Crowdfunding Hollywood? Regulation Isn’t Making it Easy for ICO Projects

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When first contacting CoinDesk, the team behind a movie called “Braid” had big news to share.

Unlike your traditional crowdfunding model, used by the likes of Kickstarter or Indiegogo, the goal of the project was to let a global pool of buyers both crowdfund and profit from the movie. Among the tools at their disposal were ethereum, a global blockchain platform, and WeiFund, a new crowdfunding platform built on top of this emerging technology.

Mitzi Peirone, the director of Braid, heralded the solution as one that would make crowdfunded movies – by the fans, for the fans – more democratic.

“A Kickstarter movie could go on to make millions of dollars and the people that gave money in the first place wouldn’t see a return,” she said.

Further, there were implications for the blockchain sector and its practices.

According to advisor Dino Mark Angaritis, the token was to be unique – not only in that it represented a stake in a movie, but that it was to be the first one issued by a US company in “full legal compliance with applicable regulations”.

At a time when regulations surrounding popular blockchain platforms like bitcoin and ethereum are still murky, the claim was big news. US law firm Perkins Coie, the team said, had even worked on the structure.

Angaritis said:

“We think that this may open the floodgates for similar structures for all types of crowdsales.”

And then came the regulatory hurdles.

The redesign

Eventually, when opportunities to participate in the crowdfunded movie finally become available on WeiFund (designed by blockchain firm ConsenSys), the offering will be a bit different than described.

Backers will still receive a tradeable token as part of a revenue sharing model, but it will only be available to non-US investors. As it stands, WeiFund still isn’t a fully fledged crowdfunding platform, and current regulations mean that WeiFund has to jump through some hoops to make this work.

Part of the reason for this is uncertainty around blockchain and its use in crowdfunding.

While there are some US-based seed investors who have participated privately, they will not be issued any tokens. The token sale for Braid, which hopes to raise $1.25m, will rely on international backers alone.

Still, the campaign will adhere to Regulation S of the Securities Act, permitting sales to international investors, which was the “easiest and quickest path” to compliance, Lowell Ness, partner Perkins Coie, explained.

“We didn’t have time to get WeiFund set up with the SEC as a crowdfunding portal. This is a new process and can take 4–6 months. We’re working on that for future offerings by WeiFund,” he said.

Another issue is how the specific funding for the movie was designed.

While some cryptographic tokens are made to function as digital commodity akin to bitcoin, others need to be structured like traditional investment offerings.

“This token is inherently designed to give people the benefit like a security would give them, this right to profit, this right to revenue, so it is a very unique structure,” Matt Corva, legal counsel for ConsenSys, told CoinDesk.

Fitting in

The whole narrative, however, illustrates the current difficulties in unlocking token sales as a funding mechanism for startups and projects – even movies.

The campaign, put together by a team of lawyers at ConsenSys and Perkins Coie, aimed to fit the idea for Braid’s offering within regulations that could serve as a guide to other companies for running compliant crowdfunding, albeit with new tools.

Crowdfunding, for example, is governed by Regulation CF and requires an intermediary to assist the issuer. Previously, this intermediary needed to be a registered broker-dealer, and while no longer the case, the new rules still require this intermediary to register with the SEC and FINRA.

Ness describes this effort as offering a sort of light version of a broker-dealer, where WeiFund is building a system for verifying accredited investors that use the service.

“You will see that forthcoming on future launches in which we do target the US market in depth,” added Corva. WeiFund is tight-lipped on when these other sales will begin, but revealed there are a few in the pipeline in the coming “weeks to months”.

But, why go through all this effort? Those involved believe it could usher in a new way to pay for creative works.

All revenue generated by the film, plus 15% interest, will be paid back to investors until they make their original investment back. Targeting $1.25m via the crowdsale, the first $1.43m goes straight to investors. Beyond that, 30% of revenue will go to token holders.

Once the film starts to generate this revenue, this money will be pooled into an account and deposited into a cryptocurrency exchange. These funds will be either converted into ether, the token on the ethereum platform, or a US dollar token.

A full platform

And while it didn’t go off without a hitch this time, those involved see the ethereum blockchain – and WeiFund specifically – as something that could come to have an impact beyond entertainment.

“Right now, we’re in a pretty critical stage where we’re between our service model, servicing these independent crowdsales, not as a platform but as a crowdsale provider,” said Nick Dodson, one of the main developers behind WeiFund.

Dodson added:

“These sales like the ones for Braid are a step toward a broader platform, but right now we’re in a service model.”

Currently Braid is in a “soft-prep period” and will begin shooting in June with the aim of having a cut ready by fall.

But those involved are optimistic about the funding.

“I think this is going to be revolutionary for independent filmmakers out there,” said Peirone, adding:

“This kind of financing system will really open up the doors for people.”

Camera repair image via Shutterstock

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MimbleWimble: Why Silly Sounding Tech Could Seriously Reform Bitcoin

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Catheryne Nicholson is the CEO and founder of BlockCypher, a blockchain web services startup.

In this opinion piece, Nicholson speaks out about the dysfunctional state of bitcoin’s community and why she believes new tech called MimbleWimble could help save it.

MimbleWimble: Why Silly Sounding Tech Could Seriously Reform Bitcoin

The state of bitcoin today is highly discouraging. Watching grown men hurl insults at each other on Reddit and Twitter is just sad.

When I became involved in 2013, bitcoin’s potential seemed endless. It was heralded as a possible solution for micropayments, remittances, microfinance, parking meters, email spam and so on. Many women, myself included, believed in bitcoin as a means to address world problems of poverty by providing access to capital for the remaining three-quarters of the world.

As time passed, I became discouraged that many needed use cases did not come to fruition. Startups attempting to build companies with those business models have died. Anything involving small payments in bitcoin has been mostly eliminated due to high fees.

