How Cryptocurrency Can Abolish the Fed (Part 2: Disruption through Bitcoin)

Knowledge of the Federal Reserve and its effects on the economy embolden people to abolish it. The vampiric embrace central banking has maintained on society has endured for too long. Technology now exists to push humanity into the next epoch, and move away from the current state of monetary cannibalism. The tools to propel this economic reformation have arisen from underground capitalism, from online shadow markets, and from the individual desire to be socially and financially independent.

This tech is referred to as cryptocurrency. It was established without the guiding hand of authority overseeing its manufacture. It was created by cypherpunks for the purpose of escaping clumsy and heavy-handed bureaucracy. It was built to be decentralized and to evade institutional control. It was meant to be the people’s money, to liberate the populace from the oppression and corruption of State banking. It was forged to shatter financial totalitarianism, and level the playing field. It is the ultimate form of technocratic nonviolent disruption and disobedience.

The White Paper

Many different cryptocurrencies exist. The most popular is Bitcoin. It first emerged in 2008 when an enigmatic figure named Satoshi Nakomoto submitted a paper to the cypherpunk mailing list referred to as the Bitcoin white paper. In the abstract of the paper Nakomoto elaborated on his intention.

He said, “A purely peer-to-peer version of electronic cash would allow online payments to be sent directly from one party to another without going through a financial institution.”

A year later, this culminated in the creation of the Bitcoin software and the Blockchain that it is founded on. The Blockchain is a public ledger that documents every transaction ever made through the protocol, and publishes it transparently. The blockchain is essentially the vertebrae of Bitcoin. It gives it all its fundamental characteristics.

However, it is not readily apparent how Bitcoin is going to revolutionize finance, much less bring down the banking conglomerate and Federal Reserve system. There are several major characteristics as to why Bitcoin and its protocol have the capacity to disempower and disrupt those who wield too much control over the economic infrastructure.

The Disruptive Power of Bitcoin

The underlying disruptive power of Bitcoin is simple yet elegant. Decentralization represents the mainstay of this tech. It does not rely on central planners. It is automated. It is programmed to spit out a limited number of Bitcoins over the course of years. The implications of this are huge. There will never be a crypto-authority, or a few guys sitting in a room deciding what is best for people, economy, or country. This is why the technology puts a check on human corruptibility, and invalidates the Federal Reserve.

Bitcoin is peer-to-peer. Transactions only occur between the people directly involved or chosen. There is no middleman. No institutional stranglehold. People no longer have to rely on a third party. They can send their money to each other without going through an organization. People can essentially debank, or become unbanked. Or looked at another way, they become their own bank. They are the masters of their own money. They do not have to worry about having their accounts frozen either. No one besides users have access to their funds. This removes the possibility of institutions stopping transfers or confiscating money.

Bitcoin represents the height of computer functionality insofar that it is also tamper resistant. If a group of tyrants or banksters wanted to access the money supply and control it for themselves, they could not accomplish this easily. The Bitcoin protocol is distributed over a large network and operates with many computers. This increases the strength and flexibility of the network, which deters hackers and tyrants. In its current State, it is almost impossible to acquire the computational power to successfully hack the protocol. Several security experts and professionals have already tried. They openly admitted failure.

As an aside, it is true that Bitcoin exchanges such as Mt. Gox have been hacked, but it was not the Bitcoin protocol itself that failed--only Mt. Gox's servers. The protocol is currently resistant to outside threats because of its size. Bitcoin's distributed nature is what makes it astoundingly resistant.

Targeting the CEO

The aforesaid reasons are why the Fed cannot deal with cryptocurrency on a practical level. Usually, when someone tries to compete with the Federal Reserve and government, they simply get arrested for counterfeiting or another bogus charge. Bernard Von Nothaus was a monetary architect who created the Liberty Dollar. His money was backed by gold, and it looked "authentic." This caused it to gain popularity. Shortly after, the Feds caught on. They arrested Nothaus for alleged domestic terrorism and then confiscated his money. He ended up getting a light sentence and not going to prison, but he lost all his revenue.

This can never happen to Bitcoin. Since the system is decentralized and no one person controls it, the State cannot just issue a warrant and arrest a CEO for "domestic terrorism" or counterfeiting. There is no central commander. The Feds would have to run around and round up all the miners and programmers involved in the network. In other words, it is impossible for them to act against Bitcoin in an efficacious manner. The system does not care about authority and bureaucracy. It will function anyway, regardless. Even if they did arrest everyone, new miners would crop up and create new nodes on the network, like new dealers crop up to sell more pills in the drug market. There is a potential threat to Bitcoin neutrality, but realistic threats to the protocol will be examined in the next part of this series.

