In Deutschland wird derzeit diskutiert, ob der Staat genug in Infrastruktur und Bildung investiert. Wie die Statista-Grafik auf Basis einer Auswertung des Handelsblatts zeigt, ist das Volumen nicht abgerufener Fördergelder beträchtlich. So sind die Gelder der beiden Fonds, mit denen besonders finanzschwache Kommunen gefördert werden sollen, bis Ende letzten Jahres zu rund 44 Prozent bzw. 92 Prozent noch nicht abgerufen worden. Mit den beiden so genannten Kommunalinvestitionsförderungsfonds sollen unter anderem Krankenhäuser oder Straßen saniert werden.
Ähnlich ist die Lage beim Digitalfonds, wo nur ein Bruchteil des Gesamtvolumens geflossen sind. Der Fond besteht allerdings auch erst seit letztem Jahr. Mit dem Fonds sollen der Breitbandausbau und die Digitalisierung von Schulen gefördert werden. Mit dem Kita-Ausbaufonds sollen 100.000 zusätzliche Betreuungsplätze für Kinder im Alter von drei Jahren geschaffen werden. Das Investitionsprogramm wurde 2017 ins Leben gerufen und soll 2020 abgeschlossen sein. Derzeit sind jedoch erst 0,25 von 1,1 Milliarden Euro abgerufen worden. Auch die Gelder des Ausbauhilfefonds Hochwasser sind noch nicht komplett geflossen. Mit den Mitteln sollen die Schäden der Hochwasserkatastrophe des Jahres 2013 beseitigt werden. Betroffen sind 11 der 16 Bundesländer.
Dies wirft die Frage auf, ob der Investitionsstau in Deutschland tatsächlich mit mehr finanziellen Mitteln zu lösen ist. Eine Untersuchung des IW Köln (PDF-Download) aus dem Jahr 2017 weist auf einen wichtigen Grund für die unbefriedigende Situation hin: so bestünde im Bereich Infrastruktur in vielen Bundesländern ein Mangel an baufähigen Projekten. Das bedeutet, bei diesen Vorhaben besteht kein sofortiges Baurecht. Die Gelder würden dann vielfach an die Bundesländer fließen, die über Projekte verfügen, die baureif sind. Im Bereich Verkehrsinfrastruktur hätte hiervon vor allem Bayern profitiert. Der Mangel an baufähigen Projekten bestehe hauptsächlich aufgrund von Kapazitätsengpässen in Baubehörden, die durch Personalabbau zustande gekommen seien.
Coinfloor’s CEO Explains Decision to Delist All Crypto but Bitcoin
London-based cryptocurrency exchange Coinfloor will delist all cryptocurrencies but Bitcoin (BTC) to focus on Bitcoin only services in January.
The United Kingdom’s oldest crypto exchange will delist all cryptos including the second-biggest altcoin Ether (ETH) and Bitcoin Cash (BCH) in conjunction with the 11th anniversary of Bitcoin’s launch on Jan. 3, 2020, Coinfloor said in a blog post on Dec. 17.
Bitcoin is the only cryptocurrency that is proven so far, Coinfloor CEO says
Obi Nwosu, CEO and founder of Coinfloor, said that Coinfloor’s move comes in line with the company’s vision to focus on cryptocurrencies that are “proven” so far.
In an interview with Cointelegraph on Dec. 17, Nwosu argued that Bitcoin is the “only game in town,” because the major cryptocurrency is doing great with its mission to provide a new form of store of value, or digital gold.
According to the executive, Ethereum technology has not been proven to date because it has yet to overcome major changes including the network’s transition to Ethereum 2.0, which is also expected to take place in January 2020. In the interview, Nwosu said that he believes that the single fact that Ethereum core developers are working on Ethereum 2.0 to replace Ethereum 1.0 shows that Ethereum is not proven. Nwosu said:
“Purely objectively speaking, if the developers are working on a replacement to Ethereum, they don’t believe that it currently solves the problem it is meant to solve.”
In contrast, Bitcoin is “already solving the problem today” despite the continuing efforts by developers to improve the major cryptocurrency, according to Nwosu:
“People are looking at improving Bitcoin, but to be clear, the view is right now Bitcoin is already a good solution to the problem. Everything else is cream on top of the coffee. It is already solving the problem today.”
Coinfloor may bring Ether back as soon as it becomes proven
As soon as Coinfloor becomes a Bitcoin-only exchange in January, its customers will not be able to deposit, purchase or sell Ether on the platform. However, Ether custody and withdrawals will still be supported after the date at an increased “administrative fee,” according to an official announcement.
As Coinfloor is about to delist Ether after listing it in January 2019, the exchange might consider relisting the altcoin as soon as the cryptocurrency becomes “proven” in future, Nwosu noted.
In the interview, the Coinfloor CEO also suggested that Coinfloor is the first crypto exchange to become crypto monogamous because they realized that Bitcoin is “way ahead of everyone else.” Nwosu added that he anticipates more exchanges following their decision in the near future.
Jill Carson is co-founder of the Open Money Initiative, a non-profit research organization working to guarantee the right to a free and open financial system, and co-host of the What Grinds My Gears podcast. She also works as an advisor and consultant for startups including Algorand, Risk Labs, dYdX, CoinList, and Tezos.
Why hasn’t cryptocurrency gone mainstream?
“It doesn’t scale.”
“It’s hard to use.”
Or maybe it was never supposed to go mainstream.
This is not to say cryptocurrency is any less important, meaningful, or useful. Rather, I think perhaps we have been judging cryptocurrencies’ success (or lack thereof) according to a false metric. We would not judge a fish by its ability to climb a tree.
By design, cryptocurrency does not solve mainstream problems.
Scale, speed, and cost are all examples of mainstream problems within finance, from main street to Wall Street. Credit card networks go down. Stock trades take days to clear. Wire transfers are expensive. In some situations, cryptocurrencies may offer marginal improvements on any of these issues, but more often blockchain-based systems will fail when compared to more conventional, centralized solutions.
This does not represent a design flaw. In fact, this is an intentional trade off.
Decentralized systems forsake scale, speed, and cost in favor of one key feature: censorship resistance. Cryptocurrency solves problems faced by the censored who, by definition, are not the mainstream.
In particular, cryptocurrency enables individuals and organizations to make censored transactions. Procuring drugs on the internet. That’s an example of a censored transaction. Buying US dollars in Argentina is another example. Paying a sex worker. Sending money to a friend in Iran. Making an online purchase as an unbanked individual. Selling cannabis as a dispensary. Getting money out of Venezuela. Supporting dissidents in Hong Kong. The primary utility of cryptocurrency lies in engaging in financial activity that is otherwise suppressed or prohibited.
This is the stated intent of cryptocurrency. Satoshi Nakamoto, the creator of bitcoin, described cryptocurrency as a tool of freedom. He compared it to other peer to peer networks like Tor which are similarly resilient to censorship. If we look at the anecdotal evidence, we can see that this is indeed how bitcoin is being used from China to Palestine. Furthermore, what little quantitative data we have also suggests that cryptocurrency use is higher in countries with financial restrictions. These results line up with predictions around cryptocurrency adoption that have existed for years. It is time to face this potentially uncomfortable reality: cryptocurrency is most useful when breaking laws and social constructs.
I, for one, do not want to live in a world where cryptocurrency has found mainstream use.
There exists a long history of censorship resistant and privacy preserving technologies: Signal for messaging, Bittorrent for file-sharing, Tor for web browsing. Like bitcoin, these tools are not built for the mainstream. Most people would rather use faster, slicker, glossier centralized alternatives like Facebook Message, Dropbox, and Google Chrome. But for censored people and organizations, decentralized technologies have always provided an escape hatch. For as long as they have existed, these tools have brought with them a certain level of societal discomfort. This discomfort stems not from these platforms being lawless domains — regulations exist on the dark web as much as they do in any jurisdiction – but rather from the difficulty these platforms present in enforcing these government policies and social norms. These technologies render censored activities more difficult to stop.
Decentralized technologies can be used for good, for evil, and for everything in between. From Hammurabi’s Code through to the Patriot Act, the morality of laws has been a matter of debate for as long as they have existed. The laws of one jurisdiction are often deemed unethical and unacceptable by its citizens and those of other geographies. To say that cryptocurrency is used primarily to engage in illegal or socially unacceptable activities is not a normative statement. It is used by freedom fighters and terrorists, by journalists and dissidents, by scammers and black market dealers, by revolutionaries and government officials. It is used by civilians to break unjust laws and escape humanitarian crisis, and it is used by the policymakers who write those very same laws. And of course, the same statements can all be made regarding the original decentralized payment system: cash.
As an industry, we spend a lot of time considering how to drive mainstream adoption of cryptocurrency. I, for one, do not want to live in a world where cryptocurrency has found mainstream use. For if it has, that world is a very scary place indeed.
This is not to discourage or devalue any of the work that is being done to improve decentralized technologies. Many projects in the industry are working toward optimizing away shortcomings in the technology. Layer 2 protocols promise to speed things up. New consensus mechanisms and forms of sybil resistance expect to improve scalability and reduce infrastructure costs. A myriad of applications are building more user-friendly wallets, on-ramps, exchanges, and other tools. All of these developments are important but they may never result in mass adoption. Improvements in scalability, speed, cost, volatility, and user experience may, however, make the critical difference for those who are users, no matter how fringe: the young woman in Venezuela surviving on bitcoin or the Chinese businessman using Tether for cross-border trade.
