An Open Letter to the Bitcoin Community from the Developers

Bitcoin Magazine
An Open Letter to the Bitcoin Community from the Developers
open-letter

Editor’s Note: This is a letter to the community written and signed by many of the Bitcoin developers, including the most prolific contributors to (at least) three separate implementations of the Bitcoin system. Signers of this letter represent about 90% of the commits in the last year or two to Bitcoin Core, according to Greg Maxwell.

As active contributors to Bitcoin, we share this letter to communicate our plan of action related to technical consensus and Bitcoin scalability.

Bitcoin is many things to many people. However, the development and maintenance of Bitcoin is a human endeavor. Satoshi sought review and cooperation, and the subsequent work by Bitcoin’s developers has made the system more secure and orders of magnitude faster. The Bitcoin developer community is dedicated to the future of Bitcoin, looks after the health of the network, strives for the highest standards of performance, and works to keep Bitcoin secure on behalf of everyone.

We’re committed to Bitcoin and responsive to the needs of the community. For the past five years, we’ve written code and managed over 50 Bitcoin releases and reviewed more than 45 formal proposals to improve Bitcoin’s performance, security, and scalability. Technical discussions, while heated at times, are always focused on improving Bitcoin.

Much work has already been done in this area, from substantial improvements in CPU bottlenecks, memory usage, network efficiency, and initial block download times, to algorithmic scaling in general. However, a number of key challenges still remain, each with many significant considerations and tradeoffs to evaluate. We have worked on Bitcoin scaling for years while safeguarding the network’s core features of decentralization, security, and permissionless innovation. We’re committed to ensuring the largest possible number of users benefit from Bitcoin, without eroding these fundamental values.

There will be controversy from time to time, but Bitcoin is a security-critical system with billions of dollars of users’ assets that a mistake could compromise. To mitigate potential existential risks, it behooves us all to take the time to evaluate proposals that have been put forward and agree on the best solutions via the consensus-building process.

In the upcoming months, two open workshops will bring the community together to explore these issues. The first Scaling Bitcoin workshop will be in Montreal on September 12-13. The second workshop is planned for December 6-7 and will be hosted in Hong Kong to be more inclusive of Bitcoin’s global user base.

We ask the community to not prejudge and instead work collaboratively to reach the best outcome through the existing process and the supporting workshops. It’s great to already see broad excitement for the event and the high concentration of technical participants attending.

We’re confident that by working together we can agree on the best course of action. We believe this is the way forward and reinforces the existing review process that has served the Bitcoin development community (and Bitcoin in general) well to date.

We welcome your participation as we continue our efforts to bring Bitcoin into the future.

Signed,

Wladimir J. van der Laan

Pieter Wuille

Cory Fields

Luke Dashjr

Jonas Schnelli

Jorge Timón

Greg Maxwell

Eric Voskuil

Amir Taaki

Dave Collins

Michael Ford

Peter Todd

Phillip Mienk

Suhas Daftuar

R E Broadley

Eric Lombrozo

Daniel Kraft

Chris Moore

Alex Morcos

dexX7

Warren Togami

Mark Friedenbach

Ross Nicoll

Pavel Janík

Josh Lehan

Andrew Poelstra

Christian Decker

Bryan Bishop

Benedict Chan

฿tcDrak

Charlie Lee

Jeremy Rubin

 

If you’d like to express your support of this letter, please sign the petition on Change.org.

 

Photo Kim Piper Werker / Flickr (CC)

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UPDATED: Bitcoin Businesses Take Steps to Prepare for CoinWallet’s September Stress Test
network

Updated on 9/2/2015 at 11:43 EST: As of September 2, transaction rates indicate that the stress test by CoinWallet has likely begun. At time of writing, over 23,000 transactions were waiting to be confirmed by the network. Bitcoin Magazine will continue to monitor the network status and provide updates.

CoinWallet, the U.K.-based Bitcoin mining and wallet business has said it will be running another “stress test” in early September to test the Bitcoin network, according to International Business Times.

