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When Binance lost $ 40 million to hackers this week, the crypto community discussed reorganizing the chain after it was suggested by a developer from MIT. Many people were upset by this proposition, declaring that there was no way a coordinated effort with miners could be pulled off. However, most bitcoiners don’t seem to remember that a similar centralized decision was made in 2013, when Btc Guild’s hashrate was leveraged to downgrade the main chain from Bitcoin 0.8 to version 0.7.
Crypto Community Outraged Over Reorg Discussion
Cryptocurrency advocates have been all riled up discussing a theoretical reorganization of the Bitcoin Core (BTC) blockchain. The conversation heated up after it was suggested by the developer Jeremy Rubin and Binance CEO Changpeng Zhao (CZ), who mentioned it after his exchange lost $ 40 million worth of BTC. Some people became extremely upset at the mere discussion of a reorganization and stated that there was no way it was possible. People have argued the subject for hours and have written long-winded posts filled with theories and calculations.
There are a couple of ways to trigger a blockchain reorganization, which occurs when the chain of recorded blocks is invalidated or orphaned by either a 51% attack or another method, forcing miners back to a point where they have to start again from a specific block height. It’s akin to rolling back a recorded history of transactions and then re-recording them again, but of course the new transactions would never be the same as the ones that were erased. If this technique was used, some believe the history of the Binance transaction which saw the loss of 7,000 BTC would be erased as well.
The Coordinated Effort to Roll Back to Bitcoin Version 0.7 in 2013
After all the discussions on social media concerning centralized entities possibly reorganizing the chain to erase the loss $ 40 million, it’s interesting to revisit the history books to see if there were any similar events back in the day. In March 2013, Arvind Narayanan described a similar situation where developers coordinated to get a large mining pool to revert the chain to prior software after an accidental fork took place. There was a severe issue with the compatibility between Bitcoin client 0.7 and version 0.8, which caused the main chain to fork into two. In fact, Narayanan detailed that a centralized decision was utilized to help find a solution.
After the crisis was assessed BTC, developers were introduced with an idea from Btc Guild which wrote: “I can single-handedly put 0.7 back to the majority hash power — I just need confirmation that that’s what should be done,” in a developer chat room. Pieter Wuille responded: “IMHO, that is what you should do, but we should have consensus first.” Narayanan’s paper underlined the centralization factor when he remarked: “So much for decentralization — The fact that Btc Guild can tip the scales here is crucial.”
“The hash power distribution at that time appears to be roughly 2/3 vs 1/3 in favor of the 0.8 branch, and Btc Guild controlled somewhere between 20% and 30% of total hash power,” the researcher noted at the time. “By switching, Btc Guild loses the work they’ve done on 0.8 since the fork started. On the other hand, they are more or less assured that the 0.7 branch will win and the fork will end, so at least their post-downgrade mining power won’t be wasted.”
Narayanan also stressed that if the hashrate was instead distributed among thousands of small independent miners, it would prove way more difficult to coordinate the effort. The paper describes how Btc Guild sacrificed their mining revenue for the good of the network. The author also hypothesized how developers would be able to convince another large pool operator if Btc guild didn’t believe it would win. After the plan was agreed upon by various developers, the alert notice was sent out which said: “URGENT: chain fork, stop mining on version 0.8.” In addition to the alert, Bitcoin Core developer Pieter Wuille told miners: “If you’re a miner, please do not mine on 0.8 code — Stop, or switch back to 0.7 — Btc Guild is switching to 0.7, so the old chain will get a majority hashrate soon.” After Narayanan summed up the events on how developers and Btc Guild fixed the situation, he explained his opinion that even though it was centralized it was the right decision.
Vitalik Buterin: ‘Incident Brings Forth Uncomfortable Facts About Bitcoin’s Notion of Decentralization’
At the time, however, the inventor of Ethereum, Vitalik Buterin disagreed and said “the incident opens up serious questions about the nature of the Bitcoin protocol and puts into the spotlight some uncomfortable facts about Bitcoin’s notion of ‘decentralization.’” Buterin also emphasized that the other aspect of Bitcoin’s decentralization that this incident called into question was that of mining pools. “The reason why the controlled switch to the 0.7 fork was even possible was that over 70% of the Bitcoin network’s hash power was controlled by a small number of mining pools and ASIC miners, and so the miners could all be individually contacted and convinced to immediately downgrade.”
So the question is, how does the BTC hashrate distribution look today in comparison to when Btc Guild was a dominant miner back in 2013? Today a 51% coordinated effort would take around five mining pools to work together as each of the dominant BTC pools have 10% or more of the global hashrate. The task would be extraordinarily expensive compared to doing this maneuver in 2013. But so-called experts shouting that a coordinated 51% reorganization couldn’t happen today, especially after a similar instance took place in 2013, are being very naive. Even Buterin concluded in his synopsis of the 2013 situation that people were worried about centralization after it happened.
In an op-ed on March 12, 2013, Buterin pondered: “Some worry, if a centralized core of the Bitcoin community is powerful enough to successfully undertake these emergency measures to set right the Bitcoin blockchain, what else is it powerful enough to do?”
