption and gain a network effect, according to an R3 press release.
Several other top banks joined R3 soon thereafter.
Now, five more banks – ING, BNP Paribas, Wells Fargo, MacQuarie and the Canadian Imperial Bank of Commerce – are joining R3, Reuters reports. R3, now supported by most of the world’s major banks (with notable exceptions in China), represents the first high-profile collaborative project to find out how blockchain technology can be used in finance.
Thirty banks across the world are now partnering with R3, signaling a significant commitment to collaboratively evaluate and apply this emerging technology to the global financial system.
“The combined strength of our technology team and the diverse global footprint of our member banks clearly differentiates us and puts us in a unique and exciting position within the distributed ledger space,” said R3's CEO David Rutter. “The R3 collaborative model is the best way to quickly, efficiently and cost-effectively deliver these new technologies to global financial markets. We look forward to welcoming more players to our growing team as the initiative continues to develop and evolve.”
Richard Gendal Brown, IBM's former executive architect of banking innovation, joined R3 in September as chief technology officer. In a recent post on his personal blog, he introduced his senior leadership team, which includes James Carlyle, formerly chief engineer at Barclays Personal and Corporate Bank, who joined R3 as chief engineer, and Bitcoin code developer Mike Hearn, who joined R3 as lead platform engineer. Ian Grigg joined R3 as architecture consultant, and Tim Swanson joined R3 as head of research.
Gendal Brown’s team will focus on the basics of fintech applications for banks and financial firms: “[W]hat properties does a technology platform need to possess if it is going to enable the world’s banks – and other firms – to deploy shared platforms to record, manage and report on their contractual agreements with each other and with their customers? What is the irreducible set of functional requirements we must provide? What are the non-negotiable non-functional requirements?”
A press release on ING Bank's website announced that, by joining R3, ING is taking the next step with blockchain technology to collaborate on research, design, and engineering that will advance innovative solutions for clients that meet banking requirements for security, reliability, performance, scalability, and auditing. ING Group, a Dutch multinational banking and financial services corporation headquartered in Amsterdam, had more than 48 million individual and institutional clients in more than 40 countries in 2013.
“We are very excited about joining the R3 consortium and taking an important step forward in our payments innovation strategy,” said Mark Buitenhek, ING Global Head of Transaction Services. “We want to make the most of what blockchain technology has to offer our customers and the best way to achieve this is through global collaboration. Working together, we will develop innovative banking solutions for our clients with consistent standards and protocols guaranteeing widespread adoption. We are convinced that this initiative brings together unique sets of expertise and experience in electronic financial markets, distributed ledgers and blockchain technologies.”
The rapid rise of R3 shows that the adoption of blockchain technology in the financial sector is reaching a point of no return. On the other hand, it can also be interpreted in the context of the ongoing trend toward appropriation of blockchain technology by the mainstream financial world, which many early adopters and Bitcoin purists consider a disturbing trend.
The post ING and Other Top Banks Join R3 to Take the Next Step with Blockchain Technology appeared first on Bitcoin Magazine.
In the aftermath of the Paris attack on November 13, the European Union (EU) is looking to crack down on bitcoin with the hope of preventing the financing of future attacks. Regulators and advocacy groups agree, though, that kneejerk regulation is not what is needed; rather, the need is thoughtful regulation and an increase in education.
“There’s nothing wrong with Bitcoin, it just means it’s another part of our financial system,” said Dana Syracuse, managing director and a member in the Anti-Money Laundering (AML) and Regulatory Compliance Practice at K2 Intelligence, in an interview with Bitcoin Magazine.
K2 Intelligence is an investigative, compliance, and cyber defense services firm. Prior to joining K2 Intelligence, he worked in the New York State Department of Financial Services and was the author of BitLicense.
“As time goes on, Bitcoin’s place is going to grow," Syracuse said. "One of the things that I talk about is, if you look at the story of bitcoin and the kind of enforcement and prosecutorial action, it shows the evolution and growth of the space.”
“Bitcoin is not the problem, and further restrictions on it are not the solution. Criminals and terrorists are using all sorts of technology to try to hide their activities over the Internet, but those who turn to bitcoin as part of that effort are making a big mistake,” said Jason Weinstein, director of the Blockchain Alliance, in an interview with Bitcoin Magazine.
