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PBOC’s Talks Dim the Prospect of Bitcoin in China – DailyFX

March 13, 2017 | Author: admin

This daily digest focuses on Yuan rates, major Chinese economic data, market sentiment, new developments in Chinas foreign exchange policies, changes in financial market regulations, as well as market news typically available only in Chinese-language sources.

- Bitcoin platforms are unlikely to become official exchanges in China.

- Consumptions contribution to the economic growth dropped in 2016.

- Would you like to know more about trading? DailyFX webinars are a great place to start.

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- The Chairman of PBOCs Operations Office Zhou Xuedong told on Monday that price bubbles were seen in Bitcoin; proper regulation on Bitcoin trading is needed in China. He said that the regulator will introduce a series of measures in the effort to strengthen oversight on Bitcoin platforms. Also, Zhou emphasized that current Bitcoin online platforms are platforms only, rather than exchanges. To become an exchange, a platform will need to receive approvals from the securities regulator and even the State Council. However, this is unlikely to happen according to Zhou.

After Bitcoin experienced extreme moves in prices in early January, officials from the PBOCs Operations Office in Beijing and headquarters in Shanghai began to inspect Chinese Bitcoin trading platforms, including the Big Three - BTCChina, OKCoin and Huobi. Zhou, as the Chair of the Beijing Operations Office, is considered to be the leader of these inspections and thus, his comments revealed the prospect of Bitcoin in China from a regulators point of view.

The trading volume on the Big Three Chinese Bitcoin platforms used to take up 98% of the entire volume across the world. After the Chinese regulator launched inspections, Chinese trading volume plunged and remains subdued.

Data downloaded from bitcoinity.org; chart prepared by Renee Mu.

As of March 13th, Chinas share in Bitcoin trading by volume dropped to 19% amid extended suspension in Bitcoin withdrawals in all the Big Three platforms. A Hong Kong based platform, Bitfinex, now ranks the first by volume.

Data downloaded from bitcoinity.org; charts prepared by Renee Mu.

Trading Platforms

Country

btcchina

China

huobi

China

Okcoin

China

bitfinex

Hong Kong

bitflyer

Japan

bitstamp

Luxembourg

coinbase

U.S.

kraken

U.S.

- Chinas Finance Minister Zhong Shan and Deputy Minister Qian Keming took questions at a press conference for the National Peoples Congress annual conference.

Chinas Foreign Minister commented on the China-US relationship in an earlier press conference. Both talks show that China is trying to avoid major trade conflicts with the U.S. According to the Finance Minister, trade-related business has generated over 180 million jobs and taxes from trade contributed to 18% of total taxes income.

The ratio shows that spending has become a major driver to Chinas economy. However, the proportion of consumption dropped in 2016 from 66.4% in the previous year. A lack of efficient supply and high costs are major obstacles that the country needs to solve in the effort to develop Chinese potential in spending.

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Bitcoin Network On Target To Surpass 4 Exahash of Mining Power As BTC Price Continues To Surge – newsBTC

March 13, 2017 | Author: admin

All things considered, things are looking quite good for the bitcoin network as a whole.

It is evident the bitcoin network hashrate continues to grow. As the mining difficulty increases, more hashpower is needed to generate new blocks. At this rate, it is only a matter of time until we surpass the 4 exahash per second threshold. The bitcoin network has come a very long way over the past few years, that much is certain.

The charts provided by BitcoinWisdom show how the hashrate has gone up steadily these past few years. Although it appears the network almost reached 4 exahash per second a while ago, things have quieted down ever since. However, it appears another mining power increase is on the horizon. Reaching 4 exahash per second signals a significant bitcoin mining milestone, to say the least. Compared to about a year ago, the hashpower has more than tripled.

One Reddit user posted an image of how the 4 exahash threshold has been reached already. The charts on both BitcoinWisdom and Blockchain.info state otherwise, though. In fact, the network sits at 3.5 exahash for the time being, which is quite a big difference. Then again, these numbers can change at any given time when someone throws a lot of hardware online. With mining hardware becoming more efficient, reaching the next threshold is only a matter of time.

Some people may wonder why people continue to invest in bitcoin mining. With the block reward halving the number of coins generated per block, there seems little incentive to do so. Then again, the bitcoin price continues to go up in the process which attracts new miners. Additionally, the high transaction fees make mining more than profitable for a lot of people under current conditions. Making money in a semi-passive way is quite appealing if people can afford the upfront investment.

When the SEC rejected the bitcoin ETF, mining support could have dwindled. Many people expected a big price crash, although most losses were recovered rather quickly. Looking at the charts now, it appears another bullish run is being prepared. This will certainly help the bitcoin network reach the 4 exahash mark in the coming months. A lot of money can be made by mining bitcoin these days, although it requires a significant upfront investment.

All things considered, things are looking quite good for the bitcoin network as a whole. The mining power increases, the price goes up, and there are more transactions than ever. While the mounting transaction fees are not fun by any means, a solution can be found to address this problem.For now, things are looking positive as bitcoin still has a lot of growth potential. These are exciting times to be part of the bitcoin ecosystem, that much is certain.

