From the Front Page - General
2,665 viewsJuly 24th, 2014 by ry.walkEdited 7/21/14 denise
Graphics Updated: 7/23/2014 - Ryan Walker Read More
2,280 viewsJuly 23rd, 2014 by mdwProofread 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 TerminologyTor 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.Read More
Currently 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!
8,127 viewsJuly 21st, 2014 by SeanM
Sunny King delivers innovation.
Sunny King, a pseudonym, is the creator of two crypto-currencies: PeerCoin and PrimeCoin. Each providing important advancements to the technology powering crypto-currencies. With PeerCoin, Sunny was the first to create a crypto-currency that uses proof-of-stake to secure the blockchain instead of proof-of-work. A method that requires very little energy for mining.
Next with PrimeCoin, Sunny was the first to show that a proof-of-work algorithm exists other than cryptographic hash functions. PrimeCoin uses mathematical algorithms to find chains of prime numbers.
Because of these creations Sunny is a heavyweight when it comes to this space, and ends up doing many interviews. However they are mostly technical.
So the intent of this interview was to include a personal side. You will find that at times Sunny remains vague and declines some questions. However Sunny does express personal views I have not seen before, hopefully making for an interesting read and a glimpse into the person behind-the-mask.
Whether we like it or not Sunny still remains like Satoshi: an intelligent, and mysterious figure, who shares free market principles and hopes for a better future through software innovations.
Interview on July 10th, 2014 via Google Chat – [email protected]
Sean Mikha:Hi Sunny! Thanks for joining us today for the featured interview article in www.LetsTalkBitcoin.com. The purpose of this interview is to get a real understanding of the day-to-day life, experiences, and thoughts of one of the great crypto-currency inventors. The person 'behind the mask', so to speak.
I completely understand your discretion and needs for privacy. However my plan is to be forward. I will ask questions that you may not want to answer, so let me know and be candid. It is totally fine, and I will not ask the same question again. I will also plan to send you a transcript of the final article before publishing so you verify content.
Sunny King: Oh thanks :)
SM: Previously in your interview for Bitcoin Magazine with Vitalik Buterin (Aug 2013), you answered that you have not revealed your identity because of the political situation. Looking back over the year with the political situation now changing (federal government auctioning off Bitcoins, name-brand companies like Overstock.com, Expedia, and DISH Network accepting Bitcoin). Along with the fact that other crypto-currency inventors such as (Dan Larimer of BitShares, Charlie Lee of Litecoin) have exposed their real identity for over a year now. Do you feel your secrecy concerns are still valid?
SK: People are easily getting complacent of the situation. Meanwhile during the year we have seen Russian and Chinese central banks showing concerns and restrict cryptocurrency, and some central banks of small countries even outright banning cryptocurrency. So it's certainly not all rosy. The political concerns have always been there. We know that the world is loosing freedoms at a rapid rate. So I think sooner or later we have to deal with the conflicts between freedom in cryptocurrency world and the reality in the political world.
SM: Ok so it sounds like you believe that there are still some events unforeseen that need to come to pass before you consider it secure for you to reveal your identity. You somewhat alluded into the same interview with Vitalik that you currently live in the US. Or at least I assumed you do. Do you live in the US today?
SK: I have never alluded to that, no I don't think. Maybe in the future. I don't know yet. Everyone has different situation. So other developers might be more optimistic regarding the political situation in the world today, many of the peercoin/primecoin community also open to their identities.
SM: Ok that was my assumption on the US thing. Sorry. Can you tell me about some of the fear and concerns you have (wherever you live) if you were to reveal your identity? Government raids, prosecution? Hackers messing with your identity? Others?
SK: Sure all of these are quite possible. You never know what the governments are capable of these days. Even many years ago cryptographers have to live in fear of persecution. So in my opinion it certainly could be a lot worse today when not only cryptography is involved, but money is involved as well.
SM: What are your major philosophies on freedom? Who do you look up to? Who have you read?
