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Drivechain Creator’s Latest Paper Sparks Debate Over Bitcoin’s Future Security

February 19, 2019 |

Drivechain Creator's Latest Paper Causes Debate About Bitcoin's Future Security

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.”

Also Read: More Than 30% of BTC Traffic Stems from the Veriblock Project

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.”

Drivechain Creator's Latest Paper Sparks Debate Over Bitcoin's Future Security
A graphical interpretation of BTC’s security budget over the next 40 years according to Sztorc’s essay “Security Budget in the Long Run.”

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).

Drivechain Creator's Latest Paper Sparks Debate Over Bitcoin's Future Security
Bitcoin developer, economist, and Drivechain creator Paul Sztorc.

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.”

Drivechain Creator's Latest Paper Sparks Debate Over Bitcoin's Future Security
Some crypto enthusiasts didn’t like Sztorc’s opinion concerning the LN’s usability, while some described the LN user experience as being not even close to onchain payments.

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.”

Drivechain Creator's Latest Paper Sparks Debate Over Bitcoin's Future Security
Sztorc emphasized on Twitter that the post describes competition with altcoins and not traditional payment networks.

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.

Drivechain Creator's Latest Paper Sparks Debate Over Bitcoin's Future Security
Sztorc’s article sparked a lot of criticism and conversation about the subject.

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.


Need to calculate your bitcoin holdings? Check our tools section.  

The post Drivechain Creator’s Latest Paper Sparks Debate Over Bitcoin’s Future Security appeared first on Bitcoin News.

Bitcoin News

Apple’s ‘black site’ gives contract workers few perks and little job security

February 12, 2019 |

Apple’s new campus in Cupertino, Calif., is a symbol of how the company views itself as an employer: simultaneously inspiring its workers with its magnificent scale while coddling them with its four-story café and 100,000-square-foot fitness center. But one group of Apple contractors finds another…


L.A. Times – Business

Lawmakers Reach Agreement in Principle to Fund Border Security

February 12, 2019 |

Senior lawmakers said Monday night they had reached an agreement in principle to fund border security and avoid a partial government shutdown this weekend.
WSJ.com: What’s News Asia

Mood Sours on Border Security Talks

February 11, 2019 |

Bargainers clashed Sunday over whether to limit the number of migrants authorities can detain, tossing a new hurdle before negotiators hoping to strike a border security compromise for Congress to pass this coming week, the AP reports. The White House wouldn’t rule out a renewed partial government shutdown if an…
Newser

What Jeff Bezos’ intimate-message breach teaches us about digital security

February 9, 2019 |

Last month, the National Enquirer shared the intimate texts that Jeff Bezos — Amazon founder, Washington Post owner and richest man in the world — had sent to Lauren Sanchez, a former television host, over the course of their months-long extramarital affair.

“I love you, alive girl,” the tabloid…


L.A. Times – Business

PR: Bitcoin.com Partners With CryptoTag to Bring Space Grade Security to the Bitcoin.com Store

February 7, 2019 |

Bitcoin.com Partners With CryptoTag to Bring Space Grade Security to the Bitcoin.com Store

This is a press release, which contains forward looking statements, and should be treated as advertising or promotional material. Bitcoin.com is not responsible for or liable for any content, accuracy or quality within the press release.

Your security and legacy is not something to be taken lightly. This is why Bitcoin.com have partnered with the security experts at CRYPTOTAG to bring their cutting edge private key and seed backup solution to the Bitcoin.com Store.

The CRYPTOTAG Starter Kit gives you the tools you need to store your private keys and recovery seed on space-grade titanium. Built to be indestructible.

Here is what the CRYPTOTAG team had to say:

‘’Our solution is an unique patented system that we tested thoroughly. We constructed CRYPTOTAG in such a way that all the components work together guaranteeing the best result for our customers.’’

