Will BlockChain Hard Forks Ever Be Safe?

Hard Forks

Hard forks don’t have the best reputation, among the blockchain community.

One of the most intuitive approaches to upgrading the blockchain is also deemed the most dangerous. Blockchains are built on common rules and the easiest way to improve them they’ve found to-date are these forks. Developers have found the execution of these hard forks to be quite challenging.

While there have been some serious improvements since the hard fork debacle that split ethereum’s blockchain in two last year, developers are continually testing to improve the process. They want to gain a better understanding of the entire process to make each previous mishap a thing of the past.

Not all blockchains struggle with these transitions and even implement them on a regular basis. The anonymous cryptocurrency Monero is one that has them scheduled regularly. Cryptocurrency developers with a more conservative view agree this practice might be something more common in the future.

Bitcoin Cash has two hard forks on their horizons after they successfully split from Bitcoin in August. Both of these updates to their blockchain are scheduled to take place within the next two months.

Hard forks are becoming the new norm but that doesn’t stop developers from debating when they are “safest” to be implemented and how to alleviate their side-effects.

Last year in the Ethereum hard fork, users and companies lost money because of the sudden creation of two chains.

With this mechanism increasing in popularity over the ecosystem, developers are hard at work trying to make them smoother and safer to ensure users don’t lose any funds.

Protecting money

The big issue dangling in the air is the “right” way to execute these hard forks.

The “replay attack” which causes the blockchain to split in two, confuses the users and the software on which cryptocurrency to follow. The user ends up accidentally sending cryptocurrency on two blockchains when it was only meant to be sent on one.

Bitcoin Gold, another hard fork projected to launch in 5 days, claims that it will add replay protection to its code. Bitcoin cash, Bitcoin’s first hard fork in August has already made changes that protect against the potential split.

SegWit2x is the best-known hard fork as it’s gained support from many of the bitcoin leaders but it’s still on the fence about this topic. Developers behind this controversial proposal believe implementing protection would deter users as they won’t want to take the extra step in making the upgrade. They strongly believe their new hard fork will become the new bitcoin. Different developers still have their own ideas on the best way to deal with these attacks.

Post-fork Uncertainty

Simultaneously, other developers insist that adding certain protection against replay attacks will ensure that users don’t end up confused and lose money.

Mark Erhardt, a BitGo engineer, explains that the copies of bitcoin end up being identical leading to them using the same address format. Unintentionally, coins get stuck in the process because the same addresses are used and are being sent between two networks.

Erhardt, who moderates the Bitcoin Stack Exchange, an active forum to ask technical questions about the protocol, mentioned he sees questions about wrong funds being sent frequently on the site.

If bitcoin cash is sent to a bitcoin address, it is still possible to recover the funds by importing the corresponding bitcoin private key into a bitcoin cash wallet. On the other hand, if a bitcoin cash user sends bitcoin cash to a bitcoin SegWit address, it might be “lost altogether,” he said.

In November, there is an anticipated hard fork and Erhardt thinks this confusion with bitcoin cash is a hint of what could come in future hard forks.

“There will be numerous incidents of users sending funds accidentally on both chains or from addresses of one chain to the other,” he told CoinDesk in his interview, adding that one way to get rid of this problem would be for future forks to use a different address format.

“I am expecting a significant increase in support requests,” he added.

Administrative questions

Yet, what’s less discussed is a way of wiping these attacks away entirely.

Luke Dashjr, a Bitcoin contributor, introduced a protocol that would make the blockchain naturally resistant to replay attacks, “hopefully ending the whole argument,” he wrote.

A bunch of different changes would need to be made to Bitcoin and the development of this of this caliber would take a decent amount of time.

Dashjr told CoinDesk that the change is “not likely” to be implemented with the Segwit2x fork, which is still likely someday in the future, t least if they continue with the hard fork methods.

There are also greater administrative questions and concerns.

