The Next Frontier in Blockchain Technology: Scaling and Commercial Optimization

The Next Frontier in Blockchain Technology:
Scaling and Commercial Optimization

Every successful startup at one point or another faces a turning point

in its history. This turning point, whether a challenge, conflict, or opportunity, oftentimes becomes the defining moment for the startup’s leadership team. How will they respond? What steps need to be taken? What is the game plan to get from point A to point B? These questions are vital, and investors and board members demand answers. Blockchain technology, though not a startup in the traditional sense, is at its turning point. Prices are at or near all time highs, trading volumes are soaring, and the number of cryptocurrency users is growing at a tremendous rate. But these statistics don’t tell the full story.

With cryptocurrency prices rising and transaction volumes hitting peaks, the Achilles’ heel of Blockchains, scalability, is back with a vengeance. The problem essentially boils down to block size–blocks that are too big are automatically rejected by the network. As a result, transactions per second are limited to single digit numbers, or double digit numbers if the Blockchain is really fast. The problem is that this pales in comparison with traditional payment methods like Visa cards. If cryptocurrencies want to compete in the transaction world in a substantive way, something needs to be done.

Sensing this need, some companies are working on customizable operating systems that will establish commercial-scale platforms. The goal is to meet growing business demand through Blockchain technology, as well as provide a central hub for all Blockchains. The hope is that platform operating systems will lay groundwork for the development of new, scalable applications, and organizations like EOS, Grid, DASH, and Waves are aiming to do just that.

How Blockchain operating systems can address the scalability problem

By creating a multi-chain parallel processing infrastructure that fulfills certain requirements, companies could pave the way for greater Blockchain commercialization. The operating systems they are working on are comprised of a main chain and an indefinite number of side chains, allowing a platform to fulfil multiple goals while reducing data redundancy.

The architecture of the operating systems establishes a well organized “Central Business District.” In this business district each industry has its own dedicated side chain–a one to one scenario where specific issues and problems receive direct attention via the corresponding chain. The highly customizable platforms consist of one main chain, or kernel, that forms the minimum viable Blockchain. As the backbone of the operating system this main chain is used as the core from which custom operating systems can be developed. Developers can use the operating system to create specific configurations, providing adaptability that has so far eluded certain Blockchain projects.

So how does this all impact scalability? In essence, a Blockchain-based operating system creates different streams (side chains) which handle very specific tasks. As a result, the main chain isn’t bogged down by having to process transactions it isn’t built to handle. The abundance of chains means that the platform can process independent transactions at one time.

The operating system creates a scenario similar to adding four additional lanes on a one way highway. Drivers can accomplish the same end goal, arriving at their destination, but take a variety of lanes to get there. Traffic bottlenecks are less likely on a five lane highway than a one line highway In the same way, a Blockchain can accomplish its goal but take a variety of chains to do so. Side chains enable the main chain to operate as intended while also getting specialized tasks done.

Blockchain solutions for everyday life

The end goal for Blockchain-powered operating systems is to provide real world commercial solutions. In order to cope with increased transaction volumes, Blockchain companies are building infrastructures that allow companies to create scalable platforms. By allowing a Blockchain to have connected yet independent side chains, companies will find that they can create customizable solutions to meet their business demands.

Chuck Reynolds


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Major ATM Manufacturer Integrates Bitcoin, Exposure to Millions of Users

Major ATM Manufacturer Integrates Bitcoin, Exposure to Millions of Users

South Korea’s Hyosung, one of the largest ATM manufacturers in
Asia, which also has its headquarters in Texas, has officially integrated Bitcoin into

its international ATM models.

South Korea's Hyosung, one of the worlds largest ATM manufacturers, which implemented #bitcoin support domestically years ago, has finally integrated #bitcoin into its international ATM model for retailers.

Importance of Hyosung’s Bitcoin integration

Since 2014 Hyosung has collaborated with leading Bitcoin service providers within the South Korean cryptocurrency industry such as the Tim Draper-backed Coinplug. For over three years Hyosung has enabled South Korean ATM users to buy and sell Bitcoin through tens of thousands of Hyosung ATMs, located at nearly every convenience store and subway station.

Through the Coinplug mobile app, Hyosung has allowed South Korean users to easily withdraw and deposit cash to sell or obtain Bitcoin, increasing the liquidity of Bitcoin for general consumers in the region. As seen in the photograph below, the efforts of Coinplug and Hyosung to transform many of the existing bank ATMs in South Korea to Bitcoin-supporting ATMs have led to an increase in mainstream adoption of Bitcoin. In the upcoming weeks Hyosung intends to roll out its full integration of Bitcoin into its international ATM models that will be shipped to supporting countries, such as the US and most European countries.

Benefits of Bitcoin supporting ATMs

Since 2016, most leading Bitcoin markets and their authorities have pressured Bitcoin exchanges and trading platforms to enforce strict Know Your Customer (KYC) and Anti-Money Laundering (AML) policies to crackdown on illicit use cases of Bitcoin and other cryptocurrencies such as Ethereum and Litecoin.