What do you think about the similarities between the 2019 Binance discussion involving a reorganization and the March 2013 rollback? Let us know what you think about this subject in the comments section below.
Image credits: Shutterstock, Blockchain.com, Pixabay, Arvind Narayanan blog Freedom to Tinker, and Twitter.
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Drivechain developer Paul Sztorc has the cryptocurrency community riled up over his latest blog “Security Budget in the Long Run.” The essay discusses the economics of BTC network fees over a long period of time and suggests rather than giving up the fees to competition, a dominant protocol should collect fees “from all networks.”
Unraveling Bitcoin’s Security Budget
Paul Sztorc has written another thought-provoking essay that has got many of the ‘bitcoin intellectuals’ talking. “Security Budget in the Long Run” speaks on how BTC could theoretically collect fees after many decades. Sztorc refers to this as the “security budget,” which is basically what participants are paying in order to prevent double spends and 51 percent attacks. Over the last few years during the scaling debate, many industry members showed concern about the block subsidy i.e the freshly minted coins and transaction fees miners get when they randomly find a block. A block needs to be instantly profitable to mine and Sztorc believes the block subsidy will continue to give the network more security in the future.
“Even though it “halves” once every four years (effectively falling by a factor of 0.84 per year), it hits for full force no matter how high the BTC exchange rate climbs,” Sztorc’s paper explains. “As long as annual appreciation 19%+, it fully compensates for the PP lost to the halvening.”
Sztorc then discussed the various theories people have used in the past, in order to describe what will offset the block subsidy when the block reward shrinks to zero. Many believe a relatively high fee market is needed for onchain transactions (txn) and most people wanting txn with cheaper fees will use the Lightning Network. For instance, Sztorc quotes the Bitcoin Core developer Greg Maxwell and other crypto luminaries for championing high fees back in 2017. The paper also underscores the rise of altcoins grabbing far more attention after BTC network fees crossed over $ 1 per txn and continued to rise.
“Furthermore, this (true) premise — that Altcoin-payments are indeed substitutes for Bitcoin-payments — is occasionally explicitly admitted, even by hardcore maximalists — Especially during the last fee run-up in late 2017,” Sztorc’s paper details.
The essay further states:
To me, this data refutes the theory that users will pay high BTC fees willingly. In fact, they seem to have only ever paid high fees unwillingly — during a brief “bubble” time (of relative panic and FOMO).
Lightning and Alternative Fee Sources
The blockchain researcher further digresses into theories of onboarding users onto the Lightning Network (LN) and the protocol’s theoretical alternative fee sources. Sztorc says that if the LN is successful then many transactions can be crammed into two onchain transactions. However, Sztorc has a hard time understanding how the LN will boost fees and guesses that they “cannot realistically increase by more than two orders of magnitude.” After detailing theories people have on how the LN can create a thriving economic system, Sztorc’s new paper details that he doesn’t have much faith in the user experience.
“LN also comes with new risks — the LN-design is very clever at minimizing these risks, but they are still there and will still be annoying to users,” Sztorc notes. “Users will prefer not to put up with them — So they will tend to prefer an Altcoin on-chain-txn over a mainchain-LN-txn.”
Merged Mining and Sidechains
Sztorc concludes his paper by discussing two of his favorite subjects — merged mining and sidechains. Essentially the programmer says merge mined sidechains can do whatever altcoins can do and then some. Concepts like Drivechain could theoretically create large block sidechains that process millions of transactions per day. Sztorc’s paper says the Bitcoin network needs a high-security budget in order to prevent 51 percent attacks. In a sense, alternative chains will subdue the chances of a market-clearing fee rate, especially when higher fees begin to dominate and start showing signs of time dependency. Sztorc’s paper emphasizes how competition will make it difficult for BTC to collect miner fees and instead every network in existence should be a subsidy for BTC.
“A better way, is to attempt to devour the entire payments market and claim all of its fee revenues,” Sztorc concedes. “This can be done using merge mined Sidechains, without any decentralization loss.”
Of course, not everyone agreed with Sztorc’s assessment concerning long term security for the BTC network. After the founder of Coinmetrics, Nic Carter called the paper a “stunner” and “outstanding as usual,” many other developers and crypto luminaries threw in their two cents. BTC developer Eric Lombrozo said the essay was a “good read” but is “still very concerned about the economics of sidechains remaining viable unless we substantially alter the trust model.”
A few bitcoiners responding were very stubborn, wholeheartedly insisting that a relatively high fee market is necessary to subsidize miners and higher fees will also mean BTC is successful. Veteran cryptographer Nick Szabo emphasized that he believes there are a few “bad assumptions” in Sztorc’s post. Szabo detailed that he has only seen one good argument for security under a transaction fee-only system. “That’s the volatility of fees, which seem to behave nonlinearly as blocks become full,” explained Szabo.
The many responses to Sztorc’s paper underlined the fact that BTC developers and maximalist proponents are still dead set on growing the fee market and LN solutions. It doesn’t seem like merged mined sidechains will be accepted anytime soon, unless it is enforced in a permissionless manner. Currently, a few alternative chains piggyback off of BTC in some form or another like Counterparty, Omnilayer, RSK, and Veriblock and there are more projects like the Stacks blockchain on the horizon. Core developers have been stubborn about Drivechain for quite some time and the issues stem from a deep distrust of miners. This is ironic given that their work is what secures the network and defines Nakamoto consensus.