To judge cryptocurrency based on mainstream adoption is to judge it on a metric it was never designed to achieve.
This post is part of CoinDesk’s 2019 Year in Review, a collection of 100 op-eds, interviews and takes on the state of blockchain and the world.
Vitalik Buterin has claimed that Ethereum will support 3,000 transactions per second after the upcoming Istanbul fork.
By Miko Matsumura
Will this unleash a new wave of Ethereum creativity? Might we expect a surge in traffic on the Ethereum network? Could its increase influence the price of ETH?
Ethereum is slow
The conventional wisdom is that Ethereum is too slow. But for what purpose is it too slow? It seems to be sufficiently fast for financial services. But the mistake people are making in saying “Ethereum is slow” is misunderstanding what a great thing, counterintuitively, it is to be slow. ETH works because users want to pay (in the form of “gas”) to perform computations.
If Ethereum is congested, it means that there are more people who want to pay to have Ethereum computations than there are the capacity to allow it.
To put it in another way, let’s say that you own an Apple Store and there is an ever-growing line of customers waiting to buy the newest iPhone. The more customers you have, the more the profit. If you are having trouble accepting the amount of money people want to give you in order to use your service, you are doing well. You wouldn’t complain in that situation.
The “world computer” isn’t a thing
So, it turns out that achieving consensus over computation is very expensive — and therefore, as slow as molasses. Istanbul will make Ethereum’s consensus a bit faster, but the term “world computer” seems hyperbolic, as it suggests there could be a singular device that handles the world’s computational needs. It doesn’t even get close at 3,000 transactions per second.Ethereum’s current state is more akin to a “Trust Machine” — to borrow the name of Alex Winter’s blockchain documentary — than a “world computer.”
DApps are also not a thing
What is a “decentralized application”? It’s a mixed metaphor that is prone to confusion. The word “app” is inseparable from the rise of smartphones and naturally the rise of the “App Store.” So, as soon as you say “DApp,” you are depicting a similar world of endless possibility and creativity. This flawed reasoning is compounded by talk in the original Ethereum white paper about the creation of a Turing complete “World Computer.” This suggests that there are an infinite number of applications that are able to run on Ethereum. But since running computations under consensus comes with a cost, it will always be greater than the cost of running computations without consensus — even if the cost of consensus is greatly reduced.
Vending machines are a thing
The cost of consensus is why it makes more sense to talk about what Nick Szabo calls “Vending Machines.” If a line of code is not handling value, then why not execute it in a faster, cheaper, more centralized environment? This reduces the practical applications of storing, transmitting, buying, selling, splitting, sharing or otherwise manipulating value. This means practical applications would naturally be pragmatic value-in, value-out smart contracts like decentralized exchanges, token swaps, nonfungible token vending, token-issuance (ICO or STO) contracts, and lending and arbitrary financial products (DeFi). If we had a “World Computer” (we don’t), it might make sense to talk about DApps, but until then, what we have are vending machines.
Lending machines are also a thing
Smart contracts relating to collateralizing and lending digital assets are getting a lot of attention these days. Concerning this, ETH in particular is well positioned, as it has a relatively large liquidity pool and a very high degree of programmability. DeFi means that there are vastly diverse sets of programmable digital financial products, but at the moment, the idea of a “Lending Machine” is one that is getting the most attention. In particular, lending seems attractive because current DeFi protocols are producing up to 10% interest rates. This could be seen as a “killer app” for crypto because traditional banks have been so close to 0% interest for so long — and it’s a compelling reason for new users to come to crypto. Currently, almost $700 million in value is locked in DeFi contracts. It remains to be seen whether such high rates will hold up as more and more money floods into the market seeking high returns.
Another obvious application is gambling apps. This is a variation on the “decentralized exchange,” but instead of exchanging a predictable amount of one token for another, users essentially exchange tokens for unpredictable returns. One of the advantages of smart contract-based gambling over other forms of online gambling is that scrutinizing the smart contracts can enable players to determine if the gambling machine is “provably fair,” unlike the centralized exchanges that are only demonstrably unfair.
The need for speed
If all we are building are vending machines, lending machines and slot machines, do we really need performance? Purveyors of “decentralized exchanges” insist that once they are fast enough, they will achieve the liquidity of “centralized exchanges.” But historically, liquidity has always moved toward high frequency trading venues — and trusted computing will always confer a performance edge versus trustless.
One of the great things about the increase in performance is simply to increase the capacity of existing apps, and to enable more similar apps to run on Ethereum. But the performance increase from Ethereum Istanbul seems unlikely to produce as-yet-unseen types of applications.
Miko Matsumura is a general partner with venture capital fund gumi Cryptos Capital. He is also a co-founder of Evercoin, a wallet and exchange. He has been working in Silicon Valley for 25 years on open-source software projects, starting with the introduction of the Java programming language, for which he was the chief evangelist.
Canada-based cryptocurrency mining company Great North Data has submitted a bankruptcy filing, purportedly due to insolvency.
As the Canadian Broadcasting Corporation reported on Dec. 4, Great North Data — which operated crypto mining facilities in Labrador City and Happy Valley-Goose Bay — filed bankruptcy documents in late November, listing CA$13.2 million ($10 million) in liabilities, while having only CA$4.6 ($3.5 million) million in assets.
Liabilities to the state
With that, Great North Data reportedly owes CA$313,718 ($238,080) to the Newfoundland and Labrador government’s Business Investment Corporation, which the company secured for building, land, machinery and equipment.
The Atlantic Canada Opportunities Agency is reportedly an unsecured creditor for CA$281,675 ($213,868) and funded the company for CA$500,000 ($379,637) in 2015 in the form of an unconditionally repayable contribution.
At press time, the firm’s website is not functional and Cointelegraph has been unable to reach Great North Data on LinkedIn. The firm also has no phone number listed.
The industry has become increasingly challenging for miners, with other firms like the former Washington-based top-five crypto mining firm Giga Watt closing down in January, claiming that it was “insolvent and unable to pay its debts when due.”
In October, BCause Mining, a Bitcoin (BTC) mining operation in Virginia Beach in the United States, was ordered to liquidate its assets, shut down its operations and lay off its 27 full-time and four part-time workers, following bankruptcy documents filed earlier this year.
Meanwhile, mining firm Bitfarms is still expanding its operations despite complaints of the residents of the city of Sherbrooke, Quebec. Bitfarms reportedly manages five mining operations spread across the province to take advantage of cheap local hydropower, while residents living near the site are complaining about the allegedly intolerable sound and vibrations originating from the facility.
Russian mining and smelting giant Nornickel has commenced testing its digital platform for metals trading.
As Bloomberg reported on Dec. 5, Nornickel began trialing its platform for digital metal tokens in collaboration with physical commodities trading group Trafigura Group Ltd., metals finance and logistics firm Traxys SA and materials technology and recycling group Umicore SA. Specifically, the platform is designed to enable clients to purchase digital tokens backed by metals and then trade them for physical supplies.
Commenting on the product rollout, Nornickel CEO Vladimir Potanin said that the company is “imply packing existing business links into a new and modern form.” Nornickel purportedly intends to raise the share its metals sales conducted using tokens to 20% within the next several years.
Nornickel’s digital platform rollout seems to have progressed according to schedule. Vice-president of Nornickel Andrey Bugrov previously said that the company expected to bring the product to the market by the end of 2019, as well as begin trading the tokens.
New life of former Soviet factories
Large factories built in the Soviet era primarily in cold climate locations are slowly drawing the attention of industry enthusiasts. The largest data center in the former Soviet Union, BitRiver, opened about a year ago in the Siberian city of Bratsk. Now, most of its clients use the facility to mine Bitcoin (BTC).
The data center allows cryptocurrency miners to take advantage of cheap energy in what used to be the world’s largest aluminum smelter.
Last year, Deputy Governor of the Leningrad Region, Dmitry Yalo, announced the development of a new mining facility in the region, which was set to be built on the site of a former Soviet fertilizer laboratory.
BRICS is the acronym coined for an association of five major emerging national economies:
Brazil, Russia, India, China and South Africa.
Brazil, Russia, India, China and South Africa, or the BRICS economic bloc, are engaging in discussions to issue cross-national digital money in order to reduce the dependence of their economies on the United States, as reported by Cointelegraph on Nov. 14. What will the new cryptocurrency look like, how does the BRICS group plan to use it and are there any existing projects underway that seek to achieve a similar goal of independence on such a high level?
BRICS and its problems
BRICS is the largest geopolitical block of countries, spanning three continents and wielding substantial economic power in global affairs. As of 2018, the five nations of the BRICS block had a combined nominal gross domestic product of $40 trillion, or about 23.2% of the gross world product.
However, such economic power does not come without competitive penchants from other nations that are vying for the markets that BRICS nations cater to. The greatest competition comes from the European Union and the U.S.
The political experience of recent years has shown that BRICS countries’ diplomacy has arguably failed in alleviating international sanctions, especially in politically sensitive markets such as the arms and the energy carriers markets. However, advances in technology are here to help out where politics cannot, as blockchain and digital assets have the potential to open entirely new horizons for finance.
