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A recent report published by the Bank of Spain states that Bitcoin is a solution for the creation of a system without censorship. This is in contrast to public comments made by most central bankers who are prone to attack cryptocurrency with little insight into why it is needed.
Explaining Peer-to-Peer Electronic Cash to Bankers
Banco de España, Spain’s central bank and supervisor of the Spanish banking system, recently published a report aiming to explain how Bitcoin works. The document details the functions of the cryptocurrency, as well as analyzing its strengths and weaknesses from the point of view of the established financial order. It also explains that the best way to understand the aims of the new system is by consulting the original Bitcoin whitepaper written by Satoshi Nakamoto.
The report mentions that according to Nakamoto the world needs “an electronic payment system based on cryptographic proof instead of trust, allowing any two willing parties to transact directly with each other without the need for a trusted third party.” Thus the goal is to create an electronic payment system similar to cash which allows remote payments without the need for the intermediation of institutions such as banks. This is meant to enable truly irreversible payments and reduce intermediation costs.
A System Without Censorship
The report concludes that cryptocurrency was envisioned as a payments system without the possibility of transaction censorship or a central authority with the power to authorize or reject transactions. It states that “bitcoin is an imaginative and elegant solution to this problem” of “the creation of a system without censorship.” However the central bank’s report also determines that traditional payment systems do not seek to resolve this problem and therefore cryptocurrency is not an alternative to them.
In line with the common position usually expressed by central bankers, the report ends by saying: “Taking into account that for most agents the existence of trusted intermediaries is not a problem, along with the costs and inefficiencies generated when an attempt is made to eliminate these intermediaries, it does not seem that bitcoin, as it currently stands, is going to have a significant impact for the financial sector as an alternative payment system to the traditional channels.”
What do you think about the conclusions of this report? Share your thoughts in the comments section below.
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Last month, on the 10th anniversary of the Bitcoin genesis block, Bitcoin Cash (BCH) developer Jonathan Silverblood launched his Cashaccount.info platform. The Cash Accounts platform allows users to tether human-readable names to BCH addresses in order to make payments easier. Now the Chinese BCH light client Ifwallet has become the first public wallet with Cash Accounts sending support.
Ifwallet and Cash Accounts
Bitcoin addresses are long strings of numbers and letters, a format that to some users can be nerve-racking and cumbersome. Over the last few months, BCH software programmer Jonathan Silverblood has been working on a project that helps bypass some of the friction associated with BCH addresses. He’s created Cashaccount.info, a platform that allows users to register a one-time human-readable name that is tied to a BCH public address. News.Bitcoin.com tested the application on January 2, the day before the official launch on Bitcoin’s 10th birthday. The platform hashes a name into the BCH blockchain by using an OP return transaction and after the transaction is registered into a block the name will be validated.
When Silverblood first launched the project he also mentioned that he had been reaching out to wallet developers so they could possibly support Cash Accounts in the future. The Cashaccount.info website shows that the programmer has discussed the idea with Electron Cash, Edge, BRD, Bitcoin.com, Stash, Ledger Wallet and more. On Feb. 14 the Cash Accounts founder explained that the Chinese cryptocurrency light client Ifwallet has added support for the name address system within the sending interface.
“Congratulations to Ifwallet for releasing the first public wallet with Cash Accounts sending support,” Silverblood stated on Thursday.
The developer continued:
When you go to send you can now type in a Cash Accounts name and if they have compatible payment information in them they will show up in a dropdown list.
Experimenting With Ifwallet and Cash Accounts
Ifwallet is a cryptocurrency wallet with a focus on bitcoin cash and provides users with a secure asset management tool for token support. The mobile wallet is backed by investors such as Coinex and is partnered with projects like Johnwick.io, Viabtc, BCH Club, and Wormhole. Ifwallet also supports the Wormhole project by implementing WHC integration and incorporating the token factory. Recently the Ifwallet project launched the decentralized applications (dapp) store module and deployed a variety of dapps that can be used with the wallet.