Bitcoin and the blockchain is a system in which no one single person is supposed to have all the power. The main bulk of the debate with Segwit2x is that each side is in a power struggle for control on the technical direction in which Bitcoin is going. Due to these opposing opinions on systems, there is fear one group might become more influential.

MimbleWimble, who is launching a new blockchain next year, are having the same discussions amongst their developers as they plan on finally rolling out their new cryptographic tricks and are able to put them into practice.

As a safeguard against unexpected technical issues that might arise after their launch, MimbleWimble developers are considering the idea of allowing hard forks for a brief amount of time.

“We’re a young project and we may make mistakes both with technical and governance rules,” MimbleWimble lead developer Igno Peverell told CoinDesk in their interview.

Their solution, if using the hard fork at all, is only using this method for two years at max.

There was obviously pushback on this idea. Andrew Poelstra, a Blocksteam mathematician, and earliest Mimble advocate urges that there is “rarely a need” to use hard forks and it poses a serious “centralization” risk.

After communicating his concerns, though, Poelstra states that the best approach to these implementations might not be so black-and-white. Therefore, he seems open to limiting the developers’ abilities to carry out the hard forks to a shorter time frame.

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Russia Joins List of National Governments to Test Blockchain Land-Registration Technology

Governments to Test Blockchain

Early next year, the Russian Government plans to begin testing a blockchain-based land registry system. They are joining a growing list of governments to test blockchain land-registration technology.

According to a publication by the Ministry of Economic Development, the Federal Service for State Registration, the Federal Tax Service and the Government of Moscow will assess the trial through July 1, 2018. The ministry will Submit and release a final report on the trial by Sept. 1.

The document translation is seen as follows: “The use of blockchain will be aimed at increasing the availability of information on the property registry, guarantees of protection of property rights, as well as the level of citizens’ trust in the sphere of turnover of real estate.”

Seventh months earlier, Prime Minister Dmitry Medvedev has asked two government ministries to begin looking into possible public-sector applications of blockchain technology.

At the time, he spoke: “We need to analyze in general, as far as it is applicable in our governance system- and public administration, and in the economy. I instructed the relevant ministries- the Ministry of Communications and the Ministry of Economic Development- to consider the possibility of using these technologies in preparing the program “Digital Economy.”

Russia’s announcement comes as no surprise as a plethora of other national and regional governments has announced their own land-registration projects. Specifically, Sweden, Ukraine, and the UK have all launched their own trials.

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NASDAQ Granted Blockchain Data Matching System Patent

NASDAQ

First filed in February, Nasdaq’s data matching system patent describes a data transfer and logging system, with a blockchain used to track trades and clearing positions. The original patent application was published in August and named Sweden-based Johan Toll and Fredrik Sjoblom as the inventors.

As of October 18th, the U.S. Patent and Trademark Office has awarded Nasdaq with an official patent.

According to specific texts, transactions within the system occur through a two-step process. Each transition will be logged in two blocks: the first that records the transaction as it comes from the source to the intermediary, and the second as it passes through that intermediary to its destination.

The biggest benefit of the system? Blockchain could now serve as a way to boost efficiency in clearing house processes.

The authors wrote: “It would thus be desirable to improve the speed and efficiency by which clearing and settlement, or both clearing and settlement processes may be performed in a computerized environment. Accordingly, it will be appreciated that new and improved techniques, systems, and processes in this area of technology are continually sought after.”

Since, Nasdaq has filed multiple intellectual property applications related to blockchain, including a proposed way to backup a blockchain-based exchange system. In fact, the rate of patent applications related to the tech generally has grown significantly in the past year.

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Global Blockchain Business Council Sees to Expand European Foothold

Global Blockchain Business Council

Announced on Oct. 18th, The Global Blockchain Business Council is planning to dramatically increase its presence in Europe. The technology advocacy group co-founded by blockchain services firm Bitfury Group will host a blockchain-focused summit at the European Parliament in Brussels, Belgium, on Wednesday in conjunction with Eva Kaili, a parliament member from Greece.