The idea of a single cryptocurrency as a means of payments and value transmission is not a new one, but it is one that is being actively purported not only in countries like Venezuela with its Petro, but also among BRICS countries. The advantages of a single cryptocurrency as a universal means of settlements among BRICS nations would solve many of the problems they face on the global economic market.
A means of circumventing U.S. sanctions
The BRICS Business Council discussed creating a common cryptocurrency as a potential solution to these problems during the 11th BRICS summit that was held in Brazil on Nov. 13–14, according to reports that cite Kirill Dmitriev, a member of the council. Dmitriev, who is the director-general of the Russian Direct Investment Fund, went on to say that an efficient BRICS payment system could be used to stimulate settlements between the countries while reducing the use of the U.S. dollar for these purposes.
It was also reported that the new system may become an alternative to the international payment mechanism SWIFT to facilitate trade with countries under U.S. sanctions.
Dmitriev also noted that in recent years, the share of U.S. dollars payments made between the BRICS countries has significantly decreased. In Russia, for example, over the past five years, the share of USD in foreign trade transactions fell from 92% to 50%, while those made in the Russian ruble rose from 3% to 14%.
At the same time, the potential for reducing the U.S. dollar’s dominance is still great, according to macroeconomic analyst Oleg Dushin, who told Russian media outlet BFM that such could be the case if Russia and India changed the currency they use to make payments between each other.
Dushin also said that Russia and China have already stopped using U.S. dollars in half of their mutual settlements and that there is currently a general trend of driving the dollar out of the international payments system. This, according to the expert, will help BRICS countries weaken the influence of the dollar in the global monetary system and reduce the risk of payments being frozen by Washington.
Denis Smirnov, a blockchain consultant from Russia, noted to BFM the convenience and reduction of transaction costs as some of the advantages of creating a single cryptocurrency system for the BRICS countries, calling it an alternative to bonds.
Commenting on the possibility of BRICS countries using a single cryptocurrency, Vladimir Rozhankovsky, an expert at the International Financial Center, told BFM:
“If it is possible to reduce currency risks, then it is better to carry out trading payments directly, and not through the purchase of dollars — this is obvious. The vast majority of more or less large global economies are now working on this issue.”
Peg to gold, not the U.S. dollar
While it is still unknown what the BRICS cryptocurrency will look like exactly, experts are discussing what it could potentially be tied to. Commenting on the possible options that the international cryptocurrency may be tied, Elina Sidorenko, the head of the Russian State Duma’s working group on cryptocurrency issues, said that there are several options on the table.
For example, it could be tied to the value of another cryptocurrency, she told Russian media outlet Dp, “but in this case, it’s impossible to avoid either the continuation of the U.S. dollar’s monopoly,” or it can be pegged to the price of a raw material or a good, but then the risk of market manipulation becomes a threat. She concluded:
“The third option is a link to gold, and taking into account the latest Basel Accords, such a decision seems very convincing and timely.”
Olinga Taeed, a council member and expert advisor at the China E-Commerce Blockchain Committee, told Cointelegraph that the Chinese have been researching the possibility of issuing a gold-backed token due to the country’s access to natural mineral reserves in Africa through China’s Belt and Road Initiative. He went on to add:
“More recently frictionless international trade has come to the fore with DLT looked upon as a possible solution for Brexit for example, replacing the usual 5-10 year gestation period. So the thinking is well rehearsed but what is new here isthe willingness to enact it and for evidence of this there is absolute clarity. Trump has made transparent the long established use of the financial instrument of the dollar to pressurise Iran, Russia, China, etc for non-financial gain.”
Russia seeks an alternative to SWIFT
Russia has been the target of sanctions since 2014. As a result of multiple economic restrictions, Russian authorities have been considering the possibility of creating alternatives to SWIFT.
One of them — the System for Transfer of Financial Messages, or SFPS — is reportedly being used in 18% of money transfers in the country, and foreign financial organizations began to join SPFS in 2018. However, in April, Russian Finance Minister Anton Siluanov noted that SPFS is not a full-fledged replacement for SWIFT and that it is unlikely to become one in the near future.
Now, the Russian government is considering another alternative: a national cryptocurrency secured by gold. Elvira Nabiullina, head of the Central Bank of Russia, said that such a currency could be used to carry out settlements with other countries for trade transactions. However, Nabiullina is also of the opinion that it is more important to develop international settlements facilitated by national currencies rather than crypto.
The sanctions had blocked at least 20% of Russia’s defense transactions in 2018 due their tether to the U.S. dollar. Though Russian authorities are gradually moving toward settlements in national currencies with BRICS states, the idea of a unified cryptocurrency is being openly discussed as an effective, transparent, untraceable and stable instrument for circumventing U.S. sanctions and decreasing dependence on the U.S. dollar.
BRICS states would be able to disregard any exchange rate differences in settlements in a single cryptocurrency, and Russia would gain solid support for its national currency — the ruble — which suffered a twofold drop in value.
China considering a national crypto to bypass U.S. sanctions
China is the leading nation of the BRICS bloc in terms of GDP and the most open nation when it comes to discussions about blockchain implementation. China is intent on accelerating the development of its own central bank-backed digital currency and is working toward the integration of blockchain technologies into other important financial mainstays of the country, such as Alibaba, Tencent and various banking institutions.
Such hasty development could in part be the result of a heated debates about Facebook’s Libra coin. Chinese analysts fear that the development of a global digital currency by a company, which is regarded to have strong affiliations with the U.S., would threaten the existence of national currencies and weaken their exchange rates. Such a stablecoin backed by the U.S. dollar may increase the power of its penetration into the global economy and thus solidify the political positions of Washington.
Chinese authorities are interested not only in the development of a unified cryptocurrency for settlements with BRICS countries but also in the launch of a national cryptocurrency that would serve as a shield against the economic adversary across the Pacific.
Brazil has a positive stance on using stablecoins
Brazil is demonstrating the highest rate of Bitcoin (BTC) trade in Latin America. Such broad penetration of digital assets in Brazil makes it both fertile ground for the development of a national cryptocurrency and firm ground to support for a unified BRICS cryptocurrency for settlements with member states.
Given the country’s positive stance toward blockchain, Brazilian authorities seem to be open to discussions with stablecoin issuers. One recent example is that of the Mile Unity Foundation, whose representatives met with members of Brazil’s Ministry of Industry, Foreign Trade and Services to discuss the use of the XDR stablecoin for international transfers of funds.
Given that Brazil had an export/import balance of $219 billion to $140 billion in 2017 alone, the potential for using a single cryptocurrency with BRICS member states for increasing such figures is immense.
Although Brazil does not suffer from sanctions, its main trade partners in technology, such as Russia, are subject to them. Using the U.S. dollar for mutual settlements between countries leaves little room to maneuver.
India is fighting with poverty and corruption
The Indian authorities are reportedly discussing the introduction of a national digital currency. There may be significant reasons for such a move, not the least of which being the alleviation of the poverty that many of the country’s 1.3 billion are languishing in.
The Reserve Bank of India is pushing for such a digital currency backed and regulated by the central bank as legal tender. The RBI hopes that blockchain can alleviate the issue with corruption, which is rampant in India, and significantly reduce the dependence of millions of Indians working abroad on financial intermediaries in cross-border transfers.
The Indian authorities are also proponents of a national digital currency for reducing the population’s reliance on other digital currencies. Given India’s stance within BRICS as a major buyer of Russian arms and as one of the most important energy trade partners, having mutual settlements in a unified digital currency would open up entirely new prospects for trading.
South Africa is making money transfers accessible for citizens
The possibility of issuing a national digital currency has even been discussed by the South African Reserve Bank, which could allow for its citizens to freely transact without the need for banks.
Given the staggering number of unbanked individuals (estimated to be around 11 million people) and those without any form of official IDs in the country, the availability of a national digital currency would help millions of citizens gain access to financial services and boost economic development. South Africa is just as bound to the U.S. dollar as all the other BRICS members in its settlements with China and Russia, meaning that is also feels the impact of the sanctions regime.
According to experts, the idea of creating a digital currency for BRICS may turn out to be highly viable, given the transition of the world from a monopolar political model to a multipolar one and the backdrop of a shift in the economy from traditional financial institutions to trading platforms.
And the main beneficiary so far could be China, which is interested in expanding its sales markets amid a trade war with the U.S. Smirnov told BFM that he believes that over time, such systems will become more widespread:
“For example, for the past two or more years a consortium of several European banks has been testing its own mutual settlement solution that works outside the SWIFT system and allows for interbank settlements.”
The individual national currencies of the BRICS countries have been dropping against the U.S. dollar over the past 10–20 years, but it is unclear whether a unified BRICS payment system would reverse this trend. However, it is possible that the U.S. dollar could be weakened if the share of settlements in dollars significantly decreases around the world.
Among other possible risks that may be associated with the idea of issuing a gold-pegged international digital currency, head of research at investment company Nord Capital Vladimir Rojankovsky noted the deregulation of the market and the possibility of manipulation. He told Russian media outlet Regnum, “Such an implementation of this project does not imply the involvement of any distinguished party, which is a living oversight body.”
