Congress sells out the last bastion of internet privacy, welcome to the dawn of the Post-Privacy Era. Ethereum devs are letting ETH holders vote on the future of mining rewards. Dash publishes legal research done on behalf of the masternodes. Ethereum + Metamask make passwords a thing of the past. Alibaba is a massive multi-national company and they are using blockchains already with plans to do more. Shapeshift raises $10.4 million in venture capital and teases about two new products to come. Bitcoin Infinity patch looks to inoculate nodes against the Bitcoin Unlimited Chain Fork. Bitcoin Core now pursuing a User Activated Soft Fork to activate Seg-Wit. Storj and the Brave Browser migrate from Bitcoin to Ethereum, and so continues “The Flippening” aka crypto-diversification.
All this and more on the Neocash Radio podcast, episode 200 — Wednesday, March 29th, 2017!
We’ve written out short overviews of the topics discussed on today’s show below! Be sure to listen in to the whole podcast to get more information, insights, and thoughts on each of them from JJ, Darren, and Randy!
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|Traditional Financial Markets||Cryptocurrency Markets|
|Gold $1,253||Bitcoin (BTC) $1,040|
|Silver $18.20||Ethereum (ETH) $52.94|
|Oil $49.44||DASH $84.20|
|Dow Jones 20,663 points||Zcash (ZEC) $63.40|
|30Y UST Yield 2.984%||Monero (XMR) $19.80|
The U.S. Senate and House of Representatives approved a new bill which will allow internet providers like Cox, Time Warner, AT&T, and Comcast to sell your search inputs and browsing data to the highest bidders. All without your consent! One critic of the repeal, Craig Aaron, president of Free Press advocacy group, told Reuters that many major Silicon Valley companies shied away from the fight over the proposed new rules because they profit greatly from this consumer data.
Related listening—Neocash Radio podcast Ep179: AT&T’s For-Profit Spying Scandal, OpenBazaar Deploys Stores, the Pentagon Steals from Soldiers, and a Cyberwar is Heating Up!
Ethereum has always had a plan to move from a Proof-of-Work consensus method to a Proof-of-Stake method. Built into the protocol is something called a difficulty bomb that is meant to ratchet up the difficulty of finding the right solution when creating a new block. The timeframe surrounding this rise in difficulty is being called an Ice Age. While the Proof-of-Stake plans are still in the works, ETH holders are being asked how the dev team ought to be handling the changing landscape.
The Ethereum Improvement Proposal #186 details what the options are and why the need for a change to the protocol. ETH holders can vote of a variation of the EIP 186 solution by sending a 0 ETH transaction to the voting address of their choice. Options include a no vote which will see no changes and four different yes votes. The current miners reward is 5 ETH.
A yes vote will delay the Ice Age and reduce the mining reward. The amount of Ether held at the address you vote from will be added to the weight of the vote you cast. The vote is being held on Carbon Vote the same platform used during the controversial DAO vote. EIP 186 would require a hardfork. The current leader as of this recording is a Yes with the mining reward reduced to less than 4 ETH.
Some of the discussion around the changes have to do with reducing the dispersal and creation of Ethereum to make the protocol more attractive to investors.
A funny pull request was posted to the Bitcoin.org Github code, requesting that description text be changed to reflect the high transaction fees and slower transaction sizes caused by the ongoing Bitcoin block size debate.
Last September, the DASH community voted to fund some preliminary legal research on several topics including capital gains tax liability for DASH as an investment, Masternode payouts, the legality of private transactions, coin mixing, and more.
Attorneys Marco A. Santori, Kathleen Pakenham and Victoria Foltz from Cooley LLP made several points (specific to U.S. law and the Internal Revenue Service):
- Masternode block rewards would likely be treated as Bitcoin block rewards, and as such, the IRS believes that they are entitled to a piece of it via capital gains tax.
- If DASH were used to purchase something “illegal,” criminal liability would be “unlikely” for Masternode operators that were simply relaying the transaction. (Likewise for cryptocurrency exchanges, wallet apps, etc.)
- “Private send transactions are used for legitimate purposes and are often required to achieve personal or commercial privacy for sensitive transactions. The use of private send transactions is not inherently suspicious.”
DASH founder/lead developer Evan Duffield explained the reasons behind private transactions and coin mixing further on Reddit:
“I think it should be stated unambiguously, the purpose of the dash mixing / privacy implementation is for improved fungibility ( the unique characteristic of dash acting as a cash medium ). The world economy, excluding the black markets is 77-125 trillion dollars. We want a piece of that. I don’t think we’re worried about the transactions going through the mixing service, because we’re aligning ourselves as a medium for standard use, not illegal activities. We want mass adoption. It’s good for everyone involved and governments don’t mind new innovative technologies that expand the economy and reduce costs to do business. It’s a win-win.”
Adella Toulon-Foerster from Cogent Law Group was also approached by DASH to give her legal opinion surrounding the compliance requirements for running a commercial exchange from DASH to fiat currency (including DASH vending machines, kiosks, ATMs etc.).