Consequently, the process of account verification and updating daily or monthly limits of Bitcoin trading accounts has become significantly challenging. On most exchanges users are required to spend at least a few weeks to submit necessary documents including personal verification (IDs or passports), bank documents, and even conduct a face-to-face interview for maximum monthly limit upgrades. For large-scale traders and investors it is worthwhile to go through such a rigorous verification process to create trading accounts. For beginner users and casual investors however, Bitcoin ATMs are significantly simpler to use to buy and sell small amounts of Bitcoin.

Currently, major Bitcoin brokerages and exchanges such as Coinbase and Gemini are focusing on providing support for institutional and retail investors. Cointelegraph recently reported that Coinbase launched Coinbase Custody, a Bitcoin custodian platform for institutional investors planning to invest a minimum amount of $10 bln in Bitcoin. A handful of companies including Coins.ph of the Philippines, the largest Bitcoin brokerage in Asia with nearly 3 million active users, are working to provide services for general consumers and small-scale Bitcoin investors. In the long-term, the integration of Bitcoin into hundreds of thousands of bank ATMs globally would further increase the mainstream adoption of Bitcoin.

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Bitcoin Price Achieves New All-Time High at $8,040; Bigger Surge in December?

Bitcoin Price Achieves New All-Time High at $8,040; Bigger Surge in December?

The bitcoin price has achieved a new all-time high at $8,040, within a week since it dipped below $5,600 on Sunday. Analysts expect the price of bitcoin to surge even further by the end of 2017, upon the entrance of institutional investors and retail traders through Coinbase, CBOE, Gemini, and CME.


Bitcoin Price Will Likely Surge Again in December

Earlier this week, CME Group announced that it will launch its bitcoin futures exchange approved by the Commodities and Futures Trading Commission (CFTC), to address the increasing demand from institutional investors and retail traders for bitcoin. Today, on November 17, Coinbase, the largest bitcoin brokerage and wallet platform in the world, introduced Coinbase Custody, another bitcoin trading platform for institutional and retail traders. On Coinbase Custody, large-scale investors can invest a minimum value of $10 million in bitcoin.

Brian Armstrong, the CEO at the $1.6 billion bitcoin startup Coinbase, stated:

“We already store billions of dollars worth of digital assets on behalf of our customers. We serve thousands of institutions via our GDAX product, the leading digital currency exchange in the U.S. We’ve raised $216M from venture capital firms and financial institutions like the NYSE/ICE, USAA, BBVA, Westpac, and MUFG. And we have approximately 200 employees working across our three offices in New York, London, and San Francisco with deep industry knowledge.”

Specifically, Armstrong noted that there exists approximately $10 billion in institutional money on the sidelines “waiting to be invested in digital currency.” If tens of billions of dollars flow into the bitcoin market throughout December and by mid-2018, the market valuation of bitcoin will surge substantially, likely to $200 billion in the short-term. Many institutional investors and high profile traders have invested in bitcoin over the past 12 months through a handful of investment vehicles including DCG’s GBTC and XBT Provider’s bitcoin exchange-traded note (ETN). Upon the launch of CME and CBOE bitcoin futures exchanges, along with Coinbase Custody, institutional investors will be able to invest in bitcoin with ease, by the end of this year.

Increasing Liquidity of Bitcoin

Already, bitcoin is far more liquid than the most liquid stock on earth in Apple. Bitcoin has a daily trading volume of around $5.8 billion, while Apple’s trading volume remains below $4 billion. Bitcoin’s daily trading volume is close to $6 billion without institutional and retail investors in the space. By December, the daily trading volume of bitcoin will be drastically higher.

In addition to the entrance of investors in the traditional finance sector, the adoption rate of major financial platforms is rapidly increasing. Most recently, $15 billion payments app Square integrated bitcoin into its mobile platform. Analysts expect more financial platforms to integrate bitcoin in the near future, as the market valuation of companies that have integrated bitcoin soared in a relatively short period. Square for instance, experienced a $1 billion increase in its market cap within a five day period, after integrating bitcoin.

Chuck Reynolds


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Tezos, a cryptocurrency that raised $232 million in July, is in crisis

Tezos, a cryptocurrency that raised $232 million in July, is in crisis

One of the biggest cryptocurrency crowdsales
hasn’t lived up to the hype.

Tezos, a blockchain technology project that made headlines

in July by raising $232 million, has been hit with its second class-action lawsuit in less than a month. It's the latest blow for the project's founders, husband-and-wife team Arthur and Kathleen Breitman. The Breitmans promised to build a blockchain with a revolutionary new governance model that would avoid the kind of strife that has plagued the Bitcoin world over the last few years. Instead, Tezos itself has been engulfed in controversy since its fundraiser ended. The couple is locked in a bitter conflict with Johann Gevers, the man they picked to lead the Tezos Foundation.

