Kevin Rose, founder of the famous Web 2.0 startups Digg and Rev3 Networks recently announced that one of his blockchain investments from his tenure at venture partner firm Google Ventures has raised even more money from some particularly unlikely sources: big banking. According to CNBC (and ostensibly confirmed by Kevin himself) the banking institutions include: Standard Chartered, Accenture Ventures, SCB Digital Ventures, the venture arm of Siam Commercial Bank, and Japan’s SBI Holdings.
That Ripple is raising is not unheard of – to date, they’ve raised around $93 million, and continue to try to journey towards profitability. This recent fundraising round is undoubtedly pushed forward on the recent news of the consortium of banks creating their own protocol based on Ripple (which I talked about a couple of weeks ago).
UBS, the Swiss bank, pioneered the “utility settlement coin” and has now joined forces with Deutsche Bank,Santander and BNY Mellon — as well as the broker ICAP — to pitch the idea to central banks, aiming for its first commercial launch by early 2018.
Ripple does contain some interesting properties presently unique to it’s protocol, which are nicely explained on WhatIsRipple.info. The first two things listed there are pretty common to any blockchain-based currency.
One of the more interesting principles, though, is the decentralized exchange/transaction facilitation.
There are many other payment providers on the Ripple network.
Brent is a customer of Justcoin, and his Justcoin balance is stored on the Ripple network alongside the Bitstamp balances of Alice and Bob.
Brent also wants to buy from Alice. However, Alice does not accept his Justcoin balance. She does not want to sign up with Justcoin to withdraw her money.
Bob does a lot of business with other Justcoin customers, and so he wouldn’t mind a Justcoin balance. Because Bob agreed to this, the network will automatically transfer some of Bob’s Bitstamp balance to Alice, in exchange for an equivalent Justcoin balance from Brent.
Bob acted as an intermediary and facilitated a payment between Brent and Alice, and two different payment providers. He can choose to charge a small fee for this service.
Because customers from different providers constantly want to send money between each other, there are many people like Bob on the network, and the market will keep the exchange fee low.
It’s early days with Ethereum, and this capability could easily be written into an Ethereum token, but currently only exists in Ripple-based blockchains. This another reason why banks are gravitating towards this protocol, since it has the built in functionality of handling the ownership and transfer of multiple financial instruments – even instruments that have their own blockchains.
As I talked about a couple weeks ago, the Ripple protocol isn’t without it’s downsides. Ripple has some fundamental flaws that must be examined and weighed both for the benefit of banks looking to move to this new technology as well as folks looking to innovate on blockchain technology in the crypto-sector. A report commissioned by distributed ledger consulting group R3CEV and authored by bitcoin developer Peter Todd has raised questions about Ripple and it’s ability to withstand the rigorous security demands of high-finance.
“Ripple still holds the majority of XRP, and it is in their favor for its value to increase,” says the report. “Ripple justifies XRP as an ‘anti-spam mechanism’ to deter transactions… However, as the volume of transactions increases the server load, transaction speed is slowed while the cost of the transaction and the amount of required XRP continues to increase.”
Todd next walks readers through a number of theoretical attacks that could take place against the Ripple protocol, discussing his estimates of the cost, scope, duration and probability of the scenarios.
Perhaps the most glaring, Todd’s writing infers, is the damage that could be done due to a “software backdoor”, as he finds that Ripple “does not provide a secure way to download any of their software”.
“This is a serious omission that has lead to significant monetary losses in the past. Ripple Labs should be following industry best-practice by signing git commits and tags as well as PGP signing their Ubuntu packages,” Todd added.
Todd ends by highlighting the potential real-world implications of these attacks in an elaborate scenario involving a dispute between the Russian government and Shell Oil, forecasting how these parties might attempt to achieve their aims through coercion on the network.