Jennifer Shasky Calvery, the director of the Financial Crimes Enforcement Network (FinCEN) explained at a Digital Currency Summit held by the Department of Justice that $4 million worth of bitcoin is circulated through regulated entities. Outside the regulated entities, $10 million worth of bitcoin is circulated. At the event, Calvery made clear that her agency didn’t regulate bitcoin; instead, it regulated the financial institutions.
Perianne Boring, the founder and president of the Chamber of Digital Commerce, echoed those thoughts. In an interview with Bitcoin Magazine , she said, “Virtual currency is already highly regulated, especially within the G7 nations. Despite the high degree of regulation, the majority of bitcoin transactions are taking place outside regulated entities, which are mostly outside the G7 nations.”
“Increasing regulation within the G7 would only increase burdens on the companies that are working hard to comply with the Bank Secrecy Act and related regulations and could potentially push more bitcoin into the unregulated entities,” Boring said.
“What is needed is rolling out regulations in a rational, thoughtful, and constructive way,” said Syracuse. “When you regulate in the face of a crisis, there is often a temptation to overcorrect, which you want to guard against. We have to be careful on the back end of a travesty like this not to overregulate.”
Regulation is not the problem; it is education
Fundamentally, it is education that is problem, not regulation. Once regulators have sufficient education, they tend to come to the same conclusion that many others do: Bitcoin is not the problem.
“I’m a little skeptical of what new regulation would exist that would help,” said Vincent D’Agostino, associate managing director in the U.S. Cyber Investigations and Incident Response practice at K2 Intelligence, in an interview with Bitcoin Magazine.
Before joining K2 Intelligence, he was the FBI’s trial agent for Silk Road 1 and the case agent for Silk Road 2.
“If more people on the counter-terrorism side took the time to educate themselves on blockchain technology, so when they did a raid and the first thing they did was take that seized data and identify the public keys so they could start to make links," he said. "They could go, we didn’t know who this linked to, but now we know everything they’ve done. It attaches that person to those wallet files."
“Every financial innovation, every new form of value transfer brings with it its own unique challenges," Syracuse explained. "Bitcoin is not unique in that. Terrorism is a major concern of major financial systems. The use of bitcoin in those kinds of activities is no different than what goes on in the traditional banking system. Education in this space is key, and that is what will lead to rational and productive regulation and communication between the regulators.”
According to a report by the U.K. Treasury, “there is little evidence to indicate that the use of digital currencies has been adopted by criminals involved in terrorist financing, whether as a means by which to raise funds (crowd funding etc.), to pay for infrastructure (e.g. server rental), or to transfer funds.”
The report also explains, “The money laundering risk associated with digital currencies is low, though if the use of digital currencies was to become more prevalent in the U.K. this risk could rise.”
That is because bitcoin is actually an inefficient method for transferring value for illicit purposes since it is a completely public ledger.
“It would be far easier to launder euros or dollars than it would be to launder a decentralized, blockchain-based currency like bitcoin,” said David Long, the principal and senior consultant at the Northern California Fraud Prevention Solutions, in an interview with Bitcoin Magazine . “Though from an initial investigative standpoint, bitcoin might present more of a challenge due to the necessity of uncovering who is actually responsible for a given transaction or transactions. However, once the actor's identity is uncovered, the blockchain makes it possible to uncover most, if not all, of a person's transactions. This capability is without parallel when the subject is dealing in euros or dollars.”
Weinstein further confirmed that point, saying, “Reports of bitcoin’s anonymity are greatly exaggerated. Criminals or terrorists who use bitcoin to facilitate their activities are foolish, because bitcoin is traceable in a way that other payment methods, including cash, are not.”
Bitcoin is pseudonymous in that all that is shown is on the public ledger is a public address. However, once a law enforcement officer is able to identify who owns that public address, he would then be able to track every transaction that went to and from that address. If the Islamic State of Iraq and the Levant (ISIL) were to transfer bitcoin, and a law enforcement officer knew that it was their address, he could track each transaction and start building a case accordingly.
Cash, on the other hand, is completely anonymous. An individual in ISIL could take envelopes of cash across state borders and easily pay for the necessary assets for committing an act of terror. A law enforcement official would have no way of verifying how the funds were used. Long gave an example where a trade-based money-laundering scheme using dollars or euros conducted by professionals could be virtually undetectable.