SK: Generally I am in favor of free market principles, you can say I am a libertarian, but I don't outright reject the existence of government, but I think it's better to give people more free choice, not always forcing people do this or do that. In terms of economics I am more subscribed to classical and austrian theories, not very much in favor of the central planning 'modern' theories.
SM: Any particular people you want to mention you look up to or have read? It can also be current people (other crypto developers).
SK: Can't say i read very deep in theories, but let's say Bastiat and Rothbard are among my favorites. Of course I respect Satoshi's work very much
SM: Do you think Satoshi was one person or a group of people?
SK: Probably one person. He is brilliant.
SM: Yes it is pretty amazing what he/she has created. Not sure if anyone has asked you: are you one person or a group of people?
SK: I am just one person
SM: Where did you get the name Sunny King?
SK: Well it's just a pseudo name, no need to read too much into it
SM: Do you invest your own money in any crypto-currency? If so, which ones?
SK: For myself, not very much. I wish I could have invested in bitcoin two years ago, probably like many of you I wasn't able to do for various reasons. It's tough. So no, I am not fit to provide any advices :P
SM: How much money would you say you've earned from crypto-currency? If you have not converted to fiat, how much would you say your stake in PeerCoin is worth? In PrimeCoin? If you can't give us exact, maybe a range, if you can share?
SK: Sorry I don't wish to disclose such information. Both peercoin and primecoin were released with open mining, so I don't have any advantages over other miners. Meanwhile many developers are releasing coins with IPO format so they can hold large sum of stakes without much investment whatsoever. Let's just say I have earned my living. So I don't have to earn huge sums from cryptocurrency to sustain my work. That's also the reason that I don't ask for any donations for my work. Also I don't aspire an extravagant lifestyle so I think I am doing quite okay.
SM: Do you do development full time?
SK: Yeah pretty much
SM: Do you regular read, visit sites, or visit chat forums (besides PeerCoin/PrimeCoin) in the crypto-currency space?
SK: I do visit our forums regularly
SM: Any others? Blogs or Reddit?
SK: sure occasionally, and some media sites as well
SM: Do you listen to Let's Talk Bitcoin?
SK: uh i probably should :p in the past i read bitcoin magazines more often
SM: What is your favorite food?
SK: haha I don't know ... how about chinese dim sums?
SM: Do you have a formal education in computer science?
SK: Let's just say I do have some experience in computer programming. Also designing algorithms and a cryptocurrency system requires a lot more than a degree in computer science.
SM: Ok but you can't tell us if you went to a college for any of those subjects or not?
SK: sure does it matter that much? I did, but to be fair I think especially in this Internet age, one can indeed self educate in these subjects, so I would generally not judge people with their degrees but instead of their actual communications and work produced.
SM: Ok so you went to college for computer science?
SK: Let's keep that private matter still.
SM: What is your favorite hobby? Besides crypto-currency?
SK: I do some meditation, tennis etc.
(Start of technical focused questions)
SM: What led to the creation of the proof-of-stake algorithm? What inspired you? Do you remember where you were or what you were doing when you came up with it?
SK: That was in 2011, we had a small study group on bitcoin
Back then there were already a few 'altcoins' floating around, and more being created, but of course not as much as nowadays. We were thinking about something different, not a clone of bitcoin, but different algorithms, for example, addressing the energy problem of bitcoin
That's how we started looking into alternative consensus mechanism, that using coins itself to secure cryptocurrency. We came up with the ideas ourselves, but later we learned that some people were discussing related ideas on bitcointalk forums in 2011 as well. Overall I think proof-of-stake is a good term describing the general ideas. The difference is, in 2011 we were pretty much the only people committed to use pure proof-of-stake as consensus mechanism. Everyone else were just trying to see if proof-of-stake can provide some patchwork to bitcoin's proof-of-work.
SM: Would you say you were the first 'altcoin' to implement proof-of-stake?