This is a common flaw in some implementations of cryptos as well – those looking to launch a new cryptocurrency and looking to avoid being 51% attacked during the nascent moments of the life of the coin may look to private mining or some other form of centralization, but in these cases, they’re creating honeypots for hackers as well as the key thing blockchain technology was designed to mitigate: central points of failure. As we discussed in the Bitfinex post a couple weeks ago, the common key component to every major loss, theft or hack in cryptocurrency history has been central points of failure.
My prediction is that this group of banks will move forward with their implementation of Ripple, and see some gains from using this new technology, and likely use it as a stepping stone to more open versions of the technology in the future. As I said, this is technology of particular importance to financial institutions, but it isn’t remarkably complex technology, and could easily be achieved on a more robustly supported blockchain like Ethereum, or even future updates to Bitcoin.
This week brings a birthday for London-based Bitstamp Bitcoin exchange, the company is turning five and is giving away a bunch of Nano Ledger hardware wallets. News outlet CryptoCoinsNews interviewed the CEO of China-based exchange CHBTC, who answered some questions about China and Bitcoin. The final auction for bitcoins sized in the Silk Road auction, although the turnout has been the lowest of all the auctions at only five bidders.
The blockchain technology fintech world is growing more interesting with Swiss bank UBS announcing a blockchain-based major currency remittance system, thus expanding the horizons for the use of blockchain in fintech.
For Bitcoin Core enthusiasts, version 0.13.0 of Bitcoin Core was just released (and is available for installation) with numerous updates and fixes to the protocol, but most importantly preparations for Segregated Witness–a proposed solution that will lower the data size of Bitcoin blockchain transactions and allow more to be stored in blocks.
Bitstamp CEO Nejc Kodrič. Image courtesy of Bitstamp.
Bitstamp turns 5, giving away Ledger wallets for its birthday
Monday marked the 5th anniversary of Bitstamp Ltd.’s launch. The London-based Bitcoin exchange launched in 2011 and now services customers across the world with offices in New York, London and Luxembourg.
To celebrate this grand event, the company is giving away 10 Ledger Nano Ses ($65 USD) and 100 Ledger Nanos ($33 USD). These are sleek, USB-compatible Bitcoin hardware wallets produced by San Francisco-based Ledger Technologies Inc.
Above is Bitstamp’s co-founder and CEO Nejc Kodrič speaking about the past 5 years and what it’s meant for the company.
Bitstamp’s legacy is not just as a Bitcoin exchange and institution that has survived the test of time when other exchanges have failed but that it has thrived. Bitstamp reached 1 million transactions by 2012, has processed over $12.8 billion USD since launch and became the first nationally licensed Bitcoin exchange in Europe this year.
CCN interviews Dawei Lee, CEO of CHBTC, one of China’s largest exchanges
CryptoCoinsNews published an interview with Dawei Lee, the CEO of CHBTC, China’s biggest exchange for Ethereum and fourth largest for Bitcoin. The company, founded in 2013, has become one of the leading cryptocurrency exchanges in China offering trades for Ethereum (ETH), Ethereum Classic (ETC), Bitcoin (BTC) and Litecoin.
Boasting about his company’s stats, Lee said, “CHBTC’s highest 24 hours trading volume was 5.431 million Etheruem (about $70.53 million) and 17.13 million Ethereum Classic (about $45.82 million), became the world’s largest Etheruem and Ethereum Classic trading platform. While Bitcoin’s average 24 hours trading volume is 120,000, which makes CHBTC rank fourth in Chinese exchange.”
In an age where many exchanges have suffered hacks and losses, Lee also proudly stated that CHBTC has operated three years without any security incidents. The company uses many industry-standard protections including offline cold storage, multi-signature wallets, SSL encrypted traffic, and two-factor authentication (2FA) with SMS and Google verification.
On the topic of China and cryptocurrency, Lee is optimistic. He says that China has continued to signal positively, such as positive announcements the Cyber Security bureau, the PBOC. However, he noted, that China still has no formal stance on cryptocurrency, digital currency, or blockchain technology since December 2013 (when the Chinese central bank released a statement that caused a lot of upheaval).