What do you think about Paul Sztorc’s post concerning block subsidy and BTC’s security over the long run? Let us know in the comments section below.
Image credits: Shutterstock, Twitter, Pixabay, and Paul Sztorc’s paper.
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Over the last few years, infighting and different visions has led to significant divides within the Bitcoin community, weakening the network effects no matter which chain you support. With all the arguments about scaling, privacy, consensus changes and the various forks, it is amazing that these public networks are still thriving. Nevertheless, the people who maintain the various software protocols that communicate with Bitcoin and the network’s many participants have lives that are finite — which means we don’t know if future generations will change the social contract Satoshi Nakamoto created years ago.
Understanding the Social Layer of Bitcoin
The technology we all know and love called Bitcoin has changed the lives of many individuals over the last 10 years. However, during the latter half of that decade, the humans who have maintained the protocol have relentlessly argued over how it should operate. This has led to a large community divide, endless fighting, and many different forks. The protocol itself, however, has been able to continuously perpetuate the social contract we call “Bitcoin” during this period. However, the arguments have led to wavering opinions and whimsical ideas that threaten the Bitcoin network’s social contract.
The independent cryptocurrency researcher Hasu Fly details the social contract very well in his memorable essay “Unpacking Bitcoin’s Social Contract.” Within the editorial Hasu details that fiat money is a social contract or an agreement between the citizens and the state. Many individuals reject this social contract though and believe the state fails to gain true consensus because it uses force as a means to manage each country’s economy. With Bitcoin, things are quite different and the protocol is used by individuals and organizations in a completely voluntary manner.
“Many don’t realize that Bitcoin works through a social contract as well,” explains Hasu’s essay. “The social layer and its rules are the heart of Bitcoin.”
After describing in great detail on how fiat money and Bitcoin are both social contracts, Hasu then reveals the rules of the network’s underlying social contract. The researcher details that Satoshi Nakamoto settled on four distinct rules: confiscation resistance, censorship resistance, inflation resistance, and counterfeit resistance. Essentially this means the owner of the coins can hold keys to the currency without it being taken away, and the owner can also transact on the network without permission. An owner of any amount of bitcoin knows that the protocol has a limited supply, and last but not least anyone can verify the first three rules at any time using the transparent and public blockchain.
Future Generations Could Drastically Change Bitcoin
So far the technology has stayed true to the social contract and one could easily say this applies to each network whether it be BTC or BCH. Hasu’s essay also details that most of the time social contracts do not fork, but the BCH fork was a rare case scenario and what was left over was “two weaker social contracts — each agreed to by fewer people than the old one.” However, we have yet to cross past one generation with the social contract in the decade since the genesis block. When people recently discussed changing the 21 million capped supply the community went ballistic, but in 10 more years we don’t know if future generations will be more willing. The average human generation is between 25-30 years and bitcoin could be changed drastically in 40 years if the social contract is not upheld today. Let’s face it, over time generations change things and some of those revisions are good and sometimes they are awful — like changing from the gold standard to fiat and trusting central banks.
For now, some of the lead developers of reference implementations are kings of the hill – or at least that’s how they act. But over time, younger generations who are smarter and can code better will challenge these open source developers, and at some point their skills will be useless. Ultimately when money is used as a social contract, participants vote by either using the tender or seeking alternatives. Furthermore, money not only applies to its own social contract theory in a general sense, but also weaves within other social contracts within our society. Like it or not, any one of the two dominant Bitcoin chains may be chosen by the masses by coexisting in an entirely different way and one chain may not survive over the next decade.
Bitcoin’s 4 Fundamentals Must Be Passed On
Still, if the first generation of users decides to stick to the rules of Bitcoin’s social contract they must continue to strengthen the agreement. After 10 years, many well-known bitcoiners are willing to dismiss the global understanding and want to discuss changing the rules. Some supporters want to instill censorship by only giving affluent individuals the ability to transact onchain and store value in Bitcoin, by bolstering a barrier to entry with expensive network fees.
The ultimate goal has always been “hyperbitcoinztion,” but if we waver on the very foundations of Bitcoin’s social convention then nothing will be socially, morally, and rationally justified. Over the last few years, some people have dismissed Satoshi’s genius and the fact he created a near perfect system that has been Byzantine fault tolerant for 10 years with 99.98332 percent uptime. Many people to this day, whichever camp they are in (BCH or BTC), still believe in Bitcoin’s rules wholeheartedly. However, with all the infighting and shifting opinions on the true meaning of rules 1-4 these issues may challenge future generations. The Bitcoin network we know of today may not be the same when our sons and daughters begin to truly participate unless we keep some consistency on the social layer. It is quite obvious that those who do not want Bitcoin’s technology to succeed are attacking the root of the social layer today, and will not relent until they have achieved their aims.
What do you think about future generations changing the social contract called Bitcoin? Let us know what you think about this subject in the comments section below.