The Age of Economic Freedom

The most important reason why the Fed will die an agonizing death is because of Bitcoin's utility. It is safe, secure, and efficient. It works and works well. There is incentive to use it. Anyone can send Bitcoin anywhere around the world for negligible fees. The fear of being defrauded is reduced because users don’t have to share private data. They can also keep multiple wallets with Bitcoin and spend their money from anywhere so long as they have an internet connection, which is becoming easier to access, even in third world countries.

Bitcoin will not dismantle the governmental banking empire by assaulting it with guerrilla warfare; it will abolish the system with guerrilla economics. The central bankers have to compete with it. Since they can’t arrest anyone, they will be forced to outpace it. Their attempts will fail, though. Decentralized currencies are the next step in innovation, not improvements of existing money and payment technologies. This implies the Fed has been subjected to a Zugzwang: all their potential moves worsen their situation. All cryptocurrencies have to do is continue growing. This is not a problem. Bitcoin has become of a phenom. It is not a matter of whether it goes mainstream, only when. The age of economic freedom has arrived, and the Fed is sounding its death knell.

Nonetheless, there will be battles over Bitcoin neutrality that have to be fought and won. The Fed and bankers will not go down without a fight. There are limitations and weaknesses in the protocol and network that the community must overcome in order to succeed...

(To Be Continued)

Do you agree that cryptocurrencies will usher in a new age of economic freedom? 

Image Sources:
jeff-gomez.com
scannellkurz.com
usnewsghost.wordpress.com

Resources:

http://dankaminsky.com/category/security/
https://bitcoin.org/bitcoin.pdf
https://www.cryptocoinsnews.com/digital-currencies-like-bitcoin-will-disrupt-global-finance/

What Is Bitcoin XT & What Is Happening With Development of The Bitcoin Core

After many attempts to debate the current block size consensus developer Gavin Andresen and Mike Hearn have forked Bitcoin Core into a patch called Bitcoin XT.

“Once XT 0.11A is launched (which will include the bigger blocks patch set by Gavin and myself), there will be a separate git branch that is Core 0.11 + only those patches and nothing else.”

Bitcoin XT is a project set aside from the core network lead by Hearn. The Core code and XT are very much the same in character, however the latter is used for a test net for changes in the code. Implementations such as block size and the relaying of double spends can be be added. The two software forks can work together although the consensus in XT has changed its block size.

Andresen has recently proposed to hard fork the Core code to the XT version via sourceforge. He would like the community to adopt the patch with its changes to block size and come to consensus with its protocol. Either core will have to adapt to the process or just step aside and let XT take the reigns. From the XT readme shown on Github the description tells that the code is more "experimental" than Bitcoin. On XTnodes.com it gives a full description of “ Why Use Bitcoin XT?”



“XT includes a bunch of other changes aside from blocksize that are also controversial.  If you're wanting bigger blocks, you are already on board with a change that is considered so controversial it must not happen, according to the Bitcoin Core developers. So you may wish to think about what "controversial" actually means, who gets to label something as "controversial" and how much you care about their opinions.”

XT currently has roughly 90 nodes in propagation and nodes are used by the team Lighthouse to check if pledges are valid. Nodes in the network are completely compatible with the existing core node structure. XT changes do absolutely nothing to the current core protocol, in time though they will not be compatible and consensus may move to this version of the blockchain trail.

Gavin's proposed increase to Core for March 2016 is a 20mb increase in block size. Hearn has a unit test comment saying XT will have an increase of 8mb and doubling every two years. Jeff Garzik’s BIP 100 and 102 block size proposal is far smaller in increase. Garzik says: “This [BIP 102] is an alternative to BIP 100, as a fallback if other consensus is not reached. It allows for limited experimentation to explore a size increase without going overboard. But it’s not flexible, probably requires another hard fork, and still is an arbitrary [economic] policy not informed by the market, so inferior to BIP 100. However, having a minimum-agreed backup plan is better than no plan at all.”

“Unit test and code for a bigger-block hard fork. Parameters are: 8MB cap ... doubling every two years (so 16MB in 2018) ... for twenty years ... earliest possible chain fork: 11 Jan 2016 ... after miner supermajority ... and grace period once miner supermajority achieved — The activation state of the fork is stored in the block tree database; it is written when the threshold is met (and unwritten if the threshold block is re-forked out of the best chain), and read at startup.”— Code review and bug fixes by Mike Hearn.