Bitcoin.com Ecommerce Manager, Blake Moore, shared why he thinks CRYPTOTAG is so important:

“Accidents happen and access combinations are forgotten all of the time. CRYPTOTAG is a must-have product if legacy and security are important to you. They are a great addition to the growing range of products and services we offer.”

CRYPTOTAG is compatible with the Bitcoin.com wallet, Ledger, KeepKey and more.
Available now at the Bitcoin.com Store.

About Bitcoin.com:
Bitcoin.com is supercharged to change the world with BCH. Our suite of developer tools has been downloaded 36,000+ times from over 100 countries.
Our team is the heart and soul of the Bitcoin Cash industry. We’re committed to making BCH available to all people, whatever their age, gender, nationality or financial status.

About CRYPTOTAG.io:
CRYPTOTAG is a Dutch startup from Amsterdam. We want to contribute to a community which we believe in. That is why we have created the only premium backup system in the world made out of space-grade titanium.
We at CRYPTOTAG have one goal: empowering people to be their own bank.

Supporting Link
https://store.bitcoin.com/cryptotag

Contact Email Address
blake@bitcoin.com

This is a press release. Readers should do their own due diligence before taking any actions related to the promoted company or any of its affiliates or services. 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 content, goods or services mentioned in the press release.

The post PR: Bitcoin.com Partners With CryptoTag to Bring Space Grade Security to the Bitcoin.com Store appeared first on Bitcoin News.

Bitcoin News

Democrats unmoved by Trump’s State of the Union bid to break gridlock on border security

February 6, 2019 |

Democrats signaled on Tuesday that President Trump’s State of the Union address did little to convince them that a legislative compromise to construct his proposed border wall is possible, as another potential partial federal government shutdown over the project looms.
FOX News

Double Down Your Bitcoin Security by Utilizing 2FA Services

January 26, 2019 |

After obtaining your first bitcoins on an exchange, you’ll want to keep them safe, even if the funds are only sitting there temporarily. One way to keep your crypto secure online is by using two-factor authentication (2FA). Security is of utmost importance when it comes to storing cryptocurrency in an online wallet and 2FA adds another layer of protection over and above a strong password.

Also read: Regulations Have Ruined the Physical Bitcoin Industry

2FA Is Essential

The cryptocurrency community is all about advocating proper security techniques, and two-factor authentication (2FA) is one method that’s taught first and foremost to newcomers. 2FA is a subset of multi-factor authentication (MFA), a system that requires the use of two different factors to unlock a combination. For example, if 2FA is applied to a cryptocurrency exchange account you would need to log in with your username and password, but you will also need to enter a 2FA authentication PIN. The authenticator is usually on a secondary device like a mobile phone or a USB key.

Double Down Your Bitcoin Security By Utilizing 2FA Services
Even if you don’t own cryptocurrencies, using 2FA to secure your online life is good practice.

Typically when you sign up for an exchange, you should add 2FA to the account right away for extra security. A great majority of exchanges nowadays also enforce the use of 2FA. However, what’s not usually taught is the fact that nearly every account you own, from social media services to email, should ideally be locked with 2FA, even if you don’t own cryptocurrencies.

There are many examples of why you should add 2FA to not just your exchange account, but to your email and other online accounts as well. Mainly because it is possible for hackers to gain access to the exchange account through the email you signed up with. After all, what point is there in locking the front door if you’ve left the back door open? Hackers could gain access to your email account if it is not secured with 2FA and when they gain possession of your email they could change the exchange account password among other malicious acts.

Double Down Your Bitcoin Security By Utilizing 2FA Services
Two-factor authentication requires people to use a secondary factor like a phone code plus login credentials as well.

A hacker can also change your mobile number to a different phone or a voice over internet protocol (VOIP) line and gain access to your exchange account if you are using SMS style 2FA (a PIN sent by text). When people leave back doors open to social media accounts, hackers can gain access to private information and through social engineering breach cryptocurrency accounts online. Of course, people who hold their private keys or seed phrase offline will be safe, but securing your online life with multi-factor authentication techniques should be a priority. Hackers want your information and are known to scan emails and social media accounts for financial information and details of bitcoin holdings.

