Daily Archives: March 29, 2017

Although it is hard to say how big the chance actually is, Bitcoin Unlimited miners may soon start mining bigger blocks. If they do, they will diverge from the current Bitcoin protocol to split off to a new blockchain. This could also result in two separate currencies, by many exchanges referred to as BTC and BTU.

However, it increasingly seems that not everyone in favor of a Bitcoin Unlimited hard fork wants to settle for a coin-split. Instead, several prominent Bitcoin Unlimited proponents have indicated that it may be better to ensure only their chain survives. This is probably also the only chance it has to be widely considered the real Bitcoin rather than a spinoff altcoin.

To ensure that only one chain survives, they have suggested that the (original) Bitcoin blockchain can be made unusable. That way it would die off and only the Bitcoin Unlimited chain would remain.

Specifically, if miners favorable toward Bitcoin Unlimited are able to overpower the remaining Bitcoin miners with a majority of hashrate, its been suggested they could launch a 51% attack.

Here is a brief overview.

Former Bitcoin Lead Developer Gavin Andresen

Gavin Andresen is the former lead developer of Bitcoin Core (then called Bitcoin-QT or simply Bitcoin). He has since contributed to Bitcoin XT and Bitcoin Classic. He now endorses Bitcoin Unlimited though he does not contribute to the project nor is he a member.

Although Andresen has in the past argued that a minority chain would be unlikely to sustain itself, he now acknowledges such a chain could, in fact, survive. As such, he noted on Twitter last February that preventing a minority-hashrate fork from confirming any transactions is a good idea.

More recently, on Reddit, Andresen elaborated on what the most effective way to attack the original Bitcoin chain would be. The former lead developer wrote:

It would be even more destructive to mine an 11-block-long empty chain, then wait until the slow chain gets 9 blocks until announcing it to the network. Or keep them guessing; choose a chain length at random, from 1 to some secret N, and orphan that many blocks at a time. Allow a couple normal blocks, then do it again.

It would be impossible for exchanges to know how many confirmations were safe for deposits and would be a nightmare for their withdrawal accounting.

Additionally, he said he wasnt sure whether such an attack would be immoral or not.

Im not even sure this kind of thing should be considered immoral majority hashpower acting selfishly for their own economic benefit (both short and long term) is the basic incentive structure that makes Bitcoin work.

And last weekend, Andresen on Twitter further distanced himself from a moral endorsement of such an attack. Instead, echoing comments he made on Reddit, Andresen claimed to have merely been exercising adversarial thinking.

Though he did add that an attack is very likely to happen.

BTC.TOP Pool Operator Jiang Zhuoer

BTC.TOP is a relatively new Chinese mining pool. Launched in late 2016, the pool currently controls some 5 percent of hash power on the Bitcoin network.

BTC.TOP is operated by Jiang Zhuoer, a former employee at China Mobile in Shanghai. Much like several other small mining pools that have appeared over the past six months, BTC.TOP has been signaling support for Bitcoin Unlimited.

In an interview with Cryptocoins News in March, Zhuoer was the first who explicitly said a 51% attack against the original Bitcoin blockchain, if it were to survive after Bitcoin Unlimited miners split off, is on the table.

We have prepared $100 million USD to kill the small fork of CoreCoin, no matter what [proof-of-work] algorithm, sha256 or scrypt or X11 or any other GPU algorithm, he said, of course referring to the continuation of the current Bitcoin protocol as CoreCoin.

The different hash algorithms mentioned by Zhuoer refer to a potential proof-of-work algorithm change Bitcoin users could deploy if the chain is attacked; a nuclear defense some Bitcoin Core developers have suggested may be proposed in such a scenario. (Whether this should still be considered Bitcoin or yet another spinoff altcoin is subject to different debate.)

Show me your money, Zhuoer added. We very much welcome a CoreCoin change to [proof of stake].

(If no proof-of-work algorithm succeeds in deterring the attack, a proof-of-stake consensus algorithm where coin holders rather than miners vote on the longest chain may be an alternative solution. But since this is unproven and perhaps insecure, this seems highly unlikely.)