The problem with this is that more people don’t realize it.
“They [law enforcement] are not using existing bitcoin investigative techniques as much as they should,” D’Agostino said. “There is no doubt that when done correctly, using bitcoin can be extremely anonymous but as long as there are human beings involved in the transfer of bitcoin, the creation and maintenance of those wallets, and the movement of that digital currency, they are going to make a mistake at some point. Those mistakes are typically catastrophic from an anonymity perspective. If it’s a group of people within a terror network moving a high volume of bitcoin both directions, they’re going to make a mistake eventually. They’ll forget to encrypt their wallets or leave their abandoned keys on a piece of discarded or seized digital device. That’ll give you an opening, a crack in the door, to give law enforcement you a chance to exploit that information and connect the subject with a set of address and transactions. So what may have started as completely anonymous set of transactions now has ends up having the opposite desired affect”
The key is educating law enforcement and national security authorities about how the technology works, so they can enhance their ability to use it to follow the money and protect public safety, Weinstein said. "We need more education, not more regulation.”
Jerry Brito, the executive director of Coin Center, explained in a recent blog post why more education is needed: “Overreaction by jittery policymakers in the wake of a crisis is always a concern, which is why education before such crises is so important. We’ve been engaged in just such education for over a year, and we’re hopeful policymakers understand that an overreaction would be counterproductive, whatever the headlines may say."
Brito echoed the point made clear by Boring and Weinstein: "The fact is that regulators understand that digital currencies do not pose the greatest risk for terrorist financing, and to the extent digital currencies pose some risk, a 'crack down' on their use would likely only serve to drive out legitimate players, which in turn would only serve to limit governments’ visibility into illicit uses.”
Bitcoin financial institutions already follow many of the same money transmitter laws that traditional institutions have to follow. Creating further regulation over them will not help prevent further acts of terrorism. Instead, educating law enforcement on the ways in which it can use the blockchain to seek and capture terrorists is one way to prevent future catastrophes.
Photo StockMonkeys.com / Flickr(CC)
Jacob Donnelly is a freelance journalist and a consultant in the bitcoin/blockchain space. He runs a weekly digital currency and blockchain newsletter called Crypto Brief.
The post Law Enforcement and Regulators Agree: Bitcoin Not Useful for Terrorists, Thoughtful Regulation and Education Needed appeared first on Bitcoin Magazine.
Bitcoin is designed as a peer-to-peer network, where nodes randomly connect to other nodes. Transactions and blocks are transmitted over this network by these nodes, until each node receives all the latest transactions and blocks. This works quite well, as the distributed model makes Bitcoin relatively censorship-resistant; there is no central point of control to shut down or pressure into compliance.
But there are other, more centralized alternatives for transmitting transaction data, too. The best known of these is “the” relay network, introduced in 2014 and maintained by Bitcoin Core developer Matt Corallo: “It's centralizing, but, hopefully, democratizing.”
Corallo's relay network serves two distinct purposes. First, it adds diversity to Bitcoin. Rather than just needing to rely on the peer-to-peer network, Bitcoin users can opt to receive transaction data and blocks through an alternative channel. This makes it harder to successfully attack the Bitcoin network; the relay network functions as a fallback. But the second, and more important reason, is a potential decrease of network latency.
Speaking to Bitcoin Magazine, Corallo explained:
The peer-to-peer code in Bitcoin Core is pretty gnarly. It's stable and it works, but it's not very efficient, and it's not very fast. The resulting network latency is a problem, especially for miners. It can sometimes take 10, 15 seconds before they receive newly mined blocks. If you're a miner, 10 seconds is like 1.5 percent loss in revenue. That is potentially a big deal. You don't want that.”
Some of the bigger miners (typically mining pools) have therefore come up with an alternative solution. Rather than using the peer-to-peer network to transmit new blocks, they have created an alternative – private – network. If one of these miners finds a new block, that miner immediately sends it over to the other miners on their private network, meaning all these miners can start mining on the new block immediately.
The problem, of course, is that this disadvantages all miners not using this private network. When a select group of miners starts mining on a new block faster than other miners this select group gets a head start every time one of them finds a block. This is especially worrisome because it is typically the bigger miners who have the time and resources to set up private networks. Smaller miners might, therefore, become less profitable and eventually drop off the network entirely, which centralizes mining even further.
