BitPay CEO Stephen Pair: We’re Open to Alternative Block-size Proposals

Bitcoin Magazine
BitPay CEO Stephen Pair: We’re Open to Alternative Block-size Proposals

BitPay, one of the top funded companies and most-used payment processor in the Bitcoin industry, is open to alternative block-size proposals – not just BIP (Bitcoin Improvement Proposal) 101.

Speaking to Bitcoin Magazine, CEO Stephen Pair reaffirmed that BitPay will adopt code to increase Bitcoin’s block-size limit by December of this year, but said this no longer needs to be the proposal as implemented in alternative Bitcoin implementation Bitcoin XT.

BIP 101 is programmed to increase the block-size limit to 8 megabytes, then doubling every other year for the next 20 years. This proposal was publicly endorsed through an open letter from some of the leading Bitcoin companies in the space last summer.

BitPay, Blockchain(.info), Circle, KnCMiner, Bitnet, Xapo, BitGo and itBit vowed to adopt BIP 101 and ready their code for bigger blocks by December. Additionally, Coinbase CEO Brian Armstrong made a similar statement on Twitter earlier this week.

But when asked by Bitcoin Magazine, Pair indicated that BIP 101 is no longer the only option for the leading payment processor in the Bitcoin space. The BitPay CEO explained that alternative proposals will be considered as well.

“In December we will adopt the leading candidate solution, which right now is BIP 101, but that could change. This will hopefully help drive consensus,” Pair said.

As one possible alternative, Pair referred to a temporary solution that would increase the maximum blocks size to 8 MB over a four-year period:

“[Blockstream president] Adam Back made a proposal that is essentially the same as BIP 101, but has a less steep curve that doesn’t stretch as far into the future. I prefer that proposal over BIP 101, but I’m not sure it will be ready by December.”

Drawing from his experience in the telecom industry, Pair sees a lot of opportunity to improve Bitcoin’s efficiency and scalability by reducing resource usage. This would, in turn, decrease the risk of bigger blocks, which is why Pair believes an increase of the block-size limit is the best way forward.

“Either extreme on block size puts Bitcoin at risk. But I don’t believe that a moderately larger block size will result in centralization because people can no longer afford to run full nodes,” Pair said.

“At the same time, a block size that is too small would result in fewer people being able to afford transactions. If only a few people use bitcoin for transactions, those people will eventually realize that they could conduct those transactions much more cheaply by compromising on decentralization.”

The Bitcoin community has been arguing if, when, and how to increase the maximum block size in order to allow for more transactions on the network for several years. The debate reached a climax in August of this year, when former Bitcoin Core lead developer Gavin Andresen and Bitcoinj developer Mike Hearn implemented BIP 101 in alternative Bitcoin implementation Bitcoin XT. Bitcoin XT has so far not garnered the required 75 percent hash-rate support among miners in order to activate, however.

While this makes an ecosystemwide adoption of Bitcoin XT seem unlikely, Pair did make it very clear that the maximum block size should be increased by December somehow.

“From our vantage point, we are quickly running out of time,” Pair said. “Bitcoin is at all-time highs regarding transaction volume, and BitPay has been setting new monthly transaction volume records every month for the last six months. We are starting to see Bitcoin used to solve very boring problems by people who could care less whether it’s bitcoin or not. This to me is an early indicator that a tipping point is near. Hopefully, we find a consensus that doesn’t put Bitcoin’s lead as the most secure and liquid payment medium in jeopardy.”

Another proposal that has been gaining in popularity, and that was drafted by Bitcoin Core developer and BitPay employee Jeff Garzik, is BIP 100. BIP 100 would allow miners to collectively vote on the block-size limit, and is currently publicly endorsed by 60 percent of all hashing power on the Bitcoin network.

Although the proposal was drafted by one of his employees (but not on behalf of his company), Pair is not convinced BIP 100 is the best way forward.

“I like the idea of a formalized consensus regarding the block-size limit built into the protocol, much like consensus regarding difficulty,” he said. “But I would have done it a bit differently than BIP 100. I also favor simplicity over complexity. Complex rules and processes bring additional risk. While there might be a debate about BIP 101’s growth curve, it is a much simpler solution than BIP 100. In my opinion BIP 100 is too risky, and support or lack thereof from the mining community won’t change that view.”

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Water Project, Inc. Launches Bitcoin Initiative to Help Sub Saharan Countries

The Water Project, Inc., a nonprofit organization providing sustainable water projects to sub-Saharan African communities, has launched a new bold initiative, with the help of bitcoin.

The organization has introduced a new program namedThe Water Promise,” which combines high-tech remote monitoring with local repair teams to ensure that water is reliable and self-sustainable in the long term.

Each bitcoin donation will be allocated to one of 42 new sensor-enabled water projects in Kenya managed by the organization.

The Water Project team is looking for donations as little as 0.196 BTC to provide clean and safe water for one individual all the way to 98.5748 BTC, to provide a well and self-sustainable sanitation system for a school.