According to "Why Use Bitcoin XT" the patch has principles the developers believe are important:

“One of the things we've been working on that will also launch with the new XT is a manifesto that lays out principles we consider to be important. These are how XT differentiates itself from Core. The other changes in XT all follow those principles, so you can read them and evaluate whether you believe those principles are controversial or common sense. If you believe the latter, you should have no worries about the other patches.”— Mike Hearn




The debate continues everyday with someone giving their subjective valuation of whether or not the code should change. It seems raising the block size has become a pretty big deal. There are those that think the entire change to the protocol is not that alarming and it should be adopted. Mike Hearn and Gavin Andresen do not think the increase should cause for such alarm and are proceeding with Bitcoin XT because consensus cannot be met. However the hope is consensus will meet for a full adoption of XT by the community or a copy of its concepts via Bitcoin Core.

What do you think of the fork Bitcoin XT? Let us know in the comments below.

Images courtesy of InsideBitcoins and Redmemes 

Save Lives - Earn Bitcoin with new EMS SignPost Software

Have you ever wanted to be paid - in Bitcoin, to help save lives?

Cincinnati-based EMS SignPost is developing a system that connects EMS personnel to critical, up-to-date medical data. EMS SignPost's parent company, EC Link Inc., has a track record of implementing Bitcoin tech in some its products. They want their new product to compensate those who help keep the system current.

Disclosure: Garrett Keirns, the author of this piece, is employed by EC Link, Inc. as an independent contractor.

The backbone of the system is an NFC embedded magnet. The magnet links to a unique - and encrypted - URL that hosts a person's medical data. The data includes medical history, current medication, and physician and family contact information. Another important feature is the ability to upload Advanced Directive documents such as "Do No Resuscitate" orders and power of attorney paperwork that can be critical to EMS personnel during an emergency. Users can sign over administrative rights to friends and family. This feature is especially important for those who aren't technically savvy.

Currently, the EMS SignPost system is running in a few, limited jurisdictions. However, there are plans for expansion. The target buyers are Fire Departments and municipalities. There is an annual licensing fee to cover hosting and development. The fee increases linearly based on the population of the area served. And, of course, this fee can be paid in Bitcoin as well as fiat. 

The developers plan to add a bounty program that rewards contributors – in Bitcoin – to keep medical information current. The exact amount of money paid out is unclear. A proprietary algorithm is being developed to identify the most high-risk people in the system. The higher the risk – the higher the payout. The Bitcoin bounties give participants (or his/her family and friends) an incentive to maintain the system. The EMS SignPost developers expect hospital, insurance companies, and local governments to help finance this bounty program. New United States Medicare laws penalize hospitals for repeated Emergency Room visits. The new rules create an incentive to treat and diagnose problems correctly the first time.

The Bitcoin blockchain will also provide reliable time stamping to verify the integrity of documents uploaded in the EMS SignPost system. Applications like Proof of Existence demonstrate how information embeds itself into the global decentralized Bitcoin ledger. A cryptographic hash of the document latches on the blockchain. The cryptographic alphanumerical string can only be reproduced with the presence of the original file.

EMS personnel are being trained to take on a greater role in the field. This trend is especially true in rural and impoverished areas. Community Paramedicine, as it is called in North America, is the concept of equipping EMS crews with the correct tools – technological and legal – to carry out this new role.

The company plans to offer more than just refrigerator magnets for citizens using their program. They are also pioneering the use of NFC-embedded bracelets and wallet cards. To maintain HIPAA compliance in the United States, EMS SignPost developers take security seriously. Only authorized personnel can view and edit patient information. Two-factor authentication programs, already popular in the Bitcoin community, will protect accounts from unauthorized logins.

What do you think of Blockchain based EMS info and NFC capability?

Image Source: EMS Signpost

BitMesh: Offering Internet Connectivity In Exchange For Bitcoin

BitMesh is a service that allows users to share internet connectivity and bandwidth. With the use of Bitcoin micropayments servers in the network gain incentive to share. The development team is lead by Andrew Donley, founder and CEO, Christopher Smith, CTO/Chief Technology Officer, and Christian Lunoe, COO/Chief Operating Officer. The team has a working prototype server, and users who wish to buy and sell internet connections will be able to join the BitMesh network.

“BitMesh’s “ Wi-Fi Marketplace” allows people to leverage existing devices to share their internet connection with peers in exchange for monetary incentives.”