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SpaceBTC Cryptocurrency Exchange to List Mobile Banking App Humaniq – Finance Magnates

March 13, 2017 | Author: admin

Blockchain banking app Humaniq has reached an agreement with SpaceBTC to list its token (HMQ)on the cryptocurrency exchange after the end of itsInitial Coin Offering in April. Operated byPAX ROMANA GROUP LTD, incorporated in England and Wales on November 2015, the SpaceBTC team is located in London, Moscow and Seville.

This is a great day for us and we couldnt be happier. Ive met the guys from SpaceBTC and theyre really good at what they do, stated Humaniq founder Alex Fork. Theyre very above board and transparent, which is essential in this industry. SpaceBTC already has partnered with Chainanalysis from Barclays accelerator, and are currently applying for regulation with the FCA. Our discussions with them have given us a lot of confidence that theyre going to be a big player in the cryptocurrency exchange market.

The issuance of HMQ is meant to jumpstart the network of users well be building. Since were targeting unbanked communities, they need a cryptocurrency to start with. So were issuing them a small number of coins, and then they can earn additional coins by performing work, making P2P loans, and so forth, addedFork. Were not excluding the use of other tokens through our banking app, but rather were providing initial currency so people can begin to use it to exchange goods and services. AKA- giving them a great reason to use the app and add more of their friends and family to the network, which will naturally attract businesses who want to offer services to our clients.

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Things Are Different In Cloud Computing, But How? – Forbes

March 13, 2017 | Author: admin

Forbes
Things Are Different In Cloud Computing, But How?
Forbes
There's this thing called cloud computing, okay we already know that, but how do you actually do it? Key vendors in this space talk about 'migration to cloud' as is it were some technical coming of age, but we rarely hear enough about the guts of what ...

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Cloud computing is the new normal: Is it time to use it for everything? – ZDNet

March 13, 2017 | Author: admin

The cloud is already playing a key role in education -- and that part will only grow in coming years.

On-demand IT has reached a tipping point and organisations of all sizes and sectors are using cloud computing services to run and develop their businesses.

But where does the cloud go next and what are some of the interesting use cases that will help take cloud to the next level?

Four business and tech leaders discuss what the cloud now means for their businesses.

1. Overcoming legacy concerns to leave the internal data centre

Okta CIO Mark Settle runs his organisation, an identity management specialist, using about 140 cloud-based applications. "I have no data centre to worry about," he says. "It makes the budgeting cycle so much easier. You basically look at your list of SaaS subscription fees and project what the future costs will be like. It can be done in as little as 90 minutes."

Settle recognises that this shift from capital to operational expenditure will have a fundamental impact on the role of the IT leader. "It's the future and it's also a very different approach from the one I've taken in any of my previous businesses," he says, looking back on a career that has included seven CIO positions.

Settle believes the cloud is now a business-as-normal activity. "Almost all executives are looking to go cloud first now -- there's very few people writing software and buying new servers to run those applications in a data centre," he says. However, he also appreciates that key challenges remain, particularly regarding legacy applications.

"On the infrastructure side, the cloud has moved from something used for testing and development to a platform for production services. People are becoming increasingly confident moving systems to the cloud and getting their stuff out of the internal data centre," says Settle.

"However, it's also a fallacy to think that large, global enterprises are going to completely abandon their data centres. I think there'll always be legacy applications that need to be maintained in-house, be that for cost reasons or a desire not to disrupt how systems work currently. The hope has to be that cutting-edge work around containerisation will help some of the doubters to deal with their legacy concerns."

2. Using on-demand IT for almost everything

The future of the cloud, says CIO consultant Andrew Abboud, is very closely related to preconceived notions of on-demand IT. "Let's get this straight," he says. "Executives around the business don't talk about the cloud -- they're not interested in the technology per se, they just want to solve the business challenges they face."

CIOs must help ensure the hype surrounding the IT industry does not get in the way. "As technologists, we get hung up on buzzwords when we should be focused on the opportunities," says Abboud. "Every organisation is different and every business must understand how the cloud will deliver benefits."

Once the CIO has helped the rest of the business to establish the context of implementation, the key debate is simply how far an organisation can push its use of on-demand IT. "We're seeing a move towards online services across business and, in the future, the key question concerns saturation -- in most cases, why wouldn't you use the cloud for everything?"

Abboud recognises concerns persist, such as around information security and the porting of legacy applications. But he is hopeful such challenges can be overcome effectively. "If you accept the logic that an external cloud provider is going to be more secure than an internal data centre, then you should really push as much of your business to the cloud as possible," says Abboud.

"Legacy applications can be a problem, especially in the finance sector. But every industry must bite the bullet and transform eventually. CIOs need to appreciate that the Cobol specialists will die out -- you have to deal with change now."

3. Boosting real-time marketing and sales communications

Experienced CMO Sarah Speake says cloud computing is a welcome addition to the marketeer's digital kit bag. Analysts spend a great deal of time investigating the role of CIOs and CMOs in an age of decentralised purchasing. Speake says the next frontier for the cloud involves CMOs helping their departments to make the most of on-demand capability.

"We should take collective responsibility for up-skilling our teams sufficiently to navigate cloud-based apps and tools appropriately to drive speed, efficiency and transparency," she says. Speake, who is an experienced CMO who has held senior marketing positions at ITV and Google, says cloud-based systems can help marketers move away from dangerous assumptions.