On such partnership, Kaili stated: “Forums like this pave the way for comprehensive collaboration between the private sector and regulators that will enable innovative platforms and smart solutions to be developed- maximizing the potential that blockchain technologies can offer.”

At the summit, the council sees to brief members of the EU parliament and representatives from the European Commission on the challenges and solutions offered by blockchain technology.

The conference is also the latest indicator that EU governing bodies have taken an interest in blockchain technology.

Jamie Smith, chief executive officer of the advocacy group spoke: “The EU is the world’s largest economic bloc and among the most important regulatory and rule setting bodies in the world, and its position on blockchain technology will have deep implications across all 28 EU member states.”

Further, the council also unveiled that it has finalized its incorporation in Geneva, Switzerland.

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Ethereum Delay Before Big Byzantium Fork

Byzantium Fork

Ethereum’s Byzantium fork might not go as smoothly as some might have hoped.

One of Ethereum’s biggest client’s, Parity, has yet to release the software that includes the protocol changes needed for the big shift. Parity Technologies supports roughly 25 percent of all Ethereum nodes and most major versions of the software have already published their releases.

The wait could foreshadow potential complications but it’s still too early to be concerned. In order for the hard fork to be successful on Ethereum, all nodes must have an updated software with the release that contains updated protocols and the block number of the hard fork.

These upgrades are triggered instantly across the network when the block number is reached unless the software hasn’t been upgraded.

Earlier in the week, Parity released two Byzantium-set releases that contained a “consensus bug” causing the networks to lose communication and split. Parity developers are currently hard at work to remove this bug from the code and get a release out in time for the Byzantium fork.

If the release isn’t out in time, it could mean a lot of further complications down the line. According to Ether Nodes, only 17% percent of Parity clients are running the new faulty Byzantium, while 80% have yet to even upgrade at all. It will be interesting to see closer to Sunday if they can get the problems fixed and how many will upgrade in time before the big fork.

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Bitcoin Pushes Nvidia To All Time High

Bitcoin

Nvidia Corp. (NASDAQ:$NVDA) is a giant in the semiconductor sector. The company has been absolutely on fire in 2017, with shares surging 71% in the last 6 months. While most would think that the tech giant would be somewhat losing moment heading into the last quarter, the stock’s uptrend is showing no signs of slowing down, with a trade value at its 52-week high: $174.56 a share.

What’s Fueling the Momentum?

The rise of Bitcoin is the simple answer, as it’s at a new all-time high, trading above $4,7000. The company has now put the entire cryptocurrency market cap at a staggering $170 billion. Nvidia and competitor Advanced Micro Devices (NASDAQ:$AMD) hold the two largest equities of the Bitcoin and Ethereum boom. Why? They create the high-powered chips that fuel the Bitcoin sector.

Let’s Put Numbers Into Perspective:

  • Apple Inc. (NASDAQ:$APPL) has a market cap of $846 billion
  • Facebook Inc. (NASDAQ:$FB) has a market cap of $497 billion
  • Bitcoin alone has a market cap around $70 billion
  • Since Bitcoin is considered a form of money, the cryptocurrency still has to make ways to the U.S. Dollar
  • However, the Federal Reverse valued the monetary base at around a cool $3.8 trillion

As if that’s still not enough. There’s another incoming massive wave for the cryptocurrency market: Blockchain. Blockchain is a decentralized public ledger that allows transactions to be made in Bitcoin. Analysts believe that Blockchain is the future of the currency, while Nvidia stock sees a moving average of $165.29 a share with increasing upside volume.

Whether you believe the hype behind Blockchain/Bitcoin or not, consider this: Burger King announced earlier this week that it was jumping into the cryptocurrency market by launching its own virtual coin called “WhopperCoin” in Russia.