The most popular use case is as a store of value. It’s not to say that isn’t useful: in the growing number of countries with devaluating currencies, bitcoin is an attractive alternative. Bitcoin has had an indelible impact as a groundbreaking technology. But it’s disheartening that it has stalled in doing more.

There are fundamental issues that will likely never be solved, as evidenced by the two-year debate on how to scale bitcoin. The community is more divisive than ever. I can’t help but think part of the reason it’s so dysfunctional is because it’s devoid of women.

Women (or any rational person) do not want to participate in this dystopian community: it’s juvenile and filled with vitriol. Bitcoin desperately needs a Patronus Charm, “a pure, protective magical concentration of happiness and hope.” [1]

My disappointment in bitcoin caused me to look at the blossoming landscape of alternate blockchains: eg litecoin, zcash, monero, ethereum and dash have all grown in market size and popularity.

It’s clear that more alternative coins (altcoins) will develop innovative solutions and come to market. This is why MimbleWimble caught my interest.

Starting point

As a brief background, the original MimbleWimble white paper was placed by someone called Tom Elvis Jedusor (Voldemort’s French name in JK Rowling’s Harry Potter book series) on a bitcoin research channel in July 2016.

Tom’s white paper “Mimblewimble” (a tongue-tying curse used in “The Deathly Hallows”) was a blockchain proposal that could theoretically increase privacy, scalability and fungibility. It remained theoretical until recently.

At the end of 2016, someone named Ignotus Peverell (the original owner of the invisibility cloak, if you know your Harry Potter characters) started a Github project called Grin, and began turning the MimbleWimble paper into something real.

Andrew Poelstra, a mathematician at Blockstream, presented on this work in January 2017 at Stanford University’s Blockchain Protocol Analysis and Security Engineering 2017 conference. More recently, Ignotus posted a technical introduction to MimbleWimble and Grin.

It took me a while to wrap my head around MimbleWimble. The more I internalized it, the more hopeful I became that something more magical than bitcoin could appear. I will attempt to explain MimbleWimble and why what it proposes – privacy, freedom of choice, equal access, fungibility, and sustainable growth over time – are so important.

Privacy matters, a lot. One of the most important rights we have is the right to privacy. It’s our right to “keep a domain around us, which includes all those things that are part of us, such as our body, home, property, thoughts, feelings, secrets and identity.” [2]

Privacy matters

I consider privacy extremely important.

It’s very apparent how valuable it is when you lose it or when someone violates it. In my 20s, I was stalked. A person whom I had met in passing on a military base waited for me after work and surreptitiously followed me home.

He did this for several weeks – all unbeknownst to me – until one day he knocked on my door and told me he had been following me and professed his undying love. I immediately slammed the door and called the local and military police. I lived alone in the woods and was so freaked out that I moved.

Only someone who has been stalked can understand how frightening this experience was. To this day, it affects many of my behaviors to guard my privacy.

Physical trespass of privacy is often preceded by online privacy violations. Recent events, such as Congress granting ISPs (internet service providers) the right to sell your personal information – browsing habits, app usage history, purchasing habits, location data – are very concerning.

As Luke Mulks from Brave elegantly wrote, “[Y]our digital data trail is the evidence of your human presence online. Your data is valuable, private, and most important, it’s yours.”

What’s available

If we cannot rely on our legislature to protect our constitutional rights (can we rely on them for anything anymore?), technology needs to intercede to make it harder for greedy capitalists to put your privacy up for sale.

Privacy extends to what to share publicly about what we buy or whom we donate to. These transactions should not be open for all to see.

Women, especially those trying to escape repressive social or economic conditions, have a dire need to stay anonymous. That’s a fundamental flaw in bitcoin: every transaction and address balance is available for the world to watch and track.

There are some things you can do to hide your transaction, such as tumbling, but you need to go out of your way to use them and they are breakable. Privacy oriented cryptocurrencies like monero and zcash improve privacy significantly.

In monero, the transaction is not natively private, but relies on ring signatures to mask exchanges. Zcash leverages a technology called zk-snarks to build private transactions, which is a huge improvement.

However, it still requires a lot of extra resources to build a confidential transaction, so most users still issue their transactions “in the clear” (clear vs shielded counts).

The big change

MimbleWimble is natively private.

There are no ring signatures or zero-knowledge proofs on top of a transparent bitcoin-like transaction. In a MimbleWimble transaction, all values are fully obscured. There are no reusable or identifiable addresses. Every transaction looks the same to an outside party.

The two properties verified in a MimbleWimble transaction are:

  1. No new money is created
  2. The parties sending money must prove ownership of their keys.

To verify no new money has been created, you must demonstrate that the sum of outputs minus the inputs equals zero. To verify key ownership, the transacting parties must legitimately prove their public and private keys exist to authorize the transaction.

MimbleWimble uses a blinding element to obscure all values – transaction amounts and keys – while holding true basic mathematical facts. The blinding element relies on multiplying and adding secret factors to obscure real values.

For example, let’s say I have a transaction with these amounts:

(1) 17 + 12 = 29
The balanced equation shows no new money was created, complying with property 1) above. The equation remains true if I apply a secret blinding number (eg 11) to all terms.

(2) 17*11 + 12*11 = 29*11
Without knowing my secret number 11, you would have a hard time guessing what the original transaction values are in this equation.

(3) 187 + 132 = 319
In equation (3), I’ve managed to keep both the values and blinding number private while still allowing others to verify I have not created new money in my transaction.

MimbleWimble: Why Silly Sounding Tech Could Seriously Reform Bitcoin

The big picture

Still don’t think this is a big deal? MimbleWimble offers other extensive benefits that indicate it could form the foundation of the kind of network bitcoin was meant to be.