OP-ed disclaimer: This is an Op-ed article. The opinions expressed in this article are the author’s own. Bitcoin.com is not responsible for or liable for any content, accuracy or quality within the Op-ed article. Readers should do their own due diligence before taking any actions related to the content. Bitcoin.com is not responsible, directly or indirectly, for any damage or loss caused or alleged to be caused by or in connection with the use of or reliance on any information in this Op-ed article.
Image credits: Shutterstock, Pixabay, Vacate Wall Street, and Hasu Fly’s 2018 essay.
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Privacy is a constant battle between those who wish to increase it and those who would strip it away. Never is this war more apparent than in Bitcoin, where factions with opposing ideals find themselves at loggerheads. On the one side are the blockchain surveillance companies that work hand-in-glove with the three-letter agencies, regulators, and governments. And on the other side are the cryptographers and developers seeking to introduce protocols that will bolster Bitcoin’s privacy.
Move Slow and Break Nothing
Introducing privacy tech to altcoins, which are more centralized than Bitcoin Core and Bitcoin Cash, is relatively easy. Only last week, the Litecoin Foundation and Beam entered into a cooperation agreement with a view to bolstering the former’s privacy. “We have started exploration towards adding privacy and fungibility to Litecoin by allowing on-chain conversion of regular LTC into a Mimblewimble variant of LTC and vice versa,” ran the agreement. “Upon such conversion, it will be possible to transact with Mimblewimble LTC in complete confidentiality.”
Bitcoin can’t enter into cooperation agreements, because it has no official team members to sign the paperwork. Reaching consensus on Bitcoin Core upgrades is meant to be hard, to prevent aspiring leaders from implementing changes unilaterally. The downside, however, is that major upgrades that have broad support are hard to pass, as even a few dissenting voices can be enough to quell them. A number of privacy upgrades that have been proposed for Bitcoin fall into this category: in theory they should work, but it may be some time – if ever – before they’re incorporated.
Whenever a transaction is sent on the Bitcoin network, it’s broadcast to multiple nodes before a miner picks it up and incorporates it into a block. During the broadcast process, which is known as diffusion, it’s possible for a bad actor operating as a node to trace the transaction back to its origin, from where there’s a high chance of ascertaining the IP address of the sender. Dandelion is a technology that uses random pathways to send transactions to a variable number of nodes, making it much harder for the sender to be traced.
Chances of implementation into Bitcoin Core: High
Estimated timeline: 12-18 months
While Dandelion should make it harder for adversaries to determine the origin of a bitcoin transaction, it does nothing to enhance onchain privacy: sender and recipient’s addresses are still publicly visible to the whole world, as well as the amount sent and a host of other potential identifiers. One privacy technology that makes all transactions private by default is Mimblewimble, as debuted by Grin and Beam this year.
For technical and political reasons, Mimblewimble is unlikely to be incorporated directly into Bitcoin Core or Bitcoin Cash to enact enforced privacy. There is the possibility of it being bolted on to BTC, however, as a sidechain. This would enable parties to transact privately on a Mimblewimble sidechain, without risking the security of the mainchain or enforcing blanket privacy on BTC users who have no desire for it.
Chances of implementation into Bitcoin Core: Moderate (as a sidechain)
Estimated timeline: 18 months+
Schnorr is not privacy tech – it’s scaling tech that merges a lot of the input data in a bitcoin transaction, resulting in reduced blockchain size. Schnorr signatures open up the possibility for introducing a host of secondary features that could improve Bitcoin’s privacy. Coinjoin, in which random transactions are mixed together to obfuscate all parties, is more effective with Schnorr, as transaction fees remain lower, incentivizing wider usage, which in turn strengthens the privacy for all users.
Schnorr is often referenced alongside Segwit, the scaling technology that Bitcoin Core has had in place for over 18 months now. Bitcoin Cash does not have Segwit, but it looks like it could be getting Schnorr signatures. As news.Bitcoin.com recently reported, they’ve been tabled for introduction to the BCH network, and could arrive as early as May in its next scheduled upgrade. Here, the benefits would again include increased scalability and enhanced privacy.
Chances of implementation into BTC/BCH: High
Estimated timeline: 9 months+ for BTC, 3 months for BCH.
Which of these privacy features do you think will be introduced to BTC or BCH in the future? Let us know in the comments section below.
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21 is a number that holds deep symbology to bitcoiners. In addition to denoting the total number of bitcoins, in millions, that will ever be issued, it’s inspired scores of cryptocurrency business names, websites, and merchandise designs. Despite its assumed inviolability, some members of the community are opposed to Bitcoin’s rigidly set 21 million supply. If they have their way, that arbitrary cap will be lifted. For many devout bitcoiners, this suggestion is sacrilegious.
Bitcoin’s Fixed Supply – Arbitrary or Mandatory?
At a “Satoshi’s Roundtable” event last week, decried by some as Bitcoin’s very own version of Bilderberg, the prospect of raising BTC’s 21 million cap was raised. It was Matt Luongo who floated the proposal, in response to a discussion about anticipated adoption of the Lightning Network (LN). With the block reward halving every four years, and onchain transaction volume likely to be low in future should LN take off, there will be little incentive for miners to secure the network. This could lead to it being vulnerable to 51 percent attacks that would undo the trust instilled in the Bitcoin network over many years.