BitMesh in a very basic description is a Mesh Network sharing economy using Bitcoin as a medium for both the buyer and seller. The service offers prepaid bandwidth offered by clients for essentially anyone in need of internet service. Offering more inclusion and choice in the world of Internet services. BitMesh is leading the pack in innovation with its unique form of Mesh Net technology.

Bitcoin.com had an in depth discussion with BitMesh to get a crisp visual of what they are doing, the services they are developing, and Mesh Nets in general:

Bitcoin.com: The phrase “ All Mesh Networks Are Not Created Equal”, would you agree with this?

Christopher Smith, CTO/Chief Technology Officer: "Equal" is a word with many definitions. Certainly different networks have different sizes, topologies, speeds, bottlenecks. It's all about which details you choose to blur out.

We take a more loose definition of "mesh network" than some others. Network topologies exist on a spectrum, with purely decentralized P2P architectures on one end, and completely centralized star topologies on the other (see image). When we call ourselves BitMesh, it is because we intend to push internet topology in the decentralized direction. We aren't ideologically attached to a specific topology, because we don't claim to know what the right topology for the internet is. In fact, we don’t think anyone really knows what the right topology is, because it’s constantly changing. Instead, we want to decrease the internet's viscosity, to lower the barrier to entry to becoming a reseller of connectivity, so the internet can morph more easily and find its own equilibrium more quickly. Right now extending internet infrastructure generally requires very deep pockets and a long vision. We hope to make it easier. The equilibrium will probably still involve some nodes being bigger and more connected than others. Very few, if any, distributions in life are perfectly uniform, so we aren't trying to force the internet into any particular set of ideology-boxes. We just want to make it bigger and better.

BC: Can you explain to our readers how BitMesh operates by offering incentive to share bandwidth?

Christian Lunoe, COO/Chief Operating Officer: BitMesh’s “ Wi-Fi Marketplace” allows people to leverage existing devices to share their internet connection with peers in exchange for monetary incentives. A seller is a user who has an existing internet connection or excess bandwidth capacity and is willing to share that with other users within the network. Buyers are users who are willing to pay for the privilege of connectivity, whether it be for a few minutes or a few months. BitMesh’s adaptive pricing encourages sellers to offer the highest quality connection to areas that have the most demand, while it also encourages increased buyer activity with a diminishing marginal cost of connectivity.


BC: Can you describe the Marketplace?

Christian Lunoe: BitMesh’s “Wi-Fi Marketplace” enables machine-to-machine transactions. That is to say that there is no need for human interaction to negotiate a contract or facilitate payments. This creates a low-friction user experience for both buyers and sellers.

As the marketplace and user base grows, BitMesh will evolve the platform from a series of individual hotspots to a true mesh network where buyers can take advantage of a competitive market. Sellers compete on price and quality of service and traffic is routed through multiple nodes within the network to deliver internet connectivity.

Christopher Smith: Using micropayment channels, we can automatically meter your bandwidth usage, so that buyers only pay for what they use. Essentially it’s a kind of trustless escrow technology that allows many payments to be made securely off chain, and only posting the summed result to the blockchain. The result is very high resolution payments with very low overhead.

This also allows for the possibility of peak-load pricing, to allow prices to reflect the scarcity or abundance of bandwidth to maintain a high quality of service.

BC: Developing mobile ad hoc networks and mesh networks has recently grown in size globally. Why do you think Mesh Networks are gaining more attention?

Christopher Smith: I think globally, the internet is moving towards a more decentralized model.The benefits of being able to easily communicate with other humans are tremendous, as communication is often the biggest bottleneck in working together with people. “Information wants to be free”, as they say. On the other hand, nature is full of hierarchies of scale, from the structure of galaxies to structure of the neocortex, so I don’t expect to see all internet hierarchies wiped out anytime soon. The centralization bottlenecks will be burned up until they are at least as useful as they are costly.

Christian Lunoe: Through the BitMesh “Wi-Fi Marketplace,” we are able to incentivize users to help extend the infrastructure of the internet. While most commonly think of an application of our technology in densely populated urban areas, there is immense value in extending connectivity to rural, underserved populations. Our ideal state is to have “power sellers” who develop business models wherein they use our platform to extend the reach of the internet to the fringe, and beyond.

 "A certain amount of decentralization of the internet is crucial to the integrity of the blockchain, because otherwise Sybil attacks become very easy for the central star-points. On the other hand, I don't think it's necessary or even desirable for the internet to be "pure-mesh". If it took more than 10 minutes for a block to be routed and transmitted across the globe, it might make it difficult to arrive at consensus. It's a complex issue."



BC: Do you think these Networks will overthrow traditional networking and communications?