Lee also briefly touched on the “zero fee” trading model that many Chinese exchanges use, noting that international colleagues criticize the exchange for this model. In fact, many Bitcoin market tracking websites will dismiss volume and values from exchanges that run zero fee models because they feel it incentivizes spam trading to simply inflate volume without currency actually changing hands in a meaningful way.
Overall, Lee also has a very positive view of the Bitcoin industry and community and its future as well.
“The Bitcoin community is a resilient, vibrant and passionate force,” he said. “As we are a China-based member of this community many times we are not in tune with what is happening with the international community due to the language barrier, culture differences and the great firewall. But what unites us all is the potential to change the world for the better with this revolutionary technology that has been able to bring like-minded individuals from across the world together on a common mission.”
Final Silk Road auction sees only 5 bidders, sells at $1.6 million
According to CoinDesk, the United States Marshals Service (USMS) has auctioned off the final lot of bitcoins sized from the Silk Road bust. The bitcoins, totaling 2,700 BTC (worth approximately $1.58 million USD) sold to an anonymous bidder.
This auction drew only five bidders in contrast to the previous auction in November, which saw a turnout of 11 bidders. During that sale the lot of 44,000 BTC (approx. $25.4 million USD) with New York-based exchange itBit winning 5 lots (and other unknown bidders receiving the rest). Another known big bidder from previous USMS auctions is venture capitalist Tim Draper, who won all of the first auction and part of the second auction.
This is the fourth and final USMS auction of Silk Road sized bitcoins and the dwindling number of participants raises a number of questions.
Amid the possible reasons could be that previous auctions tended to see extremely large entities seeking chunks of cheaper bitcoins in order to fill coffers for trading and those may be satisfied currently. Another potential reason might be because Bitcoin market value has fluctuated since 2015, seeing a spike in April of near $800 (up from previous months around $450), which then fell to the current $583. While it’s clear that Bitcoin market value is up from 2015, the current volatility might make the currency seem harder to hold.
UBS announces “Utility Settlement Coin” using blockchain-based technology for fintech
Swiss bank UBS AG has developed what it calls a “Utility Settlement Coin” (USC) in conjunction with four other of the world’s biggest banks that uses blockchain-technology to allow financial institutions to settle transactions quickly.
According to Reuters, the function of USC is to act as a digital cash equivalent to each of the major currencies backed by major banks (such as dollars or euros) rather than using a decentralized currency such as Bitcoin. Holdings in USC would have parity with a deposit in the same currency, meaning that spending USC would be the same as spending the real currency it was paired with.
“Digital cash is a core component of a future financial market fabric based on blockchain technologies,” UBS Investment Bank’s head of fintech innovation Hyder Jaffrey said.
This represents one of the first developments of blockchain technology for fintech purposes that many experts in the field have suggested could have huge disruptive influence in that sector. Especially because blockchain-based technology automates large amounts of the underlying clerical and verification work that needs to be done in order to exchange securities or currency in traditional banking systems.
This means that not only would a blockchain-based coin (such as USC would be) would save a lot of money on administration fees it would also speed things up considerably. In the case of securities, major U.S. stock exchange company Nasdaq has been experimenting with blockchain technology for settlement allowing transactions to occur in minutes (faster than what the industry calls “T+3” or approximately three days).
The World Economic Forum recently published a report that blockchain-based technology will eventually occupy a central place in the global financial system. According to the report, 80 percent of the banks surveyed are currently in the process of developing some form of blockchain-based fintech technology. The WEF also concluded that blockchain fintech represents the foundation of the next generation of financial infrastructure.
For further analysis of this announcement from UBS see Mark “Dr. Bitcoin” Hopkins, who tipped SiliconANGLE to this news. Hopkins reveals that a report from 2015 from Santander InnoVentures claimed that blockchain-based technology could save the banking industry $15-20 billion in infrastructural costs by 2022. This announcement from UBS represents the cusp of big banks putting blockchain infrastructure to use and will show what sort of savings it can sustain.