The big question hanging over the Tezos project is whether its so-called initial coin offering violated US securities laws. Those laws require companies to register with the Securities and Exchange Commission (SEC) before they can offer securities to the public. The lawsuits argue that, legally speaking, the Tezos crowdfunding campaign was a sale of securities, and so the Breitmans broke the law by ignoring SEC rules. Of course, there would have been little reason to file lawsuits if the Tezos project were a smashing success. But the launch of the Tezos network is now months overdue. Anxious investors are starting to wonder if anything will come of their investment.

Tezos sold tokens on a network that didn’t exist

The Tezos project has lofty goals. In a 2014 white paper, Tezos founder Arthur Breitman argued that Bitcoin had a poor governance model. The network depends on everyone following the same set of rules, and those rules aren't easy to change—a problem that has become increasingly obvious over the last three years. Breitman wanted to solve this problem by developing a blockchain protocol capable of modifying its own rules. The Tezos protocol has multiple layers, with a low-level "network shell" providing generic blockchain functionality but leaving most of the important decisions to higher levels of the stack.

Tezos is supposed to have built-in mechanisms for modifying the rules of these higher-level functions. A Tezos user can propose a modification to the rules, which can be accepted or rejected by other users. In theory, this should make the network much more flexible than conventional blockchain networks. The big problem is that the Tezos network doesn't exist yet. People who bought into the July presale were buying the right to receive units of the Tezos currency once the network became operational.

And the lawsuits charge that the Breitmans misled investors about how long that would be. In a May blog post, Arthur Breitman wrote that "all of the functionality described in the whitepaper has been implemented to this date, except for gas metering." The big remaining tasks, he said, were "finishing a security addition," "optimizing smart-contract storage," and "testing our network on a large scale and performing external security audits."

In his May post, Breitman predicted the Tezos network would be up and running "in a three- to four-month period." He said it might take as long as six months to finish, though he added that "Based on my assessment of the remaining development that does not seem likely, but it's not impossible."

That was written almost six months ago. The Breitmans now say that they expect to launch the network next February, and they acknowledge that it could take even longer. The Tezos organization itself has been plagued with infighting. The Breitmans chose to conduct their fundraising through the Tezos Foundation, a non-profit entity that they helped to set up in Switzerland. (As Kathleen Breitman put it, Switzerland has "a regulatory authority that had a sufficient amount of oversight but not like anything too crazy.")

Legally speaking, a Swiss non-profit organization is supposed to be independent from commercial interests, so the Breitmans tapped Gevers, a Swiss engineer, to run the Tezos Foundation. Meanwhile, the Breitmans have no formal role in the foundation's management, but they've been able to exert plenty of informal pressure. Gevers says the couple hasn't relinquished control over the group's tezos.ch domain name. The Breitmans have accused Gevers of self-dealing and have attempted to oust him in a boardroom coup. They've encouraged other board members to re-organize the foundation and delegate key functions to a subsidiary that would be under the Breitmans' control.

But Gevers is having none of it. He insists that he has an obligation to maintain the foundation's independence and safeguard the hundreds of millions of dollars in cryptocurrency entrusted to him by Tezos users. (We've asked both Breitmans and the Tezos Foundation for comment and will update if we hear back.) For now, investors' money—which has swelled in value as the value of bitcoin and ether has continued to rise—is managed by the foundation. The plan is for the foundation to acquire the Breitmans' for-profit company after the company develops and launches the Tezos network. Only then will users get their allocations of Tezos cryptocurrency—something that might not happen for months, even after the network is officially launched.

Tezos claimed investments were really donations

People who bought into the Tezos presale were buying the right to acquire Tezos currency in the future, once the network became operational. Plaintiffs say this is evidence that the pre-sale was really a stock offering, little different from a corporate IPO. US law requires anyone who offers stock to the public to register with the Securities and Exchange Commission. The Breitmans didn't do that.

Instead, they tried to skirt those requirements by describing investors' purchases as donations to the Tezos Foundation. But the lawsuit argues that this was a sham. Even the Breitmans themselves didn't really seem to believe it. "What we're going to do is allow as many people who want to buy into the crowdsale over a two-week period," Kathleen Breitman told Reuters in May. When Reuters asked Tim Draper, one of the biggest early investors in Tezos, how much he "donated" in the fundraiser, he responded, "You mean how much I bought? A lot."

The US Securities and Exchange Commission is charged with enforcing securities laws. So far, the agency has enforced the rules with a light hand. In July, days after the Tezos fundraiser had ended, the SEC ruled that a 2015 fundraising effort called the DAO had violated securities laws. But the SEC decided not to press charges in that case, merely warning that future crowdsales could get their organizers in legal hot water. But disgruntled Tezos investors aren't waiting for the SEC to crack down on Tezos. They're filing their own lawsuits based on the project's alleged violation of securities laws. Both lawsuits against Tezos point to SEC statements warning that unregistered ICOs could run afoul of securities laws.

"If it walks like a duck, and it quacks like a duck, it's a duck," this week's lawsuit argues.

The stakes are high for the Breitmans. If they lose the lawsuit, they could be forced to return the money they raised in the crowdsale, and they could face further action from the Securities and Exchange Commission. But the case could also have broader significance for the cryptocurrency world. Tezos was one of the most successful coin offerings conducted in 2017, but there have been many others like it. Most of them have not registered with the SEC, and others have offered the public tokens on networks that haven't been created yet.

