CardCash Adds Bitcoin Payments for Gift Cards at Thousands of US Retail Stores

Bitcoin Magazine
CardCash Adds Bitcoin Payments for Gift Cards at Thousands of US Retail Stores
gift-cards

CardCash, an American online company that buys and sells discounted gift cards from thousands of national retailers, has begun to accept bitcoin payments. CardCash joins companies like Gyft and Fold that provide ways for Bitcoin users to interact with the massive gift card industry.

“We saw that bitcoin was getting a lot of traction and growing in legitimacy,” CardCash CEO Elliot Bohm said in an interview with Bitcoin Magazine, “but it was slow in getting acceptance in popular brands.” He pointed out that while consumers could use bitcoin to shop at Overstock and Dell, they couldn’t spend their bitcoin at Macy’s, for example.

“We can easily be the bridge,” said Bohm. “People can use bitcoin and save money at the same time.”

In September, CardCash expects to roll out its mobile app that will allow people with a bitcoin wallet to buy gift cards online instantly. “You’ll be able to walk into Wal-Mart, go shopping, go on the app while you’re in line, and buy a gift card right there on your phone,” said Bohm. “When you get to the checkout, you just show them the barcode.”

In a press statement, Steven Weldler, VP of Online Marketing for CardCash, said, “CardCash.com is always looking to bring our service to as many people as possible, especially to the unbanked and people who can use help financially.”

Bohm noted that the Bitcoin community is very savvy when it comes to saving money and is always mindful of conversion rates. Since CardCash customers can get a discount of between 5 and 20 percent on their purchases, he said that connecting CardCash and bitcoiners made a lot of sense.

“We’ve been looking into bitcoin for a long time now,” said Bohm, “but we wanted to do it properly.” CardCash has stringent AML-compliance polices and fraud-prevention measures. Every card is verified and comes with a 45-day balance guarantee. Seller identities are authenticated, and a $10,000 per day purchase limit is in place to prevent money laundering. The company uses BitPay to process their bitcoin transactions and immediately converts to fiat; they also wanted to be sure that their banking partners were comfortable with them allowing bitcoin transactions.

So far, CardCash serves only U.S-.based customers, buying and selling gift cards that can be redeemed in the United States. But there are plans currently in the works, thanks to bitcoin, that will allow international customers to tap into the discounted gift-card scene.

Founded in 2008, CardCash has been included in the Forbes’ list of America’s Most Promising Companies for the last three years, as well as in the Inc. 500 list of the fastest growing private companies in America for the past four years.

 

Photo LaniElderts / Flickr (CC)

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

CoinWallet.eu, 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 need to demonstrate that the current Bitcoin blocksize is inadequate and does not meet the needs 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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Case Announces September 21 Shipping Date for Bitcoin Hardware Wallets
case-wallet

Bitcoin wallet manufacturer Case Inc. has concluded the final phase of testing and announced that the company will begin shipping its hardware wallets on September 21.

“Appropriation of parts is complete and the manufacturing process is nearing its end. Everyone at Case is eager to get our device in the hands of our customers who have patiently waited for their bitcoin wallets,” Case announced on its website. “Providing a secure, easy-to-use bitcoin experience around the world has been our mission from the beginning and we’re excited to finally deliver on that.”

The Case team launched its hardware wallets at TechCrunch NY on June 24 and raised $1.5 million in an equity seed funding round led by FuturePerfect Ventures, participated in by RRE Ventures, High Line Venture Partners and the Rochester Institute of Technology Fund. During a presentation at TechCrunch NY, the Case team promised its investors and its customers to ship their hardware wallets by the end of summer.

“As more important assets move to the blockchain (contracts, property and identity), having a completely secure way to store and transfer those assets becomes even more paramount,” Case CEO Melanie Shapiro told Bitcoin Magazine at that time. “We’re interested in not only servicing the consumer holding bitcoin, but also providing the banks using blockchain technology the power to manage who has the authority to execute transactions.”