In total, the organization will be leading four sub-projects:

Providing a Water Well and Sanitation for a School: 98.5748 BTC

Small Community Water Project: 9.2874 BTC

Clean and Safe Water for a Family: 0.69 BTC

Clean and Safe Water for one Individual: 0.196 BTC

Through partnerships with local communities and organizations, the Water Project team has been able to fund several types of water projects, including a drilled well, sand dam, rainwater catchment, hygiene and sanitation and spring protection, providing essential necessities for families in countries like Ghana.

Despite their hard work, the organization had to rely on traditional financial platforms like Paypal and bank wiring as the main method of payment over the past few years, to accept donations for their projects.

However, these methods of payment could be extremely inefficient at times, especially for organizations such as Water Project that are in urgent need of cash and capital to maintain a variety of programs.

The Water Project team has come to a consensus to use bitcoin as one of the main methods of payment and donation to help fund its projects in the long run.

Since early 2015, nonprofit organizations have turned to bitcoin for donations and financing due to the lack of remittance networks, outlets and banking partners across the continent.

This month, the Syrian refugee crisis has caused more than 4 million refugees to either cross borders and enter neighboring countries or to permanently relocate to the opposite side of the country to avoid a series of civil wars.

According to a report published by the Office for the Coordination of Humanitarian Affairs (OCHA), millions of refugees have escaped to Lebanon, Iraq, Turkey, Jordan and Europe, creating a serious international issue which local governments failed to take over.

In response, nonprofit organizations decided to use bitcoin to accept donations, in an attempt to create a Humanitarian Aid program to provide emergency services to refugees who are in desperate need of housing, clothing and food.

“Bitnation Refugee Emergency Response (BRER) is a Humanitarian Aid Project of Bitnation to facilitate and provide Emergency Services and Humanitarian Aid to refugees during the European Refugee Crisis of September 2015,” explained the Bitnation team.

Bitcoin has proved to be the most efficient and secure medium of payment for donations and financing, due to its transparency and decentralized nature. Using blockchain analysis tools and technologies, investors can easily trail the allocation of funds and confirm whether the donations are actually used to help the people in need.

Photo Connie Gallippi / BitGive

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Kaye Scholer Holds Bitcoin Seminar with Winklevosses to Educate Financial Professionals

On Thursday, Kaye Scholer, the New York City-based law firm specializing in life sciences and financial services, held a seminar for many of its clients as an introduction to Bitcoin both as an asset as well as a technology.

Intended as an introductory session, the seminar included topics talking about what virtual currency is, the federal and state regulations and financial opportunities associated with Bitcoin, among other topics.

The presenters were Evan L. Greebel, a partner at Kaye Scholer; Keith McGowan, a partner at BDO; Cameron Winklevoss, co-founder and president of Gemini; Tyler Winklevoss, co-founder and CEO of Gemini; and Peter Van Valkenburgh, Research Director at Coin Center. The event was moderated by Kathleen Moriarty, a partner at Kaye Scholer.

“Kaye Scholer is a market leader in representing companies and entrepreneurs in the fintech space. Evan Greebel, Kathleen Moriarty and I joined that fintech team in July and are bringing our own Bitcoin and blockchain expertise to bear in New York, Silicon Valley and beyond,” said Gregory Xethalis, counsel in the Corporate Division at Kaye Scholer, in an interview with Bitcoin Magazine. “The event was an opportunity to introduce our practice, and Bitcoin itself, to Kaye Scholer clients who are in the process of learning what Bitcoin will mean for Wall Street, both as an asset class and a technology.”

Van Valkenburgh explained in simple terms how the bitcoin blockchain works, including how the mining fee helps secure the network, and the risks that overregulation could have on the sector. The Winklevoss brothers touched on the long-term possibilities for Bitcoin both as a technology as well as an asset. Tyler Winklevoss explained how bitcoin could replace gold as a store of value because humanity may begin mining metals in space, where there is an oversupply of the same precious metals humans value for scarcity.

Overall, there were 65 attendees at the event ranging from individuals at large financial institutions (some that have already been active in the space), private hedge and private equity fund advisers and fintech professionals.

And while Kaye Scholer is the law team that has worked with the Winklevoss brothers on Gemini and the ETF, this was not an event to advertise Gemini.

“While trading professionals certainly would have an interest, it wasn’t a Gemini pitch so much as a Bitcoin informational session,” explained Xethalis.

This event is the first in a two-part series. While this event focused on the Bitcoin blockchain, the firm is holding a second one to focus in on blockchain technology as a whole.

“Tonight was intended to be an introduction to Bitcoin as an asset and technology,” Xethalis explained. “We are hosting a roundtable on November 5th that will include panelists from premier Wall Street companies that are exploring the blockchain and investors in blockchain-focused companies. That seminar will focus on the financial systems adoption of blockchain technologies for routine and complicated financial transactions.”

Jacob Donnelly is a full-time product manager and freelance journalist covering stocks, business, and bitcoin. He runs a weekly digital currency and blockchain newsletter called Crypto Brief.

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Coinprism Launches Open-Source Permissioned Ledger With Bitcoin ‘Anchors’

Coinprism , the colored coin startup that created the Open Assets protocol as experimented with by NASDAQ and Overstock , has announced Openchain.

