Ep180: All Eyes on Zcash Launch, Obama Administration Steals $5 Billion, Cell411 beats Arcade City

Iceland votes for more pirates! Encrypted communication app Signal has nothing to share with the FBI. New York wants to tell you how you can use your spare rooms. The Department of Health and Human Services is stealing according to the Government Accountability Office. Zcash launches with a bang. Zero-knowledge proofs and Ethereum. Cell411 beats Arcade city with a free, decentralized, ridesharing app… and what you should know about the Arcade City Token sale. Bitcoin version 0.13.1 Seg-wit is awaiting the signal.

All this and more on Neocash Radio episode 180 here on Wednesday November 2nd, 2016!

We’ve written out short overviews of the topics discussed on today’s show below, along with time markers for each segment! 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 Markets Crypto Markets
Gold $1298 Bitcoin (BTC) $733
Silver $18.50 Litecoin (LTC) $4.06
Oil $45.60 Ethereum (ETH) $10.97
Dow Jones 17,959 points DASH $8.95
30Y UST Yield 2.565% Monero (XMR) $4.70
Euro (EUR) $1.11 STEEM ~$0.10
Chinese Yuan (CNY) $0.148 AMP ~$0.11
British Pound (GBP) $1.23 1 Doge = 1 Doge

Iceland faces a major political shake up
The Pirate party in Iceland has tripped its vote this election cycle. The party made up of hackers, activists, and anarchists received 14.5% of the vote. They have allied with 3 left-of-center parties for a combined total of 27 out of the 63 seats in the country’s parliament. The other major winner was the Independence party allied with the Progressive party which received 29 seats. Given the lack of a clear majority there is no telling what final form may emerge.

Signal faces FBI subpoena and gag order
Open Whisper Systems is the parent company behind the encrypted communication app Signal. Earlier this year, the Federal Bureau of Investigation demanded the Open Whisper Systems hand over information on communications between two users including: subscriber name, addresses, telephone numbers, email addresses, and method of payment.

The account creation date and last server login time are the only data held by Signal, and thus, was the only data that could be turned over to the FBI. All Signal messages and voice calls use the Signal Protocol for end-to-end encryption and thus messages can only be read by sender and receiver.

The FBI also issued a gag order to OWS so that they were not allowed to comment about the FBI’s request, though thanks to the American Civil Liberties Union, the gag order has been successfully challenged.

AirBnB Again Seeks Halt to N.Y. Sublet Law, Fearing Large Fines
New Yorkers hoping to supplement their income by subletting their apartments units are in bad luck. New York City has over 100,000 hotel rooms which brought in more than $560 million in tax revenue in 2015, but government officials are scrambling as hotel competitors like Airbnb surge in popularity. A recent New York state law prohibits apartment dwellers from advertising their units for short-term rental unless the resident is staying there too. People advertising accommodations that can’t be legally rented out for less than 30 days could face fines as high as $7,500.

Airbnb said it faced “staggering penalties” if the law were enforced because it’s not clear if websites or online platforms might be held liable for the ads. The city and state of New York said they would not enforce the new law until Airbnb’s lawsuit over this issue was resolved.

The Obama Administration is breaking the law, according to government
The U.S. Government Accountability Office released a report about the Department of Health and Human Services and more specifically Obamacare. The report clearly outlines how the Obama administration is stealing $5 billion dollars earmarked for the federal treasury and giving it to private insurance companies that participate in Obamacare. The program is the Transitional Reinsurance Program and the law is very specific: if the program collects $25 billion from consumers, $20 billion is paid to participating insurers with the remaining $5 billion going to the federal treasury. In fact the law specifically states that the $5 billion, “may not be used for the program established under this section.”

The GAO describes how the HHS justifies its lawbreaking by redefining what words mean and even picking which words in the law it wants to apply. The report concludes that the HHS does not have the authority to reappropriate that $5 Billion. In other words, they are taking something without permission… aka stealing.

Want to learn more about Bitcoin, cryptocurrencies, and blockchains? Check out our intro video: “Decrypting Bitcoin: Blockchain Technology Explained”

We will be producing more in-depth videos to explain Ethereum, Dash, and the Federal Reserve soon! We’re also building a video podcast room here at Neocash HQ! Until that’s finished, we’ve started uploading our audio feed to our new YouTube channel! We hope to have video added to the podcast by year’s end!

Zcash anonymous cryptocurrency launchesZcash launches: “Blockchain Enters the Age of Anonymity”
On October 28, Zcash launched its genesis block and began mining.

“Zcash is a decentralized and open-source cryptocurrency that offers privacy and selective transparency of transactions. Zcash payments are published on a public blockchain, but the sender, recipient, and amount of a transaction remain private.”

This is done with a cryptographic tool called a zero-knowledge proof, which allows you to prove knowledge of some facts about hidden information without revealing that information.

Zcash uses a particular type of zero-knowledge proof called a zk-SNARK (or “zero-knowledge succinct non-interactive arguments of knowledge”):

Within a Zcash transaction, there may exist a string of data that the sender of a transaction provides –the “zero-knowledge proof”– along with the encrypted transaction data which proves properties of the encrypted data cryptographically, including that the sender couldn’t have generated that string unless they had ownership over the spending key and unless the input and output values are equal. The proof also guarantees creation of a unique nullifier which is used to mark tokens as spent, when they are, in fact spent. This allows for verification that the transaction is valid, while preserving privacy of the transaction details.