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A Closer Look at BIP100: The Block Size Proposal Bitcoin Miners are Rallying Behind
bip100

The block-size limit debate has taken a turn now that some of Bitcoin’s biggest mining pools are publicly endorsing BIP 100 (Bitcoin Improvement Proposal 100) instead of backing a Bitcoin XT blockchain fork. So far, F2Pool, BTCChina, BitFury, KnCMiner, 21 Inc. and several smaller pools have come out in support of this alternative proposal. Combined, this represents well over half of all hashing power on the Bitcoin network.

While these endorsements are just a show of support, and do not trigger a change of the block-size limit or a blockchain hard fork as Bitcoin XT is programmed to do, the mining endorsements do mandate a closer look at BIP 100.

What is BIP 100?

 Over the past weeks most of the attention regarding the block-size issue has gone to BIP 101 and the Bitcoin XT fork, but BIP 100 was really the first BIP to offer a solution for the block-size limit. Drafted and published as a PDF by Bitcoin Core developer and BitPay employee Jeff Garzik in June, BIP 100 does not set any specific block-size limit or program in any sort of predetermined growth. Instead, Garzik’s proposal – which does not exist as code quite yet – allows miners to vote what the limit should be.

The intended purpose of BIP 100, as described by Garzik, is to take the power to set the block-size limit away from the Bitcoin developer community and, instead, hand it to the free market. The Core developer does not believe such a responsibility over the Bitcoin protocol belongs to any select group of people, and argues that the only sensible solution would be to let the broader mining community decide.

In the BIP 100 draft, Garzik writes:

“Economic actors that wish to see the speed limit [block-size limit] at X or Y – thus dictating the free market – will lobby the Chief Scientist and other ‘core’ developers, individually, in private, in public, with carrots, and with sticks. When [the] Bitcoin market cap [grows 10 times] or more, the lobbying [will be] even more intense. Yet there is no single human or commitment on the planet capable of picking a good speed limit.”

Voting procedure

While the details of the voting process are not set in stone yet, the PDF as well as Garzik’s comments suggest it works as follows: First, 90 percent of hashing power on the Bitcoin network needs to accept BIP 100 for it to activate. This is a one-time thing that will trigger a hard fork. Once BIP 100 is activated, miners can include a public message in a newly mined block indicating how big (or small) they want the block size limit to be. For every 12,000 blocks (some three months’ worth), the bottom 20 percent of all votes is discarded, after which the minimum is chosen.

Importantly, however, the block-size limit can be only doubled or halved at most. Thus, if more than 20 percent of blocks vote to lower the limit, the maximum block size is decreased to whatever is the lowest suggestion – apart from the bottom 20 percent. If more than 80 percent votes to raise the limit, the maximum block size is also raised to the lowest suggestion – again disregarding the bottom 20 percent. But miners cannot vote the block-size limit up indefinitely. BIP100 has a hard limit of 32 megabytes, meaning the maximum can be reached in five doublings from 1 megabyte. Whether Garzik’s proposal includes a minimum block-size limit remains unclear for now.

‘21% attack’

While relatively simple, some say that the voting procedure as described above has some flaws. (But note that it is not yet completely certain that this is how BIP 100 will actually function.) One issue that was raised on Reddit is the so-called “21% attack.” This refers to the ability of 21 percent of miners (possibly a single pool) to vote the block-size limit down as much as they want.

There is some logic behind Garzik’s rule, however. It is generally believed that bigger blocks are disadvantageous for smaller pools. Most Bitcoin developers worry, therefore, that left to their own devices, big pools could keep voting the limit upward – indirectly putting smaller pools out of business and further centralizing mining. This is why Garzik proposed the threshold; he believes the block size should be raised only if a supermajority of miners (81 percent) agree. Or put differently: he believes that smaller mining pools representing 21 percent of hashing power should have “veto power” to keep the limit low.