"For all too long, we shared key documents, like Excel spreadsheets, internally via email, never knowing whether the one we were inputting into or scrutinising to drive in-depth customer segmentation was the most current or not," she says. "Accuracy was an unknown quantity, so our responsibilities in driving additional leads and revenues to the bottom line were often hard to prove."

Speake says cloud computing can provide further boosts for marketeers, such as through real-time access to customer relationship management data or via integrated marketing automation and communication. Once again, she says CMOs -- rather than CIOs -- can help people across the business to make the most of cloud-based services.

"In part, our role is to help our sales friends continuously assess customer prioritisation, depending on short- and long-term revenue potential," she says. "Equally, we will need to revise our own marketing communications to ensure we're driving leads or maintaining existing customers depending on our organisational business model."

4. Enabling education and development from any location

Matt Britland, director of ICT at Lady Eleanor Holles School, says his school uses Google Apps for Education and Microsoft Office 365. Both implementations are managed internally by the school. He says sensitive data relating to the school is not stored in the cloud. However, the technology is already playing a key role in education -- and that part will only grow in coming years.

"The cloud allows our students to work from any location as long as they have an internet-connected device," says Britland. "The cloud has to be part of the future of education because it enables learning to happen everywhere."

He is currently running a cloud-based project that allows pupils to work in teams and collaborate on the same project. The school's use of cloud-based productivity apps is also extended to staff. Britland says the right preparations are crucial.

"It can be a challenge explaining the software and its benefits to people who are new to the cloud," he says. "You have to put the right training in place and I've been running training courses. Most education professionals, however, are keen to learn and explore new opportunities."

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The many costs of cloud computing lock-in – SiliconANGLE – SiliconANGLE (blog)

March 13, 2017 | Author: admin

Gary Bloom is chief executive of the enterprise database company MarkLogic Corp. He wrote this article for SiliconANGLE.

In a situation nearly every company will face, one of the Internets brightest stars has highlighted the value of not getting locked into a single cloud computing provider.Snap Inc., creator of the messaging app Snapchat, recently revealed that it will spend $1 billion over five years on Amazon Web Services and may eventually build its own infrastructure.

The move will provide redundant infrastructure support of our business operations, Snap said in an amended S-1 registration statement for its initial public offering of shares. Snaps first filing spurred headlines, in part, because itdisclosed how closely Snaps fortunes are tied to Google Inc.s cloud, on which it said it would spend $2 billion over five years.In both filings, Snap said it relies on Google Cloud for the vast majority of its computing, storage, bandwidth and other services, and that any disruption of or interference with our use of theGoogle Cloud would seriously harm our business.

Heres the scariest part: Any transition of the cloud services currently provided by Google Cloud to another cloud provider would be difficult to implement and will cause us to incur significant timeand expense, Snap said. It also warned, If our users or partners are not able to access Snapchat through Google Cloud or encounter difficulties in doing so, we may lose users, partners oradvertising revenue.

Its pretty clear that giving the bulk of its cloud services to a single supplier is a huge risk to Snap.The company is, as The Information recentlynoted, the biggest consumer Internet company to be built from scratch on top of cloud computing infrastructureit doesnt own. It alsoreported that Google is giving Snap deep discounting and other benefits.

Discounts are enticing, but cloud lock-in is a risk to Snaps operations and economics. By warning that it may build its own infrastructure, Snap could keep its cloud suppliers honest. But that has meaning only if Snap can quickly and seamlessly transition its information technology operations from one cloud provider to another or to its own infrastructure. Cloud neutrality in what Snap builds, how it builds itand how the company runs its systems will have to be a key attribute of its daily development operations if Snap is going to benefit from a cloud neutrality strategy.

Thisrisk is not unique. By 2020, all companies will be doing something in the cloud. The cloud vendors, led by Amazon Web Services, Microsoft Corp. and Google, will want to run and manage theircustomers capacity and may even extend discounts for volume.

For now, that may not seem like a bad deal. For many enterprises, the cloud is mostly about fundamental services, such asstorage and elastic compute capacity. The underlying architecture is standardized around Intel hardware and Linux, which works in any cloud environment.

MarkLogic CEO Gary Bloom (Photo: MarkLogic)

The lock-in starts when you move to the software services and application layer of the software stack. Cloud providers offer proprietary APIs that reduce the amount of code or work required to getapps going. By using proprietary APIs, you get hooked into that vendors ecosystem. To move services to another cloud vendor or back in house will take, as Snap warned, significant time andexpense.

Enterprises may not even realize theyre getting sucked in. Almost all applications being created rely on a database. Anybody who codes software for Amazons DynamoDB database is basicallylocked into AWS as a cloud provider. Any software written for DynamoDB cant be moved to another cloud provider or transitioned on-premises unless it is rewritten, which is costly and timeconsuming.

In addition to the time and expense to transfer Google Cloud services to another provider, Snap said it has built its software and computer systems to use services provided by Google, some ofwhich do not have an alternative in the market. This comment leaves an open question as to whether buying AWS services alone is enough to mitigate the risk of cloud lock-in. It wont if theyhave to rewrite applications and change their DevOps to benefit from cloud neutrality.

Sadly, companies have been locked in before, when they chose to outsource their IT operations to providers such as IBM Corp. and Electronic Data Systems. They thought experts could manage their IT operations and datacenters better and more cost-effectively.