Freedom of choice

By obscuring all values, MimbleWimble provides full privacy and gives you the choice of what to reveal. It’s similar to donor levels in various non-profits. You’ll see the range a donation was made for, but you don’t necessarily know the exact donation.

Both the donor and the non-profit know exactly how much was donated, but no one else needs to know.

This “right to privacy gives us the ability to choose which parts in this domain can be accessed by others, and to control the extent, manner and timing of the use of those parts we choose to disclose.” [2]

Equal access

Another aspect of bitcoin that disturbs me greatly is there is little opportunity left for an average person to participate in securing the network. The requirement of a highly specialized and expensive chip for bitcoin mining – the ASIC – has almost eliminated anyone from becoming a bitcoin miner, whose primary responsibility is validating transactions and placing them into blocks.

The mining community is now heavily centralized and this has greatly contributed to bitcoin’s woes.

The ability to grow over time while still providing equal opportunity to participate are key tenets of Ignotus’ Grin implementation of MimbleWimble. Grin is designed to be ASIC resistant, so that anyone who wants to try mining can buy a widely available GPU chip at a local Best Buys or online for a reasonable price.

Making MimbleWimble ASIC resistant democratizes access. I’ve even toyed with the idea of building a GPU miner with my kids to see what it can do.

Ability to grow over time

Another way to safeguard equal access over time is to ensure the blockchain network doesn’t get dragged to a standstill when transaction volume increases.

This is the core issue in the bitcoin block-size debate: there are more transactions than can fit into a 1Mb block. As long as there’s a restrictive size limit, there will be a capacity issue. A dirty little secret is that to get around scalability issues, almost all payment processors and exchanges do off-chain transactions. Which begs the question: why bother using a cryptocurrency with blockchain?

Increasing usage will increase transaction volume. So how do you ensure that a block size can continue to accommodate volume increases? By streamlining each block.

The principle is similar to simplifying equations. If there are terms that are identical on both sides of an equation, you can cut them:

(8) 2+y = x+2
(9) 7+3+5+4+2+y = x+7+3+5+4+2

Both equations (8) and (9) simplify to:

(10) y = x

MimbleWimble maintains that if an output spends an input, you no longer have to keep them because they cancel each other out. This greatly cuts down the amount of data you have to store and process.

The only data that nodes keep is unspent outputs and block headers. Instead of thinking of blockchain capacity in terms of number of transactions, MimbleWimble is designed to grow with the number of users. The streamlined blocks make growth sustainable over time as the transaction data set does not continue to get bigger.

This increases privacy since transaction data gets removed and it also enables fungibility.

Fungibility

Fungibility is the ability for equal units to be interchangeable.

Let’s say I give you a dollar – either as a coin or a paper note. The Federal Reserve prints the paper dollar and the US Mint produces the coin dollar, but both are equal. Neither is lesser or greater than the other and you can chose to use a dollar coin or bill interchangeably.

This is a key characteristic of currency: equal units must be interchangeable, or fungible. The US dollar is fungible. Bitcoin is not.

The bitcoin blockchain keeps every single input and output forever and so each coin carries a legacy. It’s similar to equation (9) above.

Another dirty little secret is that when picking which transactions to process – in addition to the fee – payment processors, miners, and exchanges will look at the inputs (ie 7+3+5+4+2) to assess the quality of the transaction. The consequence is one bitcoin is not fungible with another.

The most valued bitcoins are called ‘coinbase transactions’, which are the ones created when a block is found. They are newly minted and ‘clean’ and some parties pay a premium to buy them. A hierarchy in coin quality develops. The consequence is, if you receive bitcoins that have inputs that are tainted (eg they have been used in a dark market), spending them may become increasingly difficult.

In MimbleWimble, because the (7+3+5+4+2) inputs and outputs are all discarded when spent, each coin is exactly equal to the other. In other words, MimbleWimble coins are interchangeable and fungible.

Conclusion

I’m very hopeful seeing the accelerating pace of research and innovation in public blockchains.

If privacy and scalability are solved, MimbleWimble could be the Patronus Charm for bitcoin, perhaps as a complementary sidechain. Imagine what a universal fungible digital coin could enable with access for everyone.

One hesitation I have, however, is that many people developing it have taken on Harry Potter-themed pseudonyms. It’s understandable given the personal attacks rampant in the community, but it does conjure a mystical aura. I’m glad Andrew Poelstra, a highly qualified real figure, is actively involved with MimbleWimble.

I hope I can add my voice to the mix, also as a real person. I realize that by not using a pseudonym, I’m opening myself to the troll armies. I’ve attempted to explain why MimbleWimble is interesting to me.

I hope it intrigues enough people and inspires both men AND women to engage early; it would be great if this community doesn’t wind up as a testosterone-filled boys club.

Apparently, Merope Riddle (Lord Voldemort’s mother) is already very involved in MimbleWimble’s development. I believe it’s worth learning, participating in its genesis, and helping to develop a healthy community around it.

Hogwarts/Harry Potter image via Shutterstock

Disclaimer: The views expressed in this article are those of the author and do not necessarily represent the views of, and should not be attributed to, CoinDesk.

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BBC Apprentice Winner Joins Blockchain ICO Humaniq

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An Apprentice winner has joined the blockchain startup world.

Tim Campbell now serves on the the Board of Humaniq, a blockchain financial infrastructure which helps connect underserved markets to the global modern economy. Campbell has served as an Ambassador to the London Mayor and a member of the Government’s Entrepreneur’s Forum, as well as a part of the Cabinet Office’s SME Panel.

Campbell’s appointment to Humaniq’s advisory board will see that he will sit alongside a Board of Directors including Alex Fork, Dinis Guarda and Dmitry Kaminskiy.

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“Humaniq is a movement of tech for good and offering a simple and secure mobile banking app for the unbanked,” states Humaniq in a press release.