Whether a “21% attack” is really a feature or a bug, therefore, is a matter of perspective. While “block-size conservatives” consider it an important restraint on the power of big mining pools, proponents of bigger blocks – such as Mike Hearn – feel that a minority of miners can hold the rest of the network back.

One last option that should be mentioned, is probably the reason it has been dubbed a “21% attack”. The voting process could allow any entity controlling more than 20 percent of hashing power to decrease the block size so much that it essentially destroys Bitcoin. While this would not be in the self-interest of this entity from a bitcoin-profit maximizing perspective, it does mean the Bitcoin network would be less resilient against outside attacks.

‘51% voting attack’

But, at the same time, the significance of the “21% attack” (or “21% veto”) has been questioned by Bitcoin developers for wholly different reasons. This is because colluding miners can simply ignore any opposition as long as they control any majority of hashing power.

“It would be trivial for any majority of miners to skew the vote,” Bitcoin Core developer Peter Todd told Bitcoin Magazine. “Once a group of miners is convinced they control at least 51 percent of hashing power on the network, they could simply refuse to mine on top of any block that doesn’t vote along with them. They can do that in subtle ways, for instance by just discarding – orphaning – a subset of blocks, something that naturally happens in the protocol anyways. In reality, therefore, miners controlling 51 percent of hashing power would have complete control over the block size under BIP 100.”

Furthermore, Todd argued that a miner vote could – and probably would – be bought by non-mining entities. Payment processors could, for instance, enter into contracts with pools to vote for bigger blocks. And since this would add overhead costs to the equation – lawyers need to be paid – Todd believes it would, again, disadvantage smaller pools, particularly in non-U.S. jurisdictions.

Todd himself offered a solution for this problem:

“If we ever get to the point that BIP 100 does get implemented, these contracts should be programmed onto the blockchain. This would both reduce overhead costs for everyone, creating a more level playing field, and make the vote-buying transparent at the same time.”

32MB Issues

Another point of critique on BIP 100 is that the 32-megabyte limit might be too small in the long run. Proponents of a bigger block size in particular – including Bitcoin XT developers Gavin Andresen and Hearn – believe this is much too low. If Bitcoin becomes widely used, a 32-megabyte limit is expected to be reached sooner or later, which probably means the block-size debate would need to be held all over again – not something they look forward to.

Garzik, on the other hand, believes this upper limit would be a good safety net.

“The 32-megabyte limit is a check-and-balance, to ensure that the system does not ‘go off the rails,’” Garzik said. “It would require a second user ‘vote’ – a second hard fork – to ensure everybody is on board with the levels of decentralization so far, and comfortable with increasing it further. My personal preference is to remove all upper limits, as the system and the free market will naturally find an equilibrium size based on individual miner choices. The 32-megabyte limit is a compromise.”

On the opposite side of the debate, developers who favor a conservative block-size approach worry that the block-size limit could actually be increased much too fast under BIP 100. From the moment of activation, it could take as little as a year and three months to reach the maximum of 32 megabytes. This is much faster than other BIPs would allow, and too fast according to several Core developers.

“BIP100 is somewhat ambiguous, and perhaps the details are still subject to change, but as-is the text allows for up to four doublings per year,” Bitcoin Core developer Pieter Wuille told Bitcoin Magazine. “It’s hard to predict the future, but the ecosystem should not allow such near-unbounded growth.”

Economics

Another problem is that BIP 100 might hand over too much economic power to Bitcoin miners. This issue was first raised by Israeli mathematician and Bitcoin expert Meni Rosenfeld, and later echoed by Hearn.

“The Bitcoin economy is composed of several groups, and no single group should be given complete power over the protocol. Miner interests are not completely aligned with those of users and node operators,” Rosenfeld told Bitcoin Magazine. “Users want transactions to be cheap and plentiful, nodes want blocks to be small and manageable, and miners could want either big or small blocks – whatever maximizes profits. If given the power to vote on the block-size limit, miners are likely to abuse it, disregarding the other groups. In every single market, giving producers the power to artificially limit supply and competition can lead to disastrous consequences, and Bitcoin is no different. ”

Garzik, however, contends that miners will ultimately have an interest to keep Bitcoin users content. The Core developer argues that the mining community would be unwise to abuse its powers, as it would effectively mean that the market would respond. In other words: Users would sell their bitcoin.