Speaking about the further development of the BRICS initiative, Teemo Puutio, an expert in compliance and an adjunct instructor at New York University School of Professional Services, told Cointelegraph:
“Whether the BRICS backed currency would ultimately succeed in gaining traction would largely depend whether it actually facilitates trade instead of adding another layer of technological complexity for the end user. […] BRICS are not alone in this however and it remains unclear whether the dominant digital currency of the future will be public such as the e-Euro or digital yuan or private, like Libra.”
Payments startup Ripple has completed the acquisition of its $50 million stake in remittance platform MoneyGram, the companies announced Monday.
According to a filing with the U.S. Securities and Exchange Commission (SEC), Ripple, in its final payment, bought $20 million of MoneyGram equity at a price of $4.10 per share, more than a dollar per share over the stock’s current price of around $3.00. Monday’s investment completes a deal first begun in June 2019.
With the completion of the deal, Ripple owns just under 10 percent of MoneyGram’s outstanding common stock, “and approximately 15 percent on a fully-diluted basis including non-voting warrants held by Ripple,” the filing said.
Under the original deal, Ripple made an initial $30 million investment, while MoneyGram in turn agreed to utilize Ripple’s products for cross-border settlements.
According to the filing, MoneyGram intends to use this capital inflow to support its operations, in particular as it expands its use of Ripple’s On-Demand Liquidity product, the renamed xRapid payment system that utilizes the XRP cryptocurrency.
Since June, MoneyGram has begun using XRP to conduct transactions in Europe, Australia and the Philippines, and currently transacts roughly 10 percent of its Mexican peso foreign exchange trading volume, the filing said.
In a statement, MoneyGram chairman and CEO Alex Holmes said the partnership was “transformative,” noting that the company could settle transactions “in seconds.”
“This initial success encourages us to expedite expanding our use of On-Demand Liquidity,” he said. “I anticipate furthering our growth into new corridors and exploring new products and services.”
Brad Garlinghouse, Ripple’s CEO, added that his firm would support MoneyGram’s “further expansion” into the European and Australian payment corridors.
Network tech giant Cisco has won a patent detailing how it could leverage blockchain to secure the data in 5G telecommunication networks.
The San Jose, Calif.-based company submitted a patent application in June 2018 for a blockchain platform that can be natively integrated in wireless networks, according to a Nov. 26 filing from the U.S. Patent and Trademark Office (USPTO).
The blockchain platform aims to manage data sessions between an equipment user, such as a phone or laptop, and a virtual network. In other words, the new technology can manage part of the data exchanges between a network and a connected device via the blockchain interface.
The company describes how a blockchain platform can be used to support network slices, referring to an architecture that allows multiple independent virtualized networks to run in the same physical infrastructure more efficiently.
“This service-oriented architecture supports network slices, which employ an isolated set of programmable resources that can implement individual network functions and/or application services through software programs within a respective network slice, without interfering with other functions and services on coexisting network slices,” the filing said.
Cisco is among a long list of information technology companies that are exploring the integration of blockchain technologies and Internet of Things (IoT). Companies, such as Bosch, BNY Mellon, Chronicled and Filament, have used Hyperledger, ethereum and Quorum to create or upgrade their products and services.
In September, Cisco partnered with artificial intelligence services provider SingularityNet to decentralize AI systems by preventing one single source from concentrating computers’ capacity to learn through blockchain technologies. The company has also been trying to develop another blockchain technology that would create a more secure environment for group chats in a network, according to a filing dated in March 2018.
The central bank of France plans to pilot a central bank digital currency (CBDC) for financial institutions in 2020. François Villeroy de Galhau, the governor of the Bank of France, announced that the bank will start testing the digital euro project by the end of the first quarter 2020, French financial publication Les Echos reports Dec. 4.
The Bank of France confirmed the news on Twitter, noting that the announcement was made at a conference co-hosted by two major French financial regulators, the French Prudential Supervision and Resolution Authority and the Autorité des marchés financiers.
Digital euro pilot won’t involve retail customers
According to the report, the digital euro pilot will only target private financial sector players and won’t involve retail payments made by individuals. Villeroy reportedly noted that a digital currency for retail customers would “be subject to special vigilance.”
As reported by Les Echos, the initiative intends to strengthen the efficiency of the French financial system, while ensuring trust in the currency.
Preventing Libra’s impact
Moreover, the project aims to assert France’s sovereignty over private digital currency initiatives like Facebook’s stablecoinLibra, Villeroy reportedly said.
Villeroy’s stance falls in line with previous statements by French finance minister Bruno Le Maire, who argued that regulators cannot allow the launch of Libra on European soil due to monetary sovereignty concerns.
According to some reports, France led the anti-Libra effort alongside Germany, Italy, Spain and the Netherlands.
Villeroy calls on France to become the first country in the world to issue a CBDC
According to a tweet by the Bank of France, its governor emphasized that France should become the first country in the world to issue a CBDC and provide an exemplary model to other jurisdictions. He stated:
“I see the interest in rapidly advancing the issuance of at least one central bank digital currency in order to be the leading issuer globally and get the benefits associated with providing an exemplary central bank digital currency.”
France has emerged as a major adopter of blockchain tech and Bitcoin
Meanwhile, France has appeared to be at the forefront of adopting crypto and blockchain technology as its government has initiated and encouraged a number of industry-related projects.
In late November 2019, the first deputy governor of the Bank of France called for a blockchain-based settlements and payments systems in Europe. As reported by Cointelegraph on Nov. 20, the French Armies and Gendarmerie’s Information and Public Relations Center was validating judicial expenses incurred during investigations on the Tezos (XTZ) blockchain at the time.
Alongside developments in blockchain, France has also emerged as a major adopter of biggest cryptocurrency, Bitcoin (BTC). In mid-October, French crypto startup Keplerk relaunched its service to accept Bitcoin payments in over 5,200 tobacco shops in France. Previously, Cointelegraph reported that at least 30 French retailers plan to launch Bitcoin payments support at over 25,000 sales points by early 2020.
German airline Hahn Air claims to be the first airline company to issue tickets on a blockchain, the firm announced in a press release on Nov. 18.
The ticket sale using blockchain technology was made possible through Hahn Air’s collaboration with a decentralized platform for the travel industry, Winding Tree. Frederick Nowotny, head of sales engineering at Hahn Air, Maksim Izmaylov, the founder of Winding Tree, and Davide Montali, CIO at Winding Tree, became the first passengers to use blockchain-booked tickets.
Commenting on the product, Nowotny said the goal of the company is to “investigate and monitor the opportunities this technology holds for travel distribution, even if widespread acceptance is still a vision of the future.”
Blockchain and crypto in the travel industry
Blockchain technology and digital currencies have been steadily entering the travel industry, in recent years. Earlier in November, Alternative Airlines, a travel company based in the United Kingdom, partnered with cryptocurrency service Utrust to facilitate payments with crypto, including Bitcoin (BTC), Ether (ETH), Dash, DigiByte (DGB) and Utrust’s native token UTK.
In late October, blockchain startup Zamna raised $5 million to automate airport security checks using blockchain and biometrics technology. Zamna said that International Airlines Group, Emirates Airlines and United Arab Emirates’ General Directorate of Residency and Foreigners Affairs are now among its clients.
Last year, in an effort to promote tourism more broadly, the state government of the Australian province of Queensland issued a grant to crypto startup TravelbyBit as part of over $8.3 million of innovation funding. The firm aims to increase the number of tourists to the province by allowing travelers to book their flights and services using cryptocurrencies.
A zero-knowledge proof is a digital protocol that allows for data to be shared between two parties without the use of a password or any other information associated with the transaction.
In its most basic sense, a zero-knowledge proof (also commonly referred to as ZKP) can be thought of as a protocol through which a digital authentication process can be facilitated without the use of any passwords or other sensitive data. As a result of this, no information, either from the sender’s or receiver’s end, can be compromised in any way.
This is quite useful, especially since such a level of safety provides tech enthusiasts with an avenue to communicate with one another without having to reveal the content of their interactions with any third party.
The idea underlying zero-knowledge proofs first came to the fore back in 1985, when developers Shafi Goldwasser, Charles Rackoff and Silvio Micali presented to the world the notion of “knowledge complexity” — a concept that served as a precursor to ZKPs.
As the name suggests, knowledge complexity acts as a metric standard to determine the amount of knowledge required for any transaction (between a prover and verifier) to be considered valid.
Where are ZKPs actually employed?
Zero-knowledge proofs are used by government agencies to determine the origin of certain data without them having to prove how or where they got the information from.
Since their inception, zero-knowledge proofs have been used across a wide array of digital domains. For example, researchers have used this technology for creating novel digital identification mechanisms that do not require users to reveal any sensitive information related to them.
In this regard, several examples exist of self-sovereign identity platforms that allow third-party personnel such as law enforcement agencies to determine whether an individual has a valid driver’s license without the person having to hand over anything other than their ID number.
Similarly, governments can also use ZKPs to determine the nuclear capabilities of various militaries without having to spy on or inspect their inventories. On the subject, it can be seen that in July of this year, the Defense Advanced Research Projects Agency, or DARPA, released a statement in which it claimed that it was working on a new project called SIEVE — i.e., Securing Information for Encrypted Verification and Evaluation — that makes use of ZKPs to determine the origin of highly secure data without the U.S. government having to reveal the way in which it was acquired.