Bitcoin Unlimited Chief Scientist Peter Rizun

Peter Rizun (better known as Peter R) refers to himself as the chief scientist of Bitcoin Unlimited, and has been one of the driving forces as the projects secretary.

Last week, Rizun, along with bitcoin.com business developer Jake Smith, visited the offices of Coinbase and BitPay to promote Bitcoin Unlimited. Coming back from these visits, Rizun published a blog post on Medium. The message Rizun said he had gotten from these companies is that a hard fork to larger blocks should be decisive and absolute.

Rizun described three levels of anti-split protection that could accomplish this. The first is an explanation of how mining would probably be unprofitable on the original Bitcoin chain decreasing the odds of the chain surviving in the first place.

The second level, however, is a type of 51% attack on a minority of miners. Once a majority of hash power signals support for Bitcoin Unlimited, Rizun wrote, the majority could reject (orphan) any blocks that do not signal this support.

Miners will orphan the blocks of non-compliant miners prior to the first larger block to serve as a reminder to upgrade. Simply due to the possibility of having blocks orphaned, all miners would be motivated to begin signaling for larger blocks once support definitively passes 51%. If some miners hold out (e.g., they may not be paying attention regarding the upgrade), then they will begin to pay attention after losing approximately $15,000 of revenue due to an orphaned block.

(It should be noted that this attack can be trivially subverted. Especially now that the attack is known, miners can, and probably will, signal fake support. Indeed, at least one small pool has literally signaled support with a poop emoticon.)

If the original Bitcoin blockchain survives even after these two levels, Rizun explained that a subset of miners in favor of Bitcoin Unlimited could disrupt this chain by exclusively producing empty blocks on the original chain. This would prevent any and all transactions from confirming as long as the attack is ongoing.

To address the risk of coins being spent on this chain (replay risk), majority miners will deploy hash power as needed to ensure the minority chain includes only empty blocks after the forking point.

And in line with the strategy described by Gavin Andresen:

This can easily be accomplished if the majority miners maintain a secret chain of empty blocks built off their last empty block publishing only as much of this chain as necessary to orphan any non-empty blocks produced on the minority chain.

(This attack can be waited out until the attackers funds run out, and perhaps dismantled altogether. Discussion on potential strategies is ongoing on the Bitcoin-development mailing list. And of course, there is the potential of a proof-of-work algorithm change.)

While noting that he doesnt necessarily endorse the strategy, Rizun predicted that a coin-split would be avoided in this way: a safe upgrade procedure, he later noted on Reddit.

Rizun also submitted his ideas to the Bitcoin-development mailing list. (Where it was, unsurprisingly, forcefully dismissed.)

Bitmain Co-CEO Jihan Wu

Jihan Wu is the co-CEO of Chinese ASIC-hardware producer Bitmain. AntPool is Bitmains mining pool, and BTC.com, another mining pool, is a subsidiary of Bitmain.

Wu is a vocal proponent of Bitcoin Unlimited as well, and announced to Bloomberg that he would switch the hash power in his pool to Bitcoin Unlimited in anticipation of a hard fork which he has since indeed done. (Though, notably, BTC.com has not.)

And in an interview with Forbes, Wu said he wouldnt rule out attacking the Bitcoin blockchain, or, undermining Core as it is described in the article.

It may not be necessary to attack it, he said. But to attack it is always an option.

Thanks to Libbitcoin lead developer Eric Voskuil for feedback.