With the preparation for segregated witness this update hopes to pave the way for increased capacity in blocks, the elimination of transaction malleability and new ways to upgrade Bitcoin’s scripting language with soft forks. (Note: Segwit is not supported yet on the mainnet Bitcoin network, this is only the infrastructure code to support it.)
Also included in this update is compact block relay code, a protocol to reduce peak amount of bandwidth when downloading new blocks by eliminating a major source of redundant peer-to-peer traffic for nodes; fee-based filtering, a mechanism allowing nodes to skip relaying unconfirmed low-fee transactions (that peers would ignore anyway); BIP32 HD wallet support for Bitcoin Core’s built in wallet allowing all keys for backup; and Child Pays for Parent (CPFP) transaction selection to incentivize miners to push priority for unconfirmed transactions by allowing children to pay increased fees for parent.
Much of this update includes highly technical, but very powerful, protocol changes (listed above) but the biggest takeaway is the preparation for Segregated Witness.
For over a year now, the Bitcoin community has been holding a debate about the future of the Bitcoin blockchain revolving around block size. As the network matures, Bitcoin blocks written to the blockchain have been filling up with transactions and eventually blocks will hit a set limit on the total size of transactions potentially slowing down the network (based on demand). Segregated Witness will work to shrink the size of transactions themselves in a block and therefore allow more transactions to be squeezed into a block.
Since a Bitcoin block is “discovered” by miners approximately every 10 minutes, the total number of transactions that can be placed into any one given block limits the speed that transactions can be processed on the network (leading to ever-increasing fees to get transactions confirmed quicker). This is especially true if some transactions must wait for later and later blocks to be confirmed. Larger blocks, however, would also be harder to transport and relay through the network and would take more space to store, both which would create their own new problems.
The debate still continues between those who desire to keep Bitcoin block sizes small (with the standard 1M size limit) and those who want to look to larger or unlimited block sizes to allow increased number of transactions per block.
According to a report in the Financial Times this morning, Santander’s long promised foray into blockchain technology was finally disclosed upon.
UBS, the Swiss bank, pioneered the “utility settlement coin” and has now joined forces with Deutsche Bank, Santander and BNY Mellon — as well as the broker ICAP — to pitch the idea to central banks, aiming for its first commercial launch by early 2018.
Bitcoin and related crypto-currencies primarily promise to cater to the so-called “un-banked,” so why would a major bank attempt to leverage blockchain technologies?
Simply put – it saves tons in administrative fees. Those who are regular users of Bitcoin (particularly for large-scale and/or international transactions) may not realize how much of a value they’re attaining at the expense of the banks. According to the report by Santander Innoventures that heralded today’s announcement, blockchain technologies could reduce banks’ infrastructural costs by $15-20bn a year by 2022. Simply put, there are enormous administrative staffing and technology requirements to reconcile international and inter-bank transfers.That’s why there’s been a number of coin, blockchain and crypto startups created to tackle this issue specifically (Setl and Ripple being two prime examples).
So what is Santander and the other banks using for this application?
One might imagine that they would try to use an already in-market solution, or even Bitcoin itself, but instead they’ve deigned to create a custom implementation of Ripple, a digital currency solution that’s been around for quite some time. Details on the banks’ implementation of Ripple are scant at this time, but from what we do know about Ripple, we can make a few sets of assumptions on how their system will work.
Ripple is a fundamentally different system of value exchange than Bitcoin or most other cryptos. Adam Levine of Let’s Talk Bitcoin summarized it neatly back in 2013. Some parts of Ripple have changed since then, but it’s essentially still an apt description of how value exchange compares and contrasts with traditional crypto:
For those of you not familiar with the Ripple system, it can be thought of as a parallel development to Bitcoin that tries to solve many of the same problems; trustless, bankless money transmission to anywhere in the internet connected world. Ripple goes about solving the problems slightly differently.