Can ZKPs be integrated into blockchain platforms?
Zero-knowledge proofs offer a lot of benefits to blockchain systems that make use of the technology. For example, they help in making crypto transaction’s extremely secure thanks to their high-level of encryption.
Yes, a zero-knowledge proof can be very easily be used within the context of a blockchain ecosystem, especially in regard to validating cryptocurrency transactions without disclosing any data related to it — such as where the transactions originated from, where it went or how much money was transferred.
A real-world use case of this technology is Zcash, a crypto platform that employs a special iteration of zero-knowledge proofs (called zk-SNARKs) that allow native transactions to remain fully encrypted while still being verified under the network’s consensus rules.
With that said, even though zero-knowledge proofs possess a lot of potential to alter the way in which today’s data systems verify information, the technology is still considered to be in its nascent stages — mainly because researchers are trying to figure out how to best use this concept as well as determining any potential flaws.
What advantages do zero-knowledge proofs offer?
ZKPs completely eliminate the need for passwords as well as the use of any other sensitive data when facilitating a transaction.
Zero-knowledge proofs allow for a transfer of information to take place between two parties without the originator having to use a password or reveal any data related to him/her. This helps weed out many of the potential risks that are involved with the use of password-only authentication protocols. Additionally, ZKPs also help in bolstering the security of a person’s online payments/transactions and public cloud accounts.
The only potential downside to using zero-knowledge proofs is that in case the originator of a transaction forgets his/her source passcode, all of the data associated with the transfer will be lost forever.
Notable use cases
Over the last two to three years, a number of platforms have adopted zero-knowledge proofs in order to bolster their native security/privacy capabilities.
ZoKrates is a digital toolbox that can be used by skilled developers to devise and verify zero-knowledge proofs using Solidity — an object-oriented programming language used for creating Ethereum-based smart contracts.
Similarly, a couple of years ago, JP Morgan Chase adopted Zcash’s zk-SNARKs-based proof of concept to bolster the privacy of its native blockchain ecosystem called Quorum. Simply put, Quorum is a fork of the Ethereum blockchain that makes use of its very own smart contract language called Constellation.
Lagos-headquartered fintech Opay has sealed $120 million in a series B financing round from a host of high-profile Chinese investors.
Founded in 2018 by web browser developer Opera, OPay — which focuses on developing digital payments solutions to promote financial inclusion — had previously raised $50 million in June of this year, according to what Opera’s spokesperson told Cointelegraph.
Opay to extend payments solution across Africa
According to a Nov. 18 report from TechCrunch, Opera’s OPay reportedly intends to use the new Series B $120 million round to scale and extend its digital payments solution beyond Nigeria to Kenya, Ghana and South Africa.
The round reportedly included big-name venture capital investors Sequoia China and Softbank Asia, IDG Capital, alongside Meituan-Dianping, GaoRong, Source Code Capital, BAI, Redpoint and GSR Ventures.
Since its Series A $50 million round, OPay’s business in Nigeria has grown to 140,000 active agents and hit $10 million in daily transaction volume, according to TechCrunch.
Norway-based, Chinese-majority owned software developer Opera is both highly active in the cryptocurrency sphere and in the African consumer market. Its eponymous web browser is the second most widely used on the African continent, after Google’s Chrome, according to 2018-2019 data from Statcounter.com
The company actively pursues web 3.0 development and progressively integrated crypto wallet and payments-functionality into its mobile and desktop products in recent years.
“Web 3.0” is a term that was initially coined to refer to efforts to develop a semantic internet, and is increasingly used to refer to the evolution of a more intelligent, open and distributed web, which could integrate the use of blockchain, decentralized computing and cryptocurrencies.
Fintech and blockchain investment on the continent
As TechCrunch notes, Africa-based startups — including OPay, PalmPay and Lori Systems — have secured a combined total of $240 million from 15 different Chinese investors in a matter of months.
In terms of the increasingly vibrant fintech and cross-border payments space, Nigeria-based Interswitch recently hit unicorn status following an equity investment from Visa and plans to go public in the future.
As Cointelegraph has reported, blockchain is gaining increasing traction in Nigeria, with lawmakers spearheading a statutory framework for crypto and blockchain regulation and private sector blockchain schemes for areas such as transportation infrastructure recently launching in the country.
The Bitcoin Core development team released the latest update on Nov. 24 to Bitcoin (BTC)’s original software client — the nineteenth in the coin’s eleven-year history.
Releasing Bitcoin Core 0.19.0 (eventually 0.19.0.1 in the available download version, following the discovery of a last-minute issue) was overseen by lead maintainer Wladimir J. van der Laan and was reportedly developed by over a hundred contributors over a roughly six month period.
New wallet format, better SegWit interoperability
As Aaron van Wirdum has revealed, 0.19.0.1 includes a range of performance improvements, updates and bug fixes, resulting from 550 merged pull requests.
The “bech32” address format (BIP 173) is now set for the first time as the default option in the Bitcoin Core wallet Graphical User Interface (GUI), having first been introduced in early 2018 with version 0.16.0.
Bech32 contains a number of amendments, such as no longer making a distinction between lowercase and capital letters and formatting addresses to begin with “bc1” as opposed to 1 or 3. The addresses are thus a bit longer than existing format, but use fewer different characters. The changes are broadly intended to reduce the margin for human error in typos or reading aloud.
Bech32 also reportedly improves interoperability with SegWit wallets, with transactions now requiring less data to be transmitted over the Bitcoin network — and thus included in the blockchain — thereby reducing costs.
Van Wirdum indicates that the updated software client also now makes it possible for users to start a pruned node immediately from setup, even those with low disk space.
Privacy and security improvements
Nodes are now required to establish more connections to one another in a bid to better thwart partitioning attacks. Bloom Filters — a way for light clients, such as those running from mobile phones, to request relevant data from full nodes on the network — have now been deprecated, as they are deemed to be weak on privacy.
Instead of Bloom Filters, 0.19.0.1 is evolving toward supporting a newer solution called “compact client-side block filtering” (BIP 158), which essentially reverses the operation of Bloom Filters by having full nodes create filters for each block and enabling light clients to use these filters to determine whether transactions relevant to them may have happened in a block.
Bitcoin Core 0.19.0 has removed payment protocol (BIP 70) from its GUI, noting that it was never widely adopted and that most wallets still use the more basic URI scheme (BIP 21) to receive payments.
The minor features outlined include support for the Partially Signed Bitcoin Transactions (PSBT) protocol, which is useful for multi-signature and CoinJoin transactions.
This October, Bitcoin Core developer Greg Maxwell had criticized the “attractive mystery” that fear of a 51% attack on Bitcoin entails, arguing that any mechanism cooked up to mitigate it always implies centralization and represents a far greater threat to the network’s integrity.
Today, November 24, 2019, marks the official release of Bitcoin Core 0.19.0, the 19th major release of Bitcoin’s original software client launched by Satoshi Nakamoto almost 11 years ago and still the dominant Bitcoin implementation on the network today. (Though due to an issue that came to light in a late stage of the Bitcoin Core 0.19.0 release process, the version released for download is actually 0.19.0.1.) Overseen by Bitcoin Core lead maintainer Wladimir van der Laan, this latest major release was developed by over a hundred contributors over a span of about six months.
The result of 550 merged pull requests, Bitcoin Core 0.19.0 includes a range of performance improvements, modernizations and bug fixes, as well as other changes.
Here’s an overview of some of these changes.
Bech32 Addresses by Default in the GUI
The “bech32” address format (BIP 173) had already been introduced in Bitcoin Core 0.16.0, released in early 2018, but is now for the first time set as the default option in the Bitcoin Core wallet Graphical User Interface (GUI).
Bech32 addresses are the addresses starting with “bc1” (as opposed to addresses starting with a 1 or a 3.) These addresses are also a bit longer, but use fewer different characters than the current address format, as there is no longer a distinction between lowercase and capital letters. (This reduces the potential for human mistakes, for example, when an address is read out loud.) Bech32 addresses are also designed to limit mistakes caused by typos.
Additionally, bech32 offers benefits in the context of SegWit. Some wallets that offer SegWit — including the Bitcoin Core wallet by default up until now — do so by “wrapping” it into P2SH outputs (with addresses starting with a “3”). To spend bitcoin from such an address, users must reveal a piece of code — the “redeem script” — to show that the bitcoin were really locked up in a SegWit output. With the new bech32 addresses, this step can be skipped, which means that spending from a SegWit output will require a little less data to be transmitted over the Bitcoin network and included in the blockchain. This makes transactions from a bech32 output even cheaper than SegWit transactions from a P2SH output.
Since not all bitcoin wallets support sending to bech32 addresses yet, Bitcoin Core 0.19.0 users will still be able to optionally generate a PS2H receiving address instead, through a toggle in the GUI.
Two Block-Only Outbound Connections Extra by Default
Bitcoin nodes connect to several other Bitcoin nodes, together forming the peer-to-peer network. Over this network, the nodes share blocks, transactions and some additional transaction data.