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AMD Earnings Release Reflects Boom In Cryptocurrencies

AMD earnings release

Summary:

  • The AMD earnings release posted at the closing bell on Tuesday, July 25 topped analyst expectations
  • Adding onto the strong quarterly performance, management is anticipating robust results from the third quarter and fourth quarters as well.
  • After hours and next day trading have propelled AMD shares as much as 10%

Advanced Micro Devices (NASDAQ:$AMD) released their 2Q17 earnings results at the closing bell on Tuesday trading.

Put into perspective, analysts estimate AMD to report a break-even Earnings Per Share (EPS) on revenues of $1.16 billion. AMD far surpassed analyst expectations by reporting Earnings Per Share (EPS) and revenue figures of $0.02 per share, and $1.22 billion.

As AMD’s earnings release for 2Q17 exceeded analyst expectations, shares of AMD have surged more than 10% in after-hours trading, and are now up 7% from its previous day close in intraday trading.

However, Patrick Moorhead, founder and principal analyst of Moor Insights and Strategy, is especially optimistic about AMD, as he believes there’s still more room for the tech company to grow.

“AMD has a lot to look forward to, as none of their actuals incorporate sales of EPYC server parts, only limited sales of the new Radeon Vega and none of the Ryzen notebook parts.” Moorhead added that AMD’s positive operating profit was merely “icing on the cake.”

AMD’s management has also come out with guidance figures, expecting year-over-year growth in the third quarter to reach about 15%. When the 15% premium is applied to revenue reported in 3Q16, we arrive at an implied revenue of $1.50 billion for the quarter, which far surpasses the $1.39 billion analyst consensus that Thomson Reuters has reported.

Management has also provided annual revenue guidance, suggesting that growth could reach mid to high-teen percentages, which is an improvement from the low-teen percentages that were last expected. In contrast, Thomson Reuters had previous full-year revenue growth projections of about 12.8%

Although AMD’s revenue forecasts are rather optimistic, they’re supported by management expectations of a year-over-year decline in inventory for 2017. AMD noted during its earnings call on Tuesday that it’s ramping up production in order to replenish inventory that has been depleted by a surge in demand.

Shares of AMD rallied in the booming wake of digital currencies such as Bitcoin and Ethereum, when AMD reported to CNBC that it had received an influx of demand for its graphics cards. At the time, the company’s RX 570 and RX 580 models were running on extremely short supply, with major computer hardware retailers often sold out.

Although cryptocurrencies have recently experienced some volatility in value, CoinDesk reports that Bitcoin has still more than doubled in value this year, while Ethereum is up 2,400% year to date. In order to mine these cryptocurrencies, miners must use graphics cards from Nvidia or AMD, with the latter delivering superior performance.

Although digital currency mining was a key topic during AMD’s earnings conference call with Wall Street Tuesday evening, management has voiced that they are still prioritizing its core gaming market. However, the company does intend to closely monitor the digital currency market.

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More Crypto Bans: Lloyds Shuts Down Credit Card Purchases

Crypto Bans

Following recent announcements by JPMorgan (NYSE:JPM), Bank of America (NYSE:BAC) and Citigroup (NYSE:C), customers will not be allowed to purchase cryptocurrency on their credit cards. Lloyds Banking Group, the largest bank in the United Kingdom, has now joined its American counterparts in the “anti-crypto campaign”.

>>J.P. Morgan Chase and Bank of America Ban Credit Card Crypto Purchases

Credit cards issued by Lloyds — including those from Halifax, Bank of Scotland, and MBNA — will be blocked from making crypto purchases through an online blacklist that will flag sellers. However, customers will still be able to buy cryptocurrencies with their debit cards for now.

According to a CNN report, this decision was made by the U.K. bank to “protect its customers” from making speculative buys on volatile assets like Bitcoin.

In addition to Lloyds, financial services firm Virgin Money has also placed a cryptocurrency ban on its credit cards. Similar to Lloyds, Virgin was concerned with customers accumulating large amounts of debts following sharp declines in the cryptocurrency market.