In the beginning, the economics looked encouraging. Then prices went up on three-year and five-year contracts as outsourcing vendors normalizedexpenses and added margins.They certainly never planned to lose money forever. Eventually, companies paid more for outsourced work than they spent in house. Yet they couldnt reclaim thework because everyone who knew how to manage it now worked for the outsourcing companies, or companies no longer owned their own data center infrastructure.

Enterprises should avoid cloud lock-in so they can get the benefits they get from any competitive marketplace, such as:

* Bargaining on price.Just as pricing increased for IT outsourcing when the suppliers added margin to the equation, so it will for the cloud. By 2020, most cloud consumers will see cloud computing billsthat are significantly higher than on-premises costs. The ability to go somewhere else will be key.

* Picking winners.We are early in this cloud transition, which 451 Research has said represents the biggest IT opportunity in decades. It is too soon to know which companies might dominate.AWS may look like a runaway leader, but Microsoft has made impressive gains. Who knows what innovations and improvements other companies may forge? In three to five years, differentclouds will focus on different things. Youll want to take advantage of what works for you.

* Being more secure. No one is ever completely safe from potential cyberattacks. If a cloud provider has a breach, you may need to move quickly to another provider. Being cloud neutral is aninsurance policy.

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Security and Reliability Top Hosting Concerns for Web Businesses – CIO Today

March 13, 2017 | Author: admin

Security and Reliability Fuel Hosting Concerns for Web-Dependent Designers, Developers, Digital Agencies and SMBs -- Liquid Web Survey Reveals Business Challenges as Web and Cloud Reliance Grows

As more and more companies move to the web and cloud, the expectations put on the infrastructure supporting these platforms, such as web and cloud hosting services, increases exponentially. Security (88 percent) is on par with reliability (89 percent) and considered as the two most important criteria when selecting a hosting provider, survey respondents said. And, when these businesses are dissatisfied with their current hosting provider, security becomes the most important factor when selecting their next provider as indicated by 91 percent of respondents. Survey respondents said that DDoS (distributed denial of service) attacks and other types of hacking attacks were the two security issues most experienced or feared.

On the reliability front, companies with fewer than 100 employees reported significant frustration with their hosting provider, and almost half of these respondents experienced technical issues from their hosting company in the past 12 months (on average 4.5 times per year). Among the 450 web-dependent professionals surveyed, 68 percent described the relationship with their hosting partner as a client-vendor relationship. Respondents also noted the importance of choosing the correct hosting provider for them in the current business climate. In fact, 86 percent of those surveyed reported that they felt a company's competitiveness would be impacted by this decision.

"If a website or application fuels the revenue generation of a business, the choice of a hosting provider should be a strategic one," said Liquid Web CTO Joe Oesterling. "Yet, often businesses make the mistake of choosing their provider based on price rather than ensuring they have a dependable partner. It's important not to buy into empty promises of 'best support' or 'most secure' without validating the performance and security of the offered hosting solutions, reviewing current customer testimonials and customer satisfaction results, and researching the skill level of the resources that will be assisting you to design, migrate and support your solution. It is definitely worth the time to make sure you are picking a partner, not a vendor."

Another trend the survey reported is the mass adoption of easy-to-use applications such as content management systems like WordPress. WordPress has enabled SMBs, designers, developers and agencies to grow their businesses; however, this has created a need for managed hosting solutions to support them throughout this growth, helping to scale the content management system accordingly.

About half of the respondents (48 percent) build websites on WordPress with 71 percent using a managed WordPress hosting solution. Of those who build websites on WordPress, 78 percent reported that they are considering using a managed WordPress service in the next 6-12 months. This included 88 percent of current managed WordPress users and 53 percent of non-managed WordPress users.

These results indicate that developers, designers, agencies and SMBs are looking for ways to find efficiencies in their work and worry less about the underlying infrastructure. Among current managed WordPress users, performance guarantees, simple installation and automatic backups are the top 3 benefits they reported experiencing with managed WordPress hosting.

"We see designers, developers, agencies and the SMBs they serve demanding simpler, more scalable hosting solutions as they become ever-more dependent on the web and cloud," said Oesterling. "We see this audience of web-reliant companies largely underserved as bigger players focus primarily on the enterprise."

When selecting a hosting provider, survey respondents noted the top five factors that are most important to them are reliability, security, performance guarantees, knowledgeable customer support representatives, and 24/7 customer support. Respondents, however, felt that they were not receiving most of these elements with almost 40 percent experiencing dissatisfaction in pricing increases and inexperienced customer support. To complicate matters further, 35 percent say their dissatisfaction is driven by a poor migration experience, ultimately preventing these businesses from switching to a better hosting provider.

"It's clear that hosting providers need to be a partner in their clients' businesses, not just a service," said Oesterling. "At Liquid Web, it's our mission to provide speed, reliability and security for our clients' websites and applications. That is their business, and we see it as part of ours, too."

Methodology

The survey was conducted in the second half of 2016. The total number of participants for the study is 450, including about 40 percent web designer (182 respondents), 48 percent web developer (218 respondents), and 11 percent digital agency decision maker (50 respondents). Of those, 77 percent belonged to companies with less than 999 employees and 23 percent were from companies with more than 1,000 employees.