“Miner income is in the long-run aligned with users in a cooperative market relationship, even if short-term counter-incentives exist,” Garzik writes. “Users signal economically via the market – or directly via email and social media! – their views on miner behavior, which must be signaled up front, months in advance of any change. While imperfect, miner voting works; it has been field tested.”

Rosenfeld, however, is not convinced.

“Committees and discussions where all groups are represented, though slow and inefficient, are much more likely to result in a decision that is good for the Bitcoin economy as a whole,” Rosenfeld said.

The post A Closer Look at BIP100: The Block Size Proposal Bitcoin Miners are Rallying Behind appeared first on Bitcoin Magazine.

Princeton University and Coursera Launch Free Online Course on Bitcoin and Cryptocurrencies
princeton

A Princeton University free online course on “Bitcoin and Cryptocurrency Technologies” will be offered by Coursera beginning September 4, 2015.

Coursera is an online education platform for Massive Open Online Courses (MOOCs), which partners with top universities and organizations worldwide, to offer courses online for anyone to take for free. MOOCs give anyone, anywhere, the possibility to acquire a world-class education.  Courses include video lectures, exercises and online interaction with teachers and other students. Some courses offer certification as well.

The Princeton Bitcoin course will last six weeks, with the last lecture on November 1, 2015, but students also will be able to follow the video lectures after that date. That’s part of the appeal of MOOCs –students who prefer to learn at their own pace can follow the video lectures asynchronously, when they want, while students who can adapt their schedules to a course’s official timetable have the added benefit of semi-synchronous interaction with the instructors.

“To really understand what is special about Bitcoin, we need to understand how it works at a technical level,” notes the Coursera website. “After this course, you’ll know everything you need to be able to separate fact from fiction when reading claims about Bitcoin and other cryptocurrencies. You’ll have the conceptual foundations you need to engineer secure software that interacts with the Bitcoin network. And you’ll be able to integrate ideas from Bitcoin in your own projects.”

The Freedom to Tinker website, hosted by Princeton’s Center for Information Technology Policy, notes that a preliminary version of the Princeton Bitcoin course has been publicly available since January, with 11 video lectures, lecture notes and exercises, on the Piazza online educational platform. The new Coursera version includes new lectures, embedded quizzes to test the students’ understanding, and a wider community of students to discuss the lectures with. About 15,000 students already have signed up, and the enrollment is growing fast.

The instructors – Arvind Narayanan, Joseph Bonneau, and Edward Felten from Princeton University, and Andrew Miller from The University of Maryland – are completing the course’s textbook, which will be published by Princeton University Press. The draft book chapters will remain freely available online after the publication of the book, but the instructors recommend buying the book.

The Princeton course is clearly aimed at a technically oriented, hands-on audience of programmers and computer scientists.

“How does our textbook (and course) differ from other books on Bitcoin?” wrote Narayanan in the first Princeton announcement in January. “It’s simple: this is unabashedly a computer science text and course. We connect the ideas we discuss to the rest of computer science, and separate fundamental concepts from implementation details. The hype in the Bitcoin community has sometimes gotten ahead of the technology, and we think that for cryptocurrencies to truly realize their potential, entrepreneurs must go back to the basics, rigorously understand the technology and build on it.”

The course will be very useful to Bitcoin entrepreneurs and job seekers wishing to enter the very hot digital currency sector. In fact, banks and Wall Street companies are rushing to enter the Bitcoin space and fishing for top talent in Bitcoin waters, and online Bitcoin job ads are surging to record highs.

In related news, Stanford University is offering a Cyber Security Graduate Certificate focused on computer systems security, including attack protection and prevention, very important skills in the Bitcoin space. The Stanford course is more intense than the Princeton course and is not free.

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