SK: Yes we are the first to have implemented proof-of-stake, any kind. Most other proof-of-stake coins are still a clone/fork from our system.
SM: Can you tell us who the "we" is? Are they still involved in the crypto space? Did they go on to make other altcoins?
SK: Mainly my co-author of the peercoin paper, Scott. He hasn't been very active in the past year. No I don't think he made any other coin, at least not that I am aware of.
SM: Anyone else?
SK: There was another guy making minor contributions and studying with us. But mainly just me and scott.
SM: Ok, same question for PrimeCoin. What led to the creation? What was the inspiration, etc..
SK: Primecoin was conceived in March 2013. I came to the idea that prime number search can indeed serve as proof-of-work consensus, which most people believed only hashcash could work as such mechanism
That was back then.
Of course after primecoin people would know better. So far primecoin's proof-of-work is still pretty much the only alternative proof-of-work in production other than hashcash. Oh by alternative proof-of-work I mean alternative proof-of-work consensus
Interestingly primecoin also tries to address bitcoin's energy problem, from a different angle. In a free market, there is bound to be coexistence of energy intensive currencies and energy efficient currencies, meaning, people have free will to consume energy to produce currency, for example, mining gold. So primecoin would demonstrate, such energy consumption can be made energy-multiuse, while preserving the critical decentralization property.
SM: When you say energy multi-use you are referring to the fact that bitcoin hashing or mining provides no meaningful by-product whereas PrimeCoin delivers the chains of prime numbers?
SK: Yes, primecoin is the first cryptocurrency with such property
SM: Now with PrimeCoin running for over a year, has anything meaningful come out of the mining effort against the coin? Do you have plans to make any tweaks to it or have faith it will deliver value in the future if it has not already?
SK: If you are fascinated with prime numbers sure enough primecoin has already delivered, it now holds 5 out of 21 world records in simultaneous prime numbers. For immediate practical benefit, there are firms attempting FPGA/ASIC development at primecoin mining, which is a lot more challenging than hash based ASIC, thus providing immediate value to cryptography and computing industry.
SM: So you do believe that the algorithm used in PrimeCoin has the potential to affect scientific knowledge still? Some have argued that since PrimeCoin is not finding a single large prime number, and instead just the chains, it doesn't hold scientific value.
SK: That's certainly debatable. For example, the 'Twin Prime Conjecture' is considered by many mathematicians as one of the top problem in number theory, versus, finding the largest Mersenne prime (currently the record for largest known single prime number). So it's not obvious that infinite existence of Mersenne primes are more valuable than infinite existence of twin primes. In my opinion, Cunningham chains and bi-twin chains are among the most beautiful prime number structures, but that could just be my taste.
SM: Does PrimeCoin provide value towards solving the 'twin prime conjecture'?
SK: It provides financial incentive to these math research, that if your theory advancement can provide better mining algorithm for primecoin mining. Twin prime is a special case of bi-twin chain, a bi-twin chain of length 2, that is.
SM: I see. So what you’re saying is you have opened the door with PrimeCoin. You proved its possible to do a proof-of-work consensus other than hash cash and have potential math research along with the fact that FPGA / ASIC development incentive may lead to problems being solved that have never happened before.
SK: It's possible, when you have asic primality testing chips, the computation capability in these fields would make a giant leap. That could also indirectly help theoretical research.
SM: I understand there is developments in PeerCoin such as innovations with the 'cold minting'. I haven't checked PrimeCoin recently is there any other developments coming with it?Or any areas you want to touch up on? How it might change or where Primecoin will be in 2 years?
SK: We were planning a minor protocol update with primecoin. I am also investigating the possibility of sidechain technology, so when it's ready, we plan to support both peercoin and primecoin sidechains
SM: oh that’s awesome, I have heard you refer to it as the back-bone so I assume this will allow the ability to now scale out new types of applications and properties
SK: Yeah I have been contemplating of data application for quite a while since 2012. For scalability reasons data for specific use is better stay out of the currency block chain. That's why side chain is a significant advancement.