About Liquid Web

Liquid Web powers content, commerce and potential for SMB entrepreneurs and the designers, developers and digital agencies who create for them. The $100 million web hosting and cloud services provider known for its high- performance services and exceptional customer support delivers reliable, highly-available, secure and hassle-free hosting backed with a human touch. Liquid Web offers a broad portfolio designed so customers can choose a hosting solution that is hands-on or hands-off or a hybrid of the two.

The company owns and manages its own data centers, providing a diverse range of offerings spanning from bare metal servers and fully managed hosting to managed WordPress and continues to evolve its service offerings to meet the ever-changing needs of its web-reliant, professional customers. With over 30,000 customers spanning 150 countries, the company has assembled a world-class team, global data centers and an expert group of 24/7/365 solution engineers. As an industry leader in customer service, the rapidly expanding company has been recognized among INC Magazine's 5000 Fastest Growing Companies for the last ten years. Liquid Web is part of the Madison Dearborn Partners family of companies. Madison Dearborn Partners, LLC ("MDP") is a leading private equity investment firm based in Chicago.

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Altcoins Make a Comeback in Wake of Bitcoin ETF Decision – The Merkle

March 13, 2017 | Author: admin

With most traders focusing on the bitcoin market right after the ETF decision was made public, people tend to forget altcoins are worth keeping an eye on as well. A lot of altcoins are appreciating in value ever since the bitcoin ETF rule change was rejected. Dash, for example, has been doing extremely well these past few days. Other currencies are seeing similar results right now, indicating the altcoin market is in firing on all cylinders.

It has become evident the SEC decision means there will never be a bitcoin ETF. In fact, there will never be a cryptocurrency ETF, or at least not until something changes drastically in the regulatory department. It is doubtful the SEC will ever grant their approval for such an investment vehicle, though, but that is of little concern to the cryptocurrency community. In the end, cryptocurrencies continue to truck along regardless of what the traditional financial world feels is right.

One thing that has become apparent over the past few days is how altcoins see a lot of trading action as of late. Various alternative cryptocurrencies have seen an influx of bitcoin trading volume, pushing nearly all markets in the green. According to some altcoin traders, the time is now to invest in alternative cryptocurrencies, although it is doubtful any of these currencies can ever gain as much traction as bitcoin. Considering bitcoin is still a very niche market, that does not bode well for most altcoins.

Some alternative cryptocurrencies may have a better shot at gaining mainstream traction alongside bitcoin, though. Dash, for example, has seen a spectacular value increase over the past few weeks. Particularly once the bitcoin ETF news came out, Dash saw an influx of new trading volume. It is evident bitcoin holders are looking to diversify their cryptocurrency portfolio, which is always a smart strategy. There is no reason to put all of ones eggs into the same basket.

With the Dash price currently sitting at US$72.75, it is evident demands for more anonymous cryptocurrencies is not dwindling anytime soon. A lot of the current Dahs supply is locked up in masternodes which provide anonymous transaction services to the network. It takes 1,000 Dash to run such a masternode, which needs to be locked into a wallet at all times. Users also receive a small reward for providing these services to the network, hence there is no reason for people to sell their existing Dash supply all of a sudden.

Dash continues to rally against bitcoin in quite spectacular fashion as well. With a 26.5% gain in the past 24 hours alone, it is evident the ETF rejection is doing wonders for the Dash price right now. It is a bit unclear how long this trend will be maintained, though. Volatility is a part of the cryptocurrency ecosystem, particularly in the altcoin market. Always be careful when investing your bitcoin in altcoins, as values can shift in a matter of minutes.

Other altcoins are reaping the rewards from the bitcoin ETF rejection as well. Monero and Ethereum have all seen nice appreciations a swell these past few days. Similarly to Dash, however, it is impossible to tell what is driving these price trends exactly, other than the bitcoin ETF rejection. Bitcoin trading is usually a bit stale during the weekend, which gives alternative currencies a chance to shine. The bigger question is whether or not this trend can spill over to next week or not.

If you liked this article, follow us on Twitter @themerklenews and make sure to subscribe to our newsletter to receive the latest bitcoin, cryptocurrency, and technology news.

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Bitcoin Surges Back Above $1200, Erases ETF-Denial Losses

March 13, 2017 | Author: admin

Bitcoin is once again trading above the price of an ounce of gold as Friday's collapse in the virtual currency - after the SEC's decision to deny an application for a Bitcoin ETF - has now been erased...

That de-escalated quickly...

Perhaps the dip-buyers know something the ETF-demand-hopers don't? The point is, as Jameson Lopp writes at CoinDeck.com, Nobody Understands Bitcoin (And That's OK)

In this guest feature, Lopp provides a deep dive into whether bitcoin can truly be understood as a technology, coming up with more questions than answers and delivering an impassioned appeal to open-mindedness and exploration.

When I first became interested in bitcoin, I found myself spending countless hours absorbing as much information about it as possible, trying to put all of the pieces together.

After years of learning, I now devote a fair amount of my time trying to help others understand bitcoin better. While many people have referred to me as a "bitcoin expert," I still consider myself a student I have yet to determine how deep the rabbit hole goes.

Andreas Antonopoulos had this to say about explaining (and thus understanding) bitcoin:

"I wrote a book that answers the question 'What is Bitcoin?' It's 300 pages long, was obsolete the moment it was printed and has to be corrected and updated every three months just to keep up with changes."