A Leg Up
Corallo's relay network is essentially a hub-and-spoke network, which consists of servers set up in eight well-connected Internet traffic hubs: New York, Seattle, Amsterdam, Beijing, Tokyo, Singapore, Hong Kong and Novosibirsk (located in central Russia). Additionally, the relay network uses a fairly basic compression algorithm. Any Bitcoin node can connect to the nearest hub on Corallo's relay network, and send and receive transactions and blocks to and from other connected nodes.
But unlike Bitcoin's original peer-to-peer network, Corallo's relay network is centrally controlled: by Corallo. This means that users of the network need to rely on Corallo, most importantly for maintenance. (Though this doesn't stop the peer-to-peer network from propagating transactions and blocks in the mean time, of course.)
The relay network is not the most reliable thing,” Corallo acknowledged. “There is no service-level agreement ... once in a while servers go down and I don't fix it right away... sometimes I'm sleeping, or drunk.”
But absent better alternatives, the relay network can still save small miners on cost, meaning they can increase their profit, and remain competitive, Corallo hopes.
It's democratizing in the sense that larger miners do something like this already,” he said. “The relay network gives smaller miners a leg up, since they don't need to spend a proportionally large portion of their resources to establish these types of relay networks themselves. So it's centralizing in some ways, but, hopefully decentralizing, in others.”
The post How a Bitcoin Backbone Gives Small Miners a Leg Up: Matt Corrallo's Relay Network appeared first on Bitcoin Magazine.
In April, Bitcoin Magazine reported that global payment provider Align Commerce launched a public beta of its payments platform, the first in the industry to use the Bitcoin blockchain transparently to enable faster and cheaper global payments.
Transactions appear as traditional payments at both the sending and the receiving end, but Align Commerce pipes the transfer through the blockchain instead of using several intermediate banking relays, halving both time and cost of traditional international wire transfers.
Now Align Commerce announced that it has raised a $12.5 million Series A round led by Kleiner Perkins Caufield & Byers (KPCB), The Wall Street Journal reports . This is the first investment of the renowned venture capital firm in a blockchain-based fintech company.
Align estimates that small businesses currently pay $50 billion in wire and exchange fees. Forbes notes that, while wire transfers typically incur fees from the initiating bank, intermediaries and the recipient’s bank, plus the foreign exchange fee, Align charges only a low 1.9 percent foreign-exchange rate.
“We were looking for applications of the blockchain for the last couple of years in ways that could build real businesses and add real value that weren’t at the mercy of the currency valuation which will move up and down and all over the place,” said KPCB general partner Randy Komisar, who will join Align’s board, in a statement reported by Forbes . “And of those blockchain companies, we invested in Align, because we believe it’s a market that’s underserved, with a CEO who understood it well and early traction from customers who reinforced that value.”
The Align Commerce platform is targeted at mainstream business-to-business (B2B) payments. The users on both ends don’t have to know that such things as Bitcoin or the blockchain exist; the only thing they have to know is that the platform processes payments faster and cheaper, with a single 1.9 percent fee paid by the party converting the currency.
“The Align Commerce platform is not only a creative and transformative use of the blockchain technology, but a fundamental reimagining of how global payments can and should be done,” said Komisar in an interview quoted by PYMNTS . “We see incredible potential in Align Commerce as a superior digital path to convenient, transparent cross-border transactions.”
If a company located in the United States buys from a seller located in the Eurozone, the seller invoices in Euros, and the buyer pays in U.S. dollars plus the currency conversion fee. The fact that Align Commerce can reduce transaction fees by as much as 50 percent while still making a profit is an indication of the radical change that the blockchain can bring to the financial industry.
Transparency is another important benefit of the Align Commerce platform, which permits real-time tracking of all operations.
“The $24 trillion cross-border payments market is growing at a breakneck pace, expected to eclipse $54 trillion by 2022, despite a highly inefficient and expensive system in which businesses spend over $50 billion on wire and foreign exchange fees, wait up to seven days for transactions to complete, and have no visibility into the process,” said former Western Union executive Marwan Forzley, now founder and CEO of Align Commerce, in April.