There are no miners; transaction validity is determined by a cascading consensus engine. Ripples themselves (XRP) were fully pre-mined and initially owned by Ripple Labs. They aren’t really traded as currency themselves, instead they are intended as an anti-spam mechanism – Like a stamp on an envelope with a check inside.
Where Bitcoin is an ownership based person-to-person system, Ripple is built on interconnected networks of p2p credit. Bitcoins are wholly owned with no risk of the redeeming party defaulting.
The Bitcoin system transfers ownership of one thing – Bitcoins. People can build layers on top of it to do other things, but at a protocol level it’s just bitcoins on the Bitcoin network.
What if you don’t want to send Bitcoins? Ripple is a good option. When you send US dollars through the Ripple system, you’re really sending IOUs that will be redeemed somewhere else in the system. Depending on your need to transact in non-Bitcoin terms, this might be important- or you might prefer instead the wholly-owned nature of cryptocurrency.
In some situations, Ripple sounds like it could work – and in the case of banks that don’t want to transfer vast sums of value onto a blockchain, perhaps a Ripple-like IOU approach is the way to go.
In my opinion, though, Ripple has some fundamental flaws that must be examined and weighed both for the benefit of banks looking to move to this new technology as well as folks looking to innovate on blockchain technology in the crypto-sector. A report commissioned by distributed ledger consulting group R3CEV and authored by bitcoin developer Peter Todd has raised questions about Ripple and it’s ability to withstand the rigorous security demands of high-finance.
“Ripple still holds the majority of XRP, and it is in their favor for its value to increase,” says the report. “Ripple justifies XRP as an ‘anti-spam mechanism’ to deter transactions… However, as the volume of transactions increases the server load, transaction speed is slowed while the cost of the transaction and the amount of required XRP continues to increase.”
Todd next walks readers through a number of theoretical attacks that could take place against the Ripple protocol, discussing his estimates of the cost, scope, duration and probability of the scenarios.
Perhaps the most glaring, Todd’s writing infers, is the damage that could be done due to a “software backdoor”, as he finds that Ripple “does not provide a secure way to download any of their software”.
“This is a serious omission that has lead to significant monetary losses in the past. Ripple Labs should be following industry best-practice by signing git commits and tags as well as PGP signing their Ubuntu packages,” Todd added.
Todd ends by highlighting the potential real-world implications of these attacks in an elaborate scenario involving a dispute between the Russian government and Shell Oil, forecasting how these parties might attempt to achieve their aims through coercion on the network.
This is a common flaw in some implementations of cryptos as well – those looking to launch a new cryptocurrency and looking to avoid being 51% attacked during the nascent moments of the life of the coin may look to private mining or some other form of centralization, but in these cases, they’re creating honeypots for hackers as well as the key thing blockchain technology was designed to mitigate: central points of failure. As we discussed in the Bitfinex post a couple weeks ago, the common key component to every major loss, theft or hack in cryptocurrency history has been central points of failure.
My prediction is that this group of banks will move forward with their implementation of Ripple, and see some gains from using this new technology, and likely use it as a stepping stone to more open versions of the technology in the future.
The typical cryptocurrency enthusiast goes through a few steps as they continue their journey, particularly if they see any early gains with their crypto investments.
Initially, they’ll put in some sum of money – usually small – into a cryptocurrency and see some amount of gains and get excited. They’ll either be excited by the gains themselves, or they’ll be excited by the process of learning how easy it is to do (compared to the mountain of challenges one has to go through in a more traditional investing situation).
Subsequently, if they’ve invested via an exchange, they may try their hand at day trading. If they invested by buying from someone in person, they’ll watch the price of the coin several times a day, perhaps obsessively with a dedicated screen, rejoicing and decrying minute moves in the market.
