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Category: bitcoin – Page 62

From digital currency to machine learning, the financial industry is being rocked by exponential technologies. Blockchain, artificial intelligence, big data, robotics, quantum computing, crowdfunding, and computing systems are allowing startups to solve consumer needs in new ways.

The downfall of the world’s largest institutions may not be imminent, but these new technologies are breaking up the previously rock solid foundation of finance, and allowing the fintech world to spring through the cracks. What’s happening now will rewrite the future of finance for years to come. By recognizing this reality and planning for it now, financial professionals can learn to thrive in an increasingly uncertain global economy.

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A new world is coming — been waiting for a while. Glad we’re finally seeing the promotion.

As Internet-of-Things keep expanding the need for interoperability and sharing of resources become a necessity. IOTA enables companies to explore new business-2-business models by making every technological resource a potential service to be traded on an open market in real time, with no fees.

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MIT has never stood stand still in the presence of change and opportunity. Their Media Lab Currency Initiative is at the forefront of Blockchain and Bitcoin research. With the fracture of the founding core team, MIT stands to become the universal hub for research and development.

The initiative now has a team of 22 people and at least
seven ongoing research projects, and it nurtures three startups that use cryptocurrencies and the underlying technology in a variety of ways. Blockchain research now sits alongside transparent robots that eat real-world fish, solar nebula research, and other imaginative, futuristic projects in progress at the university.

The initiative has already funded the work of bitcoin protocol developers and has supported research, going far beyond bitcoin—even partnering with Ripple Labs and developing enterprise data projects.

Now, the MIT Media Lab Digital Currency Initiative is working on 3 big Blockchain ideas:

  1. Shattering online ‘echo chambers’
  2. Improving blockchain privacy
  3. Building central bank currencies

The DCI is led by former White House advisor and research director Neha Narula. Read about the three BIG blockchain projects at CoinDesk.

Philip Raymond co-chairs Crypsa & Bitcoin Event, columnist & board member at Lifeboat, editor
at WildDuck and will deliver the keynote address at Digital Currency Summit in Johannesburg.

Not shocking to see; wonder how long this fact finally came out; as when you review much of the research and application of blockchaining that it is not hard to figure out that as more and more QC goes online; we would need a way to bridge block chaining environments to QC.

Quantum mechanics have ignited a transformational change in the way we envision the world and utilize technology. Economics is one of the prominent fields throughout which Quantum mechanics can be deployed. Quantum mechanics can be utilized to create a novel class of blockchains. A new paper has just been published exploring the possibilities of building blockchains on the basis of Quantum mechanics. It discusses how Quantum mechanics can be ideally deployed to build a new class of blockchains.

Quantum based blockchains, known as K-Chains, have a group of advantages over classical blockchains including communication of transactions at a Faster-Than-Light (FTL) speed, unlimited capacity of the network and an innovative offline blockchain that needn’t be connected to the internet for transactions to be executed. Extrapolation of these possibilities can lead to the creation of Quantum Turing Machines that rely on the Quantum Blockchain (K-Chain) technology. Real time data and communication protocols that span across distances of “light years” will be possible.

K-Chain.jpg

Continue reading “K-Chains – Blockchain Protocols Based On Quantum Mechanics” | >

At the heart of Bitcoin or any Blockchain ledger is a distributed consensus mechanism. It’s a lot like voting. A large and diverse deliberative community validates each, individual user transaction, ownership stake or vote.

But a distributed consensus mechanism is only effective and faithful if the community is impartial. To be impartial, voters must be fairly separated. That is, there must be no collusion enabled by concentration or hidden collaboration. They must be separated from the buyer and seller; they must be separated from the big stakeholders; and they must be separated from each other. Without believable and measurable separation, all sorts of problems ensue. One problem that has made news in the Bitcoin word is the geographical concentration of miners and mining pools.

A distributed or decentralized transaction validation is typically achieved based on Proof-of-Work (POW) or Proof-of-Stake (POS). [explain]. But in practice, these methodologies exhibit subtle problems…

The problem is that Proof-of-Work can waste an enormous amount of energy and both techniques result in a concentration of power (either by geography or by special interest) — rather than a fair, distributed consensus.

In a quasi-formal paper, C.V. Alkan describes a fresh approach to Blockchain consensus. that he calls Distributed Objective Consensus. As you try to absorb his mechanism, you encounter concepts of Sybil attacks, minting inequality, the “nothing-at-stake” problem, punishment schemes and heartbeat transactions. Could Alkan’s distributed consensus mechanism be too complex for the public to understand or use?…

While I have a concern that time stamps and parent-child schemes may degrade user anonymity, the complexity doesn’t concern me. Alkan’s paper is a technical proposal for magic under the covers. Properly implemented, a buyer and seller (and even a miner) needn’t fully understand the science. The user interface to their wallet or financial statement would certainly be shielded from the underlying mechanics.