Christian Lunoe: Mesh networks and traditional networks will coexist. We cannot ignore the value of the existing infrastructure that has been built, and the value that the backbone provides. That said, when the business model of traditional networks would lead to little or no investment in communities that would not provide a large ROI, we think that BitMesh, and mesh networks overall, provide immense value.

Christopher Smith: “Overthrow” is a dramatic word. I think of it more as evolution. Old things decay and get consumed by new things, but I don't think this will mean all hierarchies and backbones will be annihilated. The internet would be a lot slower if we had no backbones, and that infrastructure takes energy to create and maintain. I think that feature is going to stick around, at least for the immediate future.

I do expect that monopolies are going to be harder and harder to maintain, and that's a good thing for everybody in the long run.

BC: Cjdns is being used in a few networks abroad, does BitMesh use this?

Christopher Smith: BitMesh does not currently us Cjdns, although we may integrate it in the future. Andrew (CEO & President of BitMesh) and I are both super nerdy and into that sort of thing, but we've been focusing on making a simple platform and marketplace for an average user without the extra configuration requirements of Cjdns.

Christian Lunoe: We don't want to create additional friction for new buyers and sellers, many of whom may discover BitMesh’s marketplace incidentally out of need more so than curiosity. That's an important philosophy to our company. Everything we’re building is designed to create a robust, inclusive network of everyday users.

BC: Would you say Mesh Networks offer Inclusion to technology and open source data?

Christopher Smith: There’s already billions of devices around the world that could be routing but aren’t, and we think that’s an interesting opportunity. If a community is already oriented around technological inclusivity and open source principles, then making networks more “meshy” will encourage those principles.

BC: In Hong Kong, during the protests last year ‘Firechat’ was used. How do you feel about Mesh Networks bypassing governments? Can BitMesh also achieve this?

Christopher Smith: We think the internet is wonderful and don't want anybody to be able to shut it off, regardless of who they work for.

BitMesh could be used in similar situations, but it's not a panacea. Freedom will not come with a single technology or in a single leap, but we think better communication will help a lot.

BC: Micropayment channel technology. Is it incentive enough to globalize the Mesh Network idea?

Christopher Smith: We think if each piece of internet infrastructure can pay for itself in proportion to how valuable it is to the network, then that will encourage a healthier internet.

One of the major selling points of micropayment technology to us is that it can keep the difference between what has been paid and what has been received arbitrarily small, reducing the incentive for either party to fraud the other.

BC: Some would say Mesh Nets are crucial to Bitcoin and the survival of the Blockchain. Would you guys agree with this?

Christopher Smith: A certain amount of decentralization of the internet is crucial to the integrity of the blockchain, because otherwise Sybil attacks become very easy for the central star-points. On the other hand, I don't think it's necessary or even desirable for the internet to be "pure-mesh". If it took more than 10 minutes for a block to be routed and transmitted across the globe, it might make it difficult to arrive at consensus. It's a complex issue.

What do you think of the integration of Bitcoin and Mesh Networks? Let us know in the comments below.

Images courtesy of Shutterstock and Redmemes 

The Great Big Block Size Debate

Since core developer Gavin Andresen announced his proposal to the Bitcoin community to increase the block size many have been in high debate. The question is when the March 2016 date arrives will consensus be met? With miners, exchanges, core developers and the community in such an uproar it's hard to say.

Bitcoin is an open source protocol. Its core development is headed by Wladimir J. van der Laan, Gavin Andresen, Jeff Garzik, Gregory Maxwell, and Pieter Wuille. Among these five developers the code has seen others such as Peter Todd contribute to the Bitcoin code. Roughly 259 individuals have added to the the protocol and its core. Between them all and other voices over 7,400 commits have happened.

“I am - in general - in favor of increasing the size blocks: as technology grows” — Pieter Wuille, Developer

This leads to another important question. Does everyone take part in this system and have a final say in the code? The answer as of now would be yes. Gavin does indeed influence the Bitcoin project to an extent. Widely recognised as the main developer behind the scenes, and all five of them have great and different opinions. However if any of the five core developers chose not to seek consensus, or were to change any core aspect of the client they would fail. It would undermine the work of many, and there would be many disagreements. Not just from those who have contributed code but also wallet servers, miners and mining pools, and exchanges. March 11, 2013 is a perfect example of miners refuting a hard fork. Bitcoin is a peer to peer system and completely open source.