“Humaniq has the capacity to produce thousands of entrepreneurs in addition to numerous customers of tomorrow who are unbanked,” said Campbell. “I have always insisted that business has the power to bring about social change and Humaniq’s model of bringing financial instruments and education to the over two billion unbanked people around the world is the manifestation.”

Campbell will be responsible for discovering new regions for Humaniq, specifically with a focus on Africa. “The rationale for this focus comes after Campbell’s recent involvement as an invited guest speaker at the opening Enterprise Africa conference held in Accra, Ghana arranged by the British Council,” writes the company. “Throughout the duration of the journey Campbell was formally made known to a great number of inspiring companies and their founders as well as getting a glimpse of some of the underprivileged enclaves of Ghana. Observing how these two complete opposites existed at the same time in the same place in addition to the good work of the British Council giving guidance and assistance, Campbell was lead to explore how he could make a good impact in Ghana upon his arrival to the UK.”

Campbell was introduced recently to Humaniq CEO Dinis Guarda, and the two hit it off. “We welcome Tim and his captivating zeal and enthusiasm,” said Guarda. “Tim is a force of nature and he will be essential to assist us in developing the global DNA of the Humaniq organisation. He will be alongside our executive team working close to set a mark in underdeveloped and developing countries starting with Africa, with a special emphasis on Ghana. Also his knowledge in business and community building will be an asset for our dynamics”

Humaniq develops blockchain fintech for “economy-excluded” sectors challenges. The startup first raised funds via a new innovative approach known as an Initial Coin Offering (ICO), wherein many participants buy crypto-tokens representing a new form of share in an oftentimes blockchain (Ethereum) based company. 

“Doing this Humaniq wants to use innovative ways to build its community and leverage the power of digital currencies for social impact. Humaniq got to its crowd sale with more than 10,000 participants in the pre-seed investment round buying its HMQ coin crypto-currency that can be done both with Bitcoin and Ether,” writes the company.

So far the organization has reached $4M in the last two weeks. The campaign finishes on April 27th, according to Humaniq.

Campbell won the first series of the British version of The Apprentice, which appeared on BBC TV reality show. Contests battled it out for a  £100,000-a-year job working for businessman Alan Sugar.

Campbell graduated from Middlesex University with a degree in psychology, and worked as a Senior Planner with the Strategy and Service Development (formally marketing and planning) directorate of the London Underground before appearing on The Apprentice.

Campbell was hired by Sugar’s company Amstrad on a £100,000 salary. He first marketed an anti-wrinkle device.

Campbell stayed on at Amstrad’s job past his original 12-month contract. In March 2007, after two years at the company, he left to set up Bright Ideas Trust, set up to help give young entrepreneurs the opportunity to start a business with equity funding and advice from business angels. Lord Alan called Campbell a “great asset.”  In 2016, Campbell co-founded Marketing Runners Ltd with Derin Cag,a bespoke digital marketing agency in London.

The Humaniq’s blockchain token will be traded on multiple cryptocurrency exchanges, which is always an important measure of liquidity for a token derived from an ICO.

“This is just the start,” said Humaniq founder Alex Fork in a press release. “We trust these exchanges, as they have a very good reputation. This is very beneficial to the people who have participated in our crowdsale, and will begin the establishment of our post-ICO token value. Our focus is to create value for the over 10.000 people who participated our ICO. So far we reached over BTC 3484,6 the equivalent of 4 334 136.77 USD at the moment”.

Featured image from Shutterstock.

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BBC Apprentice Winner Joins Blockchain ICO Humaniq
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Ethereum, ETCUSD and ZECUSD looking tired

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In my last column I suggested that ethusd would be going higher.  If you take a look at the picture I sent in with that column, you can see that at that time, pricetime was at the high point indicated by the red arrow in the picture below. Price was above the 2nd of the 4th arc pair.  This is an excellent indication of the way markets can fool you. It becomes clear why it is important to wait for the close above resistance.  As you can see, the market reversed after the column was written, and the candle closed below the arc.  That was a red flag that caused me to close my position.  If you are following me on twitter, then you got my tweet suggesting that it was a good time to take profits.

Even though we since had a couple of closes above the arc, I am not yet convinced the rally has resumed.  This could still be the beginning of a larger correction. I say this because the arc is a natural place to stop an advance.  The other reason is that the black vertical line looming to the right of pricetime is the end of a smaller setup.  The end of a setup is often a time of reversal.  I would not buy this market here, and would in fact move my stop losses in very tight.

Ethereum, ETCUSD and ZECUSD looking tired

Just my opinion, of course.  But while I had been expecting this to be a great week, it could indeed be a great week, for the bears…  Be careful…

ETCUSD and ZECUSD have both hit 5th arcs and end of setups.  They look like they might be ready to correct…

Litecoin on the other hand issued a buy signal.  I tweeted that last night, when the (circled) price closed above the first arc. Targets are $17.50, and $20, though it would behoove traders to wait for a close above the 1st arc of the 2nd pair at least, before buying here (for reasons discussed above in the paragraph on ethusd).

Ethereum, ETCUSD and ZECUSD looking tired

 

 

Remember:  The author is a trader who is subject to all manner of error in judgment.  Do your own research, and be prepared to take full responsibility for your own trades.

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Bitcoin Unlimited Network Support Surpasses 40%

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With Bitcoin soaring to new all-time highs, one would almost forget there is still a scaling debate going on. Bitcoin Unlimited has gained some more network support over the past few weeks. As of right now, Over 40% of all blocks mined on the network signal BU. The bigger question is how this will affect the Bitcoin network as a whole.

The road has been rocky for Bitcoin Unlimited these past few months, that much is certain. Even though the project’s source code has been hit with multiple flaws and bugs, supported has continued to grow. This results in 403 out of the last 1,000 Bitcoin network blocks mined signaling for BU support. That is quite a significant development, as it seems Unlimited is getting closer to activating on the network every single day.

