Russia Makes 2016 an Election Year for Bitcoin

Bitcoin Magazine
Russia Makes 2016 an Election Year for Bitcoin

After almost two years of being in a state of confusion on how to deal with the advent of digital currencies, it appears Russia is ready to lay down the law on Bitcoin – and it may be sooner rather than later.

According to Russian news blog Forklog the country shares a two-party system with the West when it comes to the legislation of such matters. The more liberal-minded are called techlibs, who are mostly economists who favor allowing Bitcoin into the Russian market. Conservative figures in law enforcement are known as secruocrats, who are not fans of Bitcoin and other digital currencies, labeling them “money surrogates,” and are working to ban them. Each side has drafted laws either for or against Bitcoin usage in Russia.

The rumor mill of Bitcoin regulation has been churning for the better part of the last 18 months. A pro-Bitcoin draft of law will be under review by the Duma, the Russian parliament, where it is due for an official “reading” as early as next month.

Meanwhile the anti-Bitcoin securocrats are readying their draft for submission soon, according to Russian Minister of Finance Anton Siluanov.

“We will continue protecting the consumers of financial services,” Siluanov said. “We’re developing penalties for distribution of money surrogates, including bitcoins, and for the establishment of Ponzi schemes. We will prepare the draft laws and submit them to the State Duma.”

Russia has a very different take on new currencies than the West does, considering the fact that they do not have a global reserve currency status behind them. In fact, the Russian economy is shaky at best, heavily reliant on oil exports, and, with oil prices tanking recently, the country does not need something new that may further devalue the Russian ruble.

Like Bitcoin in 2014, Russia’s native currency also lost close to 50 percent of its value due to economic sanctions from the West and changes in the price of oil. The ruble has dropped again to an all-time low due to the recent drop in the price of oil worldwide. So this may not be the best time to bring in a new currency that the government does not control.

“It would be better to suppress distribution of money surrogates at early stages of the market’s development,” Siluanov said in an interview with the Russian government publication Rossiyskaya Gazeta. “According to experts, the turnover amount of money surrogates in Russia has reached 1 percent of GDP. Once the parameter exceeds 10 percent, the tool will pose a real threat to the state’s financial stability. Uncontrolled expansion of money supply in the turnover at the expense of the surrogates will result in devaluation, and gradual supersedure of the ruble from the currency market. Eventually, the state could lose its money issuance monopoly and revenue from this kind of activity.”

Like many nations and corporations worldwide, Russia seems to be in greater solidarity when it comes to Bitcoin’s underlying blockchain technology. Its advantages over currency systems appear to have interested Russian government agencies, as well. The ministry’s press center stated as much in a release to Forklog, which included another shot at Bitcoin entering the established economy:

“We see the convenience and usefulness of the blockchain technology for e-commerce, so we think the technology shall have permission to develop,” said Siluanov. “However, bitcoins, as they are, and especially their inclusion in the real economy and real banking sector, may be extremely hazardous.”

A weak ruble may have Russia looking at Bitcoin somewhat differently than other major nations. This fact may make Bitcoin even more attractive to Russian citizens looking to protect their wealth by investing in an appreciating global asset.

Can Russia stop its citizens from sharing Bitcoin on their smartphones, or forming a black market for digital currencies in general? According to Local Bitcoins, Russians are transacting about 83 million rubles or just over $1 million USD per week using its peer-to-peer exchange. Bitcoin is a hotly contested topic in a region that seems interested in resolving this issue quickly.

Evander Smart is a bitcoin writer, enthusiast and business owner. He trains people about how Bitcoin works at BitcoinVideoUniversity.com.

The post Russia Makes 2016 an Election Year for Bitcoin appeared first on Bitcoin Magazine.

PricewaterhouseCoopers Launches Bitcoin and Blockchain Technology Team

PricewaterhouseCoopers (PwC), the world’s largest professional services firm, has recruited 15 leading technology specialists to explore the application and commercialization of the Bitcoin blockchain technology.

The blockchain research team will collaborate with PwC’s Belfast office and is expected to grow to more than 40 technological specialists throughout 2016.

The London-based corporation stated that they have decided to look into Bitcoin and its underlying technology, the blockchain technology, due to the growing demand of their clients and investors. With the help of the blockchain research team, PwC aims to assist its clients in understanding the Bitcoin blockchain technology and implement it in its services.

“There’s clear evidence that banks, institutions and even governments are looking at blockchain technology as a secure storage and distribution solution. Now there is growing interest and a real demand from our clients to help understand the implications of blockchain and how to respond to it. So as the blockchain juggernaut continues to gather pace, PwC will be well-placed to service our clients’ needs at a global level,” said PwC partner and EMEA Fintech Leader Steve Davis.

“PwC is now breaking new ground in developing radical fintech solutions and these appointments represent the first stage of our plans to grow a world-class fintech offering,” Davis said. “We expect the initial core team of 15 experts to grow rapidly, with PwC in Belfast continuing to expand, exploit and deliver technology and digital solutions to global clients.”