The following is a list of 2FA services that provide a free secondary form of authentication for people who want to keep their online accounts secure. Most of the well-known cryptocurrency exchanges support the use of the popular 2FA services mentioned and a majority of email providers and social media accounts support these specific authenticators as well.

Google Authenticator

The application Google Authenticator is a reputable service that’s simple to use. The free platform is available for iOS and Android and you can use the service with online accounts such as Dropbox, Facebook, Gmail and a wide variety of cryptocurrency exchanges. A user can add as many codes as they like by either entering it manually or by using the QR reader. However, Google Authenticator requires you to back up the account’s recovery code. Otherwise, if you lose your phone, you risk being locked out of your account.

Double Down Your Bitcoin Security By Utilizing 2FA Services

Microsoft Authenticator

Software corporation Microsoft offers its own free authenticator app for its Windows line of phones, iOS, and Android devices. Similarly to Google’s version, it will allow you to manually enter or scan QR codes tethered to online account keys. Microsoft’s version offers 2FA for many of the same services but also has a one-tap push notification that can be used in place of PINs. Backups need to be saved and secured with Microsoft’s 2FA application. If the mobile device is damaged, lost or stolen the codes can be re-applied to a freshly installed app on a new device.

Double Down Your Bitcoin Security By Utilizing 2FA Services

Authy

Authy is another popular 2FA application that can be applied to multiple devices. You can add as many accounts as you want and the application also has a master backup. For instance, if Authy is used for 10 accounts and the mobile device is damaged then the owner can simply use the master backup to restore all 10 account 2FA codes. Even with the master it’s still a good idea to save the backup codes in order to restore 2FA account settings individually. Authy works for both iOS and Android devices and the application is free.

Double Down Your Bitcoin Security By Utilizing 2FA Services

Yubikey and a Few Select Hardware Wallets

With some online accounts like Gmail and Dropbox, a hardware-based 2FA solution can be utilized. For instance, the Yubikey is a small USB device that fits into your computer and the user verifies authentication with the press of a button. Certain cryptocurrency hardware wallets like Ledger and Trezor can also act as a 2FA device in a similar manner. Hardware-based 2FA solutions use the FIDO U2F standard which some find superior to other authenticators. Yubikeys and hardware wallets that offer 2FA need to be carried around however and some people find it more convenient to use their phone.

Double Down Your Bitcoin Security By Utilizing 2FA Services

2FA Is Easy to Use and Adds a Layer of Security to Your Online Life

Installing a 2FA service like Authy or Google Authenticator on a phone is straightforward. Basically, you install the 2FA software on your mobile and go to your online account’s security section to retrieve a 2FA code. From there the service should provide you with a QR or alphanumeric code so you can add it to the authenticator service. Make sure you back up this code just in case you need to restore the 2FA service at a later date. Usually, you need to enter the PIN in order to turn the online account’s 2FA on or off. After doing it for the first time, it will activate and you will be required to use the 2FA’s PIN and login credentials every time you log in.

In practice, the 2FA method is a great security measure that you can use for free to protect your online data by adding an additional layer of security. It is far more difficult for a hacker to obtain access to an account if they have to compromise not only the password, but also breach something you have with you at all times like a mobile phone or U2F key. These days, with hackers and malicious actors trying to take our data and steal our funds on a regular basis, 2FA has cemented itself as vital online tool.

Do you use two-factor authentication? What services do you recommend? Let us know what you think about this subject in the comments in the below.

Disclaimer: Readers should do their own due diligence before taking any actions related to the mentioned companies or any of its affiliates or services. Bitcoin.com and the author are 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 content, goods or services mentioned in this article. Neither Bitcoin.com nor the author is responsible for any losses, mistakes, skipped steps or security measures not taken, as the ultimate decision-making process to do any of these things is solely the reader’s responsibility. 