Read more here:
Bitcoin Unlimited Miners May Be Preparing a 51% Attack on Bitcoin - Bitcoin Magazine

Forbes

Bitcoin: 'Blood Diamonds' Of The Digital Era - Forbes Forbes Bitcoin has long been the transaction currency of choice for drug dealers and extortionists, but this month, the IRS has upped the game. Just as tax evasion ... Bitcoin Value Is High Only Due To Lawbreakers: Forbes AnalystCoinTelegraph Bitcoin Gains Value Due to Criminal Use [Only], Says Forbes ...CryptoCoinsNews Bitcoin Users May Be Cheating on Taxes - - CFO.comCFO all 5 news articles »

Read more:
Bitcoin: 'Blood Diamonds' Of The Digital Era - Forbes - Forbes

Slide: 1 / of 1. Caption: Then One/WIRED

On the surface, bitcoin is having a very good year. The price of the digital currency reached record highs well over $1,000 after years of stagnation following a major crash. But if you pull back the curtain, the civil war rages.

The global community of companies, coders, and opportunists who control the bitcoin network is now on the verge of revolt after more than two years of infighting. Basically, the bitcoin network is moving data at a painfully slow pace, and the community cant agree on how to fix it. So, one increasingly powerful group is threatening to hard fork the project. In other words: They could split bitcoin into two separate digital currencies.

The ongoing battle represents a fundamental flaw not only with bitcoin, but with so many other projects based on the idea of a blockchain, the underlying technology that makes bitcoin possible. A blockchain is designed to operate without a central authority, securely verifying and recording transactions through a network machines rather a single government, bank, or company. Across Silicon Valley and beyond, many see this big idea as a way of significantly streamlining the exchange of moneymaybe even changing the very nature of business. But at the same time, the decentralized nature of these projects is a burden. Theres no good way for the many participants to readily change the underlying technology.

If we have a process for dealing with disagreement we wont have all the collateral damage we see with bitcoin. Arthur Breitman, Tezos

The community behind Ethereum, another influential part of this movement, recently forked its project after hackers exploited a bug in its code. That was their best option. And now, bitcoin is facing much the same conundrum. Its a flaw that could ultimately bring the digital currency crashing down.

But Arthur and Kathleen Breitman are working to eliminate this flaw. Theyre building a new blockchain where the stakeholders can change the underlying technology through a kind of online voting systema blockchain that can evolve according to the will of its community. If we have a process for dealing with disagreement, for being constructive and moving on, we wont have all the collateral damage we see with bitcoin, says Arthur Brietman, 35, a French-born financial trader and technologist who spent several years with big-name banks like Morgan Stanley and Goldman Sachs. The biggest risk to bitcoin is a split in the community. That would harm the network. This is the kind of thing were trying to avoid.

The project may indeed provide a better way of building this kind of vastly distributed systemand possibly create a new kind of business. But it also raises questions about the fundamental nature of these projects and, indeed, the fundamental nature of democracy.

The Brietmans are husband-and-wife entrepreneurs based in Silicon Valley. Part of the vibrant, idealistic, and sometimes strange community of young free thinkers working to build a new kind of company using blockchain technologies, they call their creation Tezos. Under the cheeky pseudonym LM Goodmana thinly veiled reference to the Newsweek journalist who incorrectly identified the creator of bitcointhey first released a paper describing the project in 2014. Now, as they prepare to unveil the technology amid the battle over bitcoin, it carries a new significance.

On the bitcoin blockchain, transactions are processed and recorded by a vast network of miners, specialized machines that lend their computing power to the operation. In exchange for their participation, the miners receive bitcoin. But Tezos doesnt work that way. It will sell its tokens to the world at large, and then the token holders will help process and record the transactions. Basically, in recording each transaction, the system asks for help from a random token holder.

Whats more, these token holders will have the right to suggest and vote on changes to the network itself. The more tokens you hold, the more voting power you have. In other words, the token holders control the system in full. In this way, Tezos becomes a working democracy. Everyone can vote, and the vote decides outcomes. Some blockchain veterans believe Tezos could fundamentally change the dynamics of blockchain technology, helping to move projects closer to the grand ideals they espouse.

Its like the American democratic system, says Olaf Carlson-Wee, the first employee at Coinbase, Silicon Valleys most important bitcoin company, who has invested in Tezos through his hedge fund, Polychain. When you vote, even if your candidate doesnt win, you accept that democracy was in action. When people participate in a Tezos network, theyre accepting that the democratic vote of the other coin holders will govern the way the protocol moves.