With enough studying you can teach yourself how bitcoin currently works from a technical standpoint.

I maintain a list of educational resources that is sufficient to keep anyone busy for several months in pursuit of this goal. However, this approach of information ingestion will only expose the tip of the bitcoin iceberg.

Meltem Demirors posted a chart thats spot on:

One challenge to understanding bitcoin is that it is a multifaceted cross-disciplinary system that is constantly evolving.

Ferdinando Ametrano put it well:

Ferdinando hits a key point that Ill be delving into bitcoin is not just a technology; it's a technology that represents something even less tangible.

Bitcoin is a living protocol that emerges from a melting pot of ideas, philosophies, cultures and politics after they undergo trial by fire.

You can read the "Rise of the Cypherpunks" to learn how we came to be where we are today.

"Writing a description for this thing for general audiences is bloody hard. There's nothing to relate it to." Satoshi, July 5, 2010

Even Satoshi didnt fully understand what he built with regard to bitcoins security model. He (or she) ended up fixing a multitude of bugs in the first few years of bitcoins existence.

After it was 18 months old, the rate of bug fixes had slowed down to the point that new vulnerabilities were categorized and documented. Let's cover a few of the flaws that were fixed before bitcoin gained adopters.

In the first versions of bitcoin, anyone could spend anyone elses coins:

"The opcode OP_RETURN originally just caused the script to end early instead of fail, so you could steal anyone's bitcoins by simply using the scriptSig OP_TRUE OP_RETURN. It was also possible to put a pushdata opcode right at the end of a scriptSig to turn the entire scriptPubKey into a constant (which evaluates to true). Satoshi fixed these bugs by changing the behavior of OP_RETURN to cause the transaction to immediately fail and making it so that scriptSig and scriptPubKey are evaluated in two separate steps.

Theymos

Satoshi fixed a major consensus flaw by changing the 'best chain' logic from using the longest chain to using the chain with most proof-of-work. Technically, it could be argued that this was a hard fork, though it didnt actually cause a chain fork because the longest chain at the time was also the one with the most proof-of-work.

Satoshi also set the block-size limit as protection against denial-of-service attacks. The block size was originally only implicitly limited by the network message size of 32MB.

There is also a bug in OP_CHECKMULTISIG that exists to this day. Its mentioned in BIP-011:

"(OP_0 is required because of a bug in OP_CHECKMULTISIG; it pops one too many items off the execution stack, so a dummy value must be placed on the stack)."

Gavin Andresen

And who could forget the value overflow bug that allowed someone to create 184 billion bitcoins!

In my quest to find more early Satoshi bugs that aren't well-known, Greg Maxwell recalled a juicy one:

"In the early versions of bitcoin, any user could hard fork any released versions from any other versions! This design flaw showed he didn't fully understand the required conditions for safe upgrades when it was first released, but his fix showed he did understand them later.

There was an opcode called OP_VER which pushed the verifying node's version number onto the stack. (Satoshi always believed there should only be one piece of bitcoin node software.) The apparent purpose of that opcode was so that you could add features to script and have only the newer supporting versions see those new opcodes (there also was originally 16 bits of opcode space in the codebase.) But someone could have used this maliciously like "OP_VER 1234 IF FALSE RETURN ENDIF TRUE" to make version 1,234 reject a block mined by any other version. So, any user could make the system fork any any time! When he removed OP_VER, he added the OP_NOP, which is what makes modern style script soft forks possible. This change itself was a soft fork because the original versions ignored unknown opcodes.

Researchers have also discovered some flaws in Satoshi's white paper regarding the description of the system's security.

For example, there are issues of 'miner luck' and 'selfish mining'. There is even a compilation of known problems with the white paper available here.

Bitcoin clearly didnt follow a 'code is law' view, but rather 'Satoshis vision is law' given that he made a number of tweaks in the first few years as it was discovered that the code didnt fully align with the intent of the code creator.

I think this distinction is particularly relevant given that: a) Satoshi stopped contributing to bitcoin many years ago, and b) bitcoin has no formal specification.

You can tell how little bitcoin is understood simply by the vast amount of research being done to analyze and improve upon it.

Satoshi once stated that the core design was set in stone and other implementations would be a menace to the network. People often take this quote (and others from Satoshi) and use it to fallaciously argue (via appeal to authority) that the bitcoin protocol must evolve in a specific way.

I pose to you that this was just another case where Satoshi was mistaken.

As weve seen, Satoshi actually had to make a lot of changes to bitcoin as early developers were exploring the code and discovering edge cases. There are also over half a dozen bitcoin client implementations running today that aren't disrupting the network. We have even seen that a single implementation can be a menace to the network when machine-level differences can cause consensus failure, as happened in 2013 with the Berkeley DB chain fork.

Recall my earlier description of bitcoin being the result of a melting pot of contributions. This really took hold once Satoshi released his pet project that he had been working on in secret for several years.

The very first week that bitcoin launched, it also gained its first collaborator, Hal Finney. Hal was one of the few people who believed early on that bitcoin could actually work, which is clear from Satoshi's original white paper release:

"[Hal Finney] allegedly showed a lot of flaws in the early code, which were fixed by reducing the opcodes. Hal Finney was the cypherpunks' cypherpunk. He had a rare ability to both code superlatively, see the forest and the trees and describe what he saw. We all read his posts carefully, I don't think there is anyone else who commanded such respect."