On Feb. 15, news.Bitcoin.com tested the Ifwallet application and the client’s speed was similar to using the Japanese Yenom wallet. The wallet makes you create a six-digit PIN to access the interface but biometric settings like Apple’s Face ID/Touch ID can also be set up. The wallet doesn’t compel you to back up the wallet’s mnemonic phrase immediately and there is a warning message displayed until this part of the process is complete. I sent 0.00041575 BCH – or a nickel – to the Ifwallet, without realizing there was an identical amount of BSV attached to the BCH. The Ifwallet split the transaction into two and my wallet ended up with 0.00041575 BSV as well.
After the transaction confirmed, I simply used Silverblood’s directions and sent money to the Cashaccount.info name “Jamiecrypto#116.” The transaction immediately showed a sent transaction to the Cash Accounts name and the process was much simpler than copy and pasting an alphanumeric string to use as an address. Overall the application worked well and if more wallets integrate this feature it would likely make sending and receiving easier for newcomers. However, some people will definitely take issue with reusing addresses and may not find the Cash Accounts payment system compatible with efforts toward financial privacy.
What do you think about Ifwallet implementing Cash Accounts support? Do you think concepts like Cash Accounts is a good idea? Let us know what you think about this subject in the comments section below.
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IBM Corp. fell short in its latest attempt to prove machines can triumph over man. But it came close.
The tech giant’s 6-year-old artificial intelligence debating system, affectionately dubbed “Miss Debater,” went head to head with one of the world’s most decorated practitioners Monday. After a…
In the first edition of The Daily this weekend, we cover the details around the launch of a new cryptocurrency exchange rating system by Cointelligence. Also, South Korean exchange Bithumb has announced it’s establishing an OTC trading desk in Hong Kong, and the popular messenger service Telegram has postponed the launch of its TON network until March.
Cointelligence Launches Crypto Exchange Rating System
A company specializing in data research and analysis for the crypto economy has recently announced it’s launching a cryptocurrency exchange rating system. Cointelligence, which develops tools for investors, already offers rating services for initial coin offerings (ICOs) and security token offerings (STOs).
The new feature will help members of the crypto community find the most reliable digital asset trading platform, the creators promised in a press release. A team of experts from the crypto industry is tasked to produce impartial and accurate reviews of the examined exchanges. They will remain anonymous to prevent the possibility of corruption and harassment.
According to Cointelligence, users will be able to check if an exchange is safe and reliable. The company says that only actual and factual improvement of a crypto trading platform can change its rating. Commenting on the launch of the new system, Cointelligence CEO On Yavin stated:
We looked around the industry and we didn’t see anyone really doing this. Given the number of hacks and exit scams the exchange industry has seen, we felt this was an important tool to protect the community.
Cryptocurrency exchanges will be rated on several main criteria. These include accessibility and usability or the ease of setting up an account; depositing and withdrawing funds and performing trades; and financial benefit which covers applicable fees, market volume, and number of supported cryptocurrencies. The crypto experts will also examine the teams of the platforms and evaluate the associated security risks.
Bithumb Global Announces OTC Desk
Major South Korean crypto exchange Bithumb has launched a new over-the-counter (OTC) trading platform for institutional clients. In an announcement issued by Bithumb Global, the company said the “block deal, matchmaking service” will be offered under the Ortus brand owned by its Hong Kong-based subsidiary.
Institutions that want to take advantage of the OTC desk will have to undergo a strict onboarding process. The applicants will be required to provide sufficient KYC and AML documentation. Upon approval, clients will gain access to a number of services offered by Ortus such as monitored fund transfers from an insured, custodian wallet and a U.S.-based bank account as well as competitive pricing from some of the largest OTC desks and liquidity providers.