Currently, the boundaries set against cryptocurrency are getting more and more rigid. Not only are banks now placing stringent rules on these digital assets, entire nations have also been cracking down heavily as well, most prominently China, South Korea, and more recently India.

On Friday, Indian Finance Minister Arun Jaitley said his country would “take all measures to eliminate the use of these crypto assets in financing illegitimate activities or as part of the payment system.”

>>Cryptocurrency Regulation Might Be Discussed at Next G20 Summit

With these bans, owning cryptocurrency in arguably two of the biggest western countries, has become more difficult.

Perhaps people will now start to invest more cautiously in cryptocurrency if they can’t use “borrowed money”. 

Who will be next to join the crypto bans? Only time will tell.

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BlackRock Keeping Cryptocurrency Under “Close Review”

BlackRock

BlackRock, the world’s largest investment company with over $5 trillion in assets under management, has become the latest prominent figure in the financial world to take a “not now but maybe later” approach to the fast-expanding cryptocurrency industry.

In an interview with Bloomberg TV on Monday, Isabelle Mateos Y Lago, Chief Multi-Asset Strategist at BlackRock, said that although the firm is not classifying cryptocurrency as “an investable asset” yet, it is keeping it under “close review” as it’s both new and interesting.

“The fact that interest has persisted despite these repeated hacks, despite regulators waking up and trying to catch up with this new development and gradually weeding out all the illegal uses suggests there really is something to it. Clearly, it is evolving very fast.”

She also reiterated that any G20 regulations would not change anything overnight, but it is a step towards maturity for the asset class.

>>United Kingdom Planning to Roll Out New Rules for Cryptocurrency Regulation

BlackRock

Her comments today are somewhat of a contrast to those made by BlackRock CEO Larry Fink a few days ago. At the 2018 World Economic Forum meeting held last week, when asked whether he’s ready to invest in this space, Fink described cryptocurrency as “more of an index of money laundering than anything more than that.”

But at the same time, Fink conceded that blockchain is “a real technology.”

>>Tax Season: Will You Have To Claim Your Cryptocurrency?

“There are lots of ways to get in; the question is, are they safe?” continued Mateos Y Lago when asked about blockchain and ICO investment opportunities. “If you’re a venture capitalist, yes there are ways, but if you’re a regular investor, it is a very hard thing to do because you can’t really put a fair value on any of these ICO’s or investment.”

However, she did conclude by acknowledging that this is a “space worth watching.”

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2014 Bitcoin Investor Tim Draper Has Made $120 Million Profits

investor tim draper

A flashback to 2014 will remind us of when billionaire investor Tim Draper predicted that Bitcoin price will reach $10,000 by the end of 2017. As of today, November 27th. 2017, Bitcoin is sitting at $9,771.  

Since 2014, Draper has been one of the most active investors in the cryptocurrency market, alongside Barry Silbert of Digital Currency Group. Within the past three years, Draper has funded both regional and international Bitcoin businesses, including the $1.6 billion Bitcoin brokerage and wallet platform Coinbase, $160 million South Korean cryptocurrency exchange Korbit, and Bitcoin service provider Coinplug. In other words, Draper has been one of the most successful early-stage investors in the Bitcoin and cryptocurrency market.

Draper stated in an interview in 2014: “I’m very excited about Bitcoin and what it can do for the world. Bitcoin is as big a transformation to the finance and commerce industry as the internet was for information and communications. If Bitcoin were here in 2008, it would be a stable source for our world economy. Everybody should go out there and buy a Bitcoin. Every investor who’s a fiduciary should at least be partially involved in Bitcoin because it’s a hedge against all the other currencies. There’s a whole ecosystem being built that’s going to make commerce much easier with much less friction.”

Draper has secured a $120 million profit from his bulk purchase of 30,000 Bitcoins in 2014.

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