An argument has also been made for increasing the 21 million supply of Bitcoin Cash in future, on similar grounds. Due to the network’s low fees, miners would theoretically have little economic incentive to secure the network once the block reward diminishes.
I was the guy that said we might have to one day raise the Bitcoin supply cap. Fight me. https://t.co/ysqHHdcggf
— Matt Luongo (@mhluongo) February 4, 2019
Luongo’s suggestion of raising BTC’s total supply is intended to incentivize mining in a future of minimal block rewards and minimal onchain volume. While there may be an economic and security case for doing so, it is a matter that resonates strongly – even emotionally – with a sizeable portion of the Bitcoin community. There are also those who are motivated by purely financial reasons. The fact that there will never be more than 21 million bitcoins is what gives the currency its digital scarcity. Raising the fixed cap, even by a fraction, could dilute the value of everyone’s holdings, it is feared, and consign BTC to the status of an EOS-style inflationary cryptocurrency.
A Controversial Proposal That’s Sparked Intense Debate
Numerous Bitcoin luminaries have waded into the debate regarding Bitcoin’s supply following the Satoshi’s Roundtable discussion. Nick Szabo insisted that decreased hash power due to lower mining rewards would not have a significant impact on security, but conceded that “it may require recipients of very-high-value transactions to wait more blocks before relying on them.” Cobra Bitcoin took a more combative approach, tweeting “There will only ever be 21 million bitcoins. If you have a problem with that, get the fuck out of our community because you aren’t welcome.” To this, Matt Luongo responded:
This stuff has to work … If the stars align and this becomes an issue do you sacrifice a core tenet of the community or the entire security of the chain?
It is not entirely known why Satoshi chose 21 million as the number of coins to be issued, though it is speculated that this ties in with the halving reward schedule that occurs every four years. Alternatively, it could be because the total number of sats that will ever be created approximately mirrors the maximum capacity of a 64-bit floating point number.
Given that there was no mention of Bitcoin’s proposed supply in Satoshi’s seminal whitepaper, perhaps the number itself was never particularly significant to him. Whatever the case, 21 million has come to be one of Bitcoin’s defining features, and any attempt to meddle with the magic number is liable to be treated as heresy. Future generations of bitcoiners may be more receptive to raising the supply, but in the here and now, that notion seems untenable.
Do you think Bitcoin’s supply should ever be increased? Let us know in the comments section below.
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Blockchain startup Blockstack has revealed the company is in the midst of developing a new distributed ledger protocol called Stacks, a chain that leverages the hash power from the Bitcoin Core (BTC) network. Not only is the Stacks network secured by over 45 exahash of distributed hashrate, but its consensus algorithm also burns BTC by using a mechanism known as proof of burn (PoB).
Proof of Burn
Blockstack, formerly called Onename, and Stacks lead developer Jude Nelson have published a video that describes a newly designed blockchain consensus algorithm. It utilizes Bitcoin Core’s proof of work (PoW), alongside the burning of coins (PoB) in order to process blocks on the Stacks chain. Nelson details there are inherent issues with proof-of-stake consensus models and the PoB consensus mechanism is meant to bootstrap itself from the established hash power stemming from the BTC chain. Over time, the Stacks chain will slowly transition away from BTC’s hash power, but using it initially will help curb 51% attacks that have been seen in recent months with networks that have an extremely low amount of PoW.
Nelson believes it would be better to build on top of the security of BTC rather than try to mimic that success.
“Instead of expending electrical and hardware costs, participants in proof-of-burn consensus do just that — They provably destroy (or “burn”) their own bitcoin as the economic cost for their participation,” explains Nelson’s recent video describing the Stacks chain. “Every participant competing for the opportunity to write the next block must burn a certain amount of proof-of-work token (bitcoin) to enter the competition.”
The Blockstack developer continued by stating:
A participant’s likelihood of winning the competition increases with the percentage of bitcoin they burn compared to other participants — The competition’s winner writes the block, collects transaction fees, and earns the block reward of Stacks tokens.
Building on Top of the Largest PoW Chain
Nelson’s blog post and recently published video also explains that the Stacks blockchain has its own memory-hard PoW process, but only 5 percent is allocated and the other 95 percent stems from BTC’s hash power. The process is tunable so that in future the Stacks developers can lessen the dependency on the BTC chain. “As the Stacks blockchain starts to get significant hash power there is a path available (by changing the tunable threshold) to reduce the percentage for Bitcoin and slowly transition away from it,” Nelson’s report notes.
A Stacks block is found by using a mechanism called “cryptographic sortition” and each block with the burns from all participants is used to calculate a probability distribution at random. If a participant spends a lot of bitcoin during the burn process and doesn’t receive any incentive, the loss is similar to BTC miners using electricity and losing the block race, Nelson explains. “If you contribute 90% of all burns in an epoch, there’s still a 10% chance that you will lose (but your Bitcoin is destroyed either way,” the developer adds.