Using JSON web tokens, ConsenSys developer Alex Miller has created a new way to login to websites. Leveraging the Ethereum protocol and a Chrome browser plug-in called Metamask, a user is given a pop-up that will allow them to sign a message and verify that they are the account owner. The process isn’t refined yet, but it is available and functional today.
8btc.com has published an in-depth look at China-based Alibaba’s massive global growth and how blockchain technology is poised to help them scale even more. Alibaba’s $60 billion payments and finance arm, Ant Financial, recently bid $880 million to purchase U.S.-based money transmitter MoneyGram, which is anticipated to gain regulatory approval in the second half of this year. Ant Financial’s Alipay mobile payments app currently has over 450 million users, and they are looking to blockchain technology to help them scale to 2 billion users within 10 years.
China is following an economic plan called One Belt, One Road (OBOR) to create a new Silk Road of sorts, with a web of new land and sea routes that will carry Chinese-made goods to every corner of the planet.
China created the Asian Infrastructure Bank (AIIB) in 2015, and it is heavily investing in foreign infrastructure projects such as ports, roads, and railways to Europe through Pakistan, Iran, Turkey, and Eastern Europe. Meanwhile, Alibaba is building logistics centers and distribution hubs in Europe, Russia, India, and Malaysia.
“As the world becomes one vast marketplace, we may see our goods originated, verified, paid for, tracked, and distributed with blockchain technology.”
In October of last year, Alibaba announced that it would use a blockchain called the Law Chain as an email repository for its Ali Cloud platform. Ali Cloud is widely used across China for data storage, email, and more; that they will be storing their customers’ emails on a blockchain viewable by government officials.
Alibaba also recently teamed up with PricewaterhouseCoopers to build a pilot blockchain platform to help prevent counterfeit food products from getting to consumers. This ‘Food Trust Framework’ is being tested in Australia to track the flow of foods from producer to consumer.
Popular cryptocurrency exchange ShapeShift.io has raised $10.4 million in a series A round led by Earlybird Venture Capital, with participation from VC firms such as Lakestar, FundersClub, Blockchain Capital, Pantera Capital, and Access Venture Partners. In previous rounds, ShapeShift raised around $2.4 million.
In a statement, ShapeShift explained that these funds would be used to “further expansion of the team to keep up with its rapid growth,” citing that their exchange now handles about 50,000 BTC each month. The statement goes on to say that ShapeShift will also release “two groundbreaking exchange products” later this year.
“Bitcoin Infinity” patch released which could raise Bitcoin Core block size to 32MiB without running Bitcoin Unlimited
Our friend Matt Whitlock has released a patch for the Bitcoin Core client which he calls “Bitcoin Infinity,” which adds the ability for Bitcoin Core miners to accept blocks up to 32MiB without running Bitcoin Unlimited. In the event of a hard fork, where two divergent blockchains are created and actively mined, clients running his Bitcoin Infinity patch would follow the longest Bitcoin blockchain, period. In the event of a hard fork, Matt intends for this patch to be an option that Bitcoin Core supporters could use to keep track of their Bitcoin Unlimited balance without running Bitcoin Unlimited software.
Related reading—Darren recently penned a blog post titled “So Bitcoin Might Fork: Here’s What to Expect…” As BTC miners signal their support for Bitcoin Unlimited or SegWit, will we see another hard fork? What does this mean for Bitcoin users? Exchanges? Fees?
On last week’s podcast episode, we talked about an idea from the Bitcoin Core dev team to change the Bitcoin Proof-of-Work mining algorithm, which would cause all current ASIC miners to be useless for Bitcoin. Another solution is being pushed that will force the activation of Seg-Wit, a User Activated Soft Fork, with a target date of Flag day. Why do they keep calling Seg-wit activation a soft fork?
“The Flippening” (aka crypto-diversification): Storj, Brave, other services continue migrating from Bitcoin to Ethereum network
More services that previously relied upon the Bitcoin blockchain are switching over to the Ethereum network. Some in the crypto community are calling this “The Flippening,” though we like to call it crypto-diversification. It appears that people are taking the advice of Wu Tang Financial and diversifying their bonds—or as Darren’s grandma used to say, not putting “all your eggs in one basket”)—though in this case, it’s people hedging their speculation on Bitcoin by shifting support to alt-coins.
Among the latest to make the flip from BTC to ETH is Storj, an open-source distributed cloud storage platform that up until recently operated on the Bitcoin-based Counterparty protocol. Citing the rise in Bitcoin transaction fees and the BTC network congestion, Storj is migrating to the Ethereum protocol. In February alone, Storj stated that they paid over $1,600 in transaction fees, which was equivalent to 13 percent of all payouts. The migration has begun and ought to take a couple months or less.
“BAT is a payment system that rewards and protects the user while giving better conversion to advertisers and higher yield to publishers. We see BAT and associated technologies as a future part of web standards, solving the important problem of monetizing publisher content while protecting user privacy.”