If the courts decide that Tezos violated securities laws, it could put many of this year's other ICOs in legal jeopardy. The SEC hasn't begun prosecuting anyone in the cryptocurrency world for violating securities laws, but it could start doing that at any time. And a court ruling against Tezos could put pressure on the SEC to act.

Chuck Reynolds


Marketing Dept
Contributor
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‘Is It Real?’: Square CFO Speaks Out on Cash App Bitcoin Trial

'Is It Real?': Square CFO Speaks Out on Cash App Bitcoin Trial

Sarah Friar, CFO of payments firm Square,

has filled in some of the detail on why the company has launched a bitcoin pilot scheme. Revealed yesterday, Square's mobile payments product, Cash App, is now allowing a limited number of users to buy or sell bitcoin within their accounts.

Talking to CNBC, Friar explained:

"You're talking about it, it's out there, and so we want to do an experiment and say, OK, is this real? Do customers actually want to be able to do this?"

Friar noted that customers often feed back desired features in Square's products, and that some using Cash App to make payments have requested an "easy way to buy and sell bitcoin." Arguing that the fastest way to get moving with new trends is to build innovations around them, Friar said, ultimately, risks have to be taken – citing the example of early days of internet or the cloud as examples. While future developments with bitcoin are uncertain, she added, "as an innovator" Square has to give customers what they want.

Overstock finds cryptocurrency
is most popular in Alaska, with Delaware close behind

  • Overstock accepts about 50 different types of cryptocurrencies.
  • Overstock's top states by percentage of purchases in cryptocurrency are: Alaska, Delaware, Oregon, Wyoming and Hawaii
  • Because cryptocurrencies don't rely on banks it may make them more popular among libertarian-minded people, Overstock board member Jonathan Johnson
     

     

     

     

     

     

The states driving most of Overstock's purchases via cryptocurrency

aren't your typical tech havens. The top five states for cryptocurrency purchases are Alaska, Delaware, Oregon, Wyoming and Hawaii have , the company told CNBC. Overstock got this statistic by looking at the percentage of overall revenue from each state that came from cryptocurrency purchases. (Absolute cryptocurrency revenue is highest in the most populous states — California, New York, Texas, and Florida.)

Overstock began accepting its first cryptocurrency, bitcoin, in 2014. Today it allows payment from about 50 different cryptocurrencies. The company does about $300,000 worth of sales through cryptocurrency each month, said Overstock board member Jonathan Johnson. "We saw from the 2013 banking crisis is Cyprus that bitcoin was a good store of value and could act as a currency," said Johnson. "We like the pro-freedom aspect of Bitcoin." (Johnson is also the president of Overstock's Medici Ventures division which invests in blockchain technology companies.)

People paying with cryptocurrency don't buy anything drastically different from other customers. However they do tend to be male and buy twice as much as those paying with regular currency, Johnson said. Because cryptocurrency does not rely on banks or government-issued currency, it's popular among libertarians and others who distrust government intrusion and big institutions, Johnson said. It also may allow Overstock to expand in areas where many people don't have bank accounts, like Africa.

Chuck Reynolds


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How High Bitcoin Could Reach Before The Average Investor Sells It?

How High Bitcoin Could Reach Before The Average Investor Sells It?

How high Bitcoin prices could reach

before the average Bitcoin investor sells it? Very high, $196,165 per coin – roughly 30x the digital currency’s current value. That’s according to a just published LendEDU Bitcoin investor survey. “Believe it or not, that number and statement is true according to our polling data,” says Michael Brown Research Analyst with LendEDU. The survey included 564 Americans that invested in Bitcoin. That's a tiny sample, and therefore, the survey findings should be interpreted with extreme caution.

What will it take to reach that price? A world where Bitcoin, the “people’s currency,” will gradually replace national currencies in everyday transactions, with the help of the tech savvy younger consumers. “These investors could envision Bitcoin reaching that price with the help of time and younger consumers developing more of an affinity with virtual currencies, specifically Bitcoin,” adds Brown.

This digital world, in turn, will draw in older investors, who have yet to be sold on the idea of the Bitcoin’s potential. “As it stands today, the price of cryptocurrencies is rising rapidly yet many of the most influential, older investors are still not sold on Bitcoin and believe it will collapse,” continues Brown. “Just imagine when younger Americans develop more spending power and attempt to bring Bitcoin into the forefront of the U.S. economy? At that point, the price of Bitcoin will skyrocket.”

How long that will it take? Perhaps, a generation. “Jumping from the current price of $7,237.06 to something even remotely close to $196,165 would have to involve a generational transfer of economic power, meaning young consumers would need time to build their wealth and establish their presence in the U.S. economy to bring Bitcoin into the mainstream, much more so than it already is.”All that sounds like a day-dream that it is extremely unlikely to come true. The technology that made Bitcoin will crush it, provided that big banks and big governments don’t crush it ahead of technology, as was previously discussed here.

