On Friday and Saturday, a group of key players in Bitcoin met in Hong Kong and came to an agreement over some questions that have divided the community for more than a year and caused it to split into factions.

The accord represented a first step in breaking through the impasse, and afterward, the currency, which had been rising over the previous week when the event details had been finalized, reached a value of around $430, a level last seen in mid-January.

It was then hostility over the debate reached critical levels when one of the most prominent developers declared Bitcoin a failure and announced he was quitting it altogether in a widely publicized blog post that coincided with a New York Times article. The currency immediately shed 15% of its value, demonstrating one of the persistent threats to the currency – the issue of governance. The fact that Bitcoin is not controlled by any one entity but by a sprawling group of developers and other economic actors means that it is not always obvious how problems will be resolved or who is responsible for resolving them.

However, the new statement by the group calling itself the Bitcoin Roundtable seems to point to a way forward for the community.

“There were a lot of arguments [during the Roundtable],” said Samson Mow, chief operating officer of BTCC, a China-based Bitcoin exchange and one of the organizers of the event, which had about two dozen attendees. “We are not like-minded individuals who all think the same thing. However, we do have an intent to work together, which is the differentiator.” He noted that the group had invited some members of other factions who declined to attend.

This commitment to finding common ground was echoed by Valery Vavilov, CEO of BitFury, a Bitcoin chip, hardware and mining company that currently accounts for about 10% of the network’s power, whose chief information officer attended: “For us it’s important not to decide on our own but to collaborate with other parties because this is the greatest open-source project ever,” he said.

The consensus reached by the Roundtable, which wrapped up its negotiations at 3:30am Saturday, presents one of the more definitive resolutions to the standoff, mainly because its members represent 80% of the network security and included five of Bitcoin’s developers (now called the Core team to differentiate them from the splinter groups) and other economic actors in the ecosystem such as exchanges.

Mow acknowledged that the agreement was very carefully worded to account for the concerns of the various Roundtable members and that the majority of the Core developers who were not present still needed to sign on to it, but he was confident that the plan represented the most likely outcome for Bitcoin moving forward.

“It’s futile to run Classic,” Mow said, referring to a new version of the software proposed by a splinter group. “This is done. This is over. Anyone who thinks otherwise is probably not going to be convinced of reality. They have their head in the sand and they will only believe what they want to believe.”

As Bitcoin has become more popular, transaction volume has increased, nearing the limit for the number of transactions that can be processed at any time in what is called “a block.” A few developers and large Bitcoin companies have proposed increasing each block’s cap, which is currently at 1 MB, even going so far as to launch new versions of the software themselves without first obtaining consensus amongst most of the developers and other Bitcoin stakeholders.

Ten days before this meeting, a new team of developers that broke off from the original group and calls itself Bitcoin Classic made another attempt to boost that cap — this time to 2 MB (previous proposals called for an 8 MB limit) — but within a day, the group of companies and players forming the Bitcoin Roundtable released a statement effectively rejecting the Classic team’s proposal. Their stance held weight because the companies behind it comprised enough network power to prevent the Classic version of the software from being implemented, despite the fact that Classic has the support of Coinbase, one of the most well-funded consumer-facing companies in the space. (Coinbase did not respond to requests for comment, but after the Roundtable agreement, CEO Brian Armstrong published a statement on Medium reiterating his support for an immediate block size increase to 2 MB and having miners “vote” on competing versions of the software by running the one they prefer.)

Over the weekend, the Roundtable convened in Hong Kong and sketched out a plan for increasing the network’s capacity that did not follow the Classic proposal. The Roundtable plans to implement a software change that separately processes some of the data currently in each block so that it does not contribute to the amount of data used toward the block limit. That effectively increases the number of transactions that the network can handle at any given time without actually increasing the block size.

The group also announced that it will release the software to increase the block size by July, and potentially activate that new software by July 2017. However, Vavilov, who prefers a quicker timeline, said, “I think July 2017 is likely a deadline. We think it could be done faster.” Mow concurred: “In software development, not all dates are firm,” he said.

While on the surface, the debate seemed to be about the block size, it eventually became a power struggle, with the factions vying for control over the protocol. When asked why BitFury and other companies with a large portion of the network power decided to go with the Core team, Vavilov said, “For us, before we switch to another team, we need to understand if the existing team with the great experience who worked on this for many years can [upgrade the network]. For me, it would be good if Classic and Core could join forces and collaborate. Because of the Classic team, I think the Core team started to move slightly faster. The Classic team is good, but if Core can do this, why take the risk and switch?”

His comments echoed the sentiment of many of the Chinese companies that also account for a large portion of the computing power. In a previous article, I wrote about how cultural differences between China, where many of the miners are based, and the West, where many of the developers are from, are affecting Bitcoin’s progress. The Chinese Bitcoin community members I interviewed, while desiring a larger block size, were averse to switching to a new team. Some of Bitcoin’s bilingual community members surmised that those in the Chinese were not comfortable “voting” for different factions because they had grown up under China’s one-party political system.

For instance, Jack Liao, CEO of China-based Bitexchange and LightningASIC, told me then, “the Core developer team for the past two years did a great job and I trust them more than the Classic team,” mostly because they were new. (Liao signed the agreement this past weekend.)

Vavilov also said that other measures could be taken to help ease the problem of the transaction volume bumping up against the cap with other technological advancements currently in development, such as the Lightning network and side chains, that allow transactions to be processed not directly on the Bitcoin network, but connected to it.

“I think multiple competing teams are okay, but those teams should develop something but also somehow make consensus,” said Vavilov, then concluded. “But I think competition is good.”

https://bitcoininthenews.com/?q=Bitcoin-Agreement-Promises-To-Break-Impasse-Currency-Jumps-In-Value

Bitcoin prices rose over the last week, pushing higher as the sentiment surrounding the digital currency strengthened.

This increase represents a gain of more than 20%.

This week provided a contrast to the prior seven-day period between 4th February and 11th February, when the digital currency hovered in a range between roughly $390 and $370, additional BPI figures reveal.

The price of bitcoin increased on 12th February, rising from $377.82 at 12:00 am (UTC) to $383.10 at 23:00 (UTC), before continuing this upward climb the following day, reaching $392.34 at 23:00 (UTC). The digital currency suffered a loss on 14th February, but then continued to appreciate for the remainder of the week.

Market participants traded a total of 15.2 million bitcoins from 12th February to 19th February at 10:40 am (EST), according to data from Bitcoinity. China-based OKCoin was responsible for 47.45% of this transaction volume for the week, and 6.785 million bitcoins were traded through this bourse between 11th February and 17th February.

Huobi accounted for another 44.92% of total trading volume between 12th February and 19th February, and market participants transacted 7.412 million bitcoins through this exchange between from 11th February to 17th February.

Blockchain praise

Other developments coincided with the price appreciation that bitcoin enjoyed during the week, as it was announced that the central banks of both the eurozone and China are looking into blockchain technology.

More specifically, the European Central Bank revealed 17th February that it is delving into how this technology could either improve or hamper the infrastructure the region uses to settle securities and payments.

In addition, Zhou Xiaochuan, governor of the People’s Bank of China, stated in an interview with Caixin Weekly that the central bank is exploring blockchain, as well as other technologies, to establish and run an electronic cash network.

The Australian Securities Exchange (ASX) provided news of its own, announcing plans to use blockchain tech as part of a technology transformation program. As a result of this initiative, the bourse may develop a new method for settling equities trades.

While these developments may be uplifting, they will not solve bitcoin’s challenges, for example, its current capacity issue, which continues to add uncertainty to global markets.

Once the digital currency’s community overcomes this difficulty, sentiment could improve markedly, with Tim Enneking, the chairman of Crypto Currency Fund, a digital currency-focused hedge fund, predicting that bitcoin will enjoy a "major spike."

Sentiment improves

Bitcoin prices moved higher as the sentiment of global traders improved somewhat. In addition, markets enjoyed tailwinds as the adoption of both bitcoin and blockchain technology grew.

https://bitcoininthenews.com/?q=Bitcoin-Price-Passes-440-2016

On 9th February, a group of Republican and Democrat representatives and senators, put forward a bill that may end the ban on Bitcoin and other cryptocurrency exchanges in the US state of Wyoming.
Bitcoin Ban

Despite the growing acceptance of BitcoinCT r: 9 as a legitimate means of transaction and the increased usage of the cryptocurrency by businesses and customers alike, in Wyoming, as of mid-2014, nearly all trading of not only Bitcoin, but all cryptocurrencies, has almost completely ceased.

This is due to the Wyoming Money Transmitters Act that was introduced in Chapter 22 of Title 40 - Trade and Commerce, one of the Wyoming Statutes of 2011. Despite the act’s introduction in 2011, Bitcoin and other cryptocurrency exchanges only began to be affected in 2014/15 as the Wyoming Division of Banking communicated the regulatory policies’ effects on cryptocurrency exchanges.
Coinbase ceases operations

On 13th October 2015, Coinbase, one of the most popular Bitcoin exchanges in the US and the world, if not the most popular, released the following statement on its website, having already ceased operations in Wyoming in July 2014, saying that they were indefinitely suspending their business in Wyoming: “Although we strive to provide continuous access to CoinbaseCT r: 2 services, Coinbase is indefinitely suspending its business in Wyoming.

The Wyoming Division of Banking has recently communicated regulatory policies which we believe will render continued Coinbase operations there impractical. In particular, we understand that the Wyoming Division of Banking interprets the Wyoming Money Transmitter Act to require licensure of entities which offer hosted bitcoin wallet services, and that as a condition of such licensure, licensees must maintain dedicated fiat currency reserves in amount equal to the aggregate face value of all bitcoin held on behalf of customers. Although Coinbase securely maintains 100% of all customer bitcoin, it is impractical, costly, and inefficient for us to establish a redundant reserve of fiat currency in equivalent value.

We understand this suspension will inconvenience our Wyoming customers and we apologize that we cannot currently project if or when our services may be restored.”

Despite the fact that Coinbase had already developed an insurance plan that would recover any lost or stolen coins that were in a user’s online wallet, in the event that something unexpected happened, this did not satisfy the Wyoming Money Transmitters Act’s requirement that exchanges had dedicated fiat currency reserves amounting to the value of Bitcoin held on their servers.

Coinbase was forced to comply with these regulations most predominantly because of an obvious wish not to break the law, but it is important to keep in mind that Coinbase deliberately took a swift and strong stance in order to aid the legitimization efforts of the Bitcoin community. For digital currencies to be seen as a legitimate payment system, it is incredibly important that exchanges observe state and federal law strictly.
Only one exchange stays in business

Although other exchanges were operating in Wyoming, Coinbase had the biggest share of the market by a fairly wide margin. However, as these other exchanges try to compete with Coinbase, they employ the same types of rules to legitimize their company, and as result, many more exchanges followed suit and ceased their operations in Wyoming, the most recent of which being a company similar to Coinbase, called Glidera.

As further competition between exchanges occurs, more and more of them will stop doing business in Wyoming. As of 13th February 2016, there is only one exchange company, that allows you to sell Bitcoin, still operating in Wyoming - an Australia-based company called Circle. However, it is likely that it will only be a matter of time before they stop doing business too.
Solutions

Although it is possible for Wyomingites to travel to Denver, Colorado to buy goods from the handful of merchants that accept Bitcoin there, this is obviously not the optimal solution.

A new bill, Wyoming House Bill 26, hopes to change the current situation for the better. The bill, introduced on 9th February 2016, is “A BILL for AN ACT relating to the Wyoming Money Transmitter Act; amending definitions to include digital currency as a permissive investment; and providing for an effective date.” It is being sponsored by Republicans, Rep. Tyler Lindholm, Rep. David Miller, and Sen. Cale Case, and Democrats, Rep. Charles Pelkey and Sen. Chris Rothfuss.

How Wyoming House Bill 26 hopes to change things

To understand the implications of this bill, you must understand the three relevant sections of the Wyoming Money Transmitters Act that impact cryptocurrency exchanges; § 40-22-102. Definitions., § 40-22-103. License required., and § 4-22-107. Permissible investments and statutory trust.

The first outlines the definitions relevant to the bill, but the important one to us is the definition of “permissible investments”. The current definition lists cash, certificates of deposit, investment securities, and bank savings, among other definitions, as permissible investments, but currently, ‘digital currencies’ is not on this list.

The second states that, “no person shall engage in the business of money transmission without a license,” and the last states that, “Each licensee shall at all times possess permissible investments having an aggregate market value calculated in accordance with generally accepted accounting principles, of not less than the aggregate face amount of all outstanding payment instruments and stored value issued or sold by the licensee in the United States.”

Together, this essentially means that every money transmitter, i.e. Coinbase, Glidera, Circle etc., must have a license to do business. This license requires licensees to have dedicated permissible investment reserves amounting to the aggregate market value of users’ stored money, i.e. the value of the Bitcoin stored on their servers. However, the issue is that digital currencies are not recognised as permissible investments in Wyoming. This makes it nearly impossible for these companies to fulfil the license requirements as it is just not economically feasible to store that amount of money in fiat currency or otherwise.

If Wyoming decides to pass House Bill 26, digital currencies will be recognised as permissible investments, allowing these exchanges to resume their operations, businesses to continue easily accepting Bitcoin, and Wyomingites to pay for their goods and services via Bitcoin, should they choose to do so. It will also allow for the growth of new Blockchain utilizations, as well as new Bitcoin-related businesses.

Cointelegraph and the Wyoming Bitcoin community eagerly await the outcome of the vote on the bill.

https://bitcoininthenews.com/?q=New-Bill-May-Give-a-Green-Light-to-Bitcoin-Exchanges-in-Wyoming

Negative interest rates and efforts to ban cash money could help bitcoin prices soar in the coming few months.

That prediction was made over Twitter by Barry Silbert, the head of Digital Currency Group, who also cited mobile growth, capital controls, and currency wars.

“I couldn’t dream of more [sic] bullish case for bitcoin,” he tweeted on Tuesday.

Bitcoin is the currency of the Internet. It is mined with high-powered computers and operates with a distributed ledger that contains the payment history of every circulation.

One bitcoin is currently traded at US$419.00. The currency has rallied 30% from its three-month low of $322.00, registered on November 24.

Many economies may shortly adopt negative interest rates—charging commercial banks for the privilege of holding reserves with the central bank. Countries accounting for almost a quarter of the global gross domestic product (GDP) now have sub-zero interest rates, including the eurozone, Switzerland, and Japan.

Markets now attach a 10% chance (four-times higher than the start of this year) that the Federal Reserve will impose negative rates over the next 12 months in response to softer current economic activity indicators. (Source: “The consequences of negative interest rates,” CNBC, February 17, 2016.)

On Monday, the European Central Bank (ECB) said it was considering eliminating the 500-euro note, describing the bill commonly used by savers as an instrument also favored by criminals. (Source: “European Central Bank Weighs Eliminating 500-Euro Bill,” The New York Times, February 15, 2016.)

Bitcoin was created in 2008 under Satoshi Nakamoto—a programmer or a group of programmers—and does not operate under an administrator, like a central bank. Rather, a network of volunteers validate transactions via their computers.

https://bitcoininthenews.com/?q=Insider-Says-This-Could-Send-Bitcoin-Prices-Skyrocketing

An innovation center established by Sheikh Mohammed bin Rashid, vice president and prime minister of the United Arab Emirates (UAE) and emir of Dubai, has announced the formation of a research council focused on blockchain technology.

Launched in 2015, the Museum of the Future was created with the mandate to encourage innovation and help foster investigation of new technologies within the Middle Eastern nation. The keystone of the project will be an architectural centre (estimated to cost $136m) and set to be completed in 2017.

According to the release, the Global Blockchain Council will consist of 32 members including government entities (Smart Dubai Office, Dubai Smart Government, the Dubai Multi Commodities Centre (DMCC), international companies (Cisco, IBM, SAP, Microsoft) and blockchain startups (BitOasis, Kraken and YellowPay).

In the past, Museum of the Future has voiced support for emerging technologies such as drones, as well as the broader applicability of new technologies to education, healthcare and travel. Further, the announcement follows Sheikh Khalifa bin Zayed Al Nahyan’s declaration that 2015 would serve as a "year of innovation" for the Middle Eastern nation.

According to a press release from the government of Dubai’s media office, the Global Blockchain Council will explore and discuss potential applications of blockchain technology, with the goal of highlighting how it could come to impact domestic financial and non-financial business sectors.

In statements, Saif Al Aleeli, CEO of Dubai Museum of the Future Foundation, explained the importance of the initiative, given statistics he cited that suggest global blockchain investments could reach $300bn over the next four years.

Al Aleeli said: "The Global Blockchain Council will launch different initiatives under its umbrella to highlight and promote blockchain and digital currencies, and explore its advantages and disadvantages. It will also draw a roadmap for best uses of this emerging technology."

He further stated that the group’s efforts will include the creation of an annual conference that will host “high-profile individuals, workshops, awareness sessions [and] hackathons".

Dr. Aisha Bin Bishr, director general of Smart Dubai Office, an initiative overseeing Dubai's interests in smart cities, added that the Global Blockchain Council will seek to unite both public and private industry stakeholders for the efforts.

"New technologies such as blockchain open significant opportunities for all service providers to reshape transactions, making experiences more seamless and secure for all customers," Bin Bishr said in the release.

Additional statements were given by the CEO of the Dubai International Financial Centre Authority (DIFCA), an agency that reports to the UAE’s president on “economic development and planning, registry of companies and administration of companies law and data protection law,” according to the International Monetary Fund (IMF); and the operator of Nasdaq Dubai, formerly the Dubai International Financial Exchange.
First pilot project

As part of the announcement, the Museum of the Future detailed pilot projects it will embark on for the initiative.

The first pilot project, according to the release, will find Dubai-based bitcoin services startup BitOasis working with the Dubai Multi Commodities Centre (DMCC), which was created in 2002 to establish a commodities marketplace in Dubai.

BitOasis will work with the DMCC to "secure flexidesk contracts and registration process using the blockchain ledger" as a means to help the organization "stay ahead of the curve" while providing guidance on the technology to other market participants, according to Ahmed Bin Sulayem, Executive Chairman of Dubai Multi Commodities Centre Authority.

A second project will find the DMCC working with bitcoin exchange Kraken to "help DMCC catalyze" blockchain technology in select Islamic finance operations.

"It is therefore a natural next step for DMCC to play our part in not only piloting the BitOasis and Kraken Bitcoin Exchange projects, but to do everything we can to bring more projects like these to market in the future in collaboration with the Dubai Blockchain Council," Bin Sulayem said.
Points of confusion

Despite the strong signal of interest from the UAE, there were signs in its release that suggest its views on the technology remain in early stages.

For example, language included suggested that "Blockchain supports more than two million bitcoin wallets", inferred that there may be confusion at the institution between the bitcoin wallet startup Blockchain, and bitcoin’s underlying distributed ledger, referred to as the blockchain.

"Blockchain is available worldwide in more than 15 languages, and allows the user to send bitcoin by emails and text message, while still maintaining the user’s privacy and security," the release read. Notably, Blockchain was not one of the members mentioned as part of the initial Global Blockchain Council.

Elsewhere, the language similarly blurred the lines between bitcoin, the digital currency, and blockchain, a term often used to denote its distributed ledger applications.

"The blockchain market reports that the average volume of bitcoin transactions in 24 hours is $105.6m, and the bitcoin market cap is averaged at $6.8bn," the release said.

Nonetheless, the ambitious program marks a milestone for the technology in a region where there have been few major industry announcements.

https://bitcoininthenews.com/?q=Dubai-Government-Backs-Expansive-Blockchain-Research-Effort

Governance has become a key topic of interest in the Bitcoin community over the past few months, and Mastering Bitcoin Author Andreas Antonopoulos was asked about progress in this area during a recent interview on The Tatiana Show. In his response on the issue of governance, Antonopoulos noted:

“We’re seeing quite amazing developments in the area of governance — both in terms of the human and social aspects of governance.”

Blockchain Capital Managing Partner Brock Pierce recently explained that developers, miners, and economic participants are all involved in the process of deciding Bitcoin’s consensus rules. During Antonopoulos’s recent interview, he discussed three recent developments in how those rules could be decided.

Bitcoin Core Has Improved Their Communication

The first development in Bitcoin governance discussed by Andreas Antonopoulos on The Tatiana Show was the improved communication from the developers behind Bitcoin Core, which is the reference implementation of the Bitcoin protocol. Antonopoulos stated, “The [Bitcoin] Core development team have massively improved their communications in both tone and content.”

The author of Mastering Bitcoin then pointed to specific examples of Bitcoin Core’s improvements in communicating their views to the wider Bitcoin community such as their Slack, new website, FAQs on new technical developments, and official announcements via blog posts. Antonopoulos added:

“[This] shows that Core developers are understanding the importance of communicating with a broad diversity of users and stakeholders in the Bitcoin space and not just having the technical engineering discussion.”

One of the issues some Bitcoin Core contributors have noted in recent months is their lack of interaction with the wider Bitcoin community. This inaction from a communications perspective allowed other members of the ecosystem to control the conversation related to changes in Bitcoin’s consensus rules.

Segregated Witness’s Options for Technical Governance

Antonopoulos also touched on technical improvements to the Bitcoin protocol that could have an impact on governance. Segregated Witness and VersionBits are two technical developments that could make soft forks of Bitcoin less problematic in the future. Antonopoulos explained:

“Segregated Witness is opening the door . . . to some technical governance tools for multiple, parallel soft forks and improvements in Bitcoin that can be competitively tested on the network . . . That’s going to accelerate development and innovation a lot.”

Another technical innovation that could affect Bitcoin governance in the future is sidechains. With sidechains, new blockchains with completely different consensus rules can be tested without leaving the bitcoin currency network. As of today, it’s difficult to test new features or changes to the consensus rules because every bitcoin user must use the same blockchain.

Dash’s Governance Model May Not Scale to Bitcoin Level

The Tatiana Show Co-Host Josh Scigala of Vaultoro also mentioned Dash’s governance model during the interview. The success of the altcoin’s governance model was widely reported in Bitcoin media outlets after the cryptocurrency’s users were able to reach consensus on a block size limit increase in less than 24 hours.

Andreas Antonopoulos seemed skeptical of Dash’s governance model as a possible option for Bitcoin during the interview. He explained:

“Dash has some interesting ideas, but I think it’s important to keep in mind that what can be done on a fairly small scale with non-contentious issues, as is happening in Dash, doesn’t necessarily also work on a much bigger scale on a massively bigger network with a lot more money at stake and a very different structure.”

Governance will likely remain a key topic of discussion in the Bitcoin community for quite some time. The block size limit debate is just one of many contentious issues that could pop up as time goes by.

https://bitcoininthenews.com/?q=Amazing-Developments-in-Bitcoin-Governance