The company told the international journal that this round of “test” or “spam” attacks “will likely render most standard wallet software worthless and create nearly a 30-day backlog” in the system.

Bitcoin Magazine reached out to CoinWallet to learn more about the company’s plans but received no response by time of publication.

Stress Test will hammer the Bitcoin network

Much like its previous stress test in early July of this year, CoinWallet’s so-called “dust attack” will flood the network with thousands of small, spam-like bitcoin transactions that are large in data but small in value.

A backlog of thousands of transactions with almost no value (such as 0.0001 bitcoin) waiting to be confirmed can potentially tie up the network for hours.

Making it clear which side of the ongoing blocksize debate it’s on, CoinWallet said that it needs to demonstrate that the current Bitcoin blocksize is inadequate and does not meet the demands of a growing bitcoin market.

Bitcoin companies take steps to prepare

As reported previously, exchanges and wallet companies are developing strategies including BitGo’s “surge pricing” to deal with these nuisance attacks and may even at some level appreciate that testing may show the strength of the network.

Mycelium Community Manager Dmitry Murashchik told Bitcoin Magazine:

“Mycelium was hit pretty hard by the last stress test, but we have implemented changes to deal with it. On our back-end we moved to a faster database and linked our nodes so they communicate transactions directly to each other to stay in sync.

“We changed our wallet to automatically connect to another node if the current one fails, added the option to rebroadcast unconfirmed transactions in case some nodes didn’t hear them, and added dynamic fees calculated based on how clogged up the network is to make sure your transaction still gets included in the next block,” Murashchik added.

Alena Vranova, CEO of SatoshiLabs, says that they are fully prepared for the tests and are also gearing up for an increased blocksize noting, “Some companies attempt to cast fear, uncertainty or doubt on their competitor’s products. Let’s wait for the stress test in practice to judge its impact.”

Vranova sees this exercise as just as much about a political statement as about testing the network:

“We strongly feel that the bitcoin community deserves a free and fair debate on the subject: there should be zero censorship around BIP 101 discussions in any forum, including online discussion boards such as BitcoinTalk, /r/Bitcoin, or anywhere else. We stand against any sort of information censorship. A genuinely open approach, with full public access to all available information, is the best way for Bitcoin to proceed.”

QuadrigaCX CEO Gerald Cotten is not really bothered by the upcoming test.

“We use BitGo for our hot wallet, a third-party multi-signature wallet solution,” he told Bitcoin Magazine. One of the ways that we handle this type of thing is that we use a dynamic fee structure which changes based on the network load. Usually, the fee we pay on outgoing transaction is about $0.03. However, when ‘spam attacks’ are taking place we often increase it automatically to as much as $1 per transaction. Basically, we pay whatever is needed to ensure that the transaction will be confirmed within the next few blocks.”

Mycelium’s Murashchik is taking a positive view of all this saying:

“[A]lthough the first stress test was painful, it has shown us whatever weaknesses we may have had, which we have since patched, and we are looking forward to the next stress test to see how well those things we implemented will work. We believe we’re ready for it.”

BitPay also released an updated version of their Copay wallet that includes dynamic transaction fees to ensure that transactions are confirmed quickly, even during transaction backlogs. “Now Copay users can count on their wallet to scale fee levels based on the bitcoin network load, ensuring their transactions aren’t delayed,” the company said in a statement.

 

Photo sara marlowe / Flickr (CC)

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GameCredits to Integrate Digital Currencies in TurboCharged Racing and Other Video Games
gamecredits

GameCredits, a cryptographic payments platform for gamers and game developers is set to integrate digital currencies including its own altcoin called GMC in three video games, one of which was released on September 2.

“GameCredits is the first free open source gaming currency made by gamers for gamers and game developers,” explained the GameCredits team. The company believes that the integration of cryptocurrencies in video games could help increase digital currency adoption, and spur mainstream adoption for many alt-coins.

