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    Categories: General, Guest Blog

    The Evolution of BitShares (Formally ProtoShares)

    July 30th, 2014 by pairmike
    How ProtoShares evolved to become BitShares X and other future DACs.

    Original (dhimmels):

    On October 5, 2013, at the Cryptocurrency Conference, Daniel Larimer, the founder of Invictus Innovations gave a presentation on Decentralized Autonomous Companies (DAC). One idea that he presented was the creation of ProtoShares (PTS). PTS is a mineable cryptocurrency used to raise funds for the development of a suite of DACs sponsored by Invictus Innovations.


    ProtoShares was initially mineable only with CPUs and then eventually with GPUs. They were not pre-mined and quickly rose in value to over $9.00 USD with a market capitalization that exceeded $30 Million Dollars within 45 days of launching. Quite impressive.  


    However, there was one huge problem.  In order to mine PTS, miners spent an enormous amount of money on hardware, software, and cloud services.  This realization caused Invictus Innovations to devise a new means of raising capital for DACs that did not divert funds away from the DACs ecosystem. Mastercoin, a Bitcoin 2.0 protocol, raised funds via a donation crowd sale in August 2013.  This eliminated the need for mining while maximizing the fund raising efficiency.  I believe this served as a pivotal example and encouraged the company to adopt this concept.  

     

    Invictus Innovations introduced some new features to this crowd sale donation concept.  One feature was to create a second asset called AngelShares (AGS) that allowed individuals to fund future DACs and receive a stake in them.  This idea is now commonly referred to as crypto equity. The second feature was to attract individuals in the crypto currency community who have a long term view of DACs concepts and its ecosystem.  A third benefit was for new DAC developers to gain initial community support if they would honor a social consensus contract. This contract stated that a new DAC developer would set aside a minimum 20% stake in their DAC. This stake which would be split equally between AGS and PTS holders in exchange for community support, testing, and promotion of the new DAC.  Also, the developer would gain access to the technology toolkit and support from Invictus Innovations.

     

    The AGS donation period starting Jan 1, 2014 and ended July 19, 2014.  During this time, one could donate Bitcoin (BTC) or PTS and receive a percentage of 5000 AGS distributed daily.  This was a very successful donation campaign.

     

    On Feb 28, 2014, Invictus Innovations conducted a snapshot for BitShares X which grants all holders of PTS and AGS a new allotment in BitShares X when released.  AGS donations after Feb 28, 2014 did not earn any stake in BitShares X or its derivative DACs.  However, the post snapshot donations earned a stake in the following and future DACs (non BitShares X):

     

    Domain Names

    The secure alternative to todays domain name system that eliminates domain name squatting while providing security against government seizures, man-in-the-middle attacks.

     

    Voting

    Transparent-yet-anonymous elections and polling

     

    Charity

    Finding ways to help others with the technology of decentralized autonomous charities.

     

    Gaming

    Honest and transparent gaming of all kinds is now possible.

     

    Insurance

    Get 'insurance' through a Mutual Aid Society with minimal overhead using decentralized autonomous insurance policies.

     

    Lending

    Lending is one of the more difficult systems to decentralize because it generally involves matters of trust and credit worthiness. These things typically require individual judgment and ultimately accountability.

     

    Music

    With the latest technologies that enable transparent decentralized ledgers, it is now possible for artists to sell shares of their songs rather than copies of their songs.

     

    Invictus Innovations renamed ProtoShares to BitShares PTS and AngelShares to BitShares AGS. On July 19, 2014, BitShares X (BTSX), a decentralized bank and exchange was release. AngelShares  holders can claim their shares in this asset.

     

    I hope this was helpful to clarify how ProtoShares has evolved from the beginning. For more information about BitShares click here.

     



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    Categories: General, Columns

    Our Fractious Bitcoin Community

    July 29th, 2014 by mdw
    There are growing divides among the ever increasing numbers of supporters of Bitcoin. These schisms have existed since the very early days of this technology. Yet people were compelled historically by a common vision to band together and push forward as a united movement.
     
    Bitcoiners hold a wide range of views about why Bitcoin specifically, and cryptocurrencies generally, are exciting. Initially these divergent opinions were suppressed in favor of universally supported goals, but as the Bitcoin ecosystem continues to mature that bond grows weaker.

    In the Beginning There Were Techies

    First there were the technophiles. Satoshi and his contemporaries having lofty discussions about how to make digital currency technology work. How specifically to create a system like hashcash or bit-gold without the double-spend problem? It’s not clear that even they realized the import of what resulted from those discussions.
     
    The techies continue to be fascinated by new algorithms for securing the network, experimentation with sidechains or tree chains, meta protocols using Bitcoin’s blockchain as substrate, new approaches to anonymity, next-generation 2.0 metachains, and all the new and shiny advances that come along.
     
    So the techies came first. Who else could understand why this Bitcoin would work where previous iterations had not? Who else would setup machines to "mine" these worthless digital things? Technologists create; if it has value, others may follow.
     
    Geeks soon began to realize this weird idea of a blockchain as a mechanism to achieve consensus across a distributed network had merit. It wasn’t simply an inefficient, sloppy way to do data storage. It was, in fact, a solution to a classic problem in computer science involving ensuring data integrity on a network without requiring the trusting of any specific node. They quickly began to think of other applications, like de-centralized domain name systems and more.
     
    Many of them began mining what would eventually turn into fortunes. This led to the inevitable first exchange of value involving Bitcoin, the famous 10,000 BTC pizzas, which would become a cherished part of Bitcoin history.
     