“Institutions trading digital assets need to open accounts at exchanges and OTC desks around the world. However, there is no real solution for an aggregated liquidity provider or a trusted interdealer where Institutions can trade these assets,” remarked Bithumb’s director Rahul Khanna. “To fill this market gap, Ortus will operate to allow institutions to buy and sell digital assets through a network of global liquidity providers and benefit from a competitive and best price execution service.”
Telegram Delays the Launch of TON Testnet to March
Popular messaging service Telegram has released new details on finalizing its Telegram Open Network (TON). According to its latest investor update, quoted by The Block, the overall progress has been estimated at 90 percent. The document shows, however, that the company has also delayed its testnet launch from January to March 2019.
According to the publication, Telegram is now working to list the network’s native token, called gram, on cryptocurrency exchanges based in Asia such as Binance, Huobi and Okex. The company, founded by prominent Russian entrepreneur Pavel Durov, is reportedly negotiating partnerships with various online services in preparation for the launch of the messenger’s app store.
What are your thoughts on today’s news tidbits? Tell us in the comments section.
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An odd kind of asteroid has been hiding out in our solar system, close to Venus, and it took a new state-of-the-art surveying camera to detect it.
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Tidbits is a roundup of talking points from across the cryptosphere. Today, Jesse Powell and Samson Mow both voice their opinions on the custodial ownership of assets through trusted, third parties. Paul Sztorc shows the Bitcoin community that forks are not as frequent as they think and Simon Dixon breaks down his three problems with the banking system.
Not Your Vault, Not Your Gold
Recently, Venezuelan President Nicolas Maduro’s regime was denied the withdrawal of $ 1.2 billion worth of gold out of the Bank of England. Kraken exchange CEO Jesse Powell quickly pointed out that Maduro’s regime never owned their own gold, because they never stored it in their own vaults.
Not your vault, not your gold. https://t.co/ThSkkuXGqO
— Jesse Powell (@jespow) January 25, 2019
Similarly, Blockstream CSO Samson Mow took the opportunity to point out the similarities between Maduro regime’s gold and the oil that supposedly backs the Petro cryptocurrency. Both are assets that are held in custody by trusted, third parties that cannot be trusted.
And for the people of Venezuela: Not your barrel of oil, not your Petro. https://t.co/T2UiTK5dbQ
— Samson Mow (@Excellion) January 25, 2019
Forks Not as Frequent as Bitcoin Community Thinks
Director of research at Tierion and Bitcoin developer Paul Sztorc recently assembled all Bitcoin upgrade events into a pivot table. Interestingly, his findings showed forks were significantly less frequent than what the Bitcoin community initially assumed.
They're quite rare. People talk about "forks" often, but they are very infrequent.
I collated the upgrades, and placed them into this pivot table: pic.twitter.com/jyMxdv07EY
— Paul Sztorc (@Truthcoin) January 25, 2019
Sztorc goes on to explain that 2010 had about as many protocol forks as all other years. Also, the last normal upgrade was in July 2016, and the only upgrade since then was segwit.
Simon Dixon’s Three Problems With Banking
Banktothefuture CEO Simon Dixon was recently interviewed, and he explained the three increasingly problematic issues with the banking industry. Dixon believes that the banks are both unable and unwilling to solve these three problems.
The first problem occurs when clients deposit money into banks, and the banks become the legal owner of their clients’ money. During this period, the banks are able to use their clients’ funds any way they see fit. The next issue is that the banks decide how to inject their clients’ money into the economy via loans. Therefore, banks control the economy. Lastly, the monetary system is structured in a way that encourages debt rather than savings. Thus, there is innovation on the government level, the banking level and the investment banking level, to entice people, corporations and governments deeper into debt to increase the money supply. Eventually, this debt will need to be repaid, recycled into new debt, or bailed out through quantitative easing. In summary, banks are problematic because they earn money through the debt they create.
What do you think of custodial ownership of assets? Let us know in the comments below.