Bitcoin Unlimited Support Continues To Grow

Over on the /r/BTC subreddit, people are getting very excited regarding this development. That is not surprising by any means, although claiming BU support is approaching 50% is overstating things quite a bit. There is still a large gap between 40% and 50%, and it remains to be seen if this gap can be bridged anytime soon. Then again, support for SegWit is not growing anytime soon, thus it is not unlikely things will pick up speed in the coming weeks and months.

The big question is how Bitcoin Unlimited support will reach that 50% threshold. The most logical solution revolves around a major Bitcoin mining pool switching allegiances, although that seem highly unlikely at this point. One thing working in favor of Bitcoin Unlimited is how support for 8MB blocks is increasing as well, with 5.3% network support at the time of writing. An intriguing development well worth keeping an eye on.

Assuming Bitcoin Unlimited will successfully reach 50% – or preferably 51% – network support, things will get very interesting for Bitcoin. It is still possible Unlimited will hard fork Bitcoin and move on as a separate chain. Those plans are not set in stone by any means, though, and things may change in the future. While this debacle has little effect on the Bitcoin price right now, things will get very interesting once BU hits the magical 50% mark.

Header image courtesy of Shutterstock

About JP Buntinx

Bitcoin Unlimited Network Support Surpasses 40%JP is a freelance copywriter and SEO writer who is passionate about various topics. The majority of his work focuses on Bitcoin, blockchain, and financial technology. He is contributing to major news sites all over the world, including NewsBTC, The Merkle, Samsung Insights, and TransferGo.

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Bitcoin Games Weekly Payout Hits 154.3 BTC in One Week

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Bitcoin PR Buzz · April 30, 2017 · 6:00 am

Popular Bitcoin betting platform Bitcoin Games has recently paid out a record amount of 154.3 BTC worth of prizes in a single week. The winnings were paid out to 11 players, all in the form of progressive roulette winnings.

[Note: This is a press release]


Prior to the record week’s winnings, the increasingly popular Bitcoin betting platform had already paid out over 1,000 BTC worth of prizes in the last six months. The platform’s recent spike in user base has been accredited to the minimal house advantage and lack of registration process.

The Bitcoin gambling platform constantly keeps adding new titles. The popular game categories on the platform include Slots, Blackjack, Poker, Dice, Roulette, Keno, and Craps. The reduced house edge on Bitcoin Games and its provably fair gaming algorithm translates to an expected return of up to 99% for the players. With the absence of a sign-up process, members can freely come and go as they please, with total anonymity.

Bitcoin Games Weekly Payout Hits 154.3 BTC in One Week

The biggest and the latest jackpot was won on the platform’s Progressive Roulette game. Players can make the best out of “Progressive prizes” by selecting the ‘Play 1 credit’ button, which will qualify them for the Progressive Roulette wins. Bitcoin Games has further enhanced the gaming experience with faster transactions by removing network confirmations while providing an option for the players to opt for it if they wish. Bitcoin Games comes integrated with Shapeshift to ensure that players can choose to place bets using different cryptocurrencies.

Although the platform has removed few aspects of the membership process that some players might associate with security, Bitcoin Games is as secure as any other similar website. Players are offered the choice of both Authy and Google Authenticator, in order to keep their accounts safe with two-factor authentication.

Bitcoin Games also provides players with a full 24/7-customer support chat window for all queries and issues. The platform also has an attractive referral program, giving players a chance to earn up to 25% of the house edge when they onboard other players to Bitcoin Games. All payouts are instantaneous, and players can withdraw their winnings at any time.

Bitcoin Games has focused on streamlining the platform to simplify the gaming experience for its player-base. The platforms sizable progressive prizes, reduced house edge, and absence of registration make Bitcoin Games one of the simplest and easiest Bitcoin betting platform in the market.


Images courtesy of Shutterstock, Bitcoin PR Buzz

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Is Bitcoin at Risk as Google and IBM Aim for 50-Qubit Quantum Computers?

quantum

A looming concern in the crypto community is whether quantum computing will destroy Bitcoin’s underlying protocol. People are worried government agencies or other nefarious entities will crack bitcoin’s code with quantum algorithms and undermine blockchain technology. In reality, these fears reflect more of an imagined doomsday scenario than a true statement about future events.

Also read: Antonopoulos Details Bitcoin’s Two Layers of Protection Against Quantum Computing

There are two main reasons why bitcoiners should be skeptical Quantum Computing May Not Crack Bitcoin's Encryptionabout quantum computing threats to blockchain technology. People tend to wallow in fear, uncertainty, and doubt regarding new technology. They assume new technology implies some type of inevitable apocalypse. Many of their omens, however, are steeped in voodoo and superstition. They are either exaggerated or false.

First, Bitcoin’s encryption is not wholly vulnerable to quantum computing. Satoshi Nakomoto knew about the possibility of stronger computer power being able to penetrate encryption, and that is why he built the protocol to withstand attacks. Second, even if a government agency or other organization possessed the talent to bust Bitcoin’s encryption, they would likely forgo the opportunity.

Quantum Computing versus Traditional Computing

Before delving further into these points, it is important to have knowledge of how quantum computers work, and how they differ from traditional machines.

Quantum computers are built on processors containing units called qubits, also called quantum bits. These units take advantage of quantum mechanics by functioning outside the realm of the Newtonian space. In other words, they do not conform to the rules governing the macroscopic, visually perceptible world. They behave according to the mystical order of the subatomic.

Instead of engaging in the binary behavior of 0’s and 1’s in the usual “on” and “off” fashion, quantum computers fuse “0’s” and “1’s,” making them indistinguishable and interconnected.