Put another way: You would not expect a user to understand the mechanism any more than an airline passenger understands the combustion process inside a jet engine. They only want to know:

• Does it work? • Is it safe? • Is it cost effective? • Will I get there on time?

So will Alkan’s Decentralized Objective Consensus solve the resource and concentration problems that creep into POW and POS? Perhaps. At first glance, his technical presentation appears promising. I will return to explore the impact on privacy and anonymity, which is my personal hot button. It is a critical component for long term success of any coin transaction system built on distributed consensus. That is, forensic access and analysis of a wallet or transaction audit trail must be impossible without the consent and participation of at least one party to a transaction.

Philip Raymond co-chairs CRYPSA and The Bitcoin Event. He is a Lifeboat board member, editor
at AWildDuck and will deliver the keynote address at Digital Currency Summit in Johannesburg.

Research can seem bland to us laypersons. But, Marko Vukolić shares many of my research interests and he exceeds my academic credentials (with just enough overlap for me to understand his work). So, in my opinion, his writing is anything but bland…

Vukolić started his career as a post-doc intern at IBM in Zurich Switzerland. After a teaching stint as assistant professor at Eurecom and visiting professor at ETH Zurich, he rejoined the IBM research staff in both cloud computing infrastructure and the Blockchain Group.*

As a researcher and academic, Vukolić is a rising star in consensus-based mechanisms and low latency replicated state machines. At Institut Mines-Télécom in Paris, he wrote papers and participated in research projects on fault tolerance, scalability, cloud computing and distributed trust mechanisms.

Now, at IBM Zurich, Vukolić has published a superior analysis addressing the first and biggest elephant in the Bitcoin ballroom, Each elephant addresses an urgent need:

  • Scalability & throughput
  • Incentivize (as mining reward withers)
  • Grow & diversify governance & geographic influence
  • Anonymize transactions to protect privacy
  • Recognize & preserve ownership

Regarding the first elephant, scalability, Bitcoin urgently needs to grow its Blockchain dynamics into something that is living and manageable. To that end, Vukolić refers to a transaction bookkeeping mechanism that works as a “fabric”. That is, it does not require every miner to access the history-of-the-world and append each transaction onto the same chain in serial fashion. Rather than growing an ever bigger blockchain—with ever bigger computers—we need a more 3D approach that uses relational databases in a multi-threaded, transactional environment, while still preserving the distributed, p2p trust mechanisms of the original blockchain.

While clearly technical, it is a good read, even for lay enthusiasts. It directly relates to one of the elephants in the room.

I have pasted Marko’s Abstract below. The full paper is 10½ pages (14 with references).

Bitcoin cryptocurrency demonstrated the utility of global consensus across thousands of nodes, changing the world of digital transactions forever. In the early days of Bitcoin, the performance of its probabilistic proof-of-work (PoW) based consensus fabric, also known as blockchain, was not a major issue. Bitcoin became a success story, despite its consensus latencies on the order of an hour and the theoretical peak throughput of only up to 7 transactions per second.

The situation today is radically different and the poor performance scalability of early PoW blockchains no longer makes sense. Specifically, the trend of modern cryptocurrency platforms, such as Ethereum, is to support execution of arbitrary distributed applications on blockchain fabric, needing much better performance. This approach, however, makes cryptocurrency platforms step away from their original purpose and enter the domain of database-replication protocols, notably, the classical state-machine replication, and in particular its Byzantine fault-tolerant (BFT) variants.

In this paper, we contrast PoW-based blockchains to those based on BFT state machine replication, focusing on their scalability limits. We also discuss recent proposals to overcoming these scalability limits and outline key outstanding open problems in the quest for the “ultimate” blockchain fabric(s). Keywords: Bitcoin, blockchain, Byzantine fault tolerance, consensus, proof-of-work, scalability, state machine replication

* Like Marko, Blockchains, Cloud computing, and Privacy are, also my primary reserach interests, (GMTA!). But, I cede the rigorous, academic credentials to Marko.

† BFT = Byzantine Fault Tolerant consensus protocols

Related—and recently in the news:

Raymond co-chairs CRYPSA and The Bitcoin Event. A columnist & board member at Lifeboat Foundation
he edits AWildDuck. He will deliver the keynote address at Digital Currency Summit in Johannesburg.

Glad I wasn’t on TOR for a while.

Visitors to more than 10,000 Tor-based websites were met with an alarming announcement this morning: “Hello, Freedom Hosting II, you have been hacked.” A group affiliating itself with Anonymous had compromised servers at Freedom Hosting II, a popular service for hosting websites accessible only through Tor. Roughly six hours after the initial announcement, all the sites hosted by the service are still offline.

In the message, the group offers to sell the compromised data back to Freedom Hosting II in exchange for 0.1 bitcoin, or just over $100, although it is unclear whether the offer is in earnest.