Ian Grigg

Finney released a number of his emails with Satoshi to the Wall Street Journal; theyre an interesting read. You can see Satoshi's surprise as he manages to find several bugs that Satoshi had not anticipated even though he had "tested heavily".

Unlike some systems (such as ethereum), bitcoin doesn't have a formal specification. Even if bitcoin did have one, it wouldn't be any easier or harder to make changes to the protocol from a technical standpoint, though it might from a social standpoint.

As Charlie Lee noted in response to Andresens suggested definition, its amorphous:

Nor is there an objective process by which changes are enacted:

Paul Stzorc spoke about making objective decisions with bitcoin development, but its far from being realized.

His presentation was based upon this blog post.

I pose to you that bitcoins strength comes not from being the embodiment of some dogmatic beliefs of immutability, decentralization or other buzzwords, but from collaboration. The process of taking collaboration and using it to determine human consensus can be noisy and messy, but its the governance model within which we must work.

As I see it, this system of governance, rooted in voluntaryism, is the only aspect of bitcoin that is 'set in stone'.

Sergej Kotliar penned this piece years ago describing why bitcoin has similarities to religion. As he notes, there is a bit of magic to the fact that the system works as a whole, because it relies upon non-technical components.

The well-aligned incentives of the system form an "invisible hand" that guides it.

Most bitcoin users probably don't realize it, but they are subscribing to a sophisticated subjectivist ontology by participating in this collectively reinforced belief in the system of rules that comprises bitcoin.

To put it in simpler terms:

While bitcoin can be described as trustless in the sense that a full node operator needs not trust any other participants on the network, at a meta level there is often some form of trust involved. For example, almost none of bitcoins users actually read and understand the software and the protocol itself.

They are trusting the developers to be careful not to introduce flaws.

It appears to me that the fact that few people have a deep understanding of bitcoin's technical operations results in people with lesser understanding deciding which 'experts' to trust. As such, when experts clash, the crowd divides and takes sides behind the experts whose arguments they find most compelling.

Unfortunately, this means that sometimes politics are injected into the decision making process.

As Shaolin Fry recently noted, we should strive to avoid politicization of proposed protocol improvements. To be clear, this doesn't mean 'nobody in the ecosystem is motivated by political ideals'. Rather, it means that the direction of the system is not driven by politics in which one group of people forces their beliefs upon another.

For example, the concept of 'voting' generally means that a political process is occurring. We should instead strive for a system of permissionless innovation wherein participants can signal that they want to interact in certain ways, regardless of what other participants signal.

"We already have a lot of options for currencies which are (indirectly) controlled by political whim. Bitcoin should be sounder stuff than that. I would love to be able to say that the complete consensus rules on day one were involatile ('set in stone') but engineering reality makes that unrealistic. That dream for bitcoin died the day the first unambiguous and serious consensus flaw was found. The deactivation of buggy opcodes further weakened it, requiring more changes to be fully general again. But the world is seldom so conveniently black and white. Bitcoin can still deliver on the promise of being a less political money without being totally set in stone."

Greg Maxwell

Some bitcoin users achieve such a sufficient understanding of the protocol that they begin to envision potential improvements, at which point they try to change the system to better fit their perspective.

This is a 'command and control' mindset that is human nature; I myself have been guilty of making this same mistake in the past by trying to project my perspective onto bitcoin rather than ingesting the perspectives of the community.

There are far more considerations that go into debates about bitcoin's evolution than just the technical aspects of how changes would affect the network.

Ryan X Charles covered the high-level philosophies of the two most popular viewpoints in the scaling debates. Much of the contention in these debates comes from: a) different priorities and b) different beliefs in the use cases for bitcoin.

Unfortunately, a significant portion of participants in these debates have taken their perspectives and developed them to the point of dogmatic belief, which makes it nearly impossible to engage in intellectual discourse.

One reason I believe that it is easy for people to project their perspective upon bitcoin is due to its lack of specification and thus lack of clear objectives.

For example, Satoshi described bitcoin as a 'peer-to-peer electronic cash system'. But even this simple description can easily be interpreted in many ways. 'Peer-to-peer' provides no context around how many peers there should be; 'cash' provides no context around what the speed or cost of transactions should be.

Much as you can find a variety of perspectives and interpretations of the US Constitution or the Bible or the Quran, so can the writings of Satoshi be interpreted and debated.

The projection of individual perspectives onto bitcoin has led to the same sort of fracturing we can observe in political, philosophical, and religious systems. A group starts out on mostly the same page, but then an issue arises about which the group can not form a consensus.

The individuals begin to polarize their perspectives and support actions that foster tribalism. Party lines are drawn, litmus tests are applied to newcomers, dissenting speech is suppressed, propaganda is perpetuated, communications break down, and echo chambers are formed.

As a result, today, bitcoin debates often devolve into fallacious assertions and name calling, where one party considers the other party to be either ignorant or malicious. This is unfortunate because people often end up talking past each other under the assumption that they are right and the other party is wrong.

It's troubling to see the ossification of perspectives into dogmatic beliefs that degrade the quality of discourse in the community.

I pose to you that there is no single 'correct' approach to viewing bitcoin, but rather a multitude of perspectives. The diversity of perspectives and use cases was the topic of one of the first articles I ever wrote about bitcoin.