“The blockchain offers a ready alternative," Forzley said. "The Align Commerce Payments Platform is the first in the industry to use this global rail to help small and medium-sized businesses quickly collect and receive payments in their local currency while avoiding high wire fees and various hidden fees.”
TechCrunch notes that Align isn’t the only company looking to get into cross-border payments based on blockchain technology and Bitcoin. Uphold -- the re-branded Bitreserve covered by Bitcoin Magazine in October -- also plans to use the blockchain as a transparent layer for cross-border transactions.
The post Align Commerce Raises $12.5 Million, Launches Blockchain-based Cross-border B2B Payment System appeared first on Bitcoin Magazine.
Bitcoin is not anonymous, but, rather, pseudo-anonymous. By now, most Bitcoin veterans know this. It’s less obvious to many, however, why Bitcoin is not really anonymous by default, and what can be done to de-anonymize Bitcoin users – and what Bitcoin users can do to reclaim their privacy.
Below is an advanced beginners guide to get a better understanding of the nuances of Bitcoin and anonymity.
How do Bitcoin transactions work?
To better understand Bitcoin’s anonymity, it's necessary to first understand how Bitcoin works on a basic level.
Most importantly, the Bitcoin protocol effectively consist of a series of transactions. These transactions are basically a package of different kinds of data, among which are transaction inputs and transaction outputs. Inputs refer to Bitcoin addresses used to send bitcoin from, and can only be spent using the private key associated to that address. Outputs effectively refer to addresses used to send bitcoin to. Each Bitcoin transaction transfers bitcoin from one or several inputs to one or several outputs (therefore, transferring bitcoin from one or several addresses to one or several addresses).
It's possible for a transaction to simply have one input and one output. But that is rare, as it would require that the amount of bitcoin to be sent (the output) precisely equal the amount of an earlier amount received (the input).
Instead, it's quite common that a transaction consists of multiple smaller inputs in order to make for one larger transaction. If someone, for instance, controls three different inputs of one bitcoin each, and needs to send 2.5 bitcoin to an online store, the software will merge all three inputs into a single transaction.
And it's even more common that a transaction consists of multiple outputs. This is because Bitcoin uses change addresses. Change addresses allow users to create a transaction that returns the excess amount of bitcoin from one or several inputs back to the original sender. So in the example above, the software will typically create two outputs. One output attributes 2.5 bitcoin to the address belonging to the online store, while another output will attribute .5 bitcoin back to the newly generated (change) address controlled by the sender.
What makes bitcoin 'anonymous'?
There are generally three reasons why bitcoin is sometimes regarded as anonymous.
First, unlike bank accounts and most other payment systems, Bitcoin addresses are not tied to the identity of users on a protocol level. Anyone can create a new and completely random Bitcoin address (and the associated private key) at any time, without the need to submit any personal information to anyone.
Second, transactions are not tied to the identity of users either. As such, (and as long as a miner includes the transaction in a block) anyone can effectively transfer bitcoin from any address to which it controls the (private) keys, to any other address, with no need to reveal any personal information at all. Like physical cash, not even the receiver needs to know the identity of the sender.
And third, Bitcoin transaction data is transmitted and forwarded by nodes to a random set of nodes on the peer-to-peer network. While Bitcoin nodes do connect to each other using IP-addresses, it's not necessarily clear for nodes whether the transaction data they received was created by the node they connect to, or if that node merely forwarded that data.
How is anonymity defeated?
There are basically three ways to de-anonymize Bitcoin users.
First of all, even though Bitcoin transactions are randomly transmitted over the peer-to-peer network, this system is not airtight. If an attacker, for instance, has the means to connect multiple nodes to the Bitcoin network, the combined data collected from these different nodes might be enough to determine where a transaction originated.
Second, Bitcoin addresses can be linked to real identities if these real identities are used in combination with the Bitcoin addresses in some way. This includes addresses used to deposit or withdraw money to or from a (regulated) exchange or wallet service, publicly exposed donation addresses, or addresses simply used to send bitcoin to someone (including the online store) when using a real identity.
But perhaps most importantly, all transactions over the Bitcoin network are completely transparent and traceable by anyone. It's typically this complete transparency that allows multiple Bitcoin addresses to be clustered together, and be tied to the same user. Therefore, if just one of these clustered addresses is linked to a real-world identity through one or several of the other de-anonymizing methods, all clustered addresses can be.