But the peer-to-peer network can be subject to attacks, such as “partitioning attacks.” If an attacker controls a large enough number of Bitcoin nodes, it can potentially “cut off” certain parts of the Bitcoin network (or even specific nodes) by intercepting all traffic to it. The partitioned part of the network could then, for example, be fooled into accepting a minority chain — not the longest chain — as valid, which could, in turn, open the door to double-spend attacks.
A partitioning attack is countered if a node in the partitioned part of the network has even just one connection to an honest node on the main network. It would then receive and relay all transactions and blocks and would reject the minority chain in favor of the majority chain.
One way to realize this, and to make partitioning attacks harder to pull off, is to have nodes establish more connections to one another. More connections do come with more memory and bandwidth requirements, however; there is a trade-off.
Bitcoin Core 0.19.0 increases the default for outgoing connections by two, but — cleverly — these two extra connections are only used to relay blocks — they do not relay transactions or additional transaction data. This increases the added bandwidth requirements minimally, while still making partitioning attacks harder to pull off successfully.
Bloom Filters Deprecated
Bitcoin Core is a full node implementation, which means that it downloads and verifies all Bitcoin blocks. While this is optimally secure, it doesn’t make it very well suited for low-resource computing devices, like mobile phones. Mobile wallets (as well as some desktop wallets) are, therefore, usually “light clients”: these only download transactions and (parts of) blocks that concern them specifically.
One way to do this is with Bloom Filters, used by a couple of wallets today. In short, Bloom Filters are a cryptographic trick used by light clients to request relevant data from more or less random full nodes on the network. Unfortunately, however, it has become clear over the years that Bloom Filters are rather privacy-unfriendly: They essentially reveal all of their addresses to the full node. On top of that, supporting Bloom Filter requests does come at a cost in CPU and disk space for full nodes — with no direct benefit for the full node itself.
For the latter reason in particular, Bitcoin Core 0.19.0 no longer supports Bloom Filter requests by default. Users can still switch the default to support Bloom Filters if they so choose.
It’s also worth noting that the Bitcoin network as a whole will almost certainly continue to support Bloom Filters for years to come, even if no one switches their defaults, simply because older Bitcoin Core nodes typically continue to be in use for years after new versions have been released.
More Support for Compact Client-Side Block Filtering
An alternative to Bloom Filters is a newer solution called “compact client-side block filtering” (BIP 158). Compact client-side block filtering essentially turns the Bloom Filter trick on its head. Instead of light wallets creating filters to send to full nodes, full nodes create filters for each block. Light clients can then use these filters to figure out if transactions relevant to them may have happened in a block. If so, the light wallet will fetch the whole block and pick any relevant transaction data out of it.
Bitcoin Core 0.19.0 continues to move toward supporting compact client-side block filtering. Bitcoin Core nodes could already create the filters locally, but Bitcoin Core 0.19.0 users can now also make them available through a remote procedure call (RPC), for applications running on top of the node (like a wallet).
The filters are not yet available over the peer-to-peer network, however. This means that a Bitcoin Core 0.19.0 node will not automatically send filters to other Bitcoin users’ wallets. This feature could be added to a future Bitcoin Core release — or Bitcoin Core 0.19.0 users could opt to offer the feature through a custom application running on top of their Bitcoin Core node.
Payment Protocol Support Disabled From GUI
The Payment Protocol (BIP 70) was designed several years ago to improve Bitcoin’s payment experience. On top of the regular payment as broadcasted to the Bitcoin network, a user and a merchant would communicate additional details about a payment, such as a human-readable destination address (the name of the merchant) and a refund address in case something went wrong with the purchase.
While Bitcoin Core integrated the Payment Protocol in its GUI, the standard was never widely adopted. Instead, most wallets still use the more basic URI scheme (BIP 21) to receive payments: The clickable link or scannable QR-code format that, for example, communicates the payment address and amount. (The only notable exception today is payment processor BitPay, which does not support the URI scheme but uses a modified version of BIP 70.)
Perhaps more importantly than the lack of adoption, the BIP 70 payments protocol has been suffering a number of security and privacy vulnerabilities over the years. Some wallets have, therefore, actively rejected to implement the protocol. Bitcoin Core, too, had been planning to deprecate BIP 70 for some time, as maintenance of it wasn’t considered worth the effort — but BitPay’s adoption of it stalled this process.
In Bitcoin Core 0.19.0, BIP 70 has been removed from the GUI by default after all. Bitcoin Core 0.19.0 users would have to compile their node with a special configuration to still make use of the feature.
Besides the changes mentioned above, Bitcoin Core 0.19.0 comes with a long list of smaller improvements and modernizations.
It’s now possible to start a pruned node immediately from setup, for example, which lets users with little disk space easily start up a new Bitcoin node. Bitcoin Core 0.19.0 also includes new features for the Partially Signed Bitcoin Transactions (PSBT) protocol, which is useful for multisignature and CoinJoin transactions. Likewise, there are several improvements in the domain of wallet descriptors, which is particularly useful for programmers working on Bitcoin applications. Bitcoin Core 0.19.0 nodes will also accept and relay transactions that use a future SegWit version to ensure that upcoming upgrades will proceed smoothly.
-----BEGIN PGP SIGNED MESSAGE-----
Binaries for bitcoin Core version 0.19.0rc3 are available from:
Source code can be found in git under the signed tag
This is a release candidate for a new major version release.
Preliminary release notes for the release can be found here:
Release candidates are test versions for releases. When no critical problems
are found, this release candidate will be tagged as 0.19.0.
An issue has been opened on github to report experiences while testing:
Please report bugs to the issue tracker:
Changes since rc1:
### RPC and other APIs
- - #17131 fix -rpcclienttimeout 0 option (fjahr)
- - #17249 Add missing deque include to fix build (jbeich)
- - #17135 Make polling in ClientModel asynchronous (promag)
- - #17120 Fix start timer from non QThread (promag)
- - #17257 disable font antialiasing for QR image address (fanquake)
### Tests and QA
- - #17158 Fix fs_tests for unknown locales (carnhofdaki)
- - #17184 util: Filter out macos process serial number (hebasto)
- - #17085 init: Change fallback locale to C.UTF-8 (laanwj)
- - #17095 util: Filter control characters out of log messages (laanwj)
- - #17111 update bips.md with buried BIP9 deployments (MarcoFalke)
-----BEGIN PGP SIGNATURE-----
-----END PGP SIGNATURE-----
Der deutschen Wirtschaft fehlen weiterhin qualifizierte Fachkräfte. Im Oktober 2019 waren laut einer aktuellen Auswertung des IW Köln bundesweit rund 263.000 Stellen im MINT-Bereich unbesetzt. Seit 2014 hat sich diese Zahl fast verdoppelt, wie die Statista-Grafik zeigt. Vor allem gut ausgebildete Informatiker werden oft händeringend gesucht – sie machten zuletzt einen Anteil von 19,8 Prozent an den offenen Stellen aus.
Um den Bedarf zu decken, sollten verstärkt IT-Fachkräfte aus dem Ausland angeworben werden, so der Vorschlag des IW-Köln. Schon heute wäre die MINT-Fachkräftelücke ohne die ausländischen Mitarbeiter um 232.400 Personen größer.
China’s Zhejiang province has processed nearly $6 billion via a blockchain medical billing platform using Ant Financial’s blockchain technology, Chinese publication QNSB reports on Nov. 18. Successfully piloted in 2018, the blockchain-enabled platform allows citizens to make doctor’s appointments, get prescriptions as well as pay, record and store their medical bills online.
At a local blockchain event on Nov. 18, the Zhejiang Provincial Department of Finance announced that the platform had480 medical institutions across the province as of Oct. 28. The officials said that the platform processed 41.7 billion Chinese yuan ($5.9 billion) as of October.
The platform is reportedly based on Ant blockchain, a technology developed by Alibaba subsidiary Ant Financial.
Platform accelerated insurance payouts by 96 times
The platform was designed to reduce the time needed for the issuance and verification of medical documents and has reportedly sped up insurance payouts by 96 times. According to the report, the platform has cut down the insurance claims procedures from 12 days to three hours so far.
As reported by Chinese blockchain-focused publication Jinse Finance, the platform was successfully piloted in Zhejiang’s Taizhou city in 2018. Launched in partnership with 11 local comprehensive hospitals, the pilot reportedly reduced the per-patient visit time from 170 minutes to 75 minutes.
Platform is facilitated by Alipay and Ant Financial
According to a report by Asia Crypto today, Alipay, the digital payment arm of Chinese e-commerce giant Alibaba, partnered with local authorities to complete the pilot. Alipay reportedly provided the province with its Alipay payment service, while its affiliate firm, Ant Financial, was providing its blockchain technology.
In mid-November, Ant Financial started testing its enterprise blockchain platform, as reported by Cointelegraph. Called Ant Blockchain Open Alliance, the platform intends to support small and medium-sized businesses by allowing them to cut costs and expand their reach.
[a Blockchain-based payment solution does not have those kind of hacking issues … TJACK]
The web skimmer has been spotted on at least 17 popular eCommerce websites, a new Visa alert warns.
Pipka was first identified on an unnamed North American merchant website and researchers since then identified sixteen additional unnamed websites compromised by the skimmer (Threatpost has reached out to researchers for further information on the name of victim sites).
“We are not identifying merchants by name or sector but they are comprised of small to medium sized businesses. All impacted merchants have been alerted,” Sam Cleveland, senior analyst on the Payment Fraud Disruption team at Visa told Threatpost.
Researchers said that the skimmer is injected directly into varying locations on the targeted merchant’s website and, once executed, harvests the data in the configured form fields. The skimmer checks for these configured fields before executing; specifically, Pipka is configured to check for the “payment account number” field. Then, Pipka checks that the data string was not previously sent to avoid sending duplicate data, and exfiltrates the payment card data to a command and control (C2) server.
Researchers said that Pipka includes some unique features not previously observed – the most interesting centering around anti-forensics.
When the skimmer executes, it calls the start function, which in turn calls the clear function and sets the skimmer to look for data every second. Immediately after the script loads, the clear function locates the skimmer’s script tag on the page and removes it – making it difficult for analysts or website administrators to spot the code when visiting the page.
Before sending exfiltrated data to the C2 server, the skimmer also uses ROT13 encoding to encrypt the stolen data. An ROT13 cipher is a letter substitution cipher that replaces the 13th letter of text for encryption purposes. While the use of a ROT13 cipher has been observed before, it was implemented on the exfiltration C2 server, not in the skimmer itself, researchers said.
Web skimmers have been a favorite of cybercriminals over the past year.
The most infamous example is Magecart, which has made headlines over the past year or so for high-profile breaches of companies like VisionDirect, Ticketmaster and more, is known for its use of web-based, digital card skimmers, using scripts injected into websites to steal data that’s entered into online payment forms on e-commerce websites directly or through compromised third-party suppliers used by these sites. More recently, the Magecart threat group continued its offensive with two newly disclosed breaches targeting bedding retailers MyPillow and Amerisleep.
And in July, malicious domains masquerading as Google sites were discovered being used by payment card-skimming adversaries looking to dupe website visitors.
“Online credit card skimming differs from the physical skimming practices most people have heard about in that there isn’t an obvious way the average person will be able to identify if or when a web site has been compromised,” Tim Mackey, principal security strategist with Synopsys said in an email. “The only potential tell-tale sign might be that the website itself doesn’t quite look ‘right,’ though more sophisticated attacks can make even differentiating between a fake site and a legitimate one challenging.”
Visa researchers recommended that websites institute recurring checks in eCommerce environments for C2 communications; ensure familiarity with code integrated into eCommerce environments and closely vet Content Delivery Networks.
Blockchain it is not: the Proof-of-Authority (PoA) consensus algorithm does not require miners to be involved at all … and obviously forsakes on the 10-year proven test case against hacking and compromise of the PoW Blockchain. – TJACK
While the proof-of-authority consensus algorithm is turning into perhaps one of the most mature versions of blockchain technology. It is faster than other algorithms, more scalable, and does not depend on mining. Market leaders Walmart and GE Aviation are using PoA to track supply chains, and Microsoft has created a whole line of PoA-based enterprise products.
Nevertheless, there is something in this innovative mechanism that contradicts the basic principles of cryptocurrencies — decentralization and anonymity. Cointelegraph talked to technology companies to find out how PoA products work, and what benefits the use of this algorithm brings them.
How it differs from other algorithms
The PoA consensus algorithm stands apart from the rest of the algorithms, and unlike proof-of-work and proof-of-stake, it does not require miners to be involved at all. In a blockchain network based on PoA, all transactions and blocks are processed by approved accounts (validators) that replace miners.
As a result, there is no need to spend vast amounts of resources to maintain the network’s performance, making such platforms extremely cheap to maintain. In this context, PoA is currently being implemented as a more efficient alternative to older counterparts, as it is capable of performing more transactions per second.
Such blockchains are also much faster than the ones running on the PoW consensus algorithm. For example, blocks in the POA Network are generated once every five seconds, in VeChain — once every 10 seconds, and every 15 seconds in Ethereum Express.
As the name implies, in PoA, the authority of the participant is the guarantor of the transaction’s validity. Therefore, such a network is protected against manipulation by the owners of richer nodes. This is different to PoS, where the more tokens a user has, the more likely they are to form a new block. In addition, PoA validators must pass a series of checks to confirm their reliability.
All this makes PoA well-suited for private, or, as they are also called, corporate blockchains. Such networks involve a limited number of participants who are familiar with each other. In this area, the reputation of the node is crucial, with a validator’s reputation being its own main value and capital. Vlad Miller, CEO of Ethereum Express — a cross-platform working on the PoA algorithm — told Cointelegraph:
“One of the significant advantages of such platforms is the ability to scale horizontally. PoA services can combine computing power for joint transaction processing, thus increasing the throughput of the entire network.”
Notaries instead of miners
Each PoA network has its own principles for assigning validators. For example, in the POA Network — a sidechain created on top of the Ethereum blockchain — owners of nodes must be United States citizens and have a valid public notary license.
The reliability of such individuals is associated with their professional activities for several reasons: The notary data is publicly available, validators cannot refuse to verify their identity, and the presence of a notary license guarantees his qualification and the absence of a criminal record.
The transaction validation process itself implies that each block is attributed to a validators’ identity. Therefore, if they break the network rules — for example, by not accepting a transaction to a specific address — participants of the network can resort to legal instruments to settle the problem.
Notably, any decision to modify the network — whether it’s a hard fork or a small upgrade — is said to be signed as a legal document and is recognizable in a court system. This, according to the POA Network developers, allows members of the network to be protected and helps to better decide how to deal with upcoming changes.
However, the involvement of notaries in the system does not mean that it can be used exclusively in the field of documentation or legal processes. Small and medium-sized companies can use the platform in any processes that require a high transaction processing speed and low commission.
To date, the POA Network includes twelve validators, whose names are disclosed. The profiles of at least eight of them can be found on LinkedIn alone. No one can know who the person behind the network is, both literally and figuratively.
Gamers can now vote
One of the use cases identified by using the PoA algorithm is the development of online games that can be scaled significantly while obtaining a consensus of authority. For gamers, the advantage is the minimal transaction cost offered by PoA-based solutions. In addition, the PoA network is three times faster than Ethereum, thereby decreasing server workload.
For example, the Ethereum Express team, together with a gaming company, launched a pilot project achieving 1,000 transactions per block (five seconds) and a network capacity of 200 TPS. The Ethereum Express developers noted that in the future, they will be able to increase the processing speed of transactions in the network by raising the throughput of each block.
Meanwhile, Microsoft has integrated a PoA-based protocol to manage content rights and royalties on Xbox Live. Anir Kaushik, engineer at Microsoft, shared the results of this endeavor with Cointelegraph:
“Microsoft provides sales reports to publishers, which usually takes up to 45 days or more. By writing the transactions to the PoA-based Quorum protocol, transparency is improved and publishers can access data almost in real-time. The results include a 99% reduction in transaction settlement times, from 45 days to the order of minutes, and a 66% decrease in transaction costs.”
The recently introduced TokenBridge technology is another innovation brought by the POA Network. It allows players to easily transfer tokens and other assets from one blockchain to another. In practice, this means that game items can be easily transferred from one game to another.
Igor Barinov, technical lead at POA Network, explained to Cointelegraph that TokenBridge is to be integrated in several games like Clovers Network, allowing gamers to get access to liquidity of marketplaces or exchange items for ethers.
While these solutions use the PoA consensus algorithm to deliver game products to customers, the gamers themselves of Ethereum Express are its validators. The platform is built on a self-regulatory system where the community acts like a middleman, since it is interested in transparency and reliability of operations in the system. By assigning the community members voting rights, the EEX developers attempted to solve one of the main problems of the game and gambling industry — manipulation.
For gambling games, EEX developed the PoA-based decentralized management infrastructure, where the most loyal users can audit the system to look for possible fraud. On the other hand, the complete transparency of the data ensured through the self-regulated structure allows players to independently verify the game operator by checking its bank or licenses.
Tracking food, medicine and spare parts
One of the main applications for PoA is the logistics sector, which involves product supply chain tracking and verification of goods and components. The transparency and speed of the PoA algorithm allow logistics operators to track any products in real-time for maximum efficiency of deliveries.
The aviation industry is one of the use cases where the safety of passengers depends on the quality of spare parts and thus proper logistics. A report issued by PwC in 2019 claims that using blockchain to improve logistics and routine efficiency could boost the aviation industry’s revenue by as much as 4% annually, or $40 billion. According to analysts, it could also cut maintenance, repair and overhaul costs by about 5% annually, or $3.5 billion.
An example of such application is the use of Microsoft Azure’s Blockchain in GE Aviation, an aircraft manufacturer. The developed blockchain solution leverages PoA to improve how parts and repairs are tracked over their lifetime. David Havera, Blockchain Leader at GE Aviation’s Digital Group, said:
“Before, we had to manually pull historical documentation on where a part was manufactured and who repaired it, which took months to years. Now we just scan a part and have that story in real time at our fingertips.”
The pharmaceuticals industry seems to also be in need of blockchain tracking technologies. Retail giant Walmart has already incorporated MediLedger into its tracking system that will allow increasing the efficiency of supply chain management.
The MediLedger project uses an enterprise-suited version of the Ethereum blockchain, which is built using a modified Parity client and the PoA algorithm mechanism to track the origin of medicine.