Over the course of this discussion many in the community had a lot to say about Gavins proposal and his following blog posts. Blog posts which addressed certain arguments against his idea showed Andresen has been committed to this change. People like Peter Todd, Mike Hearn, and Andreas Antonopoulos had very strong opinions from the get go. Todd and others stating from the get go of Andresens proposal that not all the developers agreed with the increased block size. Arguments such as higher fees, and centralization are core issues with the increase. Positives of increasing the size include faster transaction times, and various scaling fixes.

“Block size is a question to which there is no answer, but which
certainly has a LOT of technical tradeoffs to consider.”
— Gregory Maxwell, Developer

These debates have fueled many different Bitcoin clients appearing to the public. Such as Bitcoin XT run by developer Mike Hearn. Bitcoin XT acts as a test net for the Bitcoin core and is increasing its block size as we speak. Even Andresen has expressed the intentions of adoption in a SourceForge message saying Bitcoin Core users would be asked to adopt the new changes and then approach the miners. Mike Hearn currently leads and has full commit access to XT.

Bitcoin Core is not really changed in drastic ways. There have been a bunch of hard and soft forks throughout its existence. Developer van der Laan said the core is changed in a “non-controversial and janitorial” manner. Two of China's largest exchanges BTCChina and Huobi have been against the 20mb increased proposed by developers. Some miners and various pools have also disagreed with the Increase. Various pools from China have requested an 8mb increase rather than the 20. The increased number of megabytes has been all over the map in this heated debate.

A higher limit can be phased in once we have actual use closer to the limit and make sure it’s working OK. — Mike Hearn Developer

On June 22nd core developer Jeff Garzik had an interesting discussion with another fellow developer Pieter Wuille. Posted to reddit Jeff shows the public his discussion. Peter writes:

Some people have called the prospect of limited block space and the development of a free market a change in policy compared to the past. I respectfully disagree with that. Bitcoin Core is not running the Bitcoin economy, and its developers have no authority to set its rules. Change in economics is always happening, and should be expected. Worse, intervening in consensus changes would make the ecosystem more dependent on the group taking that decision, not less.

This completely ignores reality, what users have experienced for the past ~6 years.

Jeff responds with: "Change in economics is always happening" does not begin to approach the scale of the change.

For the entirety of bitcoin's history, absent long blocks and traffic bursts, fee pressure has been largely absent.

Users & market are forced through a second period of chaos and disruption as the free market is rebooted again by changing the block size limit.

The average user hears a lot of noise on both sides of the block size debate, and really has no idea that the new "let a fee market develop" Bitcoin Core policy is going to raise fees on them.

It is clear that - "let the free market develop, Right Now" has not been thought through - Users are not prepared for a brand new economic policy - Users are unaware that a brand new economic policy will be foisted upon them” — Jeff Garzik Bitcoin, Developer

A week ago Jeff has proposed to increase the Bitcoin Core block size to 2mb. The Linux expert and self described libertarian has often given his views publicly to redditors. Currently blocks are created every 10 minutes and only hold 1mb of transaction data. If core developers reach an agreement, Garzik and several others want to initiate BIP 102 a fallback plan if consensus does not meet around the entire network.

"All that has to do be done to change bitcoin to a new economic policy - not seen in the entire 6 year history of bitcoin - is to stonewall work on block size.

"Closing size increase PRs and failing to participate in planning for a block size increase accomplishes your stated goal of changing bitcoin to a new economic policy."

"no [code] change"... changes bitcoin to a brand new economic policy, picking economic winners & losers. Some businesses will be priced out of bitcoin, etc.

Stonewalling size increase changes is just as much as a Ben Bernanke/FOMC move as increasing the hard limit by hard fork. — Jeff Garzik, Developer

Needless to say the debate is not over. Many are worried that consensus may never be reached with all the disagreements. With accusations flying everywhere, and the supposed use of sock puppets one would wonder if a conclusion can be met. A lot of people are skeptical of the proposed upcoming hard fork, and offer different alternatives showing testing as example.

However many are also positive about increasing the the block size and show in test net environments why the increase works as well. Increased transaction time could make global remittance solutions possible with Bitcoin. A smaller block size may not be adequate to handle such commitment. Although there's also the voice of ‘If its not broke, don't fix it’ which is also represented in this argument.


Do you see consensus reached by March 2016? Let us know in the comments below.

Images courtesy of Twitter and Redmemes 

2015 Q1 Bitcoin VC Investment Trumps The Numbers For All of 2014

In the first quarter of  2015, Bitcoin venture capital investment has already exceeded that of 2014. BitFury, the Amsterdam mining operation, has announced that its third round funding has exceeded 20 million dollars from investors. The company had previously acquired 20 million last summer in an investment round.