SM: When you say data application since 2012, are u talking about something like Storj? But on a side chain?
SK: Right. Namecoin and ripple have been the pioneers in data applications. The problem is the impact on base currency scalability. It would be a lot better with sidechains, each application can use a different sidechain, say if you use email you deal with an email sidechain, so the scalability of email sidechain does not impact the scalability of another sidechain and the base currency blockchain.
SM: In your research of side chains have you looked at tree chains by Peter todd? https://github.com/petertodd/tree-chains-paper
In an interview with Let's Talk Bitcoin, he has some big concerns about side chains and why they won't work. I won't elaborate here as we are running out of time. But have you had a chance to look?
SK: Not yet. I would love to look into it soon. Thanks for the pointer.
SM: In your interview with the PeerCoin community on Saturday May 24th, you said*: "The BitShares team is working on another one, but I also have doubts there." In reference to proof-of-stake and their implementation of delegated proof-of-stake or (DPOS). What doubts do you have about BitShares implementation? Can you elaborate?
SK: I don't know enough details of bitshare's DPOS proposal, the main issue I am concerned is related to the cost of 51% attack on the delegates. But I think they are doing good work researching proof-of-stake in general. So I think it's a lot more meaningful than just clone peercoin's design.
SM: Any thoughts or concerns on NXT?
SK: NXT bears some similarity to ripple. Although it uses peercoin's consensus algorithm (or a close variation of it) rather than ripple's mechanism. I think it also aims to provide data applications inside blockchain, like namecoin and ripple.
SM: What best practices would you recommend for people starting either new coins or communities? Many people start new coins or communities because others fail. With your past experience and success with PrimeCoin and PeerCoin. What advice would you give others?
SK: I would say be ethical. Everyone has different opinion this we all understand, it's a free market. But I think in order to win the battle of freedom, we would also need to look in the mirror, does free market equate to no ethics and endless fraud? Maybe the loss of freedom in society is also related to our own corruption. So I think it's always important to look at ourselves for higher ethical standard.
SM: Well Sunny, what a great answer, and a perfect way to end our interview! I want to thank you so much for taking the time with us today and going over all these tough questions! I hope we can chat again sometime in the future, AND, if you ever decide to reveal your identity will you do an article with us first please?
SK: Sure you have it :) Read More
21,356 viewsJuly 20th, 2014 by CrimsonRozeBitcoin and Family Accounting.
With the recent progress in the bitcoin evolution, particularly in regards to usability and multisignature key management, family accounting now has access to new economic tools to support a more reasonable and mindful family economy.
Lets start off with ..
For those parents who choose to have individualized economies and do not share incomes and expenses, bitcoin offers the common single key which allows both parents to retain control over their own funds just as though they had individual bank accounts or wallets. Nothing has changed in this regard.
For those parents who choose to have a shared economy however, bitcoin offers some very interesting multisignature solutions such as the one-of-two and the two-of-two keys which allows two specific use cases.
The one-of-two keys scenario indicates that both parents are capable of spending money from their shared account without the need to ask the other parent for permission. This is good for purchasing things that both parents are responsible for, like groceries.
The two-of-two keys scenario indicates that both parens are capable of spending money from their shared account, but only when both of them agree to do so. This adds an extra layer of protection against careless and/or unfair spending in a shared income environment.
Using a combination of the these two key management options, as well as the single key option, families can now set up a system in which the basic household expenses are easily paid for from a shared account while maintaining consensus on the big economical decisions and helps prevent in-family fraud, giving families a new level of economical stability.
Now lets have a look at ..
When a child comes into a family, another layer of complexity is added to the family economy. The simplest of solutions for an economy to accomodate a child is yet another single key which gives the child full access to its funds and leaves the parents with no control at all. In some cases, this might be desireable, but in other cases the parents want to shield their children from making irresponsible economic decisions.