Nelson states further:
It’s worth noting though; the burns aren’t truly “wasted” — they still improve the chain quality since their (wasted) burns get used to calculate a “burn quota” which helps slow down attackers.
The Blockstack programmer says the firm is building the chain in this manner because they believe it would be “fruitless” to compete with the security of BTC. Rather the team decided to build on top of the largest PoW chain in order to create a more distributed and censorship-resistant web. Blockstack’s main intentions have always been working toward the decentralization of the internet. Nelson believes it’s even better when there’s a blockchain system that’s verified by individuals and organizations “acting out of rational economic self-interest.” In Hong Kong, Nelson detailed that Stacks version 2 is currently under development during his recent keynote discussion concerning the protocol. At the moment developers can review the two open SIPs or Stacks Improvement Proposals.
What do you think about Blockstack’s Stacks proof-of-burn consensus model? Let us know what you think about this project in the comments section below.
Image credits: Shutterstock, Blockstack, Pixabay, and the Blockstack white paper.
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In addition to being Bitcoin’s 10th birthday, Jan. 3, 2019 will go down in history as being the crypto world’s inaugural Proof of Keys day. The initiative, conceived by Trace Meyer just weeks ago, has drawn broad support from cryptocurrency influencers and businesses. Over the past 24 hours, crypto companies have tweeted their encouragement for users to withdraw their funds from exchanges and other custodial wallets.
Proof of Keys Day Draws Strong Support From Crypto Companies
If Trace Meyer’s scheme is the success he hopes it to be, onchain activity will record a significant spike in the number of bitcoin transactions for Jan. 3, 2019, and on this day in each subsequent year too. While it is too soon to assess the efficacy of the grassroots movement to return ownership of crypto assets to users, there are signs that Proof of Keys has already been successful in raising awareness of the importance of self-custody.
If you don't own your keys, you don't own your crypto.
— Blockchain (@blockchain) January 2, 2019
Under the hashtag #notyourkeysnotyourbitcoin, Twitter users have been sharing their own experiences of reclaiming their crypto from third-party custodians, and encouraging others to do the same. While it was the cryptocurrency community who initiated the Proof of Keys proposal, crypto companies have now joined the chorus of support. Not surprisingly, projects whose business entails non-custodial storage solutions have been leading the choir, Blockchain and Keepkey among them.
Exchange Customers Hit by Delayed Withdrawals
The need for self-sovereignty of crypto assets was demonstrated this week by the reticence of Hitbtc to facilitate withdrawals. A number of customers of the controversial exchange have reported lengthy delays in accessing their funds, leaving them unable to participate in Proof of Keys on the day itself. Several Hitbtc users were greeted by a message informing them that “Withdrawals are temporarily disabled on your account.”
Other exchanges have been more supportive Proof of Keys, including Swiss-based Lykke, which made the campaign the topic of its weekly discussion, as well as Ethfinex. If bitcoin is to enable millions of people to reclaim their financial sovereignty, it will require those who are already familiar with the technology to lead by example. Proof of Keys provides the perfect opportunity for bitcoiners to put their censorship-resistant money where their mouth is.
That is why today, on #ProofOfKeys day I am reclaiming my monetary sovereignty. I am proud to be my own bank, with the ability to verify every transaction with a full node and further send my own transactions without permission or even the internet. Happy 2019 #Bitcoin. Onward. pic.twitter.com/fRdv69Kt8s
— Eric ₿ [Jan/3➞₿ ∎] (@Provingwork) January 3, 2019
What are your thoughts on Proof of Keys day? Let us know in the comments section below.
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The post Bitcoin’s Proof of Keys Day Begins With Industry-Wide Support appeared first on Bitcoin News.
Over the last 12 hours, cryptocurrency supporters across the globe have been celebrating the 10-year anniversary of the Bitcoin genesis block which was mined at approximately 18:15:05 UTC. Die-hard crypto enthusiasts believe the software released by the anonymous creator Satoshi Nakamoto has forever changed the way people look at money, and that the technology’s effect on the global economy will transform the course of history.
10 Years of Dust Sent to the Genesis Block’s Wishing Well
On Halloween 2008, an anonymous developer named Satoshi Nakamoto announced a paper called Bitcoin: A Peer-to-Peer Electronic Cash System. Two months later, on Jan. 3, 2009, the network officially launched when Nakamoto mined block 0, bringing the Bitcoin blockchain into life. The genesis block is special for a few reasons as it has characteristics that the thousands of subsequent mined blocks do not. For instance, the genesis block is hardcoded into a great majority of software clients that use the chain for reference and for infrastructure.
Furthermore, at the time of creation, block rewards gave miners 50 BTC, but the genesis block is an unspendable sum that will forever contain those 50 coins. To this day nobody knows whether Satoshi made these coins unspendable for any specific reason. Over the years, many fans have also sent funds to the genesis address, and at the time of publication, there’s a total of 66.9 BTC sitting there. Scrolling through the list of dust transactions sent to the genesis address, one can find messages to Satoshi asking the creator for coins, as many of the senders hoped the creator would send additional funds back to them.