Also read: Bitcoin in Review: Interesting Trends in Q1 of 2015

BitFury plans to open up another location in Georgia as a vehicle and data center to stay ahead of the game in mining operations. The business itself has received roughly $60 million in venture capital since its inception in 2011. Investors from this round include: DRW Venture Capital, iTech Capital, and the Georgian Co- Investment Fund. 

The first quarter of 2015 VCs dropped a whopping $229 million into Bitcoin-related startups and ventures. This investment growth has doubled in size over one year in contrast to 2014 reports. Many attribute these investments to the same enthusiasm the Internet had in the early 90s. 

 Invested In By The Finest

Circle  recently closed a $50 million funding round; 21 inc jumps over Coinbase’s 2015, giant-sized investment funding by receiving $121 million in total funding. However, Coinbase made headlines with its respectful $75 million in its start up in the beginning of the first quarter. 

Learn about how to buy Bitcoin!

According to a report from Coinspeaker, 21 Inc. is building “new technology that is expected to facilitate worldwide bitcoin adoption and promote bitcoin mining.” Although the company has been a very mysterious, it has offered a “toaster” to its constituents in a revenue share trade. Even though these gifts come strikingly different the company has been invested in by Silicon Valley’s finest. Including: Peter Thiel, Qualcomm Ventures, Data Collective, Khosla Ventures, Yuan Capital, and RRE Ventures.  

BitFury is a company to watch, as it has overtaken its rival, KnCMiner, which raised $29 million in funding. Eyes are clearly watching Bitcoin mining and its data operations. The data stored with these companies and its analysis is said to be worth millions. Start ups like Augur and Truthcoin are just now digging into the ideas of prediction markets and how powerful they will be.

It's an exciting time in the land of crypto. With the continued flow of venture capital going into it, Bitcoin has a lot of prospectors. Everyday, the habitat is getting larger and spreading into uncharted territory. People are starting to trust math and probability over the uncertainty of human error. Financial Tech and encryption protocols like Bitcoin are disrupting the existing finance market -- showing no mercy. Banks can't keep up to these new financial innovators.

Do these disruptors help the banks or continue their way without them? Let us know in the comments below!

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Images: Shutterstock, BitFury

Force or Mathematics: Fiat VS Cryptocurrency

Some people believe the US dollar is backed by gold. This is inaccurate. The US Dollar is backed by something alright, but not by an object of value. Fiat notes are propped up by the truncheon and gun. “Fiat” literally means "by decree or arbitrary order". This implies that government Federal Reserve notes are only valuable insofar as their worth is dictated by a central bureaucracy.

Also read: Bitcoin in Review: Interesting Trends in Q1 of 2015

Fiat by Command and the Golden Ticket

It is true that some government certificates used to be backed by gold. This is not the case anymore. One cannot go to a bank or government institution and get an equivalent amount of gold for their money. Years ago, the United States government allowed people to possess gold certificates which translated into equivalent gold coins, but the State eventually remanded the ability to receive gold coins. They even made these golden tickets illegal to possess for a time. The only thing that supports modern fiat currency is government command.

In an essay titled “A Brief History of the Gold Standard,” Craig K. Elwell sums this up:

“The gold standard ended in 1933 when the federal government halted convertibility of notes into gold and nationalized the private gold stock. The dollar was devalued in terms of its gold content, and made convertible into gold for official international transactions only.”

Bitcoin, the Blockchain, and Mathematics, not Brute Force

With the advent of blockchain technology and digital cryptocurrencies, people can now enjoy money that is backed by something other than brute force. But many people, as a result of the preconceived notion that currency must be backed by a beautiful object like gold, erroneously believe Bitcoin is worthless.

This is a common misunderstanding of Bitcoin and the blockchain protocol. Bitcoin is not backed by anything tangible. Instead, it is supported by something superior: mathematics. When people dismiss Bitcoin on the grounds that it is not backed by anything, they do a disservice to the idea of a currency supported by value, because the blockchain protocol that runs Bitcoin was designed to create Bitcoins through the mining process, which relies on computational power to solve mathematical puzzles.

The blockchain protocol also uses complex algorithms to limit the overall supply of Bitcoin to 21 million units. This is an elegant solution to the problem of “backing,” because it works in a decentralized fashion. This prevents authorities from gaining access to the protocol and controlling it; there is nothing more valuable than protection against people who want to steal money or manipulate its supply. Bitcoin eliminates this threat, and other threats. Thus, its brilliant mathematical foundation is the ultimate form of backing in terms of financial security, stability and trust. This means everyone can sleep well at night knowing their hard-earned money is safe and sound.