Bitcoin, you could argue, is also a democracy. But the system operates in an ad hoc way. Participants must individually and manually upgrade the software running on miners and other machines, and this leads to the kind of thing you now see with the digital currency: months of people arguing, both online and off, about how the network should evolve. Tezos removes this unorganized in-fightingand then some. Through the Tezos voting system, stakeholders can also change the voting system. We are not necessarily beholden to voting as a governance mechanism, Breitman says. Every part of the system can evolve, including the governance system itself. He compares this means of self-correction to a constitutional amendmentanother powerful idea in light of the conflict over bitcoin.

If Tezos works, the knock-on effect is potentially enormous. Like Ethereum, the Tezos blockchain is designed to run smart contracts, online agreements built with computer code that can be used to bootstrap all sorts of other businesses and applications. (Ethereum, for instance, is now driving everything from hedge funds to distributed supercomputers.)

Tezos could extend this growing trend. But its also another invitation to completely start over. Though Bitcoin and Ethereum have the momentum, Tezos is asking coders and companies to move onto yet another blockchain. And how that will play out is anyones guess. Breitman argues that bitcoin and Ethereum are still relatively smalland in the future, distributed networks will be significantly larger. If you compare them to any other industry, their capitalization is very small and the amount of programming work is still tiny, he says. It is still early in this game.

Over the next several weeks, Breitman and his company will put this stance to the test. First, they will launch an ICO, or initial coin offering, letting anyone buy a digital token tied directly into the operation of the Tezos network. Such offerings are now common practice in the blockchain world, a new way of funding online companies, but also a new way of running them. Those who hold the tokens actually own and control the operation, something thats particularly true with Tezos.

But Breitmans and their idealism may run into reality. It will work crytopgraphically, just in terms of programming language theory, says Zooko Wilcox, who created the bitcoin alternative ZCash. But it is an experiment. Naturally, Wilcox mentions the DAO, an effort to create a kind of automated venture capital fund atop Ethereum.

The DAO was the largest crowdfunded project ever, and thanks to a bug in its smart contract, it was hacked to the tune of $50 million. This catastrophe is what eventually led to the Ethereum fork. Imagine that there is a bug in the version you have all upgraded to, he says, imagining one potential future for Tezos. What if thats a bug prevents future upgrades?

Brietman admits that his democracy could go wrong. But he also points out that this is true of any democracy, including the one here in the US of A. Democracy isnt necessarily about making good choices, he says. Its about avoiding conflict. Of course, there are other ways of avoiding conflict, and in the online agethe post-Trump ageits worth asking whether a true democracy is the best method. The crowds dont always get things right. The hope is that at the very least, democracy will eventually produce more good than bad.

Original post:
A Plan to Save Blockchain Democracy From Bitcoin's Civil War - WIRED

Here's a look at what we are focusing on in the bitcoin price this morning.

Well we asked for erratic action, and weve got some. Price overnight was up and down like a see-saw, breaking in and out of our predefined range and giving us plenty of opportunity to get in and out of the markets on the breaks. We didnt bring our intrarange strategy to the table last night, and thats probably a good thing, because chances are we would have gotten chopped out if wed attempted to get in on an intrarange entry.

Today, were looking for more of the same. Wed like to see the bulls get a hold of the bitcoin price during the early start of the session and run up towards the 1100 region. It probably wont happen, but it would give us an indication that things are starting to reverse longer term after the couple of fundamental hits (and the risk aversion) weve seen over the last couple of weeks or so.

So, with that all out of the way, lets get some levels outlined right now with which we can go at price today, and try and draw a profit from the market on any action. As ever, take a quick look at the chart below to get an idea of whats on, and where things stand at present. Its a five-minute candlestick chart and its got our key range overlaid in green.

A close above resistance will get us in long towards an upside target of 1050. A close below support will get us in short towards 1020.

Lets see what happens

Charts courtesy of SimpleFX

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Bitcoin Price Watch; Volatility Abound! - newsBTC