What is clustering?
Let’s take a closer look at clustering.
A very basic clustering method is the analysis of transactions networks. In its most basic form, this refers to the several inputs combined into a single transaction. While these inputs could have originated from different addresses, the fact that they were combined into a single transaction suggests that all these inputs – and therefore all related addresses – are controlled by the same user.
Similarly, there are various methods to identify change addresses as being change addresses, which links them to the sender of the transaction. This is fairly straightforward when receiving bitcoin; the output that is not attributed to you is typically (though not always) attributed to the change address controlled by the sender. In addition, some Bitcoin software, reveals the change address to attentive onlookers, too. It does so, for instance, by always creating a change address as thelast output of a transaction. The use of multisig-addresses can be a giveaway as well.
Another clustering method is taint analysis. Taint analysis is fairly straightforward, too, and is even offered by several freely accessible block explorers. Basically, taint analysis calculates what percentage of bitcoin on a specific address originated from another specific address, whether the addresses are one transaction separated from each other – or more.
And then there's amount analysis and timing analysis. Amount analysis, as the name suggests, doesn't track specific transactions, but rather specific amounts. Similarly, timing analysis tracks specific times. If, for example, one input is exactly 2.6539924 bitcoin, and an unrelated output is exactly 2.6539924 (minus fee) one block later, it suggests that the sending and receiving addresses belong to someone using some kind of mixer (see below).
What can be done to reclaim privacy?
Bitcoin privacy is still very much an arms race. While progress is being made to improve Bitcoin anonymity on one hand, possible methods to de-anonymize users are often established on the other. And while it is beyond the scope of this article to explore all potential future possibilities to improve anonymity, there are some basic methods to increase privacy on the Bitcoin network available right now.
One such a straightforward solution is using TOR or other methods to hide IP addresses. If Bitcoin transactions are transmitted over TOR, there is no way to determine where they originated from (granted that TOR itself does as promised, of course).
Another basic solution to increase privacy is creating a new address for each transaction. Creating a new address for each transaction makes it harder to link addresses to real identities, as it would at the very least require more clustering to do so. An increasing number of Bitcoin wallets do this automatically using hierarchical deterministic (HD) wallet software.
A slightly more advanced method to gain privacy is the use of mixers. Mixers exist in multiple shapes and forms, but they basically enable that everyone using the mixer receives each others' bitcoin. If done well, mixing counters the analysis of transaction networks as well as taint analysis. And for improved results, mixing can be repeated.
One example of such a mixing strategy is CoinJoin, which merges inputs from and outputs to several users into one transaction – breaking the assumption that all inputs belong to the same user. CoinJoin does not, however, remove all taint from a Bitcoin address, since the inputs and outputs are still connected to some degree.
Alternatively, some mixers can remove all taint, as they return unrelated bitcoin from completely different addresses belonging to the mixer. However, these mixers are typically centralized, and as such will know the sending and receiving Bitcoin addresses belonging to users.
Additionally, to counter amount analysis, mixers can require all users to submit the same amount into the mix. Alternatively, mixing services can charge a random fee, making it harder for an outsider to link the amount of bitcoin sent to the amount returned. Furthermore, it's possible to break up the amount mixed, further obfuscating the coins, while smaller amounts are easier lost in “the crowd” of transactions.
To counter timing analysis, moreover, mixers can wait some random time before they send coins back; the longer this range, the harder it becomes to link transactions. Furthermore, extending the mixing time increases the likelihood of transactions to be obfuscated with normal transactions.
But in the end, Bitcoin privacy is still a sliding scale – not a binary problem. Rather than being either completely anonymous or not at all, Bitcoin users enjoy a certain level of privacy, depending on how much of their identity they reveal, which of the anonymizing techniques they apply, how many, and how often.
N.b.: For specific examples of mixing techniques, see the research paper cited below.
The article is largely based on 'Research on Anonymization and De-anonymization in the Bitcoin System', an ATR Defense Science & Technology Lab. paper by QingChun ShenTu and JianPing Yu from Bitbank Research Labs, published by Shenzhen University. Additional thanks go to Bitsquare developer Manfred Karrer and Blocktrail co-founder Jop Hartog for providing feedback on an earlier draft of this article.
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