Like the Beatles, Satoshi Left a Backward Message in Block 0
Another interesting fact about the genesis block is that many historians believe it was mined with a Windows-powered PC. Bitcoin version 0.1, the first original implementation, is written in the coding language C++ and was a Windows GUI application at first. This means the first block Satoshi mined was processed solely with a PC’s CPU. People mined BTC this way for two years after block 0 was created.
The genesis block’s hash has two additional leading hex zeroes which are not seen in block creation today (except for the infamous 21e800 hash on June 19, 2018). The content of the ‘input’ in a generated bitcoin block contains what’s called a ‘coinbase parameter,’ which in the genesis block’s case is recognized as one of the most fascinating examples of hardcoded text stored inside the chain.
The coinbase parameter for block 0 states:
The Times 03/Jan/2009 Chancellor on brink of second bailout for banks
There are many theories to why Satoshi created this text, the prevailing one being that it was a philosophical message in response to 2008’s economic crisis and the subsequent bank bailouts. In addition to the coinbase parameter, when someone decrypts the hexadecimal format, the message also shows the “Chancellor bailout” text written backward. With Satoshi mining bitcoin with his CPU, it took six days to find block 1 on January 9 after the genesis block’s creation, and some people consider this day to be Bitcoin’s birthday as well. Some bitcoiners also assume Satoshi took a break in between mining blocks 0-1, in order for the timeline to represent the Bible’s Genesis story where God’s creation of the earth took seven days.
Hal Finney, Cryptographers, Internet Geeks, Anarchists, Tech Entrepreneurs, Venture Capitalists, and Grandma
Three days later, Satoshi sent the first transaction to the developer Hal Finney who decided to run the software and accepted 10 BTC from the creator. In fact, Finney was running the Bitcoin protocol on his computer the day after block 1 was mined on January 10 and tweeted about the software that day. However, even though Finney was the first known or identified bitcoin recipient, Satoshi sent coins to quite a few people on that same day. The creator also chose to send coins from block 9, as opposed to sending funds from blocks 1-8 for another unknown reason. On March 19, 2013, Finney explained how he got excited about the protocol after it was released by the anonymous inventor.
“When Satoshi announced the first release of the software, I grabbed it right away — I think I was the first person besides Satoshi to run bitcoin,” explained Finney’s recollection of the events. “I mined block 70-something, and I was the recipient of the first bitcoin transaction when Satoshi sent ten coins to me as a test — I carried on an email conversation with Satoshi over the next few days, mostly me reporting bugs and him fixing them,” the cryptographer added.
The creation of Bitcoin’s Genesis block and the beginning stages of the network slowly started to gather more supporters as time progressed. To this day, we don’t know what happened to Satoshi when the creator left the scene in 2010, by which point he is credited with having mined close to 1 million bitcoins. Since then, the establishment has scorned the technology year after year, while Bitcoin has steadily gained traction. Meanwhile, large swathes of geeks and political idealists started to believe the protocol would revolutionize the entire monetary system on a global level. For six years after block 0 was mined, the financial elites called cryptocurrencies crap before attempting to commercialize them in 2015.
Hard Money and the 21 Million Deliverable Pieces of Subjective Value
Satoshi’s software is more than just a fundamental breakthrough in computer science; the technology is also a peer-to-peer, open, secure, censorship-resistant, and the most deliverable type of money ever created. Since the creation of the genesis block 10 years ago today, the technological innovation has allowed for a pure form of voluntary free market exchange. Transactions between global individuals are conducted in a permissionless manner across hundreds of invisible borders without the need for any pre-existing trust. The innovation Satoshi gave to the world in 2008 is the current monetary system’s black swan, equipped with a positive feedback loop. Its ability to survive 10 turbulent and testing years is surely an event worth celebrating.
What do you think about the 10-year anniversary of the genesis block and Satoshi Nakamoto’s infamous creation? Let us know what you think about this subject in the comments section below.
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Bitcoin’s 10th anniversary will fall on Jan. 3. As a decentralized currency that belongs to everyone and no one, there is no official way to commemorate its 10th birthday. From wallet manufacturers to developers, every ecosystem participant will have their own suggestions as to how bitcoiners should mark the historic occasion.
Unofficial Ways to Celebrate Bitcoin’s Unofficial Birthday
It’s human nature to see significance in numbers. That’s why the crypto community lost its mind over a block hash containing 18 consecutive zeros earlier this year, and it’s also why there will be great fanfare over Bitcoin’s 10th birthday, despite the fact that numerically speaking, 10 is no more significant than any other integer.
It’s fitting that the cryptosphere can’t even agree on the official date of Bitcoin’s birthday, which could fall on Jan. 3, when Satoshi mined the genesis block, or on Oct. 31, when he published his whitepaper. For those who believe it to be the former (or simply want an excuse to celebrate Bitcoin’s birthday twice a year), there’s no shortage of ways to mark Jan. 3. Here’s how various ecosystem participants will be celebrating the event.