This paradoxical feature allows quantum computers to make tremendously enormous calculations. For example, to comprehend the difference between a laptop and a quantum computer’s calculation abilities, think of the differences between a horse-drawn chariot and Space-X’s Dragon spacecraft. This analogy expresses how much of an advantage quantum machines have over dinosaur-age computers.

The idea that 0’s and 1’s can be fused is called superposition Quantum Computing May Not Crack Bitcoin's Encryptionin quantum physics. This is the idea that on a subatomic scale, particles take on properties of other particles. For instance, it is well known that light can be both a particle and a wave. This phenomenon is called particle-wave duality.

Furthermore, particles can also merge. In accordance with quantum mechanics, they become enjoined in a delicate dance of vibratory ecstasy. This peculiar behavior is called entanglement, and this occurs within the confines of a computer chip the same as it does across the universe-at-large.

When dealing with quantum computers, controlling these states on an microcosmic scale with ultracold processors is difficult. This is the reason why quantum computers have not readily materialized and become commercially available.

Currently, quantum computers are in the early stages of development. They have only been used for specific purposes or specific projects. There is little practical application for them. However, a Newsweek article published on April 7 said they could be implemented sooner rather than later and could be more powerful than our most advanced supercomputer:

“Eventually, quantum computing could outperform the world’s fastest supercomputer—and then all computers ever made, combined. We aren’t there yet, but at 50 qubits, universal quantum computing would reach that inflection point and be able to solve problems existing computers can’t handle, says Jerry Chow, a member of IBM’s experimental quantum computing department. He added that IBM plans to build and distribute a 50-qubit system ‘In the next few years.” Google aims to complete a 49-qubit system by the end of 2017.’

Bitcoin is Naturally Resistant to Quantum Computing

However, regardless of how powerful these computers are and how soon they are created, Bitcoin’s encryption protocol will likely remain safe. There are many questions about what exactly will occur when the black cat is set loose from Pandora’s Box, but some things we know for sure.Quantum Computing May Not Crack Bitcoin's Encryption

Bitcoin’s underlying encryption protocol, SHA-256, is stubbornly resistant to nefarious attempts to undermine it. It is likely strong enough to withstand assaults from even the most savage quantum computer onslaught. A bitcoinnotbombs.com article explained that SHA-256 is formidable enough to handle the attacks:

“In Bitcoin your public key isn’t (initially) made public. While you share your Bitcoin address with others so that they can send you bitcoins, your Bitcoin address is only a hash of your public key, not the public key itself. What does that mean in English? A hash function is a one-way cryptographic function that takes an input and turns it into a cryptographic output. By one-way I mean that you can’t derive the input from the output. It’s kind of like encrypting something then losing the key.”

They continued,

All of that is a complicated way of saying that while an attacker with a quantum computer could derive the private key from the public key, he couldn’t derive the public key from the Bitcoin address since the public key was run through multiple quantum-resistant one-way hash functions.

 Government Incentive to Destroy Bitcoin’s Encryption

Another reason why agencies or other bad actors will not crack the bitcoin code is less obvious. Assuming it was possible to exploit, they might not want to crack it. This sounds silly…because breaking bitcoin’s encryption would help government protect their antiquated financial monopoly from bitcoin’s rapid, decentralized growth. There are good reasons, though.

If they choose to crack the protocol, they expose their quantum capabilities to their rivals. This spurs their enemies to develop counter-technology. Jamie Redman, writing for Bitcoin.com, elaborated by quoting bitcoin security expert Andreas Antonopoulos,

The last thing they are going to use that on is Bitcoin. Cause the moment you use it on Bitcoin you announce to the world we have quantum cryptography that can break elliptic curve — Guess what happens? Your nuclear rivals upgrade their cryptography very easily and try to implement quantum resistant cryptographic algorithms — of which there is a lot of research and a lot of suitable candidates. And you just blew all of your research and advancement in that technology on fighting a shitty little currency that some weirdos use in Prague.

Of course, there are arguments against this position. There could be individuals within these organizations that could act alone to crack the protocol. Arguably, anyone with the knowledge and technology to dismantle bitcoin’s encryption could do so at anytime—and what is scary—is that no one would know precisely who did it.

The fact that no one has conducted this kind of quantum hack, however, is demonstrated by the fact that everyone’s coins are still stored safely in their wallets.

SHA-384 and the Evolution of Bitcoin

Those involved in the cryptocurrency ecosystem should not lose sleep agonizing over the possibility of random people cracking the protocol. Best case scenario quantum computing is not poised to undermine bitcoin’s foundational technology. Worst case scenario, the technology to attack bitcoin is already here, but no one feels incentivized enough to crack it.

Nonetheless, there is a concern from security experts that the Quantum Computing May Not Crack Bitcoin's Encryptionbitcoin protocol should upgrade from SHA-256 to SHA-384, which is a sufficiently more advanced form of cryptography. This would be done as a safety measure, just in case. That is why Satoshi Nakomoto ensured the algorithm could easily be upgraded and enhanced. He knew technology would steadily evolve and he wanted his open-source, peer-to-peer system to evolve with it.

Therefore, even if bad actors decided to lay siege to the protocol, the good guys would have time to re-engineer it to withstand attack. They would likewise be able to improve the encryption mechanism to function in lockstep with the quantum computers that enabled the security breech to begin with. In this sense, Bitcoin’s underlying technology boasts tremendous flexibility in the way it can be tweaked for the purposes of self-defense and maturation over the long-term.

Do you believe quantum computing is sufficient to crack bitcoin’s encryption? Let us know in the comments section below.


Images courtesy of Shutterstock 


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Brazilian Criminals Kidnap Woman And Demand a Bitcoin Payment

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Bitcoin and other cryptocurrencies are often used in criminal activity. While most of these attacks take place on the Internet, Bitcoin also has an allure for regular criminals. In Brazil, a few men kidnapped a 32-year-old woman this week. In exchange for her release, they demand a bitcoin payment. Luckily, the Civil Police was able to defuse the situation without money changing hands.