After burning out on watching the market obsessively, they settle on either buying and holding (and putting their head in the sand on price), or taking a measured approach to watching the price on a periodic basis.
I know this is the journey I took – and my third step included a detail that has become common amongst advanced bitcoin users: buy-and-replace.
Essentially, using a constellation of tools that allow me to easily buy and spend my bitcoin, I kept a relatively stable amount of bitcoin in my account by buying goods and services with BTC and then immediately re-buying that same amount. As I grew more comfortable with holding large amounts of money in bitcoin regardless of what the price per bitcoin was, I added another step to this – I’d buy-and-replace, but when I replaced, I’d buy whatever I spent plus an additional 10%.
Over the first year or so of doing this, I noticed that the amount of bitcoin I held grew rather quickly as compared to years past, as did the total value of the amount – which was particularly interesting considering that it was a bear year (that is a year where the price on average decreased over the course of the year).
I thought I had stumbled onto something unique, but my larger-than-expected gains were due to a time-worn technique called Dollar Cost Averaging (DCA). Dollar cost averaging is an investment technique of buying a fixed dollar amount of a particular investment on a regular schedule, regardless of the share price. The investor purchases more shares when prices are low and fewer shares when prices are high. The end result is that a disciplined investor can spend a sum of money spread out over time in a fluctuating market and net more value than investing a lump sum of the same amount.
I invited one of my friends (as well as my family’s financial adviser) David Salmon of Primerica over to the offices better explain the concept using a couple of analogies he uses when asked about the concept. He uses two stories to help explain it that are particularly illustrative, and can likely help you formulate an investment strategy of your own that will help you take advantage of fluctuations in the markets that will allow you to not sweat the small (and large) market changes that are all-too-common to cryptocurrency.
So last night, as my team was readying itself for one of the most well-attended #BigDNT presentations in memory, my attention was elsewhere, as one of the most precipitous price falls in Bitcoin history was underway. I posted to my Facebook account a quick update at the time:
So if you’re wondering why Bitcoin is dropping in price today (and why your other crypto portfolio is hurting as well), one of the leading American crypto exchanges has had a major hack, and has lost around $70-85 MM of user funds, according to reports on Reddit and Twitter.
Bitcoin will recover, but it’s unclear if Bitfinex (the affected exchange) will.
This further highlights the need for decentralized exchanges.
Technologies like Ethereum and OpenBazaar are the primary beneficiaries of today’s events (after the thieves themselves, of course).
Those are the hard facts. Here are some more:
Bitfinex was one of the highest volume crypto exchanges on the planet, and was based in Hong Kong.
They have temporarily ceased trading after the company reported a security breach that led to the theft of a large number of bitcoins.
The amount believed to have been stolen is 119,756 bitcoin, which at the time of writing is valued at $65.6 million.
Bitfinex said in a blog post that they were investigating the breach to determine what had happened, but they “know that some of our users have had their bitcoins stolen.”
Some of the blame almost undoubtedly rests with their security partner BitGo.
The theft itself is said to have been reported to legal authorities.
The market very quickly punished the Bitcoin price, dropping within hours of the news all the way to $465 per BTC before “dead cat bouncing” back well above 560. As of the time of this blog post, the price was steadily rising past $550 per coin.
What does it mean, though?
While this is certainly a highly significant event in the world of cryptocurrency, it’s not the most significant, it won’t be the last of its kind, and it will not kill cryptocurrency in general or Bitcoin in particular. The market capitalization of Bitcoin is nearly $9 billion, and $85 million only represents a small fraction of that.
There will certainly be many experts with very salient advice about what went wrong and how it could have been prevented, but the most fundamental thing to address in my opinion is the issue of centralization.
Bitcoin and most cryptocurrency was designed with many core principles in mind, and fundamentally these principles require decentralization. In the minds of the early founders of Bitcoin, decentralization represents the ability of Bitcoin to survive corruption, security threats, and “bad actors” like thieves and criminals (or more cynically, bad actors like regulators and administrators). Simply put, if you don’t have a central authority regulating and hoarding large pools of capital, you get rid of many of the existential threats that exist and threaten traditional monetary systems.