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The Lightning Network has been touted as the solution to the Bitcoin Core (BTC) network’s scalability problem for years now. Over the last few months, the Lightning Network has shown growth but there are still significant concerns about centralization, routing issues, and creating a usable mainstream-friendly interface. The ongoing joke that the network is “18 months away” continues, and on Wednesday researchers published a topological analysis of the network which highlights how the project is “structurally weak against rational adversaries.”
‘A Small Central Clique and a Loosely Connected Periphery’
At the Breaking Bitcoin conference on Sept. 9, 2017, when an audience member asked how much longer the Lightning Network (LN) will be, the ultimate answer was still “18 months.” Ever since then that timeline has been an inside joke to both LN defectors and even proponents. A recent study stemming from members of Eötvös Loránd University explains that there are still significant issues with the LN protocol. In order to review the LN, researchers Seres Istvan Andras, Laszlo Gulyas, Daniel A. Nagy, and Peter Bur published a seven-page topological analysis of the network on Wednesday.
A topological analysis uses applied mathematics and data from topological extraction, and many analysts believe many computational networks should be researched in this manner. Seres Istvan Andras shared the pre-print study with his followers on Twitter and explained the paper is a work in progress in which the researchers quantify the structural properties of the LN.
In a series of tweets, Istvan Andras explained how the research shows people’s prior intuitions toward the LN becoming centralized “were not rigorously proven,” but the team’s study shows that “the intuition is correct and it can have effects on LN.” The paper says the LN exhibits high clustering with short paths and this can be seen with entities like Lnbig.com. There was also the time that Andreas Brekken’s single node captured a large portion of the LN’s capacity. Section two of the topological study states:
LN’s local clustering coefficient distribution suggestively captures that LN is essentially comprised of a small central clique and a loosely connected periphery.
‘Extremely Harmful Attack Vectors’
The paper continues to explain the LN’s degree distribution and one metric suggests the LN could exhibit scale-free properties. However, at the moment the study emphasizes that the majority of nodes have very few payment channels and a few hubs control a large portion of the network. The paper also says that the network has improved when it comes to random failures. The network is not so resilient against targeted attacks like a Distributed Denial of Service (DDoS). The study shows that the LN saw a node loss of 20 percent on March 21, 2018, and Denial of Service (DoS) attacks are very probable by flooding Hashed Timelock Contracts (HTLCs).
“These attack vectors are extremely harmful, especially if they are coordinated well,” the study details. “One might expect that not only state-sponsored attackers will have the resources to attack a small network like LN.”
Altogether the removal of the 30 largest hubs incurs LN to collapse into 424 components, although most of these are isolated vertices — This symptom can be explained by the experienced disassortativity, namely hubs tend to be at the periphery.
Lots of Reports Conclude Lightning Is Far From Ready
The topological study from members of Eötvös Loránd University also follows the recent report from business management technology company Scipio ERP that explains the second-layer protocol is still a long way away from fixing BTC’s scalability issues. Scipio ERP did, in fact, have issues with random failures. “We have been operating the system for four months and crashes can and will happen all the time — Transaction channels can close or may not have enough peers at any time,” the company’s study details. “There are no push notifications for these events, so you won’t know until a new transaction is placed and fails.”
Reports over the last year have proved the LN is far from ready and still to this day not even close to being 18 months away from solving any significant scalability problems. If the same traction that occurred in 2017 happens this year with the expensive fee market and congested mempool, the Lightning Network will likely not be ready.
The researchers of the topological analysis report explained that they have some concepts in mind to help the LN become more robust. Istvan Andras told his Twitter followers that a better understanding of LN’s topology is essential and he wholeheartedly believes network resilience depends on topology. At the moment “high-level depictions of LN’s topology, convey a false sense of security and robustness,” Istvan Andras added.
What do you think about this topological study done by the researchers at Eötvös Loránd University? Let us know what you think about this subject in the comments section below.
Images via Shutterstock and the Topological Analysis of Bitcoin’s Lightning Network report.
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