In addition to the one-of-two and two-of-two keys we can now start looking at some very interesting multisignature scenarios involving three parties: one-of-three, two-of-three and three-of-three.
In the one-of-three keys scenario much is as expected. Any one of the parents, or the child, can spend money from the shared account. This proves useful in most of the same situations where a one-of-two key had been useful for the parents given that they trust the child not to spend needlessly.
In the two-of-three key scenario it start to get a bit more interesting. In this case the child can only spend money if at least one of the two parents agree to it. This is great for saving up for specific purposes where the child has some influence over how to spend the money but the parents want to retain enough control to make sure it is not spent for other purposes. This also allows the parents to spend the childs money should both parents agree. Depending on family situtations this might be necessary in order to sustain a functional family economy, particulary in times of economic crisis.
However, there might be cases in which it is undesireable to allow the parents to forcefully spend the child's money and for these cases another type of system is needed which is a combination of those previously discussed.
While I have not yet heard of solutions including specific keys in combination with multisignature keys I believe the programmable money that is bitcoin should be able to support the following scenario as well, we just might need to roll up our sleeves and get coding to see it happen..
Using a one + one-of-two key you can set up an account where the child retain veto against spending, but is not capable of spending itself without one of the parents approval. This is particulary useful for earmarked money, for example an education fund where the parents donate money to the child, but want to control the spending to only go to the specific purpose, while making safeguards as to the future education of the child.
In the three-of-three key scenario we have a place to save money for matters which are truly family related and both parents and the child have veto against any spending. The use is very situational and requires a family with trust and cooperation and is probably not well suited for the youngest of children.
The economic management tools above will also have some implications for ..
Statistics and Accounting.
While using the proposed key distributions above, to create a family economy suited for the particular family needs, is good in and of itself, it also comes with many statistical benefits in regards to accounting.
Since each parent and each child has their own private keys, any spending done by, or agreed to, by any of these family members is recorded into the blockchain with their signatures and this opens up for new ways of visualizing family economics on a person and family level in a fully transparent way.
Which leads us to..
I sincerely believe that there is an honest need and a real use case for this transparency and accounting as well as the various methods of restricting spending in a co-operational environment and I am glad to see that bitcoin comes with a built-in solution to all of this that doesn't require a family to sign any papers or pay any fees.
While we have no good way of knowing how these new tools will shape the families of the future, I am particularly interested in seeing this being developed. Should the tools arise I will be among the first to try them out!
Cover image courtesy of Jeffrey Tripp, licenced under creative commons. The image has been cropped to fit the LTB network requirements. Read More
2,702 viewsJuly 19th, 2014 by jratcliff63367
In today's article I am going to discuss how you can play a Bitcoin BrainWallet scavenger hunt game. My goal is to explain, as simply as possible, the basic mechanics of how to play the game assuming a target audience who does not yet know a lot about bitcoin.
2,734 viewsJuly 18th, 2014 by TronStarting editorial review: dhimmels, 2014-07-15 9:00AM Pacific Time
(minimal edits for grammar and clarity)
Finished editorial review: dhimmels, 2014-07-15 9:20AM Pacific Time
Learning about Bitcoin forces you to think about money and value. Some people who look at Bitcoin come to the erroneous conclusion that it’s like tulip mania. Tulip mania took place in the 1600s in the Netherlands when the price of a rare or unique tulip bulb could exceed the price of a nice house. It is hard to fault these armchair Bitcoin analysts for making this comparison. After all, the spectacular rise in value of something that you can’t feel, touch, or see is outside the realm of their experience.
Tulip bulbs have an interesting property that you can breed them. The folks buying the rare and unique tulip bulbs had the idea that if they purchased a valuable tulip bulb for breeding, they could make more, sell them, recoup their original investment and then continue to sell more tulip bulbs at pure profit. This seems like a pretty good idea on the face of it. Why didn’t it work? The answer lies in the geometric growth curve. I’m not a tulip expert, so I may offend the green thumbs that are reading this. Every year, you can dig up the tulip bulbs and where one was planted, you may have more than one bulb. This number is important. If the number was always exactly 1, and every tulip bulb was recovered, those tulips might still be worth the price of a home. If no new tulip bulbs were ever created, tulips would be very rare indeed . I googled it, and the number is more than 1, so you can increase your tulip bulb count holdings every year.