It is rather intriguing to learn regular criminals want a Bitcoin payment. That is very strange, considering bitcoin is anything but an anonymous cryptocurrency. In fact, one can argue bitcoin should never be used for criminal activity whatsoever. All transactions can be tracked in real-time without special software. Transactions always leave a digital trail, which is the last thing criminals want.

Kidnapping Someone for Bitcoin is Very Unusual

Then again, a few thugs in Florianopolis, Brazil, thought otherwise. Earlier this week, they kidnapped the wife of a local businessman. In exchange for her release, they asked for an undisclosed Bitcoin payment. The businessman alerted the Civil police to this incident, who were able to extract her from the criminals’ claws successfully. In the end, no money changed hands, yet it makes for a remarkable story.

It is the first time criminals ask for a cryptocurrency payment when kidnapping someone in Brazil. The goal was to have the husband pay up a sum of bitcoin in exchange for his wife’s release. However, demanding a payment in virtual currency is very risky at best. It is impossible to streamline such a  deal, as there are many variables to take into account. Buying Bitcoin in Brazil, for example, is not impossible, yet very difficult for a lot of people.

The husband successfully negotiated with the criminals in an effort to delay the payment. Interestingly enough, the Civil Police was successful in determining the location where his wife was being held. It remains unclear how this was achieved exactly, though. It is possible for criminals observed their target for some time before striking. Regardless of their preparation, the venture was unsuccessful. This goes to show cryptocurrency and criminal activity do not make for a good mix whatsoever.

In the end, it is good to learn the woman was unharmed despite her being kidnapped. The Civil Police is still conducting the investigation as we speak. So far, six potential criminals have been identified as part of this operation. Only one person is arrested at this time, although that number may increase over the coming weeks.

 

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ICO Analysis: BOSCoin | Hacked: Hacking Finance

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BlockchainOS Coin is what BOSCoin means. OS means “operating system,” for the completely non-technical among us. It differs significantly from other coins we’ve covered, as well as Bitcoin, Litecoin, and most other established cryptocurrencies. BOSCoin is not governed by the rules of consensus that are established and modifiable only by core developers with agreement from miners and full nodes, as is the case with Bitcoin, but instead by a form of democracy.

BOSCoin’s well-written whitepaper opens by crediting Ethereum with being the “prior art” in the smart contract world, and uses the notion of Ethereum as a jumping point to their own innovations. The authors take issue with the Turing-completeness of Ethereum, or the ability to replicate the functions of a Turing machine/act as a full-blown programming language.

However, the freedom and flexibility provided by the Turing-complete language which Ethereum is based on is the cause for several serious problems. We believe that using a turing-complete language may be inappropriate for writing smart contracts as they are inherently undecidable. Due to this undecidability issue, a smart contract based on a Turing-complete language will make it difficult to know what a smart contract will do before running it.

BOSCoin takes a different approach than simply adding a cost to the execution of smart contracts. They intend to create easier-to-understand “Trust Contracts.” Further, they wish to propel solutions for the following issues that have long been bothersome in cryptocurrencies more broadly:

  • Democratic governance. Node operators dubbed the “Congress Network” will have the power to propose and vote on proposals for improvement of the system as a whole. This is why BOSCoin refers to itself as “self-evolving.”
    • This is remarkably different from Bitcoin, which, as the Block Size Debate has shown us, suffers from a useful mechanism to truly gauge what users want. Reliance on social media and the like has led to great divisions within the community, notably with the exit of Gavin Andresen and Mike Hearn from the core development team.
  • Anti-centralization initiative. The whitepaper notes that a form of near-centralization has plagued Bitcoin repeatedly with a slim minority of miners retaining most of the control of the network much of the time. To solve this, they aim to “separate political and financial incentives.” To achieve both ends, users must invest funds.
  • Like Exscudo, which we recently covered, BOSCoin will launch with applications ready to go. Other developers can also create applications on top of the Owlchain protocol. The two applications BOSCoin will launch with are Stardeq and Delicracy. Stardeq will allow people to bet on the popularity of celebrities using BOSCoin, while Delicracy will have more universal appeal, being a decentralized collective voting application usable by any organization that wishes.

ICO Analysis: BOSCoin | Hacked: Hacking Finance

As you can see in the chart, BOSCoin aims to be able to handle up to 1,000 transactions per second, features a flexible block size, and has developed its own method of reaching consenus (Federated Byzantine Agreement – presumably based on the work by David Mazières.)

To earn BOSCoin later on, one must “freeze” at least 40,000 BOSCoins in their account in order to open a full node. Then they earn rewards from transactions processed by their node. The same must be done in order to become a member of the Congress Network.

More on Trust Contracts

There are two primary approaches to developing contracts on the blockchain. One is through using a flexible programming language on a virtual machine, the other is to use a slightly less flexible but decidable domain-specific language. The BOScoin team decided to go with the later. Unlike cryptocurrencies based on virtual machines, as the inference engine is based on the semantic web technology, it is possible to infer information from the code before the contract is run. The contract is decidable and the outcome of the contract clearly known.

Trust Contracts are called as they are because their outcome can be known before running them. A big plus with them is that they are writeable and readable by mere mortals, whereas most people find it difficult to actually construct (or even understand) a smart contract authored on existing platforms.

The BOSCoin model will introduce another novelty in the form of the Timed Automata Language, which was developed based on a paper regarding Smart Contracts for Bitcoin. As you can see below, BOSCoin smart contracts are highly readable by humans:

ICO Analysis: BOSCoin | Hacked: Hacking Finance

The idea is to let humans write the contracts and let the backbone, TAL, do the processing. TAL can be used by programmers to create new types of contracts, as well. This is similar to the way that a web developer does not need to develop a custom web browser for each page he writes, but simply has to operate within the confines of web standards such as HTML, CSS, and Javascript to have his content properly display. TAL would be the browser in this respect, whereas the contracts themselves would be more like HTML (which is to say, very simple.)