Im not saying that you have to agree with rhetoric propagated by people with conflicting perspectives of what bitcoin should be. I will suggest, however, that you should recognize it as such not as a malicious attack that you must defend against with a direct counterattack.

If a debate is becoming too heated and discourse is breaking down, you can always disengage.

Keep in mind that all humans fall prey to biases; we can't avoid being affected by them, but we can consciously choose how we respond to other biased people. It may also help to remember that bitcoin doesn't need you to defend it you defend your own perspective of bitcoin by choosing which software to run and by choosing the system in which you store your money.

Andreas once spoke about the "noisy" scaling debate.

While it can be unpleasant, we should remember that it is the result of a feature rather than of a flaw in bitcoin.

Bitcoin ecosystem participants should be humble when discussing it rather than confident that our understanding of the system is superior to that of others participating in a discussion. I, for one, have found my conversations to be more productive after making this realization.

I've also wasted a lot less time by avoiding conversations that were clearly going to be unproductive due to the dogmatic views expressed by the other party.

You can achieve the 'Tao of Bitcoin' by accepting that bitcoin is on its own path that is outside of your control. Dont be frustrated if your vision of bitcoin does not align with that of other users. Bitcoin will naturally converge upon the least common denominator of human consensus that which is beneficial (or at least not harmful) to the greatest subset of participants.

The Tao of Bitcoin is not understanding bitcoin, it is accepting that bitcoin is what it is.

Ive attempted to present sufficient evidence that bitcoin defies conventional educational approaches and even defies self-professed authorities who claim to understand it. The result can be bewildering, but there is no need for negativity.

We should remain hopeful that bitcoin will continue to 'fail to scale' just like the internet has.

Jimmy Song also made a great case for optimism in the face of deadlock and despair.

"In short, bitcoin is maturing and the market is starting to define what bitcoin is going to be. Im sure there are people on both sides of the debate that wont like what its going to become, but thats what you get with a decentralized currency."

I will continue my quest to consume as much information as possible about this new ecosystem, but have long since given up the goal of understanding bitcoin.

The faster I run toward the finish line, the further it moves away from me. While some people in this space are more confident than others about its future direction, the truth is that we're blazing new trails and learning as we move forward.

You dont understand bitcoin, and thats OK neither does anyone else.

Jameson Lopp is a software engineer at BitGo, creator of statoshi.info and founder of bitcoinsig.com.

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Bitcoin Surges Back Above $1200, Erases ETF-Denial Losses

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Bitcoin Needs to Think Outside ETF Box – Bloomberg

March 13, 2017 | Author: admin

The hopes of Tyler and Cameron Winklevoss to list an exchange-traded fund based on bitcoin were dashed by the Securities and Exchange Commission. That suggests the digital currency's future may not be in the U.S., and probably shouldn't hinge on a fund that invests in nothing else.

One avenue that's still open

Pensions

The U.S. regulator ended an almost four-year debate with the Winklevoss twins Friday, indicating it wasn't comfortable approving an ETF that would be based on a mostly unregulated asset and over which surveillance and enforcement may be difficult. While previous reservations from the SEC seemed surmountable, this one required bitcoin to be something else.

There's talk in bitcoin circles of using other avenues, such as a filing in Europe for an Undertaking in Collective Investments in Transferable Securities (or UCITS) stamp that would allow the creation of ETFs that could be traded across the continent and, by proxy, in Asia and Africa too. That helps explain why the currency bounced back so quickly from its weekend plunge in response to the SEC decision.

Evergreen Hope

Bitcoin plunged almost 20 percent after the SEC denied an ETF registration, then recovered on bets that this will happen elsewhere

Source: Bloomberg

I'm sorry to say that idea is equally unlikely to fly.

While UCITS regulations allow investments in derivatives and even alternative assets, there are very strict requirements on diversification. A fund can't have more than 10 percent of its net assets in securities from a single issuer, so a vehicle based on bitcoin is very unlikely to get UCITS approval. Without that,it's hard to see centers such as Singapore, Hong Kong, London or Frankfurt allowing unit trusts based on a bitcoin fund to trade. That would limit them to small exchanges with little liquidity.

This doesn't mean the digital currency has no future with retail investors.Managers should start thinking of it as a risk-management tool alongside other assets. They may have a better chance of UCITS approval with a fund that invests in, say, two or three digital currencies and maybe European and U.S. government bonds. That would also make that fund safer -- the point of the diversification requirement.

Or they could try an approach that has already worked in the U.S. While the SEC hasn't really recognized bitcoin as an asset class that it can monitor or have any responsibility over, the Internal Revenue Service did so a while ago. That openedthe door for providers of private pension plans to allow users to fund their accounts in bitcoin. So, while average U.S. investors may not be able to bet on bitcoin using an exchange-traded fund, they maylegallyput their retirement money into the digital currency and use that to invest in traditional funds.

For all their cutting-edge ideas, bitcoin enthusiasts need to think outside the box a bit more.

This column does not necessarily reflect the opinion of Bloomberg LP and its owners.

To contact the author of this story: Christopher Langner in Singapore at clangner@bloomberg.net

To contact the editor responsible for this story: Paul Sillitoe at psillitoe@bloomberg.net

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Bitcoin Needs to Think Outside ETF Box - Bloomberg

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