Openchain is an open-source distributed permissioned ledger with optional “anchors” into the Bitcoin blockchain. It is designed to solve Bitcoin’s scalability and compliance issues as encountered by financial institutions, while still enabling several of the use cases offered by the Bitcoin blockchain.

While Bitcoin’s blockchain currently offers a trustless public ledger, and is secured by a record amount of hashing power, existing financial institutions are often unable to make use of these properties. Most importantly, Bitcoin has proved to be a challange from a regulatory perspective, as regulators often require financial institutions to offer a level of accountability that Bitcoin cannot give them.

“Public ledgers like Bitcoin have been problematic for financial institutions as transaction validation is delegated to a group of potentially unknown parties – the miners – while financial institutions are often legally required to vet every transaction going through them,” Coinprism founder and CEO Flavien Charlon said in a statement. “Openchain has been designed with these requirements in mind, and offers full control on transaction validation.”

Openchain allows each company or institution to deploy its own version of Openchain, for internal use. Within these companies or institutions, each level of the organization can transact on the corresponding level of their Openchain, using their unique digital signatures.

As such, higher levels within the organization have access to higher levels of the ledger, and are able to set permissions for lower levels. These lower levels, in turn, have access only to the lower levels of the ledger.

This, in effect, replicates the existing structure of an organization onto a blockchain-like system, while incorporating some of the advantages of blockchain technology such as transparency and auditability.

Additionally, Openchain allows different organizations to transact conceptually similar to how financial institutions currently conduct business. Essentially, several companies or institutions can set up mutual gateways through an API, connecting their Openchain ledgers.

This allows these organizations to create an account on the other Openchain, acting as a mutual liability. Once a transaction is validated by both parties, the accounts on both Openchain ledgers are adjusted simultaneously.

“Openchain features a powerful hierarchical account system, a hybrid between a file system and a double-entry accounting system,” Charlon said. “This lets the administrator of an Openchain instance define their business rules, such as anti-money laundering and know your customer regulation, by setting various permissions on accounts, with different levels of granularity.”

Because the distributed permissioned ledger uses a simplified and trust-based consensus mechanism, it exceeds Bitcoin’s capabilities on a technical level. While Bitcoin is currently limited to a handful of transactions per second, Openchain offers several orders of magnitude more transactions than that. On top of that, Openchain’s transaction validation is virtually instant.

Meanwhile, Openchain offers immutability by publishing “anchors” into the main Bitcoin blockchain at regular intervals. It can then benefit from the security and irreversibility of Bitcoin while keeping transaction costs to a minimum.

“While proof of work is central to building a fully autonomous, decentralized currency such as Bitcoin, it actually becomes a burden when you start tokenizing assets,” Charlon explained. “With Openchain, we have taken all the key characteristics of a Blockchain like immutability, auditability and programmability, but removed the legacy of proof of work. This allowed us to build an extremely efficient and scalable platform with no compromise.”

Openchain open source and is now available on GitHub. Coinprism offers a test wallet at wallet.openchain.org for developers and curious users to start experimenting with it.

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BW to Launch 14nm Chip and Miner for General Population

The quiet, behind-the-scenes juggernaut in bitcoin mining, Bi Wang (BW), is announcing the release of its 14nm chip that the company believes is at the cutting edge of bitcoin mining equipment.

In a Bitcoin Magazine exclusive, BW was introduced to the community. Now it wants impact that same community.

Along with the announcement of its bitcoin chip, the company has announced that it will be releasing a bitcoin miner for consumers that will launch in Winter 2016.

“The miners are now available for pre-order at a price of 0.87 BTC with a minimum order of 333 miners which is 1 petahash,” Virgilio Lizardo Jr., Head of International at Bitbank told Bitcoin Magazine in an exclusive interview. “This price will be available until November 11, 2015. This winter, the miners will be available with no minimum order required; the price at this time has not been decided yet.”

The revelation that BW would be offering its miners to the general population comes at a time when many other mining companies are bringing their products in-house to use for their own mining initiatives.

According to BW, each 14nm chip in the miner will be able to attain anywhere from 34.6-63GH/s. The power consumption is 18W based on a voltage of 0.59V to 0.76V. This efficiency comes on the back of nearly a year of research and development. Lizardo Jr. explained that the team spent nine months coming up with the chip.

Lizardo Jr. explained that the company’s plans are to use the chips in two ways. The first is in the above described bitcoin miner. The second will be use by its own mining farm.

“BW will produce the amount needed [in the first batch] to reach our goal of 48P [petahashes] per month at our newest mining farm currently under construction,” he said.

An additional 48 petahashes/second of computational power would account for nearly 10 percent of the current mining power available.

In an interview with Bitcoin Magazine when Bitmain announced the launch of its Antminer S7, Jacob Smith, head of North America, said, “It’s an unfortunate situation that we’re the only big ASIC manufacturer selling directly to consumers right now; we’d love to see more competition in this space and for the miners themselves to have more options available.”

If BW has anything to say about it, it appears that the competition is here.

Jacob Donnelly is a full-time product manager and freelance journalist. He writes about Bitcoin at Bitcoin Magazine and runs a weekly newsletter at CryptoBrief.com.

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