Who’s Behind BOSCoin

The BOSCoin firm itself is headed up by Changki Park, a veteran of Samsung, who has worked in digital financials before. He founded Paxnet, which is an information portal for investors in South Korea and relatively successful. Their current stock value is over 6,000 KRW (over $6) with a market cap of 77 billions KRW on KOSDAQ, South Korea’s version of the NASDAQ.

Yezune Choi is the inventor of the Trust Contracts and the apparent brains of the operation. With 20 years experience in software development, he appears to be a stable and solid member of the team. A bit more research reveals that a few years ago he was involved with a Litecoin-based cryptocurrency called Suwoncoin. It appears to not have gone very far, and perhaps this is what led Choi to create something unique.

Aston Seokhyun Nam, Billy T. Kim, Ji Heon Yi, and Mino Choi are other developers who will work under the direction of Mukeun Kim. Kim is credited with creating a mobile solution for Yuanta Securities Korea. This might bode well for the ease-of-use factor involved in BOSCoin, as those with experience in mobile development are far better adjusted at avoiding the pitfalls of a bad user interface.

Investment Information

The aforementioned all appear to work for the BOSCoin Foundation. This foundation will receive 8% of the ICO coins that are to begin being sold on May 10th. Another totally 8% will go to members of the team individually. 26.8% of coins that are for the ICO were already sold in a more than $2 million pre-sale.

ICO Analysis: BOSCoin | Hacked: Hacking Finance
The ICO begins May 10th. The opening price is about 2,500 Satoshi (.00002500). Presumably only Bitcoin will be accepted for this ICO. You can go to BOSCoin.io to register an account at some point before then.

The Verdict

There is a lot to like about BOSCoin. The need for a user-friendly smart contract system presents a market with an awful lot of opportunity. One drawback is that the existence of Ethereum and its success in the market means that people may choose to develop on it instead, for fear of betting on something that could fail. But BOSCoin is user-friendly at the core, whereas Ethereum requires additional layers in order to be as much.

If BOSCoin follows through on all its stated goals, its potential for success as a competitor to Ethereum and other smart contract plays is high, though it’s difficult, from here, to see it ever becoming the dominant mode.

A self-reward of any more than 10% always lowers the evaluation of this author. In this case, BOSCoin is taking 16% away from the public pool, off the top. This is not the worst we’ve ever seen, but it’s perhaps a little suspect.

Stardeq, however, is an interesting application that may see some wide adoption from everyday people. People who have no understanding of the technology but do know their celebrities might really latch on to something like Stardeq. That they are launching it concurrently with BOSCoin, as well as Delicracy, which could see adoption among non-profits and even governmental organizations, is a big plus.

Thus, the rating here is going to have to be a 5.7. The author certainly wouldn’t invest a full coin unless he had some idea he wanted to develop on OWLChain and wanted a full node for its purposes. It’s not the best offering we’ve seen recently, but it’s definitely one to watch. There’s a good chance, like most ICOs, that after the coins hit the open markets their value will drop until more good news and solid services are released for the platform. This is usually a good opportunity to pick such coins up at a discount. Always remember that the floor on a cryptocurrency is not what someone is charging you for it, but what someone else is willing to pay for it.

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Onecoin Sends Lawsuit Threats to Media and Whistleblowers – The Merkle

OneCoin has been quite a controversial topic in the cryptocurrency community. After a recent arrest in Mumbai, which resulted in 18 OneCoin representatives arrested and $3 million seized, it seems that the scheme is starting to issue legal threats to publications and writers. One such person to receive a legal threat was Bjorn Bjercke, a blokchain professional from Norway. The cease and desist letter threatened to sue Bjercke unless he withdrew his statements, youtube videos, and articles.

Bjorn Bjercke was offered a job at Onecoin back in 2013 when he worked at CEO of RightIT – a bitcoin mining consulting company in Norway. He told behindmlm that Asenshia approached him regarding a C level position:

We are currently working on a C Level search that may interest you. Can you suggest when you may be free for a call and the best number to reach you on?

The annual salary for such a position was $2.5 million. However, once Bjercke realized that he would be working with OneCoin he turned down the position. In the process of listening to all the details about the job, the blockchain professional realized that OneCoin was using a simple SQL database to “store” their tokens. It didn’t take long for him to release that information to the public.

According the behindmlm, there are talks that OneCoin did hire an actual blockchain developer to set up a ledger for the company. However, it still doesn’t change the fact that there wasn’t a blockchain to begin with.

Bjercke wasn’t the only one to receive a threatening letter, a Bitcoin journalist from Germany writing for Coinspondent also received a legal threat from OneCoin. According to Friedemann Brenneis – the journalist in question – OneCoin lawyers were irritated by an article he published. In the article, Brenneis pointed out two publications by BaFin (the German banking watchdog) which criticized OneCoin.

After the wave of legal threats were sent, most of the users on the receiving end decided to retract their statements and remove the content. However, a few decided to stand up to OneCoin and fight them in court if it gets to that point. It is still unclear whether or not any of the journalists will actually be sued as the only received threats of litigation so far.

Unfortunately, since OneCoin is quite a large organization they have a large legal fund. While OneCoin may not be able to win the libel and defamation cases, they can use stall tactics to bleed the defendant’s dry. That is a common strategy used by entities with large sums of cash to make others with less resources comply. Only time will tell whether OneCoin’s threats are legitimate or not, however, so far we haven’t see any libel lawsuits filed by OneCoin lawyers.

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