Chuck Reynolds


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I’m Really Into Blockchain. I Blockchain Everything!

I'm Really Into Blockchain.
I Blockchain Everything!

In this opinion piece, part of a weekly series of columns, Casey grapples with the inconsistencies of language in the world of blockchains and cryptocurrencies and tries to find a way to live with it all.

You can measure how long someone has been into cryptocurrencies
by how they use the word "blockchain."

My initiation came in the fall of 2013, when there was only one cryptocurrency worth talking about, which meant there was really only one blockchain. So, for me, the word had to come with the definite article: the blockchain. This was about a year and a half before "blockchain" became a generic reference carrying an indefinite article – a blockchain – and two years before it morphed into an uncountable noun: "blockchain" as a concept.  (Imagine someone saying "I'm interested in ledger" and you'll understand why this drives some of us nuts. A blockchain is a tangible thing, not a practice, a process or a field of interest.)

But thinking about the etymology of these words is more than just an academic exercise. It helps us understand the motives and interests that fuel subtle but important changes in meaning. For example, recognizing that detaching the word "bitcoin" from "blockchain" works to neuter the former helps us see how those most threatened by cryptocurrency are trying to shape the debate. By the same token (no pun intended), if you don't understand why "blockchain," expressed as an uncountable noun, means something different from "a blockchain" or "the [bitcoin] blockchain," you could fall into a trap. It means you probably don't understand the technology you're dealing with and that someone could take advantage of you.

So, when Christian Smith, a colleague from the MIT Media Lab, gave an impassioned speech last week condemning the widespread use of "the blockchain," it irked me. Not only did he dis the definite-article form on which I'd cut my cryptocurrency teeth, he happily used the uncountable noun form. To be fair, he was speaking at the MIT Legal Forum on AI & Blockchain. Perhaps I have to accept this increasingly ubiquitous usage as an unavoidable fact of life? Like taxes.

Still, Smith raised some good points. He rightly observed that there is now a plethora of distributed ledgers carrying the label "blockchain," and thus that there is no monolithic single chain to which we all must adhere. And I fully share the disdain he expressed for that aggravating phrase, "just hash it and put it on the blockchain." But to banish the definite article seemed to me to deny the word's roots. I tend to view "the blockchain" as a nod to bitcoin's catalytic role in fostering wider interest in "blockchain technology." (Pro tip: if you want to talk about "blockchain" as a field of interest, use it as a modifier to a word like "technology"; it can also modify other words, like "pedant.") We still say "the wheel" to talk about other the starting point of that world-changing invention, don't we?

Origin of 'blockchain'

Hardcore bitcoin enthusiasts, those who have been in the space from the beginning, sometimes scoff at the newfound ubiquity of the word "blockchain." Back in the day, no one really thought of the blockchain as being especially significant, other than that it described the particular transaction recording system that bitcoin used, one that happened to be arranged into a cryptographically linked chain of blocks. "Blockchain" didn’t appear in Satoshi Nakamoto's initial white paper. It has been suggested the first usage came from Satoshi's early collaborator, Hal Finney, and even then in a less iconic, two-word construction – "block chain" – which Satoshi and others later picked up and used.

Once blockchain explorers were created, allowing people to more easily search the ledger, the single word started to gain significance. No doubt, its growing popularity was helped by the fact that the most popular of those software tools belonged to the startup named Blockchain – typically expressed with its URL extension ".info" to distinguish it from the bitcoin ledger.  (One mark of the confusion around all this is now found in how Blockchain.info's original logo is frequently used in slide decks by speakers seeking to illustrate a generic technology they call "blockchain.")

Dedicated bitcoin developers still don't really talk about the blockchain as an isolated thing of any great importance. They view bitcoin as an all-encompassing technology, within which the chain-of-blocks ledger is just one part.  I personally think the blockchain deserves to be recognized on its own. It's what gives bitcoin its immutable time-stamping capacity, allowing tricks like Julian Assange's "proof of life" and it lets us forecast when each halving will occur.

It also encapsulates the principle of the "longest chain" – contested as it may be – and, when the community is divided over a contentious hard fork proposal, as it was until recently, it's the blockchain that literally manifests that division. Still, core devs have a point: it's not entirely accurate to describe the blockchain, as many do, as the "technology underpinning bitcoin." Things got confusing when Wall Street banks got interested in distributed ledgers.

They used the phrase "blockchain without bitcoin," which misleadingly suggested that blockchains were not only important but more important than cryptocurrencies – even though, without the latter, it was impossible to have the groundbreaking permissionless, fully censorship-resistant, record of transactions that bitcoin introduced. This new usage had a purpose, of course. It allowed the newcomers in suits to strip the technology of its most disruptive characteristic – the fact that no one could control it – and impose their own control over it. It was a subtle but powerful act of appropriation.

What to do about it

Should we care about this? Well, yes, and no.

As anyone with teenagers knows, language, especially English, is always evolving. And it needs to. Language imposes rules on social interaction. It constrains what we can and can't do with expression. This helps us make sense of each other, but if the rules are overly inflexible, they limit our imagination and our capacity for innovation.