Image credits: Shutterstock, Yubikey, Google, Microsoft, Authy, Bitcoin.com, Pixabay.


Have you seen our widget service? It allows anyone to embed informative Bitcoin.com widgets on their website. They’re pretty cool, and you can customize by size and color. The widgets include price-only, price and graph, price and news, and forum threads. There’s also a widget dedicated to our mining pool, displaying our hash power.

 

The post Double Down Your Bitcoin Security by Utilizing 2FA Services appeared first on Bitcoin News.

Bitcoin News

Jamaica Stock Exchange Plans to List Security Tokens

January 25, 2019 |

Jamaica Stock Exchange Plans to List Security Tokens

The Jamaica Stock Exchange (JSE) is to list security tokens as tradable assets after completing a 60-day live trading pilot with Canadian blockchain company Blockstation. The JSE joins a growing list of stock exchanges in parts of the world that have started to offer similar services, including trade of common cryptocurrencies like bitcoin core.

Also read: Mastercard Fined $ 650M by EU for Artificially Raising Fees

Successful Pilot Paves Way for Security Tokens Listing

Marlene Street Forrest, managing director of the JSE, was quoted by the Jamaica Observer newspaper as saying that the pilot, carried out with select broker-dealers, market makers, and the Jamaica Central Securities Depository, had been successful.

“The pilot has been very smooth so far and we are quite happy with the results,” Street Forrest said. “We are looking forward to moving to the next stage of the pilot which would eventually include the listing of security tokens.”

Jamaica Stock Exchange Plans to List Security Tokens

The trial included quotes, trading, and settlement services. The pilot also aimed to “demonstrate the complete lifecycle of the digital asset ecosystem, including the JSE setting up and managing broker members and market makers on the platform.” The Caribbean country’s securities depository body managed the clearing, settlement, and custody of cash and cryptocurrency while enforcing compliance reporting and reconciliation across all participating companies.

Blockstation, the Toronto-based startup, said listing of security tokens on the Jamaican bourse will be key to mainstreaming crypto assets and improving adoption.

“We are excited to have successfully implemented the first real end-to-end digital asset trading ecosystem with the JSE within their regulated environment,” Jai Waterman, Blockstation’s co-founder and chief enterprise architect, told the publication. “We are looking forward to onboarding, through the pilot exercise, the next wave of brokers and international investors who can enjoy the benefits of safe digital currency access through trusted financial institutions.”

Growing Global Trend

The JSE and Blockstation have been working on their digital currency venture since early 2018. The Jamaica Stock Exchange is the latest in an expanding list of stock exchanges around the world that are opening up to investing in digital coins.

Jamaica Stock Exchange Plans to List Security Tokens

Last year, the Gibraltar Stock Exchange announced the launch of its digital asset trading platform, which supports BTC, LTC, ETH and ETC against the dollar. The Malta Stock Exchange has also agreed a deal with Binance, Fifth Force, and Okex “for the development and launch of blockchain-powered platforms.” A platform will be developed that allows for listing and trading of digital coins.

In Germany, the country’s second-largest stock exchange, Boerse Stuttgart, is also creating a complete crypto asset infrastructure. It will have a mobile-based application for buying and selling virtual currencies called Bison, as well as a specialized platform to handle ICOs and a custody and trading venue for cryptocurrencies.

What do you think about traditional stock exchanges listing cryptocurrency? Let us know in the comments section below.


Images courtesy of Shutterstock and JSE.


Express yourself freely at Bitcoin.com’s user forums. We don’t censor on political grounds. Check forum.Bitcoin.com

The post Jamaica Stock Exchange Plans to List Security Tokens appeared first on Bitcoin News.

Bitcoin News

US orders some diplomats to leave Venezuela, citing security concerns

January 25, 2019 |

The State Department on Thursday ordered non-essential staff at the U.S. Embassy in Venezuela to leave the country, one day after Venezuelan President Nicolas Maduro said he was giving diplomats 72 hours to leave the country.
FOX News