What’s interesting, though, is that while the means of decentralized transfer and maintenance of the system was built into the design of Bitcoin, one key piece was left out: the means of deriving market value or currency exchange. As such, to fill that gap, people and organizations started creating what basically look like traditional marketplaces – places where capital pools and becomes vulnerable in the typical ways that banks and other capital pools are vulnerable to bad actors and bad circumstance.
How does this benefit Ethereum?
This is why in my original post I said that this leaves Ethereum and OpenBazaar as the primary beneficiaries. Both of these technologies enable large-scale decentralized exchange. The technologies and digital organizations that enable this are still nascent and lesser known, but the concept is solid, and the outcome is real: trustless exchange of value in an environment less attractive to hackers. These large pools of capital are always going to be a honeypot for those that would like to make off with the money. In a decentralized exchange situation, you can store your own value in wallets that you control until it’s time to make an exchange, at which time the value exchange happens.
Any technology companies or cryptocurrencies that continue to adhere to the principles of openness, transparency and decentralization will be the primary beneficiaries of the natural evolution of this technology, and now is the tail end of the time to be considered a first mover in this space. It was in response to some of the large heists several years ago that OpenBazaar and other decentralized marketplaces were started. It won’t take too many more major heists like this to further push users towards experimenting and using as a natural course of things these decentralized technologies.
There’s been some interesting positive movement in the world of Ethereum, both locally in DFW as well as for the larger crypto markets. Just yesterday, Coinbase and GDAX announced support for Ethereum wallets and accounts on their web and mobile wallets – and last night at the weekly YoCoin meetup at Barista‘s event space, YoCoin made the announcement that they’re moving off the Scrypt algo over to an Ethereum based blockchain (the developers are doing a buy-back/swap).
As such, I was asked to do my Dr. Bitcoin thing and talk a little bit about what I knew of Ethereum and Turing-complete blockchains, which I enjoyed.
There’s a lot still not known by the general public about Ethereum and how it works tactically, so I thought I’d put together a brief tutorial for those that asked about how to download and install the Mist wallet (the name for the developer-supported wallet for Ethereum and Ethereum-based coins).
I’ll be adding a video tutorial and some additional screenshots for the YoCoin users as soon as I get the details from the developers. This step-by-step guide will get you as far as having your Mist wallet ready for action.
Update: Video walkthrough embedded below! Scroll past the video for written and illustrated instructions.
Head to the Download Page
Head to the “Github” repository. The only authorized place to currently download the Ethereum Mist wallet is right here. If someone tells you to download an Ethereum wallet, but sends you to another URL, it’s not the authorized place. The page should look like this one
Scroll Down to the Downloads
You’ll see a lot of different files listed. You’ll want to download the appropriate file that matches your operating system. Download the one labeled “Mist”, not Ethereum Wallet.
Save the File
Depending on your browser, it’ll look something like this.
Find the downloaded file
You should have a zip file in your downloads folder. Most operating systems know how to use this without any special configurations.
Extract the files on your computer
I like to create directories in my “Documents” folder to store downloaded software, but you may have a different way of doing things. You can easily do this in Windows by right-click dragging the file inside the zip file over to your Documents folder, like so. It’ll pop up a submenu to confirm – just say yes.
This might take a while.
There’s a lot of files.
Make it easy on yourself…
… and make a shortcut. Just right-click drag the Mist.EXE file in the newly created folder over to your desktop, and it’ll give you the submenu you see below. Select the option “Create Shortcuts Here.”
Click Confirm a few times.
You’ll see some pop-up windows about security and ToS acceptance. Say yes on both.
Setup and install.
You’ll a pop up window asking if you want to use the test network or the main network. Use the main network.
Password Creation
You’ll want to create a password. Use something easy to remember but hard to guess.