There is a cultural zeitgeist underway in the "blockchain space," a Cambrian explosion of ideas. We can do our part to try to steer the evolution of the language associated with that, but preventing change and new forms of expression is as difficult as stopping biological evolution. What we must demand is awareness of why we use the words we use and why others choose theirs. (I'll begrudgingly accept "blockchain" as an uncountable noun if others will understand why my co-author Paul Vigna and I put "The Blockchain" into the title of our new book to acknowledge the technology's bitcoin-rooted history.)

With awareness hopefully comes consistency of usage. That's vital if we are to develop this technology and its applications.  We need precision in communication if we are to come together and collaborate on the same ideas. If we are at least thinking, reading and educating ourselves about such matters, we can be more accepting of the fluidity of word usages. That way, we avoid the harmful, confining effects of political correctness for blockchain. (See what I just did there.) I only have one demand: don't, whatever you do, start using "blockchain" as a verb.

Chuck Reynolds


Marketing Dept
Contributor
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MasterCard has filed a patent on its own blockchain-based money transfer solution

MasterCard has filed a patent
on its own blockchain-based money transfer solution

In about 2014, most bitcoin companies quickly pivoted

to the “next big thing”: blockchain. Among them were the financial and fintech houses that were eager to avoid SEC scrutiny of their cryptocurrency holdings but were happy to use blockchain technology to speed up transaction times. Many of those early efforts are now apparently bearing fruit. MasterCard, for example, has just filed a patent for a “Method and System For Instantaneous Payment Using Recorded Guarantees.” This is, in short, a patent for a blockchain-like system that offers instant payment. It is not a clone, per se, but a patent that assumes that a blockchain-like ledger will be available to store and manage international transactions instantly.

The patent describes:

A method for processing a guaranteed electronic transaction, includes: storing account profile, each include an account number and balance; receiving a transaction message from an acquiring financial institution via a payment network, the message including a specific account number, transaction amount, and payment guarantee data; identifying a specific account profile that includes the specific account number; deducting the transaction amount from the account balance in the specific account profile; generating a record of payment guarantee that includes the transaction amount and data associated with the payment guarantee data; generating a return message including a response code indicating transaction approval and data associated with the generated record; transmitting the generated record to a computing system via a communication network; and transmitting the generated return message to the acquiring financial institution via the payment network.

While the abstract itself doesn’t mention blockchain, MasterCard intends to use the technology in the process, describing a step in which “the payment guarantee data stored in the third data element included in the received transaction message includes at least a blockchain network identifier and (i) a public key or (ii) a destination address, the record of payment guarantee is a blockchain transaction for payment of the transaction amount stored in the second data element included in the received transaction message to (i) the destination address or (ii) a destination address associated with the public key.

The computing system is a node in a blockchain network corresponding to the blockchain network identifier.” That’s definitely a mouthful, but it basically means they’ll store a record of the transaction in some immutable form. MasterCard has explored blockchain tech before even as its CEO attacked bitcoin publicly. This tendency to cut the cryptocurrency out of a blockchain discussion is not new and it’s not stopping any time soon. Whether it works, however, is a different question.

Chuck Reynolds


Marketing Dept
Contributor
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CoinHive Cryptocurrency Miner Is 6th Most Common Malware, Says Report

CoinHive Cryptocurrency Miner Is 6th Most Common Malware, Says Report

Cyber-security solutions provider Check Point Software

has said that the threat from cryptocurrency mining malware is rapidly growing. According to the company's latest Global Threat Impact Index report, the CoinHive variant became the sixth most-used malware in October. CoinHive – a JavaScript program that lurks unseen on websites – works by tapping the processing power of visitors' computers to mine monero.

Maya Horowitz, threat intelligence group manager at Check Point, said in a press release that the emergence of mining malware like CoinHive highlights the "need for advanced threat prevention technologies" to curb such practices and protect networks from cyber-criminals.

Horowitz added:

"Crypto mining is a new, silent, yet significant actor in the threat landscape, allowing threat actors to make significant revenues while victims' endpoints and networks suffer from latency and decreased performance."

According to the report, malware variant RoughTed (adware) topped the index, followed by Locky (ransomware) and Seamless (traffic redirection). Recently, internet domain provider Cloudflare suspended websites that ran hidden cryptocurrency miners, including that of the operator of torrent site ProxyBunker. This site was said to be running the Coinhive miner for four days prior to the suspension.

Chuck Reynolds


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Many Exchanges for Buying Bitcoins with your Credit Card

27 Exchanges for Buying Bitcoins with Credit Card

Buying Bitcoins with a credit card – 9 exchanges reviewed
(plus a list of 18 more…)

From Coinmama's homepage you can choose how many Bitcoins you'd like to buy / sell. You can enter the price either in BTC or in USD or choose one of the offered packages. Once finished, click "buy Bitcoins" and you will be taken to the sign up page. After you fill out your initial details you will need to go through additional verification by submitting a photo ID document. Verification is usually pretty quick (it took me 1.5 hours to get verified). You can also buy up to $500 without doing the verification process. With verification you can buy $1000/daily and up to $5000/month.