“We at GameCredits are breaching this chasm and are baldly exploring those uncharted waters – all in the name of providing crypto currencies the mainstream adoption they deserve,” GameCredits Monetization Expert Silvio Gucek explained.

The video game industry is one of the few markets that could benefit greatly from the block chain’s ability to send out micro transactions, or small transactions worth less than a dollar.

The market cap of the currency (GMC) that GameCredits will integrate in its games is currently US$1,574,294, which is substantially smaller than most alt coins in existence. However, the company believes GMC is the right fit for its games, as it has a max number of GMC that will ever exist, like bitcoin.

The first game to adopt the company’s currency is TurboCharged, a hybrid racing game which enables users to bet GMC for races and missions.

“As we launch our initial venture, I expect Turbocharged to act as a catalyst for innovation in this field. TurboCharged permits us to properly vet our betting system and in-game transaction platform, which shall be implemented at a much larger scale in our upcoming game ‘EON,’ currently in development,” announced GameCredits Project Manager Victor Alejandro.

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itBit Hires Former NYDFS General Counsel Daniel Alter, Pushes Ahead with Bankchain Project
itbit

In April, Bitcoin Magazine reported that Bitcoin exchange itBit had filed for a banking license in New York. Later in May, itBit was granted a trust charter by the New York Department of Financial Services (NYFDS) under New York State banking law, the first such charter granted to a digital currency company by the NYDFS. ItBit also announced the successful completion of a $25 million Series A funding round.

On September 2, itBit announced the appointments of Daniel “Danny” Alter as the company’s new general counsel and chief compliance officer, and Kim Petry as chief financial officer. Petry was previously CFO of global operations and technology at Broadridge Financial Services and, before that, served as CFO and vice president of global commercial/corporate card payment at American Express.

Alter joined itBit after stepping down in February from his most recent post as general counsel of the New York State Department of Financial Services (NYDFS), where he served as principal counsel and strategic adviser to the New York state superintendent of financial services.

The former New York State Superintendent of Financial Services Benjamin Lawsky left the NYDFS after releasing the controversial Bitlicense regulations for digital currency businesses operating in New York. Lawsky’s move to a consulting business was strongly criticized by the libertarian Cato Institute.

“Because of the contacts he made as a regulator, [Lawsky] can hire himself out to Bitcoin companies wanting to signal to other regulators that they have the approval of the regulatory establishment,” noted Cato Senior Fellow Tim Harper.

It seems likely that Alter’s move to itBit might be criticized in the same grounds.

“The New York State Public Officers law requires that I have a two-year recusal before I can appear before the New York Department of Financial Services on behalf of the company,” said Alter in a pre-emptive statement reported by Reuters. “And it will certainly apply to itBit. I will not step near or have any communications with the New York Department of Financial Services. Those will be handled by outside counsel or qualified compliance people within the company.”

“Between Danny’s deep expertise in financial services and virtual currency regulation and Kim’s demonstrated track record as a successful CFO of global financial organizations, I’m confident that itBit will continue to grow and develop innovative blockchain-based solutions to address the financial industry’s greatest pain points,” said itBit co-founder and CEO Chad Cascarilla. “Danny and Kim possess a deep understanding of how to grow and run a successful business within the regulatory framework of the financial services industry, and their expertise will be invaluable as we work toward the launch of our new permissioned distributed ledger product – Bankchain.”

Bankchain, a new high profile project still held under wraps by itBit, will be a closed, “permissioned blockchain” owned and operated by banks and financial institutions – in other words, a private blockchain without bitcoin and anonymous miners. According to itBit claims, Bankchain will automate, accelerate and simplify post-trade processes across the financial services industry, saving institutions time and money.

Bankchain is “the first consensus-based ledger system exclusively for financial institutions,” states the still very basic Bankchain website. “Bankchain is a new clearing and settlement network that leverages blockchain technology to reimagine how financial institutions execute post-trade. The decentralized network is powered by itBit but fully governed by the member participants that join the platform.”