With Zcash, there are actually two types of addresses: “transparent” and “shielded.” The transparent addresses—and amounts from their transactions—are publicly visible on a blockchain, similar to Bitcoin. But if one chooses to use a shielded address, it becomes obscured on the public ledger; when both the sender and the receiver in a transaction are using shielded addresses, the amount sent will be encrypted as well.

“View keys” are on the horizon for the Zcash dev team, which would allow users to reveal information about their own transactions to third parties. “We call this ‘selective disclosure,’ ” Zcash founder & CEO Zooko Wilcox said in a statement to American Banker. “It also comes with an encrypted memo field, which allows institutions to safely attach sensitive data to transactions, and make that information visible to authorized parties.”

ZCash mimics Bitcoin in several ways, with slight adjustments. New ZCash blocks will be created roughly every 150 seconds (2.5 minutes), and they will be starting with a 2MB block size limit. The monetary supply curve will mirror Bitcoin’s—there will only be 21,000,000 ZEC ever mined—but because Zcash’s blocks are mined four times more frequently than Bitcoin, the number of ZEC created per Zcash block will be a quarter the number of BTC created per Bitcoin block. As a security precaution, the launch began as a “slow-mine”, starting with zero ZEC paid out as a reward for mining the first block, which will grow to 12.5 ZEC over the first 34 days of mining. The mining reward will halve every four years, just as the mining reward for Bitcoin has.

There was no crowdsale, ICO, or premine for founders/investors, though 10% of the mining rewards generated in the first four years will serve as the “Founders Reward.”

Zero-knowledge proofs coming to Ethereum
Reddit’s r/ethereum board was pretty stoked to hear that the zero-knowledge proof capabilities of Zcash would be coming to Ethereum as well. Ethereum chief scientist Vitalik Buterin—who is also an adviser for Zcash—tweeted that zero-knowledge proofs had been on Ethereum’s roadmap for more than two months. In fact, Zcash developers announced this “Zerocash over Ethereum” capability in late July.

Christopher David & his Decentralized ridesharing app Arcade City a scam? Arcade City announces token sale

Decentralized ridesharing is a hot topic, as Uber and Lyft squeeze more money out of their drivers and they continue to face regulatory hurdles. Arcade City, the self-proclaimed “Uber killer”, has been gathering all kinds of praise in the media despite the fact that it still has yet to deliver an app that actually connects drivers and riders.

Arcade City has now launched its ARC token sale—and raised about $360,000 as of the publication of this episode—for use in the app (which allegedly will run on the Ethereum blockchain whenever it does launch). But questions regarding Arcade City founder Christopher David’s past business dealings bear further investigation.

A former friend/colleague wrote a piece on Medium called “An American Fraudster: The Dirge of Christopher David, CEO of Arcade City” detailing how David has ignored court orders to repay him. A piece on Fusion proclaimed: “If Arcade City resembles David’s past projects, it may hinge on little more than smoke and mirrors,” and goes on to detail others who’ve been allegedly burned by David’s smooth talk and poor money management skills.

When asked about the funds by Fusion, David admits: “I failed to deliver on repeated promises to pay them the money I owe them. My personal debt runs in the high five figures… I have a list of creditors I’m working my way down.”

Cell 411 app allows ridesharingFor those tired of waiting for a simple decentralized ridesharing app, it was just announced that the new version of Cell 411 has ridesharing functionality built in. Drivers using Cell 411 can set their own pricing formula and are able to choose payment methods like cash, credit, silver, cryptocurrencies like Bitcoin, or even bartering. Unlike Uber, Lyft and other ridesharing companies, riders get to choose their driver based on pricing, payment methods and the vehicles used.

Bitcoin version 0.13.1 Seg-Wit update released
Last Thursday version 0.13.1 of the Bitcoin Core was released. The update contained the final pieces for controversial Segregated Witness code. Before seg-wit can activate miners must signal support by mining blocks with the Bitcoin Core protocol. The signaling starts after November 15th and the goal is 95% of the last 2016 blocks mined – which takes roughly 2 weeks at 10 minute block times. Once this threshold is met miners will be able to use the new validation code that is also contained in this update.

This requires changes across the Bitcoin ecosystem as many of the apps and services that use Bitcoin. This is no small undertaking, Github and Bitcoincore.org have lists of wallets that that plan to support seg-wit and their readiness. BitPay is singing a slightly different tune, they plan to support the change when it is going to happen.

BitPay CEO Stephen Pair told Bitcoin Magazine, “we don’t know exactly when the activation will occur, so we don’t want to spend time now only to have it take another six months or a year before activation happens.”

Six months or a year does not seem unreasonable given the current support for bigger block solutions. Node Counter lists bigger block support at 10.6% with 106 of the last thousand blocks mined with big block miners. Bitcoin Unlimited is driving this support with 91 of the last thousand blocks. A look at network hashrates on blockchain.info shows a loss in hash rate for Bitcoin Unlimited with viaBTC falling to 6.1% and Bitcoin.com to 2.3%.

Andreas Antonopoulos is a big supporter of Seg-Wit and seems to think that the activation will occur before the end of the year.

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