Once verified you can buy Bitcoins pretty easily with your credit card through the simple interface. If you verified your address I suggest you use "Visa, Mastercard via Simplex" since it's the fastest option. If you want to continue without verification you can use the "MoneyGram" option. You can then pay the amount with your credit card on MoneyGram's website (this is applicable to US residents only).

The next step will be to enter your own Bitcoin address. Unlike other exchanges CoinMama doesn't keep your Bitcoins on their wallet (which is a good thing). This means you'll need to get a Bitcoin wallet before continuing. The last step will be to enter your payment details and place your order. Coinmama uses the services of Simplex allowing merchants to sell Bitcoins via credit cards as a payment method. I'll probably be doing a more in-depth review of Coinmama soon as it has become quite a popular method for buying Bitcoins.

Buy Bitcoins with a credit card through CEX.IO

PROS: Reputable company, high buying limits
CONS: Limited countries available, higher exchange rates
Overall rating: B+

There is an option to buy Bitcoins using your credit card at the CEX.IO bitcoin exchange. Established in 2013 as the first cloud mining provider, CEX.IO has become a multi-functional cryptocurrency exchange, trusted by over 450,000 users. CEX.io works in the United States, Europe, and some countries in South America. After opening an account just click on "Wallet" and "Fund" next to the request currency. You will then have the option to either wire transfer the money or use your credit card to get your Bitcoins instantly

Cex.io also offer instant withdrawals of USD, EUR, and RUB to payment cards.This means you can deposit and withdraw funds in and from your payment cards once they are linked to your CEX.IO profile. Withdrawal requests are processed automatically, right after their placement, and you do not need to log in to third party services. In most cases, withdrawals are processed instantly, and this will enable you to gain convenient access to withdrawn funds on your Visa/MasterCard right away.

Buy Bitcoin with a Credit Card at Coinhouse

PROS: Reputable company, high buying limits 
CONS: Limited countries available, higher exchange rates
Overall rating: B+

Coinhouse is the "House of Bitcoin" in Paris. You can buy bitcoins directly online by Visa / MasterCard or cash with Neosurf prepaid card available in most European countries. After confirming your account and confirming your identity you will be able to purchase up to 2,000 euros in bitcoin a day, to a maximum of 10,000 euros per month. The delivery of Bitcoins is immediate after confirmation of payment.

Buy Bitcoins with a credit card through Bitpanda

Pros: Multiple payment options, relatively low fees 
Cons: Fees are hidden inside the exchange rate, EU citiznes only
Overall rating: B

Bitpanda is an Austrian Start-Up Company that was founded in October 2014. The company allows you to buy Bitcoins or Ethereum with a credit card as well as with Wire transfers, Neteller, Skrill, SEPA and more. The company supplies its services to European countries only with a relatively low fee. If your account is verified the limit is 2,500€ daily (75,000€ monthly) for credit card purchases. For other options, there’s a 10,000€ daily (300,000€ monthly).

Buy Bitcoins with a credit card through Bitstamp

PROS: Great reputation, multiple payment options, accepts customer worldwide
CONS: Average fees, verification process can take a long time, not very user friendly 
Overall rating: B

Established in 2011, Bitstamp is one of the most reputable and oldest Bitcoin exchanges. The exchange is fully licensed by the Luxembourg ministry of finance. Bistamp started accepting credit card purchases recently via Simplex (the same company the supplies services to Coinmama). At the moment this service is open to most European and US citizens. 

Buy Bitcoins with a Credit Card Through VirWox

PROS: No verification needed, available worldwide 
CONS: High fees, poor support  
Overall rating: B

Virwox is a virtual currency exchange set up on late 2007 for the purpose of trading Second Life Lindens (SLL) and other virtual currencies used in online gaming. Currencies traded other than Linden Dollars include Avination’s C$, and the Open Metaverse Currency (OMC). In April 2011, VirWoX started accepting Bitcoin and basically opened a loophole for people to buy Bitcoins with Paypal by first purchasing SLL via Paypal and then converting that SLL to Bitcoins. As of writing this post the site has over 740K registered users.

Virwox's option is less intuitive and has more fees. However it is possible to get you Bitcoins within 48 using this method. Because of chargeback risk Virwox is taking on themselves they are limiting the amount you can deposit initially through Paypal or a credit card, here are the exact limits according to their website from April 30th 2015.

The first thing you'd want to do is go to VirWox. VirWox is a Virtual World Exchange which was originally setup to trade Second Life Lindens – a virtual currency also known as SLL. We are going to use VirWox as a mediator in order to purchase Bitcoins with a credit card since most places won't allow you to do this as I've mentioned in the beginning of the post. So After you've entered  VirWox you're going to need to sign up. There's a link on the top left that says "Not registered yet ?". Then all you need to do is to fill out your personal details. Where it says "Avatar Name" you can just leave it at "No Avatar". The Avatar is taken from the game Second Life and we don't really need to link anything here.

Once you've entered all of your information you can just click "Register". The next thing that will happen is that you will get an email from VirWox with your temporary password. I strongly advise you to change that password since you will be transferring money through this site. Once you get that email just log into VirWox with your username and password. The first thing you will need to do now is to deposit some money into your account. Just click on the "Deposit" link on the left side and go to the PayPal Express Checkout section. There you can choose how much money you would like to deposit.

Note that there is a max amount of money you can deposit, but it will go up as soon as time goes by (the exact amounts are stated on VirWox's homepage). So after you enter the amount you want to deposit just click the "PayPal" button. You will now move on to the PayPal payment page. If you have a PayPal account you can just log into it and make the payment. If however you don't have an account and want to pay with a credit card you can just click the link "Don't have a PayPal account ?". Once you click that link you can just enter your credit card information and buy deposit money to VirWox with your credit card.

After you deposit the money it will show on the top left side in VirWox on your USD balance. Now it's time to buy some Bitcoins. The first step you'd be doing is buying SLL with your USD. Just go to the SLL/USD and select how many SLL you want to buy according to the current conversion rate. In the picture above I don't have enough USD to buy SLL but if you've followed the steps correctly so far you'd see the amount of SLL you can buy with your USD. After you've bought SLL they will also show up in the top left side (you can see mine on the top left in the former picture). And now it's time to exchange these SLLs into BTC. So go to the SLL/BTC exchange and just exchange as many SLLs as you'd like.

Important!!!

Sometimes a manual review will be required by VirWox after this step. This can take up to 48 hours but usually takes around 6 hours. I get a lot of emails from people who sort of "panic" at this stage thinking they will never get their money back. Sit tight, and if after 48 hours nothing happens email Virwox's support (support@virwox.com).After you'll exchange them you will see the Bitcoins showing up in your account on the top left as well. The last step that's left is to withdraw the Bitcoins into our wallet. So just click on "Withdraw" on the left side and you will be able to enter a Bitcoin address that you can send your newly acquired Bitcoins to. After the transaction will be approve (this can take up to 48 hours but usually takes around 2) you will see the Bitcoins in your wallet.

Buy bitcoins with a credit card via IndaCoin

PROS: Good support, available worldwide 
CONS: High fees, not enough reputation yet  
Overall rating: B-

Indacoin is a UK based exchange which allows users worldwide to buy Bitcoins with a credit card. The minimum amount is $5 and limit for the first month is $500. After 40 days of the card using monthly limit will be increased to $ 3,000. In order to use your card you will need your 5 digit code which is on your credit card statement and to verify you phone number. The process is seems fairly simple however I have not tried this exchange out myself so I can not vouch for it.
Even though the site states that they do now charge any fees, their exchange rate is pretty high due to credit card processing. At the time of writing this post 1 Bitcoin is sold for around $297 while the Bitstamp exchange rate is $245.  Such a premium is considered high even for credit card payments.

Buy Bitcoins with a credit card through 247Excahnge

PROS: Good support, available worldwide  
CONS: Requires verification, high exchange rates 
Overall rating: B+

247Exchange has been around since 2014 and it allows you to buy Bitcoins with either a wire transfer or a credit card. The rates on the site are pretty descent but the buying process is a bit cumbersome. I recently tried to purchase Bitcoins at the exchange and had a some issues completing the transaction. The business seems to be pretty legit and has a good reputation online. The good thing about the exchange is that it shows you all fees before hand so you don't get surprised by the final charge amount as may happen sometimes with different exchanges. If all other options fail this is a good fall back for buying Bitcoins with your credit card.

Buy Bitcoins with a credit card through Bitcoin.com

PROS: Simple process 
CONS: High fees, questionable support    
Overall rating: B-

Bitcoin.com is an information website set up by Roger Ver. It aspires to be the "go to" site for everything Bitcoin related. The website recently collaborated with Simplex, the same credit card processor of Coinmama, in order to allow the purchase of Bitcoins with a credit card directly from the site.

The site takes a 2.5% service fee on top of the credit card processing fee which is 5%. Moreover, the exchange rate the site uses is around 1.5% higher than what you'd find at Bitstamp or Coinbase. The final thing to take into consideration is that it's not really clear who supports you if you buy Bitcoins on this site. There are help forums but they are for general Bitcoin subjects, and if you want to contact the company directly you'll need to go through an 8 steps questioner.  Seems like answering customer questions isn't at the top of the list here.

Buy Bitcoins with a credit card through Payza.com

PROS: Simple process 
CONS: Risk Free, No signup or maintenance fees.     
Overall rating: B

Payza.com supports credit cards, band accounts, bitcoins and much more.. It even has more flexibilty with your Payza Card. You can also use Payza to shop online or process payments on your e-commerce website. It uses an Innovative security and robust protection system. You are able to utilize the instant online money transfers. Which means that you are able to send money instantly anywhere, anytime..

How do I know which exchange to use ?

It can get kind of hard to decide which exchange is the best platform for buying your bitcoins because there are so many of them. That's why we also created our best bitcoin exchange comparison page to make the process easier for you.

Chuck Reynolds


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