I had a great Junior High School math teacher. A student asked him how to get rich. After a joke about not being a math teacher, he said, “Save fifteen percent of everything you make and invest it with compound interest and start early.” He taught us how to calculate compound interest, and since it was the Jimmy Carter days of high inflation, the compound interest rate was significant. That lesson stuck with me -- the power of compound interest, not the saving part. It turns out you need both to become rich.
Let’s tiptoe back to the tulips. These tulips were breeding at a geometric rate with nothing but the requirements of land, water, and sunlight to limit the growth. The motivation was wealth and everyone wanted to sell their tulips to recoup the cost of their original tulip investment. The only possible mathematical outcome of this exponentially-increasing tulip production was that the tulips would lose value as too many of them came into existence. This was foreseeable. I don't have the stats on how many mathematicians invested in tulip bulbs, but I'd guess the answer is none.
Bitcoin has a geometric curve too. The difference is that the multiplier for bitcoin is less than 1. It is, in fact 0.5. Roughly every four years, as determined by the original Bitcoin developer Satoshi Nakamoto, the rate at which new bitcoins will be generated will drop by half. An exponential curve with a multiplier less than 1 is known as exponential decay. The number of new bitcoins doesn’t explode like the rate of new tulip bulbs. New bitcoin production decreases and trends toward zero which is the exact opposite of tulip mania.
To summarize, tulip mania was mathematically unsustainable because tulip production grew exponentially while tulip consumption was limited by the total human population size. Bitcoin has an exponential decay of the number of new units to be distributed among the holders of bitcoin. These are apples and oranges, or tulips and bitcoins. Not the same thing at all.
The tulip bulb mania is closer to the quantitative easing policies of central banks. It is mathematically unsustainable. If I thought quantitative easing was a good idea, I’d use it myself and get one credit card to pay another, and then pay that with a cash advance from another credit card. If it worked long enough, I might even convince myself that it was great idea and that it saved me from the brink of financial ruin. I don't have the stats on how many mathematicians are invested in dollars, but I would hope none. Read More
2,505 viewsJuly 18th, 2014 by William
Backup below (dhimmel):
One frequently mentioned use case for cryptocurrency is as a conduit for international remittances. Currently, more than 200 million people live outside of their birth countries and these people send home over half a trillion dollars per year to relatives and friends. Money takes circuitous routes between wallets in Atlanta and hands in Accra (or the other way around). These routes are shaped by densely interlinked networks of national and international governments, laws, organizations, corporations, technologies, currencies and human relationships. This nexus of interrelated forces and actors constantly reshapes the channels through which people working abroad send money home. This column will draw attention to interesting developments in this space that have a bearing on cryptocurrency and other decentralized technologies.
One company that is currently basking in the Bitcoin buzz is BitPesa, a startup seeking to enable BitCoin remittances to Kenya. BitPesa, which opened for service this month, charges a 3% fee to exchange BitCoin into Kenyan Shillings and deposit this money into a specified mobile money account.
BitPesa works seamlessly with its namesake M-Pesa, the viral electronic cash network owned by Safaricom, Kenya’s leading cellular provider. M-Pesa is like a privatized currency—users deposit money with Safaricom, and this balance is linked to their phone number. Users can then beam these funds to other people’s phones or spend them at an ever-expanding network of M-Pesa merchants. Currently M-Pesa can be used to buy groceries, pay bills, hire cabs, and much more. In fact, some reports argue that 31% of Kenya’s GDP passes through the M-Pesa network. SafariCom is now East Africa’s most profitable company and has expanded into markets around the world, spawning competitors like Econet’s EcoCash based in Zimbabwe.