The team further emphasized that the proposal of U.K. chief scientific adviser Sir Mark Walpor to embrace blockchain technology in facilitating public services such as passport issuance, real estate ownership verification and tax collection inspired the company to actively explore the potential application of the blockchain technology.

PwC firmly believes that the blockchain technology could significantly reduce costs and enhance traditional financial systems in various industries. Through its growing blockchain team, the company plans to continuously explore the application of the technology in the existing banking systems and transaction settlement systems.

“Blockchain technology is worrying major players in the financial services industry as they don’t know where it will go or its potential to disrupt business models. However, in document delivery and settlement processing alone, it will offer significant cost reduction and efficiency gains,” said PwC U.K. Executive Board member and U.K. and EMEA consulting leader Ashley Unwin.

“We are confident that these disruptive fintech technologies will trigger a huge increase in demand for blockchain expertise, and we intend to be a leader in exploiting these disruptive new technologies,” Unwin said.

One limitation, according to PwC, is the relatively low level of awareness for bitcoin and digital currencies in general. According to the results of PwC’s forthcoming Global Fintech survey, which polled 545 leading asset managers, fund transfer companies, and insurers, 9 percent of the managers were familiar with bitcoin, but more than 30 percent of the managers had never heard of the cryptocurrency.

But the firm still feels optimistic in funding a group of blockchain researchers, as the fintech sector in the U.K. is growing at an explosive rate.

“The U.K.’s technology sector is increasingly focusing on fintech as offering radical and disruptive solutions to existing business models,” according to the company. “The sector raised a record $3.6 billion of venture capital in 2015, with the fintech sector accounting for almost a quarter of all investment raised by London-based tech companies.”

Over the next few months, the PwC team, which consists of more than 208,000, employees, will actively provide in-depth understanding of Bitcoin the system and raise the awareness of bitcoin the currency within their clientele.

The post PricewaterhouseCoopers Launches Bitcoin and Blockchain Technology Team appeared first on Bitcoin Magazine.

Blockchain Solution for International Trade Takes Prize at FBS and Deloitte Shanghai Hackathon

This article is by Krystle Vermes.

In an effort to bring blockchain enthusiasts together for the sake of innovation, Wanxiang Blockchain Labs and Deloitte hosted the Shanghai Blockchain Hackathon on the weekend of January 8. Over the course of two days, teams of blockchain experts came together to create projects worthy of cash prizes.

The CargoChain team developed the winning idea, taking home the $30,000 grand prize.

“My partner [John Freeman] and I created CargoChain, which digitalizes international trade with specific focus on the bill of lading,” said Dominik Schiener, a member of the winning team. “CargoChain places the bill of lading as an eternal record into the blockchain and provides a clear chain of custody. It additionally has an escrow system which gets rid of the inefficiencies of letter of credit. This makes it possible for mutually untrusted parties to conduct trade without worrying about the legitimacy of the other party.”

A second-place prize worth $20,000 also was awarded, as well as a third-place prize and special prizes worth $10,000 each, which went to other participating teams.

“CargoChain was well received at the Hackathon, and people from Deloitte and Wanxiang loved the idea,” Schiener continued. “There is a clear demand to reduce costs and make international trade more efficient by finally getting rid of all the paperwork. Currently, I’m assessing potential opportunities, but I think that it would be amazing to help reshape the backbone of our economy with a blockchain-based system that benefits all the actors involved in trade.”

However, it wasn’t all about competition for the attendees of the Shanghai Blockchain Hackathon. The event also featured workshops and the opportunity for participants to speak with experts from Ethereum, Deloitte Rubix Team and Wanxiang Blockchain Labs. These individuals also were available for technical support throughout the hackathon.

The goal of Shanghai Blockchain was to bring together blockchain enthusiasts, engineers and designers to think creatively about Bitcoin as a whole. Now that the event is over, the sponsors of the Shanghai Blockchain Hackathon are still working to promote their initial objective.

Wanxiang Blockchain Labs recently announced the launch of BlockGrant X No. 2, which is a follow-up to its first sponsorship program, BlockGrant No. 1: Genesis. The first program gave a total of $100,000 to nine teams that created projects focusing on everything from random-number generation to decision-making. BlockGrant X No. 2 will have a budget of $40,000, and teams have until January 31 to submit their applications to participate. A global panel will convene to determine the winners based on their viability, significance and innovativeness.

As Wanxiang Blockchain Labs and other organizations continue to promote Blockchain and all things Bitcoin, the future looks bright for the industry as a whole.

“I think that in the coming years, we will finally see a crystallization of clear use cases of the blockchain,” says Schiener. “It will become clearer where and how exactly it makes sense to implement a blockchain to reshape certain processes. I am not a believer of ‘one chain to rule them all,’ which is why I think that once blockchains become interoperable, we will create new possibilities for organizations, startups and individuals to take the best of each blockchain and combine them in yet unimaginable applications.”

Krystle Vermes is a professional writer, blogger and podcaster with a background in both online and print journalism.

The post Blockchain Solution for International Trade Takes Prize at FBS and Deloitte Shanghai Hackathon appeared first on Bitcoin Magazine.

Amid Bitcoin Scaling Debate, Segregated Witness Testnet Enters Public Stage

In the midst of a heated debate over block size and Bitcoin’s future, Bitcoin Core developers Dr. Pieter Wuille, Eric Lombrozo and Johnson Lau have launched a third iteration of the Segregated Witness “testnet.” Dubbed SegNet, the latest version of the Bitcoin test network includes several improvements over its predecessors, and is available to anyone who wants to try it or experiment.

SegNet, like the previous versions, is essentially a clone of Bitcoin, specifically intended as a demo version. But while the two earlier SegNets were open only to developers working on the project, now everyone can use it.

Speaking to Bitcoin Magazine, Ciphrex CEO and Segregated Witness developer Lombrozo said:

“All wallet and other app developers are invited to test and experiment with the latest version of SegNet, and offer feedback. We’ve opened up an IRC channel on Freenode, #segnet-dev, and welcome all discussion pertaining to integrating and supporting Segregated Witness transactions in wallets. Many developers have already joined the effort. I’m happy to see the excitement and enthusiasm, and hope many others will join, too.”

Segregated Witness, the talked-about centerpiece of the scalability “roadmap” proposed by Bitcoin Core, is set to introduce several significant improvements to the Bitcoin network. Most important, it allows for an increased number of transactions by circumventing the original 1-megabyte block size limit, using an add-on to existing blocks called the “witness.” This could increase the effective block size up to some 1.75 to 2 megabytes, depending on the types of transactions.

“Compared to earlier SegNet versions, this latest iteration includes four main improvements,” said Lombrozo, whose mSIGNA wallet will implement Segregated Witness once it is rolled out. “First off, we moved the ‘add-on anchor’ – the Merkle root of the witness – to a different part of the coinbase transaction. We did some research, and as it turns out that works better for existing mining-hardware. Second, we changed the signature hashing algorithm such that verification requires fewer steps. This makes running a full node less burdensome, closes off a denial-of-service vector that is particularly nasty for bigger blocks, and decreases block relay time over the network. Third, transaction input values will be signed. This prevents some fringe attack vectors, where users can accidentally pay too high a fee. And fourth, we lowered the cost for typical, non-multisig transactions. Since these are still in the majority on the network, that should increase total throughput.”

One of the interesting attributes of Segregated Witness, as first presented at the Scaling Bitcoin workshop in Hong Kong, is that it can be rolled out as a soft fork. This means that to use it, only miners need to change their software; all other users can “opt-in” if and when they choose to. For this and other reasons, the Bitcoin Core development team prefers soft forks over hard forks, which require a synchronized network-wide switch of all users.

Over the past week, however, the idea of implementing Segregated Witness as a soft fork came under increased scrutiny. The team behind the recently launched Bitcoin Classic implementation believes that a change in fee policy is undesirable, questions whether the increased transaction throughput will be sufficient, and points out that there is a security degradation for nodes that don’t upgrade to the latest version of the software. Critics also maintain that the proposed soft fork method requires an “ugly” hack, which could complicate development of wallet and app software.

The Bitcoin Core development team, however, maintains that the security tradeoffs are highly theoretical and negligible, and far fewer than those associated with a hard fork. They point out that soft forks have been implemented several times before: when multisig was rolled out, or more recently with CheckLockTimeVerify. Core developers also contend that the increased throughput almost equals that of the 2-megabyte hard fork solution planned by Bitcoin Classic, and could in some cases amount to a bit more. They consider the changed fee policy a feature, not a bug, because it incentivizes users to utilize the added space in blocks.

“As for the ‘ugliness’ of the workaround… I’ll lay it out bluntly here,” Lombrozo said. “A simple block size increase via a hard fork puts all of the burden on the infrastructure rather than the app developers. What we’re proposing with Segregated Witness places a little bit of burden on app developers – which we think is fair. As a bonus, it also means these apps will be ready to support much more sophisticated features in the future, such as smart contracts, the Lightning Network and other payment channel solutions. It’s still not a very complicated thing to support, and many wallet developers seem eager and excited by all this.”

Segregated Witness is scheduled to be rolled out in Bitcoin Core and the Bitcoin network by April of this year. BitGo, BitcoinJS, BlockTrail, Breadwallet, Coinkite, Coinomi, Digital Bitbox, EI8HT, Electrum, GreenAddress, Green Bits, Ledger, Libbitcoin, libbtc, mSIGNA, Mycelium, NBitcoin, Omnicore and Samourai Wallet have indicated support, so far.

For more information on Segregated Witness, see Bitcoin Magazine’s threepart series on the proposal.

The post Amid Bitcoin Scaling Debate, Segregated Witness Testnet Enters Public Stage appeared first on Bitcoin Magazine.