The company planned to launch a pilot project in conjunction with the U.S. Food and Drug Administration in June 2019 and is currently testing various approaches with the goal of creating an interoperable electronic system for tracking and validating drugs by 2023.
Consumer goods, such as food products, are also being transferred onto blockchain in their supply chains — and Walmart is once again in the lead. The giant’s Chinese branch has teamed up with PwC and VeChain to track the movement of goods.
On June 25, Walmart China reported that by 2020, tracking of products via blockchain technology will encompass over 40% of all of their vegetable sales and 12.5% of seafood product sales.
Walmart is not alone in its strive for blockchain application in food product tracking, as the United Nations World Food Program has also applied the Parity Ethereum network to track deliveries and accounting for balances without the need for a third-party financial services provider.
The PoA algorithm has found its way into everyday commerce as well, with the Bancor project applying it in Kenya to alleviate poverty by providing local communities with the ability to buy and sell local currencies using credit cards or popular cryptocurrencies, involving 1,000 businesses and 20 schools. The project, launched on July 5, 2018, fosters entrepreneurship and helps locals generate income.
The Bancor founding group previously launched a number of local currency pilots serving various communities. Among them is the currency for a local community of mothers that processed more than 1,000 transactions per day at its peak, although its activity was eventually reduced, since the currency was not transferred outside the group.
The energy sector is also applying the PoA algorithm with the Energy Web Foundation (EWF) launching its own blockchain for a number of major energy companies, such as Mercados Electricos. The application will allow companies to significantly increase energy efficiency and ensure regulatory compliance.
According to the founders of the company, getting started is extremely easy: Anyone can download the program and start using the smart grid. In addition, each smart home connected to blockchain will allegedly receive its identification number with a wallet tied to it. Those individual wallets can be tied to an electric vehicle and its charging station.
While today’s owners of electric cars have to use a lot of applications from various charging stations, with blockchain, a station can automatically find out who the driver is and whose wallet should be used for payment by using the car’s ID number, as stated by the EWF.
In the long run, blockchain can enable decentralized energy trading. If consumers begin to generate more energy on their solar roofs than they need, they will be able to sell the surplus through a distributed registry system at real-time regulated prices.
For corporate use only
The PoA consensus algorithm provides a mechanism that exempts administrators of complex computing operations, thus reducing electricity consumption and increasing network profitability.
Although PoA-based blockchains forgo decentralization principles and use publicly known validators for processing transactions, various use cases show that this algorithm can be a good tool in the corporate environment, which it is oriented toward. Regarding this, Miller from Ethereum Express said:
“Due to the decentralized nature of most blockchain networks, the Proof-of-Stake consensus algorithm is not always suitable for certain enterprises and corporations. In contrast, PoA-based systems may represent the best solution for private blockchains, since the performance of this algorithm is significantly higher.”
Microsoft’s Kaushik shared the same point of view, adding that companies that integrate PoA in their processes get “enterprise compatibility at the risk of losing some degree of decentralization, while still maintaining the benefit of efficient multi-party collaboration.”
Likewise, it can be useful for the government entities, according to Joseph Edwards, head of research for Enigma Securities. He added that, “if a local government or a retail supply chain has a blockchain, it’s usually going to be PoA.”
The cryptocurrency space has changed a lot since the first blockchain transaction on the Bitcoin network. Along with the well-known Proof of Work and Proof of Stake algorithms, other consensus mechanisms were proposed, with alternative methods for reaching consensus within a blockchain system.
The PoW consensus algorithm used by Bitcoin is the most reliable and secure in existence today.However, it is not really scalable. Bitcoin, as well as other PoW-based blockchains, have limited performance in terms of transactions per second (TPS). Such limitation is related to the fact that Bitcoin relies on a distributed network of nodes, which need to reach consensus and agree on the current states of the blockchain. This means that before a new block of transactions gets confirmed it needs to be verified and approved by the majority of network nodes. Therefore, the decentralized aspect of Bitcoin is not only providing a secure and trustless economic system but it is also limiting its potential to be used on a larger scale.
In regards to the amount of transactions per second, Proof of Stake blockchains usually present a better performance than Bitcoin. However, the difference is not that significant and PoS networks did not really manage to solve the scalability problem.
In this context, the Proof of Authority is currently being implemented as a more efficient alternative because it is able to perform much more transactions per second.
What is Proof of Authority?
Proof of Authority (PoA) is a reputation-based consensus algorithm that introduces a practical and efficient solution for blockchain networks (especially the private ones). The term was proposed in 2017 by Ethereum co-founder and former CTO Gavin Wood.
The PoA consensus algorithm leverages the value of identities, which means that block validators are not staking coins but their own reputation instead. Therefore, PoA blockchains are secured by the validating nodes that are arbitrarily selected as trustworthy entities.
The Proof of Authority model relies on a limited number of block validators and this is what makes it a highly scalable system. Blocks and transactions are verified by pre-approved participants, who act as moderators of the system.
PoA consensus algorithm may be applied in a variety of scenarios and is deemed a high-value option for logistical applications. When it comes to supply chains, for example, PoA is considered an effective and reasonable solution.
The Proof of Authority model enables companies to maintain their privacy while availing the benefits of blockchain technology. Microsoft Azure is another example where the PoA is being implemented. In a few words, the Azure platform provides solutions for private networks, with a system that does not require a native currency like the ether ‘gas’, since there is no need for mining.
Proof of Authority vs Proof of Stake
Some consider PoA to be a modified PoS, which leverages identity instead of coins. Due to the decentralized nature of most blockchain networks, PoS is not always suitable for certain businesses and corporations. In contrast, PoA systems may represent a better solution for private blockchains because its performance is considerably higher.
Conditions for Proof of Authority Consensus
Although the conditions may vary from system to system, the PoA consensus algorithm is usually reliant upon:
valid and trustworthy identities: validators need to confirm their real identities.
difficulty to become a validator: a candidate must be willing to invest money and put his reputation at stake. A tough process reduces the risks of selecting questionable validators and incentivize a long-term commitment.
a standard for validator approval: the method for selecting validators must be equal to all candidates.
The essence behind the reputation mechanism is the certainty behind a validator’s identity. This can’t be an easy process nor one that would be readily given up. It must be capable of weeding out bad players. Finally, ensuring that all validators go through the same procedure guarantees the system’s integrity and reliability.
The perception of the PoA mechanism is that it foregoes decentralization. So one could say that this model of consensus algorithm is just an effort to make centralized systems more efficient. While this makes PoA an attractive solution for large corporations with logistical needs, it does bring some hesitation – especially within the cryptocurrency scope. PoA systems do have a high throughput, but aspects of immutability come into question when things like censorship and blacklisting can be easily achieved.
Another common criticism is that the identities of PoA validators are visible to anyone. The argument against this is that only established players capable of holding this position would seek to become a validator (as a publicly known participant). Still, knowing the validators’ identities could potentially lead to third-party manipulation. For instance, if a competitor wants to disrupt a PoA-based network, he may try to influence public known validators to act dishonestly in order to compromise the system from within.
PoW, PoS, or PoA all have their own unique advantages and disadvantages. It is well known that decentralization is highly valued within the cryptocurrency community and PoA, as a consensus mechanism, sacrifices decentralization in order to achieve high throughput and scalability. The inherent features of PoA systems are a stark contrast from how blockchains have been functioning until now. Still, PoA presents an interesting approach and cannot be disregarded as an emerging blockchain solution, which may suit well for private blockchain applications.
Bitcoin (BTC) mining difficulty adjusted downwards more than at any time since its 2018 price low on Nov. 8, data shows.
As noted by entrepreneur and cryptocurrency commentator Alistair Milne on Monday, difficulty fell by around 7% after the network’s latest readjustment.
Difficulty reveals Bitcoin network maneuvering
Mining difficulty refers to the effort required for miners to solve the equations necessary to validate transactions on the Bitcoin network. A higher difficulty implies competition for block rewards is higher, while drops incentivize more participation.
The mechanism functions as a self-stabilizing device for Bitcoin, ensuring network security is sufficient even when price or network activity drops significantly.
From its recent bottom of 5.1 trillion in December 2018, when BTC/USD traded at $3,100, the difficulty has increased incrementally throughout 2019. In late October, the metric reached an all-time high of 13.7 trillion and has now corrected to 12.7 trillion, data from monitoring resource Blockchain shows.
“Seems to confirm the cost of mining (on average) is ~$8,000” Milne summarized.
Hash rate retakes 100 quintillion hashes per second [100 EH/s]
At the same time, Bitcoin’s network hash rate saw renewed bullish upside on Monday, having similarly seen a period of contraction in recent weeks.
At press time, hash rate, which is an estimation of how much computing power is dedicated to validating transactions, had passed 100 quintillion hashes per second once again.
The United Kingdom-based firm now has around 7,000 miners, and by the end of Q1 2020 plans to increase the total to 17,000.
As Cointelegraph reported, mining companies overall remain buoyant about the future profitability of the sector. Canaan Creative, another significant player, is reportedly set to undergo a $400 million initial public offering, or IPO, this month.
At the same time, Bitmain is going ahead with the expansion of a Texas mining farm which officials say could ultimately become the largest in the world.
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