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The opinions expressed in this article are not necessarily those of Bitcoin.com. Sterlin Lujan

Gold-Backed Cryptocurrencies: Innovative or Redundant?

The debate between Bitcoin and gold is often waged by two opposing sides: those who believe that Bitcoin is the future currency of the world, and those who think gold is the only alternative to fiat. However, there is a third-party in this discussion -- although they are a minority in the cryptocurrency community.

Also read: Gold Takes a Backsesat to Bitcoin During Greek Debt Crisis

Disclosure: this author is a paid blogger at Anthem Vault, a company that has recently launched the Hayek, a gold-backed cryptocurrency.

This third group believes that a combination of gold and Bitcoin would result in a currency that takes advantage of the best of both worlds. Essentially, these people envision a cryptocurrency that represents ownership over an amount of gold in the physical world. The digital coin would act as a gold certificate, working as a perfect money substitute. The only time the tokens would need to be redeemed for gold is if the owner simply wishes to increase his or her physical store of gold.

Thus, by using a gold-backed cryptocurrency, we get the “intrinsic” value of gold as well as the speed and portability of Bitcoin. According to its supporters, this kind of cryptocurrency is capable of reaching a much broader market than a purely digital currency. Those who are reluctant to trust a computer program with their wealth, or people who doubt the reliability of Bitcoin’s digital scarcity can find solace in the token’s gold value.

Commodity-backed digital currencies have received support from people who tout sound money reform, but are not exactly familiar with Bitcoin’s technology. To them, cryptocurrency is a promising idea, but its lack of tangibility either intimidates them or rouses doubt. One of the most prominent people to get behind the concept of a commodity-backed cryptocurrency is Rand Paul, a Republican candidate for US President in 2016. In May of 2014, Paul stated that he would like to see a digital currency backed by a basket of stocks:

“I was looking more at it until that recent thing [sic]. And actually my theory, if I were setting it up, I'd make it exchangeable for stock. And then it'd have real value. And I'd have it pegged, and I'd have a basket of 10 big retailers… I think it would work, but I think, because I'm sort of a believer in currency having value, if you're going to create a currency, have it backed up by -- you know, Hayek used to talk about a basket of commodities? You could have a basket of stocks, and have some exchangeability, because it's hard for people like me who are a bit tangible. But you could have an average of stocks, I'm wondering if that's the next permutation."

While gold-backed cryptocurrencies may sound like a best of both worlds scenario, there are a couple things that could make them redundant. These redundancies could make commodity-based digital tokens unnecessary, since their purely digital counterparts would be less bulky.

Having a digital currency tied to gold drives up transaction costs. When a digital transaction takes place, and the ownership of physical gold changes hands, the gold storage facility will have to alter its records. Managing the records requires labor; even automated processes would have high capital and maintenance costs. These expenses would be reflected in transaction fees, meaning that the gold-crypto hybrids are not as “cheap” as pure digital currencies.

As far as a gold token’s protocol is proprietary, its users must trust the issuing firm. Since the tokens represent ownership over a physical supply of gold, they will most likely be premined to match the amount of gold owned by the issuing company -- and later to match the amount of gold deposited by customers. Therefore, the issuer will have the ability to create tokens in excess of its gold reserves, allowing it to operate with fractional reserves for its own benefit. Aside from devising a decentralized gold token, the only choice users have is to trust that the issuer will not engage in questionable activities.

An issuing firm can also use its gold reserves without the knowledge of its depositors. Since gold is not linked to a decentralized protocol that automatically logs all transactions -- like Bitcoin’s blockchain -- a customer will have a hard time knowing whether or not the firm is using his or her gold for personal gain. This practice also qualifies as running fractional reserves which, depending on the stipulations of the deposit contract, betrays the trust of the depositors.

The higher transaction costs and trust requirements associated with gold-backed digital currencies puts them at a disadvantage to purely digital currencies, but that doesn’t mean that they are totally useless. Having a token that acts as a hybrid between tangible and digital media of exchange builds a useful psychological bridge for gold bugs initially being exposed to cryptocurrency. This hybrid could ease newcomers into the digital currency world, making the learning curve seem smoother. Whether or not the users of such currencies complete the transition to totally digital coins, though, depends on whether or not they value decentralization and affordability over familiarity.

Are gold-backed cryptocurrencies a good idea? Let us know in the comments below!

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The opinions expressed in this article are not necessarily those of Bitcoin.com.