BitPesa claims that users around the world will be able to deposit BitCoin onto their platform and designate M-Pesa accounts in Kenya to receive Shillings. The conversion is done automatically so recipients in Kenya receive the money on their cellphones within minutes. Recipients do not require a BitCoin address or need to worry about market volatility. Senders, on the other hand, must find their own ways to buy BitCoin, although BitPesa has online tutorials about how to do this. Importantly, it should be noted that the fees associated with acquiring BitCoin are not included in BitPesa’s 3% calculation.
BitPesa is not currently available in the United States, likely due to stringent American restrictions on international money transfer. It is, however, available in the United Kingdom where I will be traveling tomorrow. Is there a reader from Kenya who would be willing to help me test the BitPesa system? Please let me know ASAP in the comments section or in the forums and I will use the service to send you a small amount of BitCoin.
BitPesa is a good example of a company using BitCoin to cash in on the business of sending money from “rich” countries to “poor” countries. Kitiwa, on the other hand, is a notable BitCoin startup based in Ghana that works the other way around. Kitiwa allows people in Accra to buy BitCoin with local currency in order to make online payments and send money abroad. This service is needed in Ghana because payment networks like Visa and PayPal routinely block people living there (and in other African countries) from using their systems.
Kitiwa users begin by opening a BitCoin address, and the Kitiwa website contains a tutorial on using Blockchain.info to do this. Users then then pay for BitCoin with MPower Payments, a Ghanian mobile payments startup that allows people to fund purchase with their bank accounts, credit cards or mobile money accounts. Users can then use their BitCoin to pay for internet services like web hosting, send money to relatives living abroad or hire overseas consultants. The Kitiwa website even has a tutorial on how to use BitCoin to shop on Amazon.com through Gyft.
These developments in Africa’s BitCoin ecosystem occur just as banks in the United States are pulling out of the remittance business. Laws aimed at money laundering and the financing of terrorism have increased costs for banks, which are responding by axing services. As Michael Corkery recently reported:
“JPMorgan Chase and Bank of America have scrapped low-cost services that allowed Mexican immigrants to send money to their families across the border. The Spanish bank BBVA is reportedly exploring the sale of its unit that wires money to Mexico and across Latin America. And in perhaps the deepest retrenchment by a bank, Citigroup’s Banamex USA unit has now closed many of its branches in Texas, California and Arizona that catered to Mexicans living in the United States and stopped most remittances to Mexico as it faces a federal investigation related to money laundering controls.”
In a recent op-ed the New York Times argued that banks’ move away from the remittance business will result in migrants paying higher fees to send money home, and that a possible solution would be for the World Bank to act as a centralized remittance clearinghouse. Many BitCoin enthusiasts are probably hoping that the opposite happens—that the banks' withdrawal will create openings that can be filled by BitCoin startups like BitPesa and Kitiwa. We will see what happens.Read More
2,664 viewsJuly 17th, 2014 by rotalumis
July 10th, 2014 by johnMeanwhile, In Afghanistan... In a March 2012 article written for the MIT Technology Review, Jessica Leber shared an anecdote from leaked State Department cables describing the shock of Afghani policemen when they received their first paycheck via the mobile phone payment system M-Paisa. The amount they received was around 30% more than they were receiving previously, prompting them to believe they'd received a raise. After some investigation, it was discovered that they hadn't re... Read More
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June 27th, 2014 by adamUpdate: LTBCOIN Asset Drop Incoming later tonight! 6/27/2014 Hey Reader, Adam B. Levine here and happy to finally share the LTBCOIN project with you. If you’d like to dig into the more technical papers, you’ll find them here. LTBCOIN is a brand new kind of thing - a crypto-rewards system where people who help LTB to be useful are rewarded for their efforts, and it’s built on Bitcoin! Why is LTBCOIN Valuable? Effective July 1st, 2014 LetsTa... Read More
2,396 viewsJune 23rd, 2014 by johnbarrett
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