The hackers also claim child pornography made up more than half the data stored on the servers. It’s impossible to verify that claim without seeing the data itself, but it’s consistent with what we know about previous dark-web hosting companies. The original Freedom Hosting was compromised by law enforcement in 2013, resulting in a number of child pornography prosecutions. At the time, the service hosted as many as half of the websites accessible only through Tor, commonly referred to as the Dark Web.

Continue reading “An Anonymous group just took down a fifth of the dark web” | >

There are at least four ways to acquire Bitcoin and three ways to store it…

Acquire Bitcoin: You can trade Bitcoin in person, accept it as a vendor, mine it, or buy on an exchange.

Store Bitcoin: You can keep your Bitcoin in an online/cloud service (typically, one that is connected to your exchange account), keep it on your own PC or phone, or even print it out and store it on a piece of paper. Like a physical coin, the piece of paper has value. It can be placed in your lock box or under your mattress.

Let’s look at the market for Bitcoin Wallets (all of these are free), and then we shall talk about Bitcoin exchange services. This includes my personal recommendation for the typical consumer or coin enthusiast…

1. Choosing a Wallet

You can start your search for a wallet on this page at Bitcoin.org. Use the drop down tabs to refine your search by platform: Mobile, Desktop, Hardware gadget or Web. Don’t overlook the web option. For many users, the wallet (and VAULT) included with an online exchange account is all you need.

Each wallet platform is further distinguished by operating system. For example, you can find a smartphone wallet for Android, Apple, Windows Mobile or Blackberry. Some popular apps are listed under more than one OS or platform.

When you click on any of the app logos, you will see a checklist of five key traits, according to reviewers at the Bitcoin Foundation:

  • Control over your money
  • Simplified validation
  • Basic transparency
  • Secure environment
  • Weak privacy

These are not necessarily critical traits/features. It depends on your needs and preferences. For example, everyone wants good privacy and security. But not everyone wants to control their private keys. That places the risk of loss, backup and/or the burden of inheritance issues on you, rather than a standardized recovery process. The feature comparison simply helps you to begin your own comparison and evaluation.

For Android users, my personal recommendation is Bitcoin Wallet by Andreas Schildbach (the logo is a tilted orange ‘B’). It is simple, secure, well maintained and very popular. (iPhone users: See my my suggestion in the recommendations, below).

2. Portable –vs– Online

Despite the simplicity and low cost of spending or sending Bitcoin between individuals and vendors, getting your first Bitcoin can be confusing, complex and even risky. For this reason, I suggest that Newbies open an account at a very established and trustworthy exchange.

In the near future, this will include most big banks. But for now, the safest and most reputable exchange is Coinbase in San Francisco. They are also the one with the highest level of regulatory compliance. Bitstamp of Slovenia and Great Britain is a close second. In my opinion, using either of these organizations as a currency exchange or a secure place to park your digital currency is a safe bet.

Both of these exchanges include a cloud wallet service that—when used properly—is safe and secure. But, because Bitcoin is still in its infancy, you will need to learn about sweeping funds into a ‘vault’ (to better protect against hacking) and you should also learn about portable backups and multi-sig (to protect your assets, in the event of forgetfulness, death or incapacitation).

With either type of wallet—device storage or online with an exchange—I recommend that you install and play with a portable wallet on your phone, just to get the hang of a few basic functions: Display wallet address for incoming money, Send money, Request money (i.e. send an invoice), and Pay with the QR-camera feature. All wallets serve these basic and critical needs.

Recommendations:

  • Coinbase is a most reputable exchange for buying/selling & storing Bitcoin
  • Bitcoin Wallet by Andreas Schildbach is an excellent choice for portable, secure storage. This app is available for Android phones only. Apple iPhone users may wish to try Bitcoin Wallet by Blockchain. I have not reviewed it. It has a slightly less friendly user interface but it is stable and very popular.

Related Reading:


Philip Raymond co-chairs CRYPSA, produces The Bitcoin Event and is a board member at
Lifeboat. He will deliver the Keynote Address at Digital Currency Summit in Johannesburg.

Nice try; no faith it will succeed long term with QC.

Singapore-based Quantum Foundation announced that it is working on a new project called Qtum, which combines the technology of both bitcoin and ethereum to facilitate blockchain technology adoption for corporations. Qtum is an open-source blockchain project that aims to build smart contract functionalities that can be implemented at an enterprise level.

The initial financial backing of $1 million by several industry leaders is a testament to the validity of the technology that the Qtum project is creating but also demonstrates full faith in its team of developers. Early-stage angel investors in the project include ethereum co-founder Anthony Di Iorio, Fenbushi partner Bo Shen, and OKCoin CEO Star Xu, among others. The Qtum project also intends to launch its native cryptocurrency to support the project through a crowd sale to raise further funds.

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