Merchants and Manufacturers
Vendors would predictably like you to celebrate Bitcoin’s 10th by buying memorabilia. We’ve covered much of this stuff already, including an expensive watch, an expensive clock, and a reasonably priced hardware wallet. For those too penurious or too cynical to rinse $ 4,000 on a Bitcoin timepiece, there are more affordable souvenirs available; a t-shirt or framed print should suffice.
Mainstream media have gotten cryptocurrency wrong for a decade, and they’re not going to break the habit of Bitcoin’s lifetime on its 10th. Expect buttloads of verbose hit pieces masquerading as thought pieces pondering “What has Bitcoin actually achieved?” By the time they finally get it, it’ll be too late. Meanwhile, don’t give the media the rage clicks they crave. If you really want to read about Bitcoin’s decade in review, there’ll be plenty of cryptocurrency publications, news.Bitcoin.com included, on hand to do the honors.
On Jan. 3, a significant number of bitcoin users will be busy withdrawing their cryptocurrency from exchanges and storing it on non-custodial wallets. The move will be initiated as part of Proof of Keys, a scheme designed to return ownership of bitcoin from third parties to individuals, where the digital coins were always meant to reside.
Expect to see plenty of geeky tweets from prominent Bitcoin developers on Jan. 3 that draw upon the rich trove of data at their disposal. A handful of devs have been working on the cryptocurrency’s code since the early days, and thus Bitcoin’s 10th will also be an opportunity for self-reflection. There are no longer service medals to be earned for making code commits to Bitcoin Core or Bitcoin Cash — merely the satisfaction that comes from knowing you’ve played a small part in optimizing Satoshi’s creation for the next wave of users.
Exchanges, wallet developers, P2P platforms and other crypto businesses will be celebrating Bitcoin’s 10th in their own way; expect to see discounts, zero-fee trading and other offers to mark the occasion, plus a whole lot of Bitcoin trivia shared on social media.
While there’s no obligation to celebrate Bitcoin’s birthday (as a permissionless creation, that’s one of its charms), many of those who’ve come to know and love the cryptocurrency over the last 10 years will take a moment to toast this milestone. Whether that means raising a glass, buying bitcoin, or withdrawing coins to a non-custodial wallet, there are numerous ways to observe Bitcoin’s most symbolically significant birthday yet. The next time an anniversary as widely celebrated arrives will likely fall on Jan. 3, 2059, when Bitcoin turns 50. Here’s to the next 40 years.
How will you celebrate Bitcoin’s 10th birthday? Let us know in the comments section below.
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Bitcoin was born as a wholly digital currency, and it might have remained that way had it not been for the efforts of an early adopter from Utah. His name was Mike Caldwell, but on the Bitcointalk forum, he was better known as Casascius. The physical bitcoin creator took a digital phenomenon and converted into physical matter. For the first time in history, bitcoins were tactile.
Why a Physical Bitcoin?
“Why a physical bitcoin?” That was the question with which Bitcointalk forum regular Casascius titled his thread on Sep. 6, 2011. Hours earlier, he’d posted a separate thread announcing the launch of the first physical bitcoins. In many respects, his creations looked and felt just like conventional coins, and back then were worth scarcely more. In fact, with the first batch that Casascius released, the cost of postage alone was set at 1 BTC, while each 1 BTC coin was priced at 1.25 BTC to cover production costs.
“One side has a hologram,” explained Casascius. “Underneath the hologram layer is a private key. The first 8 characters of the bitcoin address appears on each coin.” “These look awesome,” replied forum user ‘the joint,’ “but why would you buy this given the current state of the Bitcoin market/economy? This might be nice as an investment if there was a good indicator that your investment would give you any kind of return.” When he wrote these words, 1 BTC was trading for $ 6.86.
The 1,000 BTC Physical Coin
So successful were the Casascius physical coins that the 1 BTC batch was followed by 10, 25, 100, and even 1,000 BTC editions. At bitcoin’s peak, around this time last year, that holographic 1,000 BTC coin would have been worth around $ 20 million. Mike Caldwell sold his Casascius physical coins until late 2013, by which point close to 28,000 coins had been minted. Almost half of those coins have now been redeemed, but over 47,000 BTC remains unclaimed at this time, waiting until the owners can bring themselves to peel off the holographic layer and redeem them using the private key.
“Now we can cross out the line in the first sentence of the [Bitcointalk forum] FAQ, which is that “a bitcoin is not tangible,” wrote Casascius, upon announcing his invention. “The fact that a bitcoin is no longer invisible, I think, is huge in and of itself.” He wasn’t wrong. While BTC has remained a primarily digital currency, today physical bitcoins exist in many forms including paper wallets, commemorative coins, and limited edition trinkets. Simply through engraving, printing, or etching the public and private keys to a bitcoin address, and obfuscating the latter, anything can be turned into a physical bitcoin and used to hold any amount of BTC or BCH.
— Melik Manukyan ludvigart.com (@realLudvigArt) November 20, 2018
Casascius started out as just another arcane pseudonym on an obscure digital currency enthusiasts’ forum. Today, his moniker stands synonymous with the birth of physical bitcoins.
Bitcoin History is a multipart series from news.Bitcoin.com charting pivotal moments in the evolution of the world’s first and finest cryptocurrency. Read part three here.
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