Wallet Import
You’ll be asked to import your old wallet. If this is your first time setting up, just ignore this screen.
Add some ETH and you’re Good to Go
Eventually you’ll need to load up a little bit of ether so that you’ll have what’s called “GAS” to cover your transaction fees (which you’ll be charged any time you send ETH or YOC. You can skip that for now.
On Thursday evening, I was invited to give a brief talk at the meetup for a new cryptocurrency, YoCoin. I was first introduced to the group by happen-stance, when two locals from the marketing team for YoCoin came in to make a Bitcoin purchase. I’ve had the good fortune in the intervening time to get to know them and investigate the cryptocurrency they’ve been working on.
Initially, I wasn’t particularly interested in yet another alt-crypto. There are so many of them out there, it’s impossible for even someone who monitors the alt world full time to keep track of much more than their names. I did go and check out YoCoin after they told me a bit about their business during one of the times they came in to buy from me, and I discovered that while it was a mostly unremarkable scrypt currency algorithmically, the adoption curve was quite impressive.
What piqued my interest is why it shot up so high, so I talked to Bruce and Sam, the gentlemen marketing the coin locally. The thrust of their approach has to do with focusing on merchant and user adoption outside the bubble of crypto and finance geeks who usually go in for these things. That’s interesting to me, because that’s essentially what’s been cryptocurrency’s biggest issue: they’ve usually a rock solid technology-base, but no way to market it to people who aren’t crypto-anarchists or grey-market enthusiasts.
In a world with thousands of scrypt-coin clones, what’s interesting about YoCoin is it’s team and their commitment to market smarter (read: outside the bubble) and develop better UX and UI than what cryptocurrencies are generically known for.
I’ve been hoping for local Dallas action in the crypto space, and now we have it. I’ll be watching YoCoin closely to see how it evolves.
[Disclosure: YoCoin is in talks with Barista Ventures (where I’m a Venture Partner) to execute an app development deal. YoCoin is also a frequent buyer of Bitcoin from Roger Wilco, my new content marketing startup.]
Fadhe Chehade, former CEO and President of Internet governance body ICANN, has sent ripples through the community following a recent decision to be the frontman a new Chinese government program to franchise their way of managing internet access to the world.
Chehade is probably familiar to many of you in my circles, as he was a guest on my program, theCUBE back in January of 2014, when we were attending and covering an event on Internet governance and economics.
I picked up this story over at SlashDot and The Register, who framed it in an overwhelmingly negative light. And who can blame them? Not only is China at the helm of this initiative to reformulate internet governance, so is Russia and “other authoritative governments.” This isn’t the stuff that dreams are made of. The headline from that interview was that “the way we govern the internet is not tenable.” A real cynic would say that Chehade, in our 2014 interview, was telling us ‘stop me, I’ll kill again!’
“The Internet is many many networks — what makes it one is a logical layer on top of the physical layer,” Chehade went on to say. “That logical layer includes what ICANN manages, names, numbers protocol parameters. That layer has to remain strong and in tact, in order for the physical infrastructure to be unified before we get to the application layer and content layer. If we lose that, and suddenly governments decide they will create their own numbering or naming system. A country like China, would name introduce to the world a Chinese Internet route.”
In the same interview, Fade told us that he saw the next eighteen months as critical, giving a “pinhole in a pipe analogy.” In his analogy, all it takes is a pinhole in a plumbing pipe to bring down the infrastructure of a house, and he saw the next eighteen months forward from January of 2014 as critical to maintaining the current approach to internet governance (that is to say, when you type in a thing that you’re looking for, you specifically get that thing – not a filtered or different thing that someone else wants you to see instead).
It was difficult to discern, knowing now what we do, whether he was simply emoting the sentiment of ICANN, or speaking from personal conviction as to how the internet works.
It’s somewhat disheartening, given all the excitement percolating around blockchain technologies, that Fade decided against pursuing one of those ