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[DNotes]

http://dcebrief.com/the-future-of-cash-vs-the-future-of-money/

[1715687667]

1715687667

[1715687667]

1715687667

[DNotes]

Transaction Fees Increase as Bitcoin Blocks Get Full

http://www.newsbtc.com/2016/03/01/transaction-fees-increase-bitcoin-blocks-get-full/

By the look of things, there is no improvement in sight anytime soon. The Bitcoin memory pool is full of transactions waiting for network confirmations, and the numbers only keep going up over time. Some people might see this as a sign of how Bitcoin is gaining a lot of popularity, but these confirmation delays are not doing anyone any favors right now.


Bitcoin Transaction Gets Stuck For Hours

Whenever somebody sends a Bitcoin transaction with a lower than normal fee, it only makes sense to face a slight delay. The way Bitcoin mining works is by prioritizing transactions based on the transaction fees paid. Low to no transaction fees will usually lead to a delay when waiting for network confirmations, although things never got out of hand as much as they do now.

These days, it is not just the low fee transactions which are faced with network confirmation delays, but the regular fee is no longer sufficient either. This creates a very awkward situation in the Bitcoin world, as the 0.001 BTC fee – worth US$0.43 at the time of writing – is no longer sufficient to get guaranteed confirmations from the next few blocks on the Bitcoin network.

But it is not just the transaction fees that are creating this backlog, as the network blocks mined on February 29th could not take in more transactions. All of the mined blocks were completely full, a strong indication as to how the block size needs to be increased much sooner than people anticipated. As a result, only high priority fees will get transactions confirmed these days, a cost currently sitting at 0.0044 BTC or US$1.90.

With the transaction fees increasing spectacularly to move funds across the Bitcoin network in a quick manner, it becomes even more apparent as to how much the block size debate is hurting the ecosystem right now. Paying close to US$2 per transaction for a money transfer solution supposedly much cheaper than traditional solutions is not acceptable.

By the look of things, there is no improvement in sight anytime soon. The Bitcoin memory pool is full of transactions waiting for network confirmations, and the numbers only keep going up over time. Some people might see this as a sign of how Bitcoin is gaining a lot of popularity, but these confirmation delays are not doing anyone any favors right now.

There is no indication any Bitcoin network stress test is going, like what happened when the Bitcoin XT client started gaining popularity last year. Some people mention how they got lucky and had a transaction confirmed by the next network block while paying regular fees. Others might find themselves waiting for hours, if not days, until the transaction is confirmed.

Will A Block Size Increase Fix The Problem?

Unfortunately, there is no right or wrong answer to this question right now. Yes, a bigger Bitcoin block size would allow for more transactions to be included in every block, and could result in lower transaction fees in the long run. However, it is impossible to confirm whether or not this would be the case, as there is no reason for the sudden flood of Bitcoin transactions hitting the network.

While it is true the block size debate has gone on far too long, a rushed solution might not be the preferable answer right now. The latest Bitcoin Core release includes an option to resend transactions with a higher fee if the user decided to do so, partially solving the problem of delayed network confirmations. But at the same time, a more permanent solution needs to be made available to all Bitcoin users, and it will be up to the developers to do exactly that.

Transaction fees and limits is something we will have to take very seriously not only for DNotes itself but the extended payment network. This is a huge value proposition for digital currency, lower fees and speed of transactions. Great article.

[RJF19]

Transaction Fees Increase as Bitcoin Blocks Get Full

http://www.newsbtc.com/2016/03/01/transaction-fees-increase-bitcoin-blocks-get-full/

By the look of things, there is no improvement in sight anytime soon. The Bitcoin memory pool is full of transactions waiting for network confirmations, and the numbers only keep going up over time. Some people might see this as a sign of how Bitcoin is gaining a lot of popularity, but these confirmation delays are not doing anyone any favors right now.


Bitcoin Transaction Gets Stuck For Hours

Whenever somebody sends a Bitcoin transaction with a lower than normal fee, it only makes sense to face a slight delay. The way Bitcoin mining works is by prioritizing transactions based on the transaction fees paid. Low to no transaction fees will usually lead to a delay when waiting for network confirmations, although things never got out of hand as much as they do now.

These days, it is not just the low fee transactions which are faced with network confirmation delays, but the regular fee is no longer sufficient either. This creates a very awkward situation in the Bitcoin world, as the 0.001 BTC fee – worth US$0.43 at the time of writing – is no longer sufficient to get guaranteed confirmations from the next few blocks on the Bitcoin network.

But it is not just the transaction fees that are creating this backlog, as the network blocks mined on February 29th could not take in more transactions. All of the mined blocks were completely full, a strong indication as to how the block size needs to be increased much sooner than people anticipated. As a result, only high priority fees will get transactions confirmed these days, a cost currently sitting at 0.0044 BTC or US$1.90.

With the transaction fees increasing spectacularly to move funds across the Bitcoin network in a quick manner, it becomes even more apparent as to how much the block size debate is hurting the ecosystem right now. Paying close to US$2 per transaction for a money transfer solution supposedly much cheaper than traditional solutions is not acceptable.

By the look of things, there is no improvement in sight anytime soon. The Bitcoin memory pool is full of transactions waiting for network confirmations, and the numbers only keep going up over time. Some people might see this as a sign of how Bitcoin is gaining a lot of popularity, but these confirmation delays are not doing anyone any favors right now.

There is no indication any Bitcoin network stress test is going, like what happened when the Bitcoin XT client started gaining popularity last year. Some people mention how they got lucky and had a transaction confirmed by the next network block while paying regular fees. Others might find themselves waiting for hours, if not days, until the transaction is confirmed.

Will A Block Size Increase Fix The Problem?

Unfortunately, there is no right or wrong answer to this question right now. Yes, a bigger Bitcoin block size would allow for more transactions to be included in every block, and could result in lower transaction fees in the long run. However, it is impossible to confirm whether or not this would be the case, as there is no reason for the sudden flood of Bitcoin transactions hitting the network.

While it is true the block size debate has gone on far too long, a rushed solution might not be the preferable answer right now. The latest Bitcoin Core release includes an option to resend transactions with a higher fee if the user decided to do so, partially solving the problem of delayed network confirmations. But at the same time, a more permanent solution needs to be made available to all Bitcoin users, and it will be up to the developers to do exactly that.

Transaction fees and limits is something we will have to take very seriously not only for DNotes itself but the extended payment network. This is a huge value proposition for digital currency, lower fees and speed of transactions. Great article.

Couldn't the entire process be compressed if not already? I'm no expert in Bitcoin code but, it seems to me a lot of space is being wasted in the method of transmission.

[CryptoBroker79]

Here is another great article, China's firewall is causing miners outside the country to recieve blocks well after they've been solved by Chinese miners. This means other miners would be working on old blocks, wasting electricity and eating into their revenue. With large scale mining operations monopolizing the SHA 256 algorithm, this begs the question; could an alternative algorithm that is more asic resistant be a long term solution to keep a currency's mining decentralized?




---------

Why the Great Firewall of China Is Causing Serious Issues for Bitcoin Miners

https://bitcoinmagazine.com/articles/why-the-great-firewall-of-china-is-causing-serious-issues-for-bitcoin-miners-1456508966

What’s wrong with increasing the block size limit? This is the question that a portion of the Bitcoin community has been asking almost nonstop since the controversy around this possible alteration to the protocol went into hyperdrive last year.

In a recent appearance at Bitcoin Meetup Switzerland, Bitcoin Core Contributor Jonas Schnelli covered at least one possible issue with raising the block size limit too quickly: the effect larger blocks have on wasted resources for miners.

It should be noted that Schnelli has decided not to take an official, public stance on the block size debate.

In Bitcoin Mining, Every Second Counts

A key point to understand about bitcoin mining is every second of hashing affects one’s ability to turn a profit. New blocks are not received by all nodes on the network instantaneously, which means miners are, at least at times, wasting resources by building on an old block that is no longer the most recent. After all, a miner can only build on top of someone else’s found block after he knows that block exists.

Schnelli explained this issue during his recent talk in Zurich:

“There are consequences with 2-megabyte blocks. Chinese miners -- they are now [for] 2- megabyte blocks, but maybe it will turn out to be a problem for them . . . Every second really counts . . . When you mine a block that is no longer valid and you don’t get the information that a new block is here, you’re wasting lots of energy. If it’s just ten seconds you mine on the wrong block, you lose energy, and you lose coins in the end. That’s why, with Chinese miners [especially], every second counts, and [with] 2-megabyte [blocks], it’s twice the bandwidth you need.”

This is not the first time a Bitcoin Core contributor has talked about the issue of block propagation in terms of the mining process. Multiple developers discussed this problem in interviews during the leadup to Scaling Bitcoin Montreal.

Do Bigger Blocks Mean Bigger Profits for Bigger Miners?

In the past, Bitcoin Core Contributor Peter Todd also has discussed this issue. During his presentation at Scaling Bitcoin Montreal, Todd explained how lousy block propagation becomes more problematic when the Great Firewall of China is factored into the equation.
Due to the way the Great Firewall works, miners in China often find out about new blocks before miners in other countries (especially across the world in the United States). Since China also currently holds a majority of the hashing power on the network, miners who are not in China end up losing out on a bit of revenue. This is due to the fact that, on average, miners outside of China will hear about new blocks later than miners inside of China, which means non-Chinese miners waste more resources on blocks that have already been found.

Todd pointed to some past research to illustrate his point during his Scaling Bitcoin talk:

“We’ve done various simulation results. A big one that works out very well is Pieter Wuille’s work where we’ve gone and shown that -- and he actually used realistic mining and latency networks with this where when you look at the situation in China, for the amount of time it takes data to propagate over the Great Firewall of China and their relative hashing power percentage -- people who are not part of that group are earning something about like eight percent less revenue.”

Todd noted that losses are lower in reality due to Blockstream Core Tech Engineer and Bitcoin Core Contributor Matt Corallo’s Bitcoin Relay Network, and it should also be pointed out that Pieter Wuille’s work was testing 20-megabyte blocks.

The point here is large miners have an added advantage over small miners due to the time it takes for miners to learn about new blocks. If the block size limit were increased, it would take longer for blocks to propagate around the network, thus increasing this advantage.
One of the original founders of Bitcoin Classic, Jonathon Toomim, also presented on the issues related to block propagation with bigger blocks at Scaling Bitcoin Hong Kong. His testing focused on the now-withdrawn BIP 101 proposal, and he concluded that the increase to 8 megabytes would not be appropriate. During his tests, he found it took anywhere between 15 and 150 seconds to send block data to another peer when the two parties were on opposite sides of the Great Firewall of China.
At the Bitcoin Foundation’s DevCore Workshop back in October, Bitcoin Core Developer Gregory Maxwell explained that the second-to-last mining pool to learn about a new block is currently dealing with a 5 percent orphan rate.

On a related note, there’s a theorized vulnerability in Bitcoin mining, known as selfish mining, where a miner may decide to not let others know about a block they found in order to give themselves a head start on finding the next block.

Possible Solutions to Block Propagation Issues

There are a few proposed solutions that could solve the issue of slow block propagation on the Bitcoin network. Bitcoin Core’s current roadmap includes two such solutions: invertible bloom lookup tables (IBLTs) and weak blocks. According to the Bitcoin Core website, these two features can offer a 90 percent reduction in critical bandwidth when relaying blocks, which should allow for a safer increase of the block size limit.

Two possible solutions recently brought up by Bitcoin Classic Developer Gavin Andresen on this issue are UDP broadcast of block headers and validationless mining. Bitcoin Security Consultant Sergio Lerner recently wrote a blog post on the latter of the two options.

There are also other proposed solutions for this issue, but the point is that plenty of smart people are working on potential fixes. Based on Bitcoin Core’s roadmap, it appears that IBLTs and weak blocks are the most likely solutions to get implemented first.

It should also be mentioned that, as Blockchain Capital Managing Partner Brock Pierce recently pointed out, China’s control over the majority of hashing power may not last forever.

Scaling Bitcoin Is Not Simple

One of the last points made by Schnelli at Bitcoin Meetup Switzerland is that the issue of scalability is not as simple as some have made it out to be.

Schnelli noted:

“I don’t want to say I’m looking behind every curtain, but if you don’t really go down to the technical fundamentals it’s easy to say, ‘Increase the block size.’ Sure. Sounds nice. Everybody can understand it. But there are better solutions that maybe take more energy to think about.”

Like many other developers involved with Bitcoin Core, Schnelli views Segregated Witness (SegWit) as a viable alternative to simply increasing the block size limit.

Bitcoin Core Contributor Eric Lombrozo recently outlined five benefits of the SegWit proposal at Blockchain Agenda San Diego.

[DNotes]

Transaction Fees Increase as Bitcoin Blocks Get Full

http://www.newsbtc.com/2016/03/01/transaction-fees-increase-bitcoin-blocks-get-full/

By the look of things, there is no improvement in sight anytime soon. The Bitcoin memory pool is full of transactions waiting for network confirmations, and the numbers only keep going up over time. Some people might see this as a sign of how Bitcoin is gaining a lot of popularity, but these confirmation delays are not doing anyone any favors right now.


Bitcoin Transaction Gets Stuck For Hours

Whenever somebody sends a Bitcoin transaction with a lower than normal fee, it only makes sense to face a slight delay. The way Bitcoin mining works is by prioritizing transactions based on the transaction fees paid. Low to no transaction fees will usually lead to a delay when waiting for network confirmations, although things never got out of hand as much as they do now.

These days, it is not just the low fee transactions which are faced with network confirmation delays, but the regular fee is no longer sufficient either. This creates a very awkward situation in the Bitcoin world, as the 0.001 BTC fee – worth US$0.43 at the time of writing – is no longer sufficient to get guaranteed confirmations from the next few blocks on the Bitcoin network.

But it is not just the transaction fees that are creating this backlog, as the network blocks mined on February 29th could not take in more transactions. All of the mined blocks were completely full, a strong indication as to how the block size needs to be increased much sooner than people anticipated. As a result, only high priority fees will get transactions confirmed these days, a cost currently sitting at 0.0044 BTC or US$1.90.

With the transaction fees increasing spectacularly to move funds across the Bitcoin network in a quick manner, it becomes even more apparent as to how much the block size debate is hurting the ecosystem right now. Paying close to US$2 per transaction for a money transfer solution supposedly much cheaper than traditional solutions is not acceptable.

By the look of things, there is no improvement in sight anytime soon. The Bitcoin memory pool is full of transactions waiting for network confirmations, and the numbers only keep going up over time. Some people might see this as a sign of how Bitcoin is gaining a lot of popularity, but these confirmation delays are not doing anyone any favors right now.

There is no indication any Bitcoin network stress test is going, like what happened when the Bitcoin XT client started gaining popularity last year. Some people mention how they got lucky and had a transaction confirmed by the next network block while paying regular fees. Others might find themselves waiting for hours, if not days, until the transaction is confirmed.

Will A Block Size Increase Fix The Problem?

Unfortunately, there is no right or wrong answer to this question right now. Yes, a bigger Bitcoin block size would allow for more transactions to be included in every block, and could result in lower transaction fees in the long run. However, it is impossible to confirm whether or not this would be the case, as there is no reason for the sudden flood of Bitcoin transactions hitting the network.

While it is true the block size debate has gone on far too long, a rushed solution might not be the preferable answer right now. The latest Bitcoin Core release includes an option to resend transactions with a higher fee if the user decided to do so, partially solving the problem of delayed network confirmations. But at the same time, a more permanent solution needs to be made available to all Bitcoin users, and it will be up to the developers to do exactly that.

Transaction fees and limits is something we will have to take very seriously not only for DNotes itself but the extended payment network. This is a huge value proposition for digital currency, lower fees and speed of transactions. Great article.

Couldn't the entire process be compressed if not already? I'm no expert in Bitcoin code but, it seems to me a lot of space is being wasted in the method of transmission.

The last I remember, there is some local compression, but not completely. The trimmed blockchain idea and lite clients seems like the best solution for having a lightweight wallet for consumers and everyday users, but we still need full nodes. I think the problem is data has to be decompressed if it is compressed in order to be read, so it's a trade off. If the client/node is compressing and decompressing constantly it would be a massive drain on system resources.

[CryptoBroker79]

Transaction Fees Increase as Bitcoin Blocks Get Full

http://www.newsbtc.com/2016/03/01/transaction-fees-increase-bitcoin-blocks-get-full/

By the look of things, there is no improvement in sight anytime soon. The Bitcoin memory pool is full of transactions waiting for network confirmations, and the numbers only keep going up over time. Some people might see this as a sign of how Bitcoin is gaining a lot of popularity, but these confirmation delays are not doing anyone any favors right now.


Bitcoin Transaction Gets Stuck For Hours

Whenever somebody sends a Bitcoin transaction with a lower than normal fee, it only makes sense to face a slight delay. The way Bitcoin mining works is by prioritizing transactions based on the transaction fees paid. Low to no transaction fees will usually lead to a delay when waiting for network confirmations, although things never got out of hand as much as they do now.

These days, it is not just the low fee transactions which are faced with network confirmation delays, but the regular fee is no longer sufficient either. This creates a very awkward situation in the Bitcoin world, as the 0.001 BTC fee – worth US$0.43 at the time of writing – is no longer sufficient to get guaranteed confirmations from the next few blocks on the Bitcoin network.

But it is not just the transaction fees that are creating this backlog, as the network blocks mined on February 29th could not take in more transactions. All of the mined blocks were completely full, a strong indication as to how the block size needs to be increased much sooner than people anticipated. As a result, only high priority fees will get transactions confirmed these days, a cost currently sitting at 0.0044 BTC or US$1.90.

With the transaction fees increasing spectacularly to move funds across the Bitcoin network in a quick manner, it becomes even more apparent as to how much the block size debate is hurting the ecosystem right now. Paying close to US$2 per transaction for a money transfer solution supposedly much cheaper than traditional solutions is not acceptable.

By the look of things, there is no improvement in sight anytime soon. The Bitcoin memory pool is full of transactions waiting for network confirmations, and the numbers only keep going up over time. Some people might see this as a sign of how Bitcoin is gaining a lot of popularity, but these confirmation delays are not doing anyone any favors right now.

There is no indication any Bitcoin network stress test is going, like what happened when the Bitcoin XT client started gaining popularity last year. Some people mention how they got lucky and had a transaction confirmed by the next network block while paying regular fees. Others might find themselves waiting for hours, if not days, until the transaction is confirmed.

Will A Block Size Increase Fix The Problem?

Unfortunately, there is no right or wrong answer to this question right now. Yes, a bigger Bitcoin block size would allow for more transactions to be included in every block, and could result in lower transaction fees in the long run. However, it is impossible to confirm whether or not this would be the case, as there is no reason for the sudden flood of Bitcoin transactions hitting the network.

While it is true the block size debate has gone on far too long, a rushed solution might not be the preferable answer right now. The latest Bitcoin Core release includes an option to resend transactions with a higher fee if the user decided to do so, partially solving the problem of delayed network confirmations. But at the same time, a more permanent solution needs to be made available to all Bitcoin users, and it will be up to the developers to do exactly that.

Transaction fees and limits is something we will have to take very seriously not only for DNotes itself but the extended payment network. This is a huge value proposition for digital currency, lower fees and speed of transactions. Great article.

Couldn't the entire process be compressed if not already? I'm no expert in Bitcoin code but, it seems to me a lot of space is being wasted in the method of transmission.

I think regardless of what they do, the issue of spam/dust transactions needs to be addressed. Increasing the mempool size would be a good place to start. Part of the appeal of cryptocurrency is the ability to handle micro transactions, the "developing world" can really benefit from cost effective micro payment networks.

[DNotes]

Here is another great article, China's firewall is causing miners outside the country to recieve blocks well after they've been solved by Chinese miners. This means other miners would be working on old blocks, wasting electricity and eating into their revenue. With large scale mining operations monopolizing the SHA 256 algorithm, this begs the question; could an alternative algorithm that is more asic resistant be a long term solution to keep a currency's mining decentralized?




---------

Why the Great Firewall of China Is Causing Serious Issues for Bitcoin Miners

https://bitcoinmagazine.com/articles/why-the-great-firewall-of-china-is-causing-serious-issues-for-bitcoin-miners-1456508966

What’s wrong with increasing the block size limit? This is the question that a portion of the Bitcoin community has been asking almost nonstop since the controversy around this possible alteration to the protocol went into hyperdrive last year.

In a recent appearance at Bitcoin Meetup Switzerland, Bitcoin Core Contributor Jonas Schnelli covered at least one possible issue with raising the block size limit too quickly: the effect larger blocks have on wasted resources for miners.

It should be noted that Schnelli has decided not to take an official, public stance on the block size debate.

In Bitcoin Mining, Every Second Counts

A key point to understand about bitcoin mining is every second of hashing affects one’s ability to turn a profit. New blocks are not received by all nodes on the network instantaneously, which means miners are, at least at times, wasting resources by building on an old block that is no longer the most recent. After all, a miner can only build on top of someone else’s found block after he knows that block exists.

Schnelli explained this issue during his recent talk in Zurich:

“There are consequences with 2-megabyte blocks. Chinese miners -- they are now [for] 2- megabyte blocks, but maybe it will turn out to be a problem for them . . . Every second really counts . . . When you mine a block that is no longer valid and you don’t get the information that a new block is here, you’re wasting lots of energy. If it’s just ten seconds you mine on the wrong block, you lose energy, and you lose coins in the end. That’s why, with Chinese miners [especially], every second counts, and [with] 2-megabyte [blocks], it’s twice the bandwidth you need.”

This is not the first time a Bitcoin Core contributor has talked about the issue of block propagation in terms of the mining process. Multiple developers discussed this problem in interviews during the leadup to Scaling Bitcoin Montreal.

Do Bigger Blocks Mean Bigger Profits for Bigger Miners?

In the past, Bitcoin Core Contributor Peter Todd also has discussed this issue. During his presentation at Scaling Bitcoin Montreal, Todd explained how lousy block propagation becomes more problematic when the Great Firewall of China is factored into the equation.
Due to the way the Great Firewall works, miners in China often find out about new blocks before miners in other countries (especially across the world in the United States). Since China also currently holds a majority of the hashing power on the network, miners who are not in China end up losing out on a bit of revenue. This is due to the fact that, on average, miners outside of China will hear about new blocks later than miners inside of China, which means non-Chinese miners waste more resources on blocks that have already been found.

Todd pointed to some past research to illustrate his point during his Scaling Bitcoin talk:

“We’ve done various simulation results. A big one that works out very well is Pieter Wuille’s work where we’ve gone and shown that -- and he actually used realistic mining and latency networks with this where when you look at the situation in China, for the amount of time it takes data to propagate over the Great Firewall of China and their relative hashing power percentage -- people who are not part of that group are earning something about like eight percent less revenue.”

Todd noted that losses are lower in reality due to Blockstream Core Tech Engineer and Bitcoin Core Contributor Matt Corallo’s Bitcoin Relay Network, and it should also be pointed out that Pieter Wuille’s work was testing 20-megabyte blocks.

The point here is large miners have an added advantage over small miners due to the time it takes for miners to learn about new blocks. If the block size limit were increased, it would take longer for blocks to propagate around the network, thus increasing this advantage.
One of the original founders of Bitcoin Classic, Jonathon Toomim, also presented on the issues related to block propagation with bigger blocks at Scaling Bitcoin Hong Kong. His testing focused on the now-withdrawn BIP 101 proposal, and he concluded that the increase to 8 megabytes would not be appropriate. During his tests, he found it took anywhere between 15 and 150 seconds to send block data to another peer when the two parties were on opposite sides of the Great Firewall of China.
At the Bitcoin Foundation’s DevCore Workshop back in October, Bitcoin Core Developer Gregory Maxwell explained that the second-to-last mining pool to learn about a new block is currently dealing with a 5 percent orphan rate.

On a related note, there’s a theorized vulnerability in Bitcoin mining, known as selfish mining, where a miner may decide to not let others know about a block they found in order to give themselves a head start on finding the next block.

Possible Solutions to Block Propagation Issues

There are a few proposed solutions that could solve the issue of slow block propagation on the Bitcoin network. Bitcoin Core’s current roadmap includes two such solutions: invertible bloom lookup tables (IBLTs) and weak blocks. According to the Bitcoin Core website, these two features can offer a 90 percent reduction in critical bandwidth when relaying blocks, which should allow for a safer increase of the block size limit.

Two possible solutions recently brought up by Bitcoin Classic Developer Gavin Andresen on this issue are UDP broadcast of block headers and validationless mining. Bitcoin Security Consultant Sergio Lerner recently wrote a blog post on the latter of the two options.

There are also other proposed solutions for this issue, but the point is that plenty of smart people are working on potential fixes. Based on Bitcoin Core’s roadmap, it appears that IBLTs and weak blocks are the most likely solutions to get implemented first.

It should also be mentioned that, as Blockchain Capital Managing Partner Brock Pierce recently pointed out, China’s control over the majority of hashing power may not last forever.

Scaling Bitcoin Is Not Simple

One of the last points made by Schnelli at Bitcoin Meetup Switzerland is that the issue of scalability is not as simple as some have made it out to be.

Schnelli noted:

“I don’t want to say I’m looking behind every curtain, but if you don’t really go down to the technical fundamentals it’s easy to say, ‘Increase the block size.’ Sure. Sounds nice. Everybody can understand it. But there are better solutions that maybe take more energy to think about.”

Like many other developers involved with Bitcoin Core, Schnelli views Segregated Witness (SegWit) as a viable alternative to simply increasing the block size limit.

Bitcoin Core Contributor Eric Lombrozo recently outlined five benefits of the SegWit proposal at Blockchain Agenda San Diego.

This is a very interesting problem with widespread consequences. The problem with ASIC resistant algorithm's as a solution is that if it can be solved by a computer, someone can create a chip to do the same, make it smaller and more efficient. As soon as the demand is high enough, someone will find a way. I'm sure there are a multitude of ways to approach this problem though.

[Dyna]

Here is another great article, China's firewall is causing miners outside the country to recieve blocks well after they've been solved by Chinese miners. This means other miners would be working on old blocks, wasting electricity and eating into their revenue. With large scale mining operations monopolizing the SHA 256 algorithm, this begs the question; could an alternative algorithm that is more asic resistant be a long term solution to keep a currency's mining decentralized?




---------

Why the Great Firewall of China Is Causing Serious Issues for Bitcoin Miners

https://bitcoinmagazine.com/articles/why-the-great-firewall-of-china-is-causing-serious-issues-for-bitcoin-miners-1456508966

What’s wrong with increasing the block size limit? This is the question that a portion of the Bitcoin community has been asking almost nonstop since the controversy around this possible alteration to the protocol went into hyperdrive last year.

In a recent appearance at Bitcoin Meetup Switzerland, Bitcoin Core Contributor Jonas Schnelli covered at least one possible issue with raising the block size limit too quickly: the effect larger blocks have on wasted resources for miners.

It should be noted that Schnelli has decided not to take an official, public stance on the block size debate.

In Bitcoin Mining, Every Second Counts

A key point to understand about bitcoin mining is every second of hashing affects one’s ability to turn a profit. New blocks are not received by all nodes on the network instantaneously, which means miners are, at least at times, wasting resources by building on an old block that is no longer the most recent. After all, a miner can only build on top of someone else’s found block after he knows that block exists.

Schnelli explained this issue during his recent talk in Zurich:

“There are consequences with 2-megabyte blocks. Chinese miners -- they are now [for] 2- megabyte blocks, but maybe it will turn out to be a problem for them . . . Every second really counts . . . When you mine a block that is no longer valid and you don’t get the information that a new block is here, you’re wasting lots of energy. If it’s just ten seconds you mine on the wrong block, you lose energy, and you lose coins in the end. That’s why, with Chinese miners [especially], every second counts, and [with] 2-megabyte [blocks], it’s twice the bandwidth you need.”

This is not the first time a Bitcoin Core contributor has talked about the issue of block propagation in terms of the mining process. Multiple developers discussed this problem in interviews during the leadup to Scaling Bitcoin Montreal.

Do Bigger Blocks Mean Bigger Profits for Bigger Miners?

In the past, Bitcoin Core Contributor Peter Todd also has discussed this issue. During his presentation at Scaling Bitcoin Montreal, Todd explained how lousy block propagation becomes more problematic when the Great Firewall of China is factored into the equation.
Due to the way the Great Firewall works, miners in China often find out about new blocks before miners in other countries (especially across the world in the United States). Since China also currently holds a majority of the hashing power on the network, miners who are not in China end up losing out on a bit of revenue. This is due to the fact that, on average, miners outside of China will hear about new blocks later than miners inside of China, which means non-Chinese miners waste more resources on blocks that have already been found.

Todd pointed to some past research to illustrate his point during his Scaling Bitcoin talk:

“We’ve done various simulation results. A big one that works out very well is Pieter Wuille’s work where we’ve gone and shown that -- and he actually used realistic mining and latency networks with this where when you look at the situation in China, for the amount of time it takes data to propagate over the Great Firewall of China and their relative hashing power percentage -- people who are not part of that group are earning something about like eight percent less revenue.”

Todd noted that losses are lower in reality due to Blockstream Core Tech Engineer and Bitcoin Core Contributor Matt Corallo’s Bitcoin Relay Network, and it should also be pointed out that Pieter Wuille’s work was testing 20-megabyte blocks.

The point here is large miners have an added advantage over small miners due to the time it takes for miners to learn about new blocks. If the block size limit were increased, it would take longer for blocks to propagate around the network, thus increasing this advantage.
One of the original founders of Bitcoin Classic, Jonathon Toomim, also presented on the issues related to block propagation with bigger blocks at Scaling Bitcoin Hong Kong. His testing focused on the now-withdrawn BIP 101 proposal, and he concluded that the increase to 8 megabytes would not be appropriate. During his tests, he found it took anywhere between 15 and 150 seconds to send block data to another peer when the two parties were on opposite sides of the Great Firewall of China.
At the Bitcoin Foundation’s DevCore Workshop back in October, Bitcoin Core Developer Gregory Maxwell explained that the second-to-last mining pool to learn about a new block is currently dealing with a 5 percent orphan rate.

On a related note, there’s a theorized vulnerability in Bitcoin mining, known as selfish mining, where a miner may decide to not let others know about a block they found in order to give themselves a head start on finding the next block.

Possible Solutions to Block Propagation Issues

There are a few proposed solutions that could solve the issue of slow block propagation on the Bitcoin network. Bitcoin Core’s current roadmap includes two such solutions: invertible bloom lookup tables (IBLTs) and weak blocks. According to the Bitcoin Core website, these two features can offer a 90 percent reduction in critical bandwidth when relaying blocks, which should allow for a safer increase of the block size limit.

Two possible solutions recently brought up by Bitcoin Classic Developer Gavin Andresen on this issue are UDP broadcast of block headers and validationless mining. Bitcoin Security Consultant Sergio Lerner recently wrote a blog post on the latter of the two options.

There are also other proposed solutions for this issue, but the point is that plenty of smart people are working on potential fixes. Based on Bitcoin Core’s roadmap, it appears that IBLTs and weak blocks are the most likely solutions to get implemented first.

It should also be mentioned that, as Blockchain Capital Managing Partner Brock Pierce recently pointed out, China’s control over the majority of hashing power may not last forever.

Scaling Bitcoin Is Not Simple

One of the last points made by Schnelli at Bitcoin Meetup Switzerland is that the issue of scalability is not as simple as some have made it out to be.

Schnelli noted:

“I don’t want to say I’m looking behind every curtain, but if you don’t really go down to the technical fundamentals it’s easy to say, ‘Increase the block size.’ Sure. Sounds nice. Everybody can understand it. But there are better solutions that maybe take more energy to think about.”

Like many other developers involved with Bitcoin Core, Schnelli views Segregated Witness (SegWit) as a viable alternative to simply increasing the block size limit.

Bitcoin Core Contributor Eric Lombrozo recently outlined five benefits of the SegWit proposal at Blockchain Agenda San Diego.

This is a very interesting problem with widespread consequences. The problem with ASIC resistant algorithm's as a solution is that if it can be solved by a computer, someone can create a chip to do the same, make it smaller and more efficient. As soon as the demand is high enough, someone will find a way. I'm sure there are a multitude of ways to approach this problem though.

There is excellent discussion going on here this morning. Hard to stay away when so many interesting issues are involved. So here is my take. We all want things to be perfect the first time around; for example, MS Windows 1. But now we have Windows 10. Wait, as in the case of Bitcoin, we also want it to be decentralized, fast, free, secured, and unlimited data constraints. And my idea is always better than yours; if you don’t agree with me than you are a nasty guy (to borrow a line from Donald Trump).

I am certain that we can not have it all. Something will have to give, but at this point in time, no one is quite sure what is the best solution; perhaps a middle ground. In the mean time, we have plenty to do and taking good notes while the industry is all over the place burning up big bucks by the millions. Being open source and decentralized, we must plan and execute very cautiously. Our best shot is to fire only one shot and not missed the mark. That is what we are positioning DNotes to do. At this point, it is a moving target and we are waiting, waiting ….

[Chase]

Moving in the right direction...


Governments Around the World Are Warming Up to Bitcoin and the Blockchain

Read more: http://www.nasdaq.com/article/governments-around-the-world-are-warming-up-to-bitcoin-and-the-blockchain-cm586766#ixzz41hJwsMPq

[DNotes]

Moving in the right direction...


Governments Around the World Are Warming Up to Bitcoin and the Blockchain

Read more: http://www.nasdaq.com/article/governments-around-the-world-are-warming-up-to-bitcoin-and-the-blockchain-cm586766#ixzz41hJwsMPq

Great article! It does look positive for the future, however I'm very anxious.

The developments around bitcoin and the blockchain technology are fast evolving. While banks, and technology companies are already involved in many such projects, governments are becoming increasing open the changes which have entered the financial ecosystem (and extending beyond finance), while making sure that they do not compromise on issues such as money laundering and other illicit activities.

[TeeGee]

Here is another great article, China's firewall is causing miners outside the country to recieve blocks well after they've been solved by Chinese miners. This means other miners would be working on old blocks, wasting electricity and eating into their revenue. With large scale mining operations monopolizing the SHA 256 algorithm, this begs the question; could an alternative algorithm that is more asic resistant be a long term solution to keep a currency's mining decentralized?




---------

Why the Great Firewall of China Is Causing Serious Issues for Bitcoin Miners

https://bitcoinmagazine.com/articles/why-the-great-firewall-of-china-is-causing-serious-issues-for-bitcoin-miners-1456508966

What’s wrong with increasing the block size limit? This is the question that a portion of the Bitcoin community has been asking almost nonstop since the controversy around this possible alteration to the protocol went into hyperdrive last year.

In a recent appearance at Bitcoin Meetup Switzerland, Bitcoin Core Contributor Jonas Schnelli covered at least one possible issue with raising the block size limit too quickly: the effect larger blocks have on wasted resources for miners.

It should be noted that Schnelli has decided not to take an official, public stance on the block size debate.

In Bitcoin Mining, Every Second Counts

A key point to understand about bitcoin mining is every second of hashing affects one’s ability to turn a profit. New blocks are not received by all nodes on the network instantaneously, which means miners are, at least at times, wasting resources by building on an old block that is no longer the most recent. After all, a miner can only build on top of someone else’s found block after he knows that block exists.

Schnelli explained this issue during his recent talk in Zurich:

“There are consequences with 2-megabyte blocks. Chinese miners -- they are now [for] 2- megabyte blocks, but maybe it will turn out to be a problem for them . . . Every second really counts . . . When you mine a block that is no longer valid and you don’t get the information that a new block is here, you’re wasting lots of energy. If it’s just ten seconds you mine on the wrong block, you lose energy, and you lose coins in the end. That’s why, with Chinese miners [especially], every second counts, and [with] 2-megabyte [blocks], it’s twice the bandwidth you need.”

This is not the first time a Bitcoin Core contributor has talked about the issue of block propagation in terms of the mining process. Multiple developers discussed this problem in interviews during the leadup to Scaling Bitcoin Montreal.

Do Bigger Blocks Mean Bigger Profits for Bigger Miners?

In the past, Bitcoin Core Contributor Peter Todd also has discussed this issue. During his presentation at Scaling Bitcoin Montreal, Todd explained how lousy block propagation becomes more problematic when the Great Firewall of China is factored into the equation.
Due to the way the Great Firewall works, miners in China often find out about new blocks before miners in other countries (especially across the world in the United States). Since China also currently holds a majority of the hashing power on the network, miners who are not in China end up losing out on a bit of revenue. This is due to the fact that, on average, miners outside of China will hear about new blocks later than miners inside of China, which means non-Chinese miners waste more resources on blocks that have already been found.

Todd pointed to some past research to illustrate his point during his Scaling Bitcoin talk:

“We’ve done various simulation results. A big one that works out very well is Pieter Wuille’s work where we’ve gone and shown that -- and he actually used realistic mining and latency networks with this where when you look at the situation in China, for the amount of time it takes data to propagate over the Great Firewall of China and their relative hashing power percentage -- people who are not part of that group are earning something about like eight percent less revenue.”

Todd noted that losses are lower in reality due to Blockstream Core Tech Engineer and Bitcoin Core Contributor Matt Corallo’s Bitcoin Relay Network, and it should also be pointed out that Pieter Wuille’s work was testing 20-megabyte blocks.

The point here is large miners have an added advantage over small miners due to the time it takes for miners to learn about new blocks. If the block size limit were increased, it would take longer for blocks to propagate around the network, thus increasing this advantage.
One of the original founders of Bitcoin Classic, Jonathon Toomim, also presented on the issues related to block propagation with bigger blocks at Scaling Bitcoin Hong Kong. His testing focused on the now-withdrawn BIP 101 proposal, and he concluded that the increase to 8 megabytes would not be appropriate. During his tests, he found it took anywhere between 15 and 150 seconds to send block data to another peer when the two parties were on opposite sides of the Great Firewall of China.
At the Bitcoin Foundation’s DevCore Workshop back in October, Bitcoin Core Developer Gregory Maxwell explained that the second-to-last mining pool to learn about a new block is currently dealing with a 5 percent orphan rate.

On a related note, there’s a theorized vulnerability in Bitcoin mining, known as selfish mining, where a miner may decide to not let others know about a block they found in order to give themselves a head start on finding the next block.

Possible Solutions to Block Propagation Issues

There are a few proposed solutions that could solve the issue of slow block propagation on the Bitcoin network. Bitcoin Core’s current roadmap includes two such solutions: invertible bloom lookup tables (IBLTs) and weak blocks. According to the Bitcoin Core website, these two features can offer a 90 percent reduction in critical bandwidth when relaying blocks, which should allow for a safer increase of the block size limit.

Two possible solutions recently brought up by Bitcoin Classic Developer Gavin Andresen on this issue are UDP broadcast of block headers and validationless mining. Bitcoin Security Consultant Sergio Lerner recently wrote a blog post on the latter of the two options.

There are also other proposed solutions for this issue, but the point is that plenty of smart people are working on potential fixes. Based on Bitcoin Core’s roadmap, it appears that IBLTs and weak blocks are the most likely solutions to get implemented first.

It should also be mentioned that, as Blockchain Capital Managing Partner Brock Pierce recently pointed out, China’s control over the majority of hashing power may not last forever.

Scaling Bitcoin Is Not Simple

One of the last points made by Schnelli at Bitcoin Meetup Switzerland is that the issue of scalability is not as simple as some have made it out to be.

Schnelli noted:

“I don’t want to say I’m looking behind every curtain, but if you don’t really go down to the technical fundamentals it’s easy to say, ‘Increase the block size.’ Sure. Sounds nice. Everybody can understand it. But there are better solutions that maybe take more energy to think about.”

Like many other developers involved with Bitcoin Core, Schnelli views Segregated Witness (SegWit) as a viable alternative to simply increasing the block size limit.

Bitcoin Core Contributor Eric Lombrozo recently outlined five benefits of the SegWit proposal at Blockchain Agenda San Diego.

This is a very interesting problem with widespread consequences. The problem with ASIC resistant algorithm's as a solution is that if it can be solved by a computer, someone can create a chip to do the same, make it smaller and more efficient. As soon as the demand is high enough, someone will find a way. I'm sure there are a multitude of ways to approach this problem though.

There is excellent discussion going on here this morning. Hard to stay away when so many interesting issues are involved. So here is my take. We all want things to be perfect the first time around; for example, MS Windows 1. But now we have Windows 10. Wait, as in the case of Bitcoin, we also want it to be decentralized, fast, free, secured, and unlimited data constraints. And my idea is always better than yours; if you don’t agree with me than you are a nasty guy (to borrow a line from Donald Trump).

I am certain that we can not have it all. Something will have to give, but at this point in time, no one is quite sure what is the best solution; perhaps a middle ground. In the mean time, we have plenty to do and taking good notes while the industry is all over the place burning up big bucks by the millions. Being open source and decentralized, we must plan and execute very cautiously. Our best shot is to fire only one shot and not missed the mark. That is what we are positioning DNotes to do. At this point, it is a moving target and we are waiting, waiting ….

"I am certain that we can not have it all. Something will have to give, but at this point in time, no one is quite sure what is the best solution; perhaps a middle ground. In the mean time, we have plenty to do and taking good notes while the industry is all over the place burning up big bucks by the millions. Being open source and decentralized, we must plan and execute very cautiously. Our best shot is to fire only one shot and not missed the mark. That is what we are positioning DNotes to do. At this point, it is a moving target and we are waiting, waiting …."

I appreciate that quote, might take that - thanks!

[Dyna]

Here is another great article, China's firewall is causing miners outside the country to recieve blocks well after they've been solved by Chinese miners. This means other miners would be working on old blocks, wasting electricity and eating into their revenue. With large scale mining operations monopolizing the SHA 256 algorithm, this begs the question; could an alternative algorithm that is more asic resistant be a long term solution to keep a currency's mining decentralized?




---------

Why the Great Firewall of China Is Causing Serious Issues for Bitcoin Miners

https://bitcoinmagazine.com/articles/why-the-great-firewall-of-china-is-causing-serious-issues-for-bitcoin-miners-1456508966

What’s wrong with increasing the block size limit? This is the question that a portion of the Bitcoin community has been asking almost nonstop since the controversy around this possible alteration to the protocol went into hyperdrive last year.

In a recent appearance at Bitcoin Meetup Switzerland, Bitcoin Core Contributor Jonas Schnelli covered at least one possible issue with raising the block size limit too quickly: the effect larger blocks have on wasted resources for miners.

It should be noted that Schnelli has decided not to take an official, public stance on the block size debate.

In Bitcoin Mining, Every Second Counts

A key point to understand about bitcoin mining is every second of hashing affects one’s ability to turn a profit. New blocks are not received by all nodes on the network instantaneously, which means miners are, at least at times, wasting resources by building on an old block that is no longer the most recent. After all, a miner can only build on top of someone else’s found block after he knows that block exists.

Schnelli explained this issue during his recent talk in Zurich:

“There are consequences with 2-megabyte blocks. Chinese miners -- they are now [for] 2- megabyte blocks, but maybe it will turn out to be a problem for them . . . Every second really counts . . . When you mine a block that is no longer valid and you don’t get the information that a new block is here, you’re wasting lots of energy. If it’s just ten seconds you mine on the wrong block, you lose energy, and you lose coins in the end. That’s why, with Chinese miners [especially], every second counts, and [with] 2-megabyte [blocks], it’s twice the bandwidth you need.”

This is not the first time a Bitcoin Core contributor has talked about the issue of block propagation in terms of the mining process. Multiple developers discussed this problem in interviews during the leadup to Scaling Bitcoin Montreal.

Do Bigger Blocks Mean Bigger Profits for Bigger Miners?

In the past, Bitcoin Core Contributor Peter Todd also has discussed this issue. During his presentation at Scaling Bitcoin Montreal, Todd explained how lousy block propagation becomes more problematic when the Great Firewall of China is factored into the equation.
Due to the way the Great Firewall works, miners in China often find out about new blocks before miners in other countries (especially across the world in the United States). Since China also currently holds a majority of the hashing power on the network, miners who are not in China end up losing out on a bit of revenue. This is due to the fact that, on average, miners outside of China will hear about new blocks later than miners inside of China, which means non-Chinese miners waste more resources on blocks that have already been found.

Todd pointed to some past research to illustrate his point during his Scaling Bitcoin talk:

“We’ve done various simulation results. A big one that works out very well is Pieter Wuille’s work where we’ve gone and shown that -- and he actually used realistic mining and latency networks with this where when you look at the situation in China, for the amount of time it takes data to propagate over the Great Firewall of China and their relative hashing power percentage -- people who are not part of that group are earning something about like eight percent less revenue.”

Todd noted that losses are lower in reality due to Blockstream Core Tech Engineer and Bitcoin Core Contributor Matt Corallo’s Bitcoin Relay Network, and it should also be pointed out that Pieter Wuille’s work was testing 20-megabyte blocks.

The point here is large miners have an added advantage over small miners due to the time it takes for miners to learn about new blocks. If the block size limit were increased, it would take longer for blocks to propagate around the network, thus increasing this advantage.
One of the original founders of Bitcoin Classic, Jonathon Toomim, also presented on the issues related to block propagation with bigger blocks at Scaling Bitcoin Hong Kong. His testing focused on the now-withdrawn BIP 101 proposal, and he concluded that the increase to 8 megabytes would not be appropriate. During his tests, he found it took anywhere between 15 and 150 seconds to send block data to another peer when the two parties were on opposite sides of the Great Firewall of China.
At the Bitcoin Foundation’s DevCore Workshop back in October, Bitcoin Core Developer Gregory Maxwell explained that the second-to-last mining pool to learn about a new block is currently dealing with a 5 percent orphan rate.

On a related note, there’s a theorized vulnerability in Bitcoin mining, known as selfish mining, where a miner may decide to not let others know about a block they found in order to give themselves a head start on finding the next block.

Possible Solutions to Block Propagation Issues

There are a few proposed solutions that could solve the issue of slow block propagation on the Bitcoin network. Bitcoin Core’s current roadmap includes two such solutions: invertible bloom lookup tables (IBLTs) and weak blocks. According to the Bitcoin Core website, these two features can offer a 90 percent reduction in critical bandwidth when relaying blocks, which should allow for a safer increase of the block size limit.

Two possible solutions recently brought up by Bitcoin Classic Developer Gavin Andresen on this issue are UDP broadcast of block headers and validationless mining. Bitcoin Security Consultant Sergio Lerner recently wrote a blog post on the latter of the two options.

There are also other proposed solutions for this issue, but the point is that plenty of smart people are working on potential fixes. Based on Bitcoin Core’s roadmap, it appears that IBLTs and weak blocks are the most likely solutions to get implemented first.

It should also be mentioned that, as Blockchain Capital Managing Partner Brock Pierce recently pointed out, China’s control over the majority of hashing power may not last forever.

Scaling Bitcoin Is Not Simple

One of the last points made by Schnelli at Bitcoin Meetup Switzerland is that the issue of scalability is not as simple as some have made it out to be.

Schnelli noted:

“I don’t want to say I’m looking behind every curtain, but if you don’t really go down to the technical fundamentals it’s easy to say, ‘Increase the block size.’ Sure. Sounds nice. Everybody can understand it. But there are better solutions that maybe take more energy to think about.”

Like many other developers involved with Bitcoin Core, Schnelli views Segregated Witness (SegWit) as a viable alternative to simply increasing the block size limit.

Bitcoin Core Contributor Eric Lombrozo recently outlined five benefits of the SegWit proposal at Blockchain Agenda San Diego.

This is a very interesting problem with widespread consequences. The problem with ASIC resistant algorithm's as a solution is that if it can be solved by a computer, someone can create a chip to do the same, make it smaller and more efficient. As soon as the demand is high enough, someone will find a way. I'm sure there are a multitude of ways to approach this problem though.

There is excellent discussion going on here this morning. Hard to stay away when so many interesting issues are involved. So here is my take. We all want things to be perfect the first time around; for example, MS Windows 1. But now we have Windows 10. Wait, as in the case of Bitcoin, we also want it to be decentralized, fast, free, secured, and unlimited data constraints. And my idea is always better than yours; if you don’t agree with me than you are a nasty guy (to borrow a line from Donald Trump).

I am certain that we can not have it all. Something will have to give, but at this point in time, no one is quite sure what is the best solution; perhaps a middle ground. In the mean time, we have plenty to do and taking good notes while the industry is all over the place burning up big bucks by the millions. Being open source and decentralized, we must plan and execute very cautiously. Our best shot is to fire only one shot and not missed the mark. That is what we are positioning DNotes to do. At this point, it is a moving target and we are waiting, waiting ….

"I am certain that we can not have it all. Something will have to give, but at this point in time, no one is quite sure what is the best solution; perhaps a middle ground. In the mean time, we have plenty to do and taking good notes while the industry is all over the place burning up big bucks by the millions. Being open source and decentralized, we must plan and execute very cautiously. Our best shot is to fire only one shot and not missed the mark. That is what we are positioning DNotes to do. At this point, it is a moving target and we are waiting, waiting …."

I appreciate that quote, might take that - thanks!

Glad that you like it, TeeGee.

[Chase]

Interesting article out today from the Bank of England against central bank issued digital currencies:


BOE's Broadbent Says Digital-Currency Shift Comes With Bank Risk

http://www.dailynewsx.com/news/business-news/boes-broadbent-says-digital-currency-shift-comes-with-bank-risk-51275.html

[DNotes]

http://dcebrief.com/bitcoin-freelancers-gain-wage-protection-through-bitwage-upgrades/

[Dyna]

Interesting article out today from the Bank of England against central bank issued digital currencies:


BOE's Broadbent Says Digital-Currency Shift Comes With Bank Risk

http://www.dailynewsx.com/news/business-news/boes-broadbent-says-digital-currency-shift-comes-with-bank-risk-51275.html

The article is certainly very interesting. Replacing fiat currency with digital currency is an interesting concept, at the surface. But in practice, it will have serious unintended consequences, beyond what we could even imagine today. Risking the wealth of nations with early stage technology that is still evolving is reckless and irresponsible. Let the private sectors continue to work on it for the next 20 years in a relatively small scale. We still maintain the position that DNotes will serve as a trusted digital currency to supplement, not replace, fiat currencies globally one day.

I agree with the following quotes from the article:


“A distributive ledger that replaced the current system of clearing and settling securities could save some of the $54 billion currently spent a year on those services, he said.

Still, digital units like Bitcoin won’t replace more established currencies like the pound, dollar or euro, he said.

“Almost always, these currency substitutions occur only once the existing currency has become deeply compromised,” he said. “Even then, the thing people naturally reach for is an existing, trusted currency — often the US dollar — rather than some entirely new unit of account.”

A central bank digital currency “might threaten” commercial banks lending activity, according to Broadbent. “If bank lending became scarcer, or more expensive, it’s likely that investment and economic activity would suffer.”

“Taking deposits away from banks could impair their ability to make the loans in the first place,” he said. “Banks would be more reliant on wholesale markets, a source of funding that didn’t prove particularly stable during the crisis, and could reduce their lending.”

[DNotes]

Some good points in this article on wired outlining the issues surrounding regulation of digital currency. Of course they mention the criminal anonymity thing again, but at least this article referred to it as "pseudonymous". We Must Regulate Bitcoin. Problem Is, We Don’t Understand It.

"Because Bitcoin is a decentralized payment system that operates independently of any government or central bank, people can exchange value on a peer-to-peer basis, without passing through any financial intermediary.  This means that the Bitcoin network does not reside in any given regulation, and can therefore be constructed to be agnostic to any jurisdictional rules. Given this current lack of a central regulatory authority, people can operate the network in a pseudonymous manner, without disclosing their identity to anyone. "


"The challenge is that most regulations today are defined by the product they are meant to regulate. Regulations thus assume a vertical dimension, whereas the innovation brought about by the blockchain has more of a horizontal dimension:  it is a cross-cutting innovation that will affect many different sectors of society. And the compartmentalization of this technology into the crypto-currency debate might actually misframe both the challenges and opportunities of this new technology."

[Chase]

Great article written by Perianne Boring:


What the Internet was for your parents, the blockchain will be for you

When the Internet became mainstream in the mid-1990s, it was difficult to fully grasp the impact the transformative technology would have on society. Policymakers didn’t know how to regulate it, partly because they didn’t understand what it was capable of. At its onset, if a flurry of conflicting regulations from different government agencies had been imposed on this burgeoning technology, the Internet as we know it today might not exist.  Instead, we have this extraordinary source of information and a vessel of global commerce that is an essential aspect of everyday life for so many of us...

...When a new technology enters the mainstream, policymakers are often eager to regulate it in an effort to ensure fair use, consumer protection and accountability. The problem arises when multiple agencies, each with their own definitions of the technology and its uses, create broad based regulations that overlap or conflict with one another.

The U.S. Commodity Futures Trading Commission (CFTC) has classified bitcoin as a commodity, while the Security Exchange Commission (SEC) is looking at it through the lens of a security. The Internal Revenue Service treats virtual currency as property, and the Financial Crimes Enforcement Network regulates it as currency. This patchwork of incompatible rules can cause gridlock in the industry and stifle innovation, potentially forcing companies to domicile and innovate elsewhere.

In addition, there are lawmakers and regulators on Capitol Hill who have little working knowledge of digital currencies or blockchain technology, making it even more difficult to successfully regulate. Regulation is a process that requires a dialogue between government agencies, lawmakers and industry leaders who have a deep understanding of how the technology works.

Full article: http://thehill.com/blogs/congress-blog/technology/271163-what-the-internet-was-for-your-parents-the-blockchain-will-be

[DNotes]

Great article written by Perianne Boring:


What the Internet was for your parents, the blockchain will be for you

When the Internet became mainstream in the mid-1990s, it was difficult to fully grasp the impact the transformative technology would have on society. Policymakers didn’t know how to regulate it, partly because they didn’t understand what it was capable of. At its onset, if a flurry of conflicting regulations from different government agencies had been imposed on this burgeoning technology, the Internet as we know it today might not exist.  Instead, we have this extraordinary source of information and a vessel of global commerce that is an essential aspect of everyday life for so many of us...

...When a new technology enters the mainstream, policymakers are often eager to regulate it in an effort to ensure fair use, consumer protection and accountability. The problem arises when multiple agencies, each with their own definitions of the technology and its uses, create broad based regulations that overlap or conflict with one another.

The U.S. Commodity Futures Trading Commission (CFTC) has classified bitcoin as a commodity, while the Security Exchange Commission (SEC) is looking at it through the lens of a security. The Internal Revenue Service treats virtual currency as property, and the Financial Crimes Enforcement Network regulates it as currency. This patchwork of incompatible rules can cause gridlock in the industry and stifle innovation, potentially forcing companies to domicile and innovate elsewhere.

In addition, there are lawmakers and regulators on Capitol Hill who have little working knowledge of digital currencies or blockchain technology, making it even more difficult to successfully regulate. Regulation is a process that requires a dialogue between government agencies, lawmakers and industry leaders who have a deep understanding of how the technology works.

Full article: http://thehill.com/blogs/congress-blog/technology/271163-what-the-internet-was-for-your-parents-the-blockchain-will-be

Good article, they really need to make up their minds about what digital currency is.

"Fortunately, next month these parties are coming together at the DC Blockchain Summit, an event that brings a cross section of government agencies and lawmakers together with industry leaders to have a holistic discussion about the future of blockchain technology. Look out for Wall Street powerhouses and industry experts like former JP Morgan executive and CEO of Digital Asset Holdings Blythe Masters – who will share their knowledge and engage in an open conversation with policymakers, paving the way for consistent, effective regulation." - Hopefully there will be good representation for our industry.

[Dyna]

Great article written by Perianne Boring:


What the Internet was for your parents, the blockchain will be for you

When the Internet became mainstream in the mid-1990s, it was difficult to fully grasp the impact the transformative technology would have on society. Policymakers didn’t know how to regulate it, partly because they didn’t understand what it was capable of. At its onset, if a flurry of conflicting regulations from different government agencies had been imposed on this burgeoning technology, the Internet as we know it today might not exist.  Instead, we have this extraordinary source of information and a vessel of global commerce that is an essential aspect of everyday life for so many of us...

...When a new technology enters the mainstream, policymakers are often eager to regulate it in an effort to ensure fair use, consumer protection and accountability. The problem arises when multiple agencies, each with their own definitions of the technology and its uses, create broad based regulations that overlap or conflict with one another.

The U.S. Commodity Futures Trading Commission (CFTC) has classified bitcoin as a commodity, while the Security Exchange Commission (SEC) is looking at it through the lens of a security. The Internal Revenue Service treats virtual currency as property, and the Financial Crimes Enforcement Network regulates it as currency. This patchwork of incompatible rules can cause gridlock in the industry and stifle innovation, potentially forcing companies to domicile and innovate elsewhere.

In addition, there are lawmakers and regulators on Capitol Hill who have little working knowledge of digital currencies or blockchain technology, making it even more difficult to successfully regulate. Regulation is a process that requires a dialogue between government agencies, lawmakers and industry leaders who have a deep understanding of how the technology works.

Full article: http://thehill.com/blogs/congress-blog/technology/271163-what-the-internet-was-for-your-parents-the-blockchain-will-be

Good article, they really need to make up their minds about what digital currency is.

"Fortunately, next month these parties are coming together at the DC Blockchain Summit, an event that brings a cross section of government agencies and lawmakers together with industry leaders to have a holistic discussion about the future of blockchain technology. Look out for Wall Street powerhouses and industry experts like former JP Morgan executive and CEO of Digital Asset Holdings Blythe Masters – who will share their knowledge and engage in an open conversation with policymakers, paving the way for consistent, effective regulation." - Hopefully there will be good representation for our industry.

Excellent article. Perianne Boring did a great job in clearly stating the case. Hope the right people are listening.

[RJF19]

"When a new technology enters the mainstream, policymakers are often eager to regulate it in an effort to ensure fair use, consumer protection and accountability. The problem arises when multiple agencies, each with their own definitions of the technology and its uses, create broad based regulations that overlap or conflict with one another."

Personally, from what I've seen on the other side of these agencies, regulation is driven by much more basic human emotions, greed & control. I've listened to senior level administrators justify sweeping changes in regulations with justification at the level "because I can"

When regulation kicks in, so do the fees, charges, budget increases, new personnel and good old fashioned power along with every other way possible for a government to squeeze money from the new technology. And, there is also, quite simply, the need to control and dominate, a very basic human failing I'm afraid. Sorry to be cynical but, that's the way I see it in most cases.