“[Bankchain] is a proprietary itBit protocol, not blockchain based, but is derived off of blockchain,” itBit head of global operations Steve Wager told Coindesk in August. “We will also not be using bitcoin as the native token; it will be an itBit proprietary token.”

Reddit users strongly criticized the “Sinister Bankchain Project,” but it appears that the trend toward private, permissioned blockchains is here to stay, with strong support expressed, among others, by Accenture and Digital Asset Holdings CEO Blythe Masters.

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Coinbase Expands to Canada and Singapore to ‘Spur Mainstream Bitcoin Adoption’
coinbase-world

Leading bitcoin exchange and wallet provider Coinbase has expanded its services to Canada and Singapore as a part of its project to expand their services globally. Now, consumers in Singapore are able to buy and sell bitcoin for Singapore dollars through Coinbase.

This follows the company’s announcement from ealier this week that Coinbase users based in Canada will be able to buy and sell bitcoin with Canadian dollars instantly, using the Coinbase Wallet. Additionally, users will be able to buy and sell bitcoin with a Canadian bank account directly and trade BTC/CAD on Coinbase’s exchange.

“Our mission at Coinbase is to spur mainstream bitcoin adoption, which we’ve set out to achieve by providing people with a simple, secure on-ramp to the bitcoin world,” Sam Rosenblum, international expansion lead at Coinbase told Bitcoin Magazine. “By expanding our wallet and exchange services to Canada, we’re getting bitcoin into the hands of even more people globally and, by extension, helping to drive growth of the entire Bitcoin network.”

As a celebration for the expansion of their services to Canada, Coinbase will waive conversion fees for Canadian customers until September 9.

“To celebrate the launch, Coinbase will waive its retail conversion fees for Canadian customers of the direct buy/sell service, available at Coinbase.com, through September 6 (11:59 Pacific time). Standard trading fees on Coinbase Exchange apply,” the Coinbase team announced.

Hackathon and Plans

Along with the announcement, Coinbase also has announced its plans to sponsor a hackathon at the University of Waterloo called “Hack the North hackathon.” As a commemoration of their expansion, Coinbase will award the group that best integrates and implements the API of Coinbase with US$1,000 in bitcoin and guaranteed interviews for an engineering internship at the company.

Coinbase has always been a keen supporter of bitcoin and blockchain hackathons worldwide. To date, it has sponsored multiple blockchain hackathons and offered prizes in bitcoin and participated as panelists and mentors.

The company also has recently begun to host its own bitcoin hackathons, dedicated for developers hoping to build innovative applications with bitcoin.

“We’re interested to see apps which highlight new use cases for Bitcoin, making bitcoin easier to use for wider audiences,” the Coinbase team announced.

The winner of the company’s second global hackathon, Mailman, received more than US$70,000 worth of prizes, US$10,000 of bitcoin and a guaranteed place at bitcoin- and virtual reality-focused Boost VC’s accelerator class. Mailman is an email paywall system which allows users to reward timely replies with bitcoin and filter spam using the blockchain, which Coinbase believes “taps into a core benefit of Bitcoin: permissionless innovation.”

Similar to its efforts for its own bitcoin hackathons and other competitions it has sponsored so far, Coinbase plans to actively assist Bitcoin startups in Canada by financing bitcoin hackathons in Canada, and by making it easier for Canadian merchants and bitcoin users to purchase and sell bitcoin easily.

Initially, the company decided to launch its bitcoin exchange to nine of the provinces in Canada, as their blog post reads: “Users in all Canadian provinces will have the ability to buy and sell bitcoin with CAD using the Coinbase Wallet, and those in 9 of 10 Canadian provinces can begin trading on Coinbase Exchange using the BTC/CAD currency pair.” However, James Watkins of Coinbase told Bitcoin Magazine, “We’ll be launching Coinbase Exchange nationwide on Monday as well.”

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