    And Then Came Progressives

    After living through the financial mess of the previous decade, many young idealists soon began to wonder if this weird digital money could provide some degree of freedom from the encumbrance of the traditional world of finance. An influx of counter-culture advocates flocked to Bitcoin, but were more diverse in their worldview than the original money hackers.
     
    These early adopters included a fair number of Libertarians, who found appeal in the idea of usurping government control over existing, corrupt financial systems. They pointed to the big banks, repeatedly sanctioned for market tamperingmoney launderingrigging ratesfraud and more. They were disgusted that these same institutions could receive billions in public bailouts when their dubious investments went belly up. Worse still, these huge banks and financial firms continued to engage in the same behaviors, merely paying fines every time they got caught.
     
    This group of early adopters also included self-proclaimed agorists, who rallied behind the notion that they could avoid letting governments know anything about their money, and avoid supporting it with their participation, and avoid paying taxes. This contingent included everything from living-off-the-grid isolationists to fiercely independent separatists. 


    Success Has a Downside

     
    Of course as Bitcoin the currency started to be valued in the nascent marketplace, it attracted the attention of criminals. Criminal enterprise is an indicator of success in the case of currencies. The US dollar is going to remain the preferred currency of criminal organizations for now, but new opportunities emerged for the unsavory elements in our midst to conduct business across distances using Bitcoin.
     
    The dark web became filled with Bitcoin scammers. Governments realized they could gain credibility in the eyes of those anxious about technological change by attacking underground Bitcoin enterprises like Silk Road
     
    Fraudsters began to emerge as well, as it became obvious that profits could be made. Some untrustworthy exchanges would repeatedly have trouble and freeze withdrawals, some would simply take deposits and disappear. 
     
    New altcoins would pop up with no hint of utility, engage in marketing campaigns and then dump everything as soon as the coin gained value. Some had no programmers, some had hidden pre-minesDaFuqcoin even deployed a trojan.
     
    And so there came to pass an uneasy alliance between many technologists, believing that algorithms can solve problems better than laws, and criminals looking for anonymity, and privacy advocates bemoaning the increasingly intrusive nature of online surveillance. This ushered in new tech like ZerocashDarkcoincoin mixing services, and Darkwallet.


    Enter the Entrepreneurs

     
    We then started to see a new class of technologists flocking to Bitcoin. Not the early pioneers, but more practical entrepreneurs. Some blended in perfectly, understanding the tech well at a sufficient level to bring it to main street. The result was friendlier wallets, exchanges, and tutorials.
     
    But the entrepreneurs working in the financial services space quickly realized they needed what others in the growing community were stridently opposed to. To build real exchanges in the post-Gox era, for example, required quantifying legal and regulatory risk. Business opportunities depend on predictability.
     
    Uncertainty is the worst environment for financial services; clearly spelled out governmental policies, even problematic ones, would bring opportunities. So how to make others in the community understand? Broad, sweeping regulation appeals to nobody. But the intersection of fiat and crypto is the domain of those governments who control the old currencies.


    The View From Main Street

     
    Bitcoin has survived MT Gox, Silk Road busts, repeated faux-banning in China and much more without sustaining any lasting damage, and that has vindicated those who truly believed. This has ushered in still more folks from main street, who have started to call for regulation, and to ask about those safeguards to which they’ve become accustomed in life. 
     
    Now they ask about services to insure deposits. They worry about the complexity, they worry about making mistakes. They wonder if the free-for-all altcoin markets would ever get some oversight. They talk about all those things that so many early adopters are so adamantly opposed to.
     
    Beyond the need for simplicity of design and function, the newly intrigued would like to participate more broadly. For that to happen requires fewer scammers and fraudsters, a wider variety of wallets and online account options, and the ability to scrutinize and audit services like online exchanges.


    The Inevitable Fragmentation

     
    The ever broadening base of Bitcoin supporters is highly democratic, and growing more diverse with each passing day. Entrepreneurs versus Agorists? Libertarians vs. Venture Capitalists? The plurality that is the Bitcoin community grows further apart with each new on boarding of users. Perhaps that’s not a bad thing.
     
    Isn’t this really what most of us wanted? Bitcoin’s becoming mainstream. So many different voices are speaking up. Did we expect dogma from a self-appointed group of thought leaders to be promulgated throughout the user base like an ancient religion? No, it only makes sense to expect a messy competition of ideas and aspirations. 
     
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    Categories: General, Guest Blog

    Bitcoin vs. Ponzi

    July 28th, 2014 by Tron

    “I can’t believe you fell for that Ponzi Scheme!” or “Sounds like a pyramid scheme to me.”  Have you ever heard this when telling someone about Bitcoin?  Don’t worry, it happens all the time.  Let’s take a closer look at why.

     

    We have Charles Ponzi, a 1920s notorious scam artist, to thank for the lending his name “Ponzi” to the practice of ripping people off by promoting a fake investment with huge returns, then not really investing the money, but rather siphoning funds while paying the original investors with new investor’s money.

     

    Why would anyone even compare bitcoin to a Ponzi scheme?  There are two reasons.

     

    First reason -- the huge returns.  In a Ponzi scheme the high returns are paid to the original investors so the original investors put in more money, and also to get testimonials to entice new investors (suckers).  With bitcoin, the high returns are simply the increase in market value of a new digital asset class that can’t be counterfeited.  Bitcoin benefits from the network effect in the same way that the telephone, the Internet, and Facebook have benefited. Since the returns for bitcoin, so far, have been massive, those that don’t recognize the sea change, compare it to other “investments” with massive returns -- the dreaded Ponzi scheme.  

     

    The second reason for the comparison is the similarity of the passion of those talking about bitcoin with the fervency of those promoting a Ponzi scheme.  This passion is sometimes described as being cult-like.  For the Ponzi scheme promoter the fervency is a matter of survival.  If new money doesn’t come in, the Ponzi scheme collapses, and there will never be enough to make everyone whole because it has been paid out to early investors or siphoned off.  With Bitcoin, I believe the cult-like passion comes from understanding what this new currency means for the future, and desire to share it with others.  I’m guilty of this.

     

    In the typical Ponzi scheme, the investment opportunity doesn’t really exist, it’s a fictional story used to explain the huge returns promised by the Ponzi scheme promoter.  A Ponzi scheme must promise huge returns because that’s how the promoter gets new money to keep the scheme going.  The new money is paid out to early investors to keep the fiction going, while some of the funds are being siphoned by the Ponzi operator.  For a Ponzi scheme to work, it’s critical that only the Ponzi promoter and co-conspirators know how much has been ‘invested’, because any type of audit or transparency of a Ponzi scheme will collapse it instantly.  

     

    Bitcoin can’t be a Ponzi scheme as it is the ultimate in transparency.  It’s so transparent its like a glass door that you don’t see until it’s too late and you smash your face.  It’s so transparent, that there’s dozens of websites that list every transaction anyone has ever made.  It’s so transparent that every fraction of every bitcoin in existence can be traced from its origination to its ultimate destination address.   The only thing we don’t know is who owns the keys to these addresses, and we should keep it that way.

     

    But beware, bitcoin can be used in Ponzi schemes, in the same way scammers might use Dollars, Yen, Euros, or gold.  The tell-tale signs of a Ponzi scheme will be large percentage returns, and you’ll have to send your bitcoin to someone else to get these spectacular returns.  Thankfully, if you remain the sole holder of the private keys for your bitcoin you will be safe from any Ponzi scheme.

     

    Does Bitcoin need more people using it to continue its increase in value?  Sure, but Coca-Cola (NYSE:KO), Apple (NASDAQ:AAPL), and Amazon (NASDAQ:AMZN) also need more customers.  Increased demand or usage translating into increased value is shared with almost every company, stock, bond, commodity, and currency in existence.

     

    Some curmudgeons complain that the early adopters did really well.  Yes, similar to the way Venture Capital firms that recognized the early potential of Facebook (NASDAQ:FB), and Twitter (NYSE:TWTR) did really well.  

     

    Sadly though, most residents of the US are not allowed to invest in early stage companies because they’re not accredited investors.  Yep, even if you use your own money, early stage companies can’t let you be a part of their growth and success unless you’re quite literally a millionaire.  Bitcoin has no such restriction because unlike its earlier centralized predecessors like eCash, DigiCash, and Cybercash, Bitcoin can’t be intimidated, bribed, fined, or arrested.

     

    Bitcoin is a revolutionary global payment network that sprang into existence on January 3rd, 2009 with no promoter, and nobody robbing from Peter to pay Paul.  The verdict is in -- Bitcoin is no more a Ponzi scheme than politicians are honest.

     
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    Categories: Breaking News, Conferences

    Bitcoin Scholars to Compete for 15,000 Euro SWIFT Grant

    July 28th, 2014 by bcohen
    Only Publish
    Antime Saturday & Sunday
    Or Monday through Friday 3 PM - 4:00 AM  PST Read More
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    Categories: General

    Darkcoin's Approach to Anonymity is Truly Trustless and Opens Endless Possibilities

    July 27th, 2014 by fernando
    Darkcoin is best known for being the first cryptocurrency focused exclusively on anonymity and privacy. What is less understood is how these features are implemented as well as how they open many exciting possibilities.
     
    In order to achieve anonymity, Darkcoin has successfully implemented master nodes. They are both innovative and necessary to achieve the privacy that Darkcoin promises.


    What are master nodes?

    Simply put, master nodes are servers connected to the network that perform certain tasks hand in hand with DarkSend (Darkcoin's anonymity feature) and they get paid for it. This concept is called proof-of-service.
     
    Anyone can run a master node. The objective is decentralization: to have enough running so no one controls an important fraction of masternodes. However, to avoid bloating the network and to discourage reckless operators, there is one condition that needs to be fulfilled: proof-of-ownership of 1000 Darkcoins. The coins don't need to be in the master node, but they do need to be held. If the owner moves or spends those coins, the master node stops working.
     
    Master nodes get paid by the network for the services they provide. Twenty percet of the each new block's reward goes to pay the master nodes. Each reward is paid to one maste rnode randomly selected, so in the long term all master nodes should receive a similar amount of rewards.
     
    In the current release of Darkcoin (RC3), two master nodes mix the coins of the transactions that users send choosing to be anonymous. However, in a couple of weeks, a new release of the software (RC4) will be launched and their role will change.
     
    In RC4, master nodes will anonymize the Darkcoins users have in their wallets at preset intervals. This way, when they want to send them to somebody, they will already be anonymous and the transaction won't be tracable by third parties. Additionally, transactions will be much faster than otherwise.  That is, if the coins had to be mixed/anonymized at the moment of the transaction.
     
    Up to eight master nodes will be involved in the process of anonymizing the coins of a given user.  It wil be a completly trustless system because the risk of someone controlling all involved master nodes is negligible. Hypotheically, with 700 master nodes (slightly less than the current existing number) there is a one in 1.3 trillion chance of someone with the needed twenty-five master nodes (costing $160,000 at today's prices) controling the eight involved nodes necesary to trace the transaction. Even more reassuring is the fact that the Darkcoins are never at risk, even if there are rogue master nodes.  Because, the Darkcoins never leave the user's wallet.
     

    What master nodes mean for the future

     
    Having so many servers with the full blockchain and working for the coin can be extremely useful. Thanks to the reward system, there is no risk of not having enough masternodes.  So, the developers can rely on them for any new decentralized feature they want to implement. This is huge. Because, the developer can depend confidently on a thousand distributed servers working 24/7.


    One doesn't need a big imagination to speculate, as others have, about other great ideas such as light wallets that still rely on master nodesblockchains, messaging services, as well as distributed storage. Only time will tell!
     
    Disclaimer: I own a significant number of Darkcoins and I am quite involved with the Darkcoin community. But, I view Darkcoin with a critical eye because my money is at stake. 
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    Categories: General, Columns

    In-depth Review: BitPesa

    July 27th, 2014 by William
    Last week I reported on two Bitcoin startups in Africa that are working to cash in on the remittance business: Kenya-based BitPesa and Ghana-based Kitiwa. These startups are working to leverage Bitcoin’s low transaction fees to reduce the cost of sending money across international borders.

    In this week’s column, I give a detailed review of BitPesa, based on four test transactions. My tests reveal that BitPesa is indeed a convenient, comparatively low-cost way of remitting money to Kenya.

    I found that the total fees for using BitPesa are slightly higher than the advertised 3%. However, BitPesa is still more economical than other options like Western Union. Moreover, BitPesa enables micro remittances, which are not currently practical through established money transfer services.


    What is BitPesa?

    BitPesa is a remittance service based in Kenya that allows users to exchange Bitcoin for Kenyan Shillings that are sent directly to a recipient’s mobile money account.

    Mobile money is a growing phenomena in Africa and around the world. People deposit money into an account associated with their cellphone number, then use their phones to buy things in shops, to send money to other mobile money accounts, or to cash out into paper currency.

    Kenya’s Safaricom owns the M-Pesa service, which is at the vanguard of the mobile money movement. Almost every adult in Kenya owns an M-Pesa account, and a third of the country’s GDP passes through the system. Users are assessed fees when transferring money between accounts and when exchanging mobile money for cash. These fees make mobile money a lucrative business, and Safaricom is now East Africa’s most profitable company.

    BitPesa, which works seamlessly with M-Pesa and competing mobile money platforms, allows people outside of Kenya to upload BitCoin and specify a Kenyan phone number to electronically receive Shillings in return. As stated, BitPesa advertises a 3% fee for this service.

    Not Available in All Markets

    I initially attempted to test BitPesa from my home in New York City. However, the system blocked me from creating an account, likely due to the United States' stringent money transfer laws.

    Currently I am traveling in England, where I successfully opened a BitPesa account and completed four test transactions.  

    Account Registration

    The registration process for BitPesa is trivial, requiring only a name, email address, mailing address and date of birth. Users must also check a box that permits BitPesa to confirm their identity information.

    Transactions

    After registering, users are asked to input the quantity of Pound Sterling (£) that they would like to remit to Kenya. This sum is immediately translated into the quantity of Kenyan Shillings (KSH) that will be received and the amount of Bitcoin (BTC) that is required to process the transaction.

    The user then specifies a person to receive the money by inputing their name, email address and mobile money phone number.

    A Bitcoin address is subsequently generated and a 10 minute countdown timer is initiated. The user must deposit the indicated amount of Bitcoin to the specified address in order to complete the transaction.

    In all of my test transactions, the recipients’ mobile money accounts were credited after one confirmation on the BitCoin network, which took between 2 and 15 minutes.

    Identification Required for Subsequent Transactions

    After the first transaction, BitPesa will not work until the user uploads a government-issued identity document.

    Fees and Exchange Rates

    I completed four test transactions in the amounts of £1, £2, £5 and £6. The table below details each of these transactions:

    Amount sent Amount received Bitcoin used
    £1 KSH 145 .00283
    £2 KSH 289 .00566
    £5 KSH 723 .01416
    £6 KSH 868 .01699

    At the time of testing, the market exchange rate for Bitcoin was 1 BTC = £353.73. The following table shows that this is roughly the same exchange rate that BitPesa used in calculating the Bitcoin required for each transaction:

    Amount sent (£)

    Bitcoin used (BTC)

    BitPesa's exchange rate (£/BTC)

    Market exchange rate at time of transaction (£/BTC)

    Difference

    1  0.00283  353.36  353.73  -0.37
    2  0.00565  353.98  353.73  0.25
    5  0.01412  354.11  353.73  0.38
    6  0.01695  353.98  353.73  0.25


    At the time of testing, the market exchange rate for Kenyan Shillings was £1 = KSH 149.23. The table below illustrates that BitPesa’s fees were indeed approximately 3%:

    Amount sent (£)

    Amount received (KSH)

    BitPesa's exchange rate (KSH/£)

    Market exchange rate (KSH/£)

    BitPesa's fee*

    1 144 144.00 149.14 3.45%
    2 289 144.50 149.14 3.11%
    5 723 144.60 149.14 3.04%
    6 868 144.67 149.14 3.00%
         

    *(Market Rate – BitPesa's Rate)/Market Rate, expressed as percentage



    It should be noted that the above calculations do not include the costs of purchasing BitCoin. I buy Bitcoin in the United States, on a low cost exchange, for a 1% fee plus $0.15. This increases the total transaction cost to about 4% from BitPesa’s advertised 3%.

    Not everyone desiring to send money to Kenya will be able to access low-cost exchanges. Immigrants who are undocumented or do not have bank accounts will likely have to purchase their Bitcoin with cash, at up to 10% above the market rate.

    Additionally, the above calculations do not include Bitcoin miners’ fees paid to transfer Bitcoin from a user’s wallet to BitPesa’s site. For each of the above test transactions, I paid a negligible .0001 BTC ($0.06) using my Mycelium smartphone wallet.

    Finally, receivers in Kenya must pay additional fees to Safaricom to withdraw cash from the M-Pesa network or to send money to another M-Pesa user. In the above £5 (KSH 723) transaction, the receiver would pay KSH 33 (4.5%) to send to another M-Pesa account or KSH 27 (3.7%) to withdraw cash.

    Not all M-Pesa transactions accrue fees, however. Buying airtime on the Safaricom network is free, as are transactions within Kenya’s mushrooming network of M-Pesa merchants. For instance, the recipient of my test transactions uses M-Pesa to buy gasoline and does not pay transaction fees to do so.

    Comparison with Existing Methods of Money Transfer

    Western Union is one of the world’s most well-established money transfer companies. In the United Kingdom, Western Union allows people to send money online, from their bank account to a Kenyan mobile money account like M-Pesa. The chart below uses Western Union’s fee calculator to determine the effective exchange rate for various remittance amounts:

    Amount sent (£)

    Western Union transfer fee (£)

    Total used (£)

    Amount received (KSH)

    Effective exchange rate (KSH/£)*

    2 2 4 295.24 73.81
    5 2 7 738.27 105.47
    10 2 12 1476.2 123.02
    50 4.9 54.9 7380.98 134.44
    100 4.9 104.9 14761.96 140.72
    500 19.9 519.9 73809.82 141.97
            *higher is better

     

    Compare this to BitPesa’s effective exchange rates in the table below:

    Amount sent (£)

    1% Bitcoin purchase fee (£)

    Total used (£)

    Amount received (KSH)

    Effective exchange rate (KSH/£)

    2 0.02 2.02 289 143.07
    5 0.05 5.05 723 143.17
    10 0.10 10.10 1447 143.27
    50 0.50 50.50 7235 143.27
    100 1.00 101.00 14470 143.27
    500 5.00 505.00 72349 143.27

    This comparison reveals that BitPesa yields a better exchange rate in all cases. Importantly, savings are particularly pronounced for small transactions. These “micro-remittances” in the range of £2 - £10 ($4 - $20) are impractical via established money transfer companies like Western Union.

    Conclusions

    BitPesa—one of Africa’s first Bitcoin startups—could make waves in the international remittance market. In addition to offering competitive exchange rates across the board, BitPesa also enables micro remittances. This may be the company’s strongest selling point for Kenyans living abroad, who often encounter situations where they wish to quickly send home small sums. BitPesa thus destabilizes the prevailing business model for money transfer services where smaller remittances accrue far higher fees than larger remittances, as illustrated in the Western Union table above. 

    BitPesa is also appealing in its convenience. Using the service is almost effortless once a person is comfortable with buying BitCoin and transferring it between wallets. BitPesa thus allows users to send money from their laptops or smartphones, eliminating the frustration of standing in long queues at brick-and-mortar money transfer outlets.

    There are drawbacks to using BitPesa, however. For instance, the service is not available in the United States, which will undoubtedly frustrate a number of potential users there.

    The extreme volatility of Bitcoin is a second potential drawback. Users who purchase Bitcoin and do not immediately send it might find that the value of their Bitcoin decreases (or increases) drastically in a matter of days or hours. Receivers are not directly affected by this volatility, however, because BitPesa converts Bitcoin into Shillings as soon as it enters the platform. In fact, receivers do not need to know anything at all about Bitcoin, or even that it was used in the transaction.

    In sum, BitPesa appears poised to disrupt the international remittance market by offering competitive fees, by enabling micro remittances, and by offering users a convenient way of sending money. It is an up-and-coming company to watch in Africa's fledgling Bitcoin ecosystem.

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    Categories: General, LTB News

    LTB Community Roundup #2

    July 26th, 2014 by MikeJohnson
    (original copy below)
    Let's take a quick look at what has been happening in the Let's Talk Bitcoin community since the last time we spoke.

    CryptoConrad asked if people are living entirely off of cryptocurrencies as he will be leaving his traditional career soon. Several people have come in to the thread and a great discussion is now underway regarding the feasability of living entirely off cryptocurrency.

    loon3 has been thinking about a LTBc Football Fantasy League that seems to be gaining some significant steam. If you are a fan of the NFL or fantasy sports you might want to drop in and check it out.

    In Episode 129 of Let's Talk Bitcoin Adam spent a few minutes at the beginning to discuss Dogeparty a new Counterwallet type system built on DOGE which has lead to a discssion regarding proof of burn versus proof of charity. Listen to the first few minutes of that episode if you haven't already and then head over to this thread and chime in with your thoughts.

    Ecuador has made moves regarding a Bitcoin ban and I'm fully expecting to see some lively discussion in a thread created by Chain Radio regarding this. Ecuador is exploring a county issued cryptocurrency. I'm curious to see what other community members think of this so head over here and chime in.

    Would you consider a "premium" version of Let's Talk Bitcoin if it contained benefits such as audio articles for commuters and other features? Adam is asking over in this thread and the discussion and is alive. Be sure to leave your thoughts.

    What is your favorite alternative currency? This thread has a lively discussion going regarding the various merrits of various cryptocurrencies. This thread has seen a lot of action as lots of people chime in regarding the various cryptocurrencies and I am fully expecting it to grow even larger as new currencies are created every single day.

    Etherium recently opened a crowd sale to the public and William is asking the community for what they think about Etherium and if they are taking part in the crowdsale. Are you taking part in the sale or staying away?

    Cryptonaut took a few minutes recently to announce the new Let's Talk Bitcoin referal program. Check out this thread for the details. You can now earn even more LTBC for sending people to the community!

    The Let's Talk Bitcoin countinues to grow with new members joining each day, great discussion threads cropping up all over the place and things are only going to get better. If you are still on the fence about joining and reading this post be sure to hop right in because you'll be getting in on the ground floor of an ever-growing community. Read More
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    2,489 views
    Categories: General, Breaking News

    Lawsky Aims a BitLicense Missile at Bitcoin

    July 25th, 2014 by thinking
    Why NY’s Lawsky hopes to kill off Bitcoin and how he’s asking the crypto community to give him a hand.

    Backup (editting by dhimmel):


    Enter Benjamin Lawsky, reaching out to the Bitcoin community and showing he is a man of the people.

    I suggest otherwise at best a politician at worst a wolf dressed in sheep’s clothing.

    Bitcoin is Lawsky’s dream ticket to acceptance by the banking elite, as a New Yorker for many years and having witnessed the division between wealth and public office it has been clear to me since the outset that Lawsky would use the promise of reigning in of Bitcoin to further his financial relationships.

    Maybe ask yourselves with whom did he spend more time discussing the importance of Bitcoin, Jamie Dimon or Marc Andreessen, Jim Gorman or Fred Wilson?

    It’s imperative that everyone takes a deep breath and calms down, this is not the end of Bitcoin or the decentralised movement but it will be shaken more than needed if anyone buys that he has any interest in cultivating innovation and change.

    Lawsky’s proposal has made it ‘very clear’ that folks this is war. A David and Goliath war, decentralised logic versus the centralised behemoths from whom he seeks approval.

    Let’s look more closely at his plan, a plan I suggest that has been carefully hatched in accordance with the bankers he seeks to protect. A plan that is designed to attract support from non-thinking states and countries to mimic his lead and to contain the spread and ultimately the dismissal of digital money.

    Firstly his plan depends on NYC’s global influence over financial markets; whilst that seems obvious I suggest he won’t even get domestic buy in.

    Sure he will get some states to agree but what about California, how can he expect Californians to agree to a bill that would make participation in innovation conditional on regulatory inspection of purpose. Such suggestions ‘might’ work in NYC and Omaha but not in States where innovation is valued.

    Then look at the other financial capitals that will supposedly follow suit, London and Singapore have shown leadership in respect to Bitcoin why would they act to stop it in its tracks, are we now going  to see trade leverage used to ensure compliance with US leadership simply to protect the banks that led us to the abyss?

    Don’t get me wrong regulation is good, transaction identification is essential but having to register to pass Bitcoin to your friends or developing software that may never even be used? This wreaks of McCarthyism, it’s not hard to imagine Senate hearings where Crypto not Pinko is bestowed upon the technically gifted, where they are vilified for their association with financial innovation.

    Prohibition has never worked and has always led to enforcement costs that far outweigh the benefits, only a fool thinks he can contain cross boarder development, when they cannot contain shipment of illicit substances from a known point of production.

    This alone points to the obvious futility of the Bitlicense as a deterrent and highlights a more Machiavellian objective. Consider if you will how his ignorance draws you in, in your desire to point out his mistakes and to help craft refinements whilst in return, seeking changes that will never come.

    Ignorance or lack of interest is further displayed when you see mention of identity inclusion but with no thought given to how it should be included and what will be done with it once it is. Again another superficial attempt to address a legitimate issue and one that displays the lack of interest in a subject and rather how it might be used to gain assistance in defining robust incarceration.

    The essence of the argument against Lawsky’s bill is the apparent lack of thought into how these things might work and why they are important, rather it seems he has simply thrown thoughts over the fence in order to appear active when in fact he wants the industry to help him define a bill that is specifically designed to undermine the existence of decentralised technologies.

    Consider carefully any support you offer to guide this bill, as acceptance by Lawsky will be minimal and ultimately he will only use it to refine a casket for digital money, offer him NO assistance and he has nothing, a bill that cannot be enforced because it makes no sense and a challenge to refine it as he simply doesn’t understand the subject.

    Leave him to his own devices as he will make mistake after mistake as the technology and the challenge is beyond him and anyone not devoted to the task.

    By ignoring his cry for input we buy time for Bitcoin and digital money to further embed it’s way into our lives, help him and you accelerate his desire to kill of a nascent industry that is fundamental to future financial efficiencies.

    We should also look carefully at ourselves and what is driving the desire for change, we see everyone rallying around the call for decentralised services to marginalise the banks but tied to that cry is a radical desire to poke the beast.

    This last part is just plain stupid as it undermines the importance of the real message, that being the fundamental need to streamline the financial and commercial markets so citizens and businesses enjoy the savings and convenience of P2P transactions.

    Allowing emotive crusades to corrupt the success of these essential objectives is naive and counterproductive, ask Charlie Shrem deep down he knows he was an idiot to goad ‘the man’ and he’s now paying the price.

    So let’s see what lies ahead, firstly open source projects will officially move offshore yet developers won’t leave their desks, overseas deployment services will emerge to enable anonymous deployment of future initiatives, smart governments will encourage this as they will also offer incentives for developers to relocate so they might enjoy the freedom they deserve, sure the US will try to reach out and restrict development by US citizens overseas but how?

    Back in the US, project developers will be given open-source tasks that will not result directly in currencies but rather be innocuous components that if used a certain way might benefit currencies but then again might not.

    Digital friendly financial centres will spring up all over the world all competing for exchanges, developers and  innovation and in another 5 years, as it won’t take long for the foundations of discontent to be established, Lawsky will realise that he was personally responsible for throwing New York City under the bus having sacrificed potential leadership in the new economy and with it jobs and opportunities and all for no avail.

    Lastly I’d like to address the issue of anonymity, this is the scourge that allows Lawsky and people like him the evidence required to persecute Bitcoin and its derivatives.

    No matter your need for freedom it will never and can never be allowed to justify the financing of terrorism, slavery, extortion, pedophilia and other crimes that undermine society and to that end the crypto-community need to pull their head in and focus their attention to changing the narrative from anonymity to privacy.

    It is fundamental that we pay due respect to the obligation we have to not only protect society from corporate scum bags but also against crimes that destroy families and the innocence of children.

    For Lawsky I’d suggest no matter what you do anonymous transactions are here to stay but if you show a willingness to work with the development community towards a decentralised world you will be able to craft laws and technology that will limit its impact.

    Lastly beware the Silbert, Circle and other big players that have defined their commitment to Bitcoin and see alternatives (alt-coins) as distracting, they love Bitlicense as it allows them to cement an exclusive position.

    ThinkingActive

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  • 41 Comments
    2,581 views
    Categories: General, Fiction

    Doctor, doctor, I'm addicted to Bitcoin!

    July 25th, 2014 by Spengler
    (Backup below) (FYI links checked and/or corrected as necessary in content)

    Patient: Doctor, doctor, I'm addicted to Bitcoin! When I wake up, the first thing I do is shout, "BITCOIN AHOY!".

    I get in the shower and have to sing Ode to Satoshi really loudly until a passer-by throws a rock through my window (I guess so they can hear me better).

    Then I get dressed, smelling my socks which I bought with Bitcoin as I do so. I love to darn those socks - at least 27% of the cotton in them is original!

    I have to have alphabetti spaghetti for breakfast so I can spell out "I love Bitcoin" on the toast. Sometimes there's no letter "v" in the tin, so I just write on the wall instead.

    When I drive to work I catch up on the latest LTB podcasts. Occasionally I swerve all over the road a little bit as I try to remember the "magic word" for later. I can't wait to see if the LTB network will start a subscription service for early release episodes and audio versions of all their contentChain Radio's launching next week too.

    Sometimes I accidentally drive into the side of the local bank because I went into a daydream, imagining a time in the future when the bank is no longer there. When this happens I get locked up and have to spend my time inside thinking about Bitcoin.

    When I get to the office I send all of my work to someone the other side of the world, and they do it for me. I pay them with Bitcoin because it's better than using Western Union. I'm hoping to get locked up for this too, so I can spend my time in prison thinking about Bitcoin. I spend my time at work reading articles on Let's Talk Bitcoin because they haven't made them available in audio format yet. Nevermind, at least I earn LTBcoin for doing it.

    On my drive home I listen to year old episodes of LTB which I missed the first time round. I love it. It reminds me how lucky I am to have Bitcoin in my life.

    When I get home I turn on my computer and open up a couple of Bitcoin related windows in the browser. One of them will often be Let's Talk Bitcoin again, so I'll keep refreshing the page to see if there are any new topics or articles to read! The other may be something like Winkdex. I like to press Alt-Tab really really really quickly to flash between the windows until I feel sick! I call this a Bitcoin high. I think it's legal.

    Then I eat a tin of Spam and go upstairs to pray (A Bitcoin Prayer):

    *Our Satoshi, who art in hiding*

    *Hallowed be thy name*

    *Thy protocol done*

    *Wallets will come*

    *On clients as they are on paper*

    *Give us this day our daily Bitcoin*

    *And forgive us our speculation*

    *As we forgive those who use silk road*

    *And lead us not into no confirmation*

    *But deliver us from fiat*

    *For thine is the blockchain, the power and the glory*

    *For ever and ever*

    *Anon*

    Then I go to bed shouting, "BITCOIN AHOY!", and I dream of Bitcoins and Gravy!

    Is there anything you can do to help me?

    Doctor: What's Bitcoin?

     
    Patient: It's how I'm going to pay you. Here, look! Read More
  • 9 Comments
    3,897 views

    Congressional Research Service Quietly Revises Bitcoin Report

    July 25th, 2014 by CrimsonRoze
    Original (dhimmels):

    Last week the Congressional Research Service updated a the Bitcoin: Questions, Answers, and Analysis of Legal Issues document to better reflect current events.

    The document serves as an introduction to Bitcoin and and aims to cover all information necessary for members of the US Congress to make decisions and includes information on many various subjects such as how Bitcoin works on a technical level, Bitcoins benefits and drawbacks, discussions about mainstream usage of Bitcoin and current and future regulation and laws.

    Considering the pace of development, particulary in the regulatory environment, over the last months it is then surprising to see such an important document making only minor updates and completely omitting any information relating to some of the heavier events and debates, such as the Auction of the silk road BitcoinsPittsburgh planning to accept digital currencies, the document about Bitcoin regulation internationally, the current Discussions about NY regulation and current information about the Federal Reserves Bitcoin Policy.

    In fact, the update seems to consist only of statistical updates about prices and market caps and minor changes such as updating the list of current exchanges and a short one-sentence addition about the bankrupty of Mt Gox.

    With truly big companies such as Dell starting to accept bitcoin and a large quantity of smaller companies getting started around bitcoin the amount of people who is working with companies that has a relation to bitcoin should probably be significant, yet there is no information in the article about the number jobs that will get affected by regulatory decisions.

    Proper and good information is the basis of sound decisions and while this document is a decent primer to the technology behind bitcoin and the current tax and anti-money-laundering regulation there is a clear lack of information regarding the social and financial developments as well as informtion on the environmental aspects of handling money.


    Brian Cohen will be receiving 10% of LTBcoin disbursements for this article for his research leading up to the finding of the updated article. Read More
  • 18 Comments
    2,938 views
    Categories: General, Guest Blog, Columns

    On Value by Design: Boston and the Bitcoin Dream Protocol

    July 24th, 2014 by ry.walk
    Edited 7/21/14  denise

    Graphics Updated: 7/23/2014 - Ryan Walker Read More
  • 40 Comments
    3,675 views
  • 54 Comments
    2,428 views
    Categories: General, Columns

    Funding Anonymity with Crypto

    July 23rd, 2014 by mdw
    Proofread and edited7/21/14  denise





    The Tor network is a widely used tool which provides a degree of anonymity to users. Users have their location obscured from those watching certain destinations, and what they are doing hidden from those who know their location. 

    But Tor has some problems, one of which is a relatively small number of people running servers on the network. These so-called relay node operators would be rewarded under schemes currently being considered, by issuing a token in exchange for proof of bandwidth provided to the network. In this article we explore how this clever scheme might work in a bit more detail.

    Tor network is a unique tool on the Internet, providing a high level of anonymity to its users. Recently we reviewed a whitepaper proposing a plan to issue a crypto currency with the goal of incentivizing those key players who make it all possible. This would institutionalize a rewards structure, in the same spirit as a recently announced EFF initiative to give prizes and recognition to people who operate network nodes for twelve months.

    Tor network accomplishes this difficult feat of fuzzing what users do and where they're located by routing traffic through a set of randomly chosen nodes before reaching the intended destination. This can only currently be done because people volunteer to run nodes on the Tor network. As you might imagine, there's a shortage of volunteers. The brave folks who run the more important of these network components are not only unpaid, but they face frequent attack by malicious agents, and make themselves persons of interest to the NSA.

    This recent proposal aims to at least offer some small financial reward for those who will contribute to the continued operation of Tor. Network nodes who route traffic toward its destination can receive tokens for doing so, and would have an opportunity to exchange them for fiat, or bitcoins or other.

    Tor Terminology

    Tor network is made up of servers referred to as nodes. These servers relay information through the network, thus the moniker relay nodes, and are further categorized based on their specific roles.

    Guard nodes
     are the entry into the Tor network. They act as the gatekeepers, but due to Tor's ingenious omion routing scheme they cannot know the intended destination - only the next hop within the network.

    Exit nodes
     are the most important ones, sending traffic from within Tor network to the actual destination. These critical nodes are more scarce than ordinary relay nodes, largely because they are prime targets for attack. They are in a unique position to attack user sessions since they directly connect to the destination endpoint. If they are able to collude with guard nodes they can de-anonymize users, since together they will know both endpoints; e.g. who is using Tor and what they're doing.

    Each trip through Tor network is called a circuit, and consists of 3 pseudorandom nodes including a guard node, relay node and exit node. These nodes are chosen from a list of active nodes provided by a Directory Server. There are very few of these, since a high level of trust is essential. These Directory Servers are also key to making the proposed incentive scheme work.

    So who gets the coins, how would they be issued, and what exactly gets rewarded?

    The basic idea is to reward relay node operators who can demonstrate that they provided bandwidth which was used to route requests on the network. Every node interacts with at least one other node, and the nodes within a circuit can validate claims by adjacent nodes in a given circuit. Under this proposal these nodes could be rewarded with tokens, for each time they participate. A bit more information needs to be published by the Directory Servers, and nodes will need to do a little more work.

    It's widely believed that NSA and other agencies run many Tor nodes, especially high speed exit nodes. The nodes with the most available bandwidth get chosen more often, and as mentioned earlier, exit nodes are in a unique position to collude and to execute man-in-the-middle attacks. It has been shown also that the NSA targets Tor users for extra scrutiny, and key players even moreso.

    But before we forsake Tor, thinking it's a rigged game, it's important to realize that the facts are somewhat more confusing. Tor was built and funded by the US Navy. It's very useful for government agents conducting operations in the field with anonymity. But there are many other uses for law enforcement generally, as well as whistleblowers, political dissidents, and more.

    The US Government has continued to provide most of the funding for Tor over the years, and still does. But this does not mean that it's a honeypot. There is a need to have operatives in faraway places able to interact with their colleagues inconspicuously. The fact that people hide from government suveillance, and even use the network for criminal activity does not make it less useful.

    The leaked Snowden documents clearly suggest that the NSA has had mixed results trying to breach the anonymity of users on Tor. It's also clear that the more people who can be persuaded to run nodes on the network, the more anonymity is afforded to users. More guard and exit nodes mean less chance of some single entity operating both of these nodes for a given circuit. And generally the more users on a network, the harder it is to match users with destinations.

    relay, guard, exit nodes on TorCurrently there are just under 6000 relay nodes on Tor network, and of those it looks like there are just over 1000 exit nodes currently. Constrast this with about 2.4 million daily users and you can easily see how more nodes are needed. Thus the impetus for creating incentives. It costs money to operate a high bandwidth node, and now we have people discussing how to best offset that cost with an altcoin. One more victory for blockchain tech!
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  • 35 Comments
    3,972 views
    Categories: Beyond Bitcoin
  • Let's Talk Bitcoin! #129 Dogeparty and Delegated Proof of Stake

    July 22nd, 2014 by adam

    On Todays Episode

    Adam talks about the costs of Counterparty and introduces Dogeparty (dogeparty.io) an experimental solution, along with Proof of Charity - a new Token Initialization Method.  Join the conversation on the LTBn forums

    Daniel Larimer, CEO of Invictus Innovations (bitshares-x.info) (bitsharestalk.org) speaks with Stephanie, Andreas and Adam about the release of BitsharesX, their Delegated Proof of Stake system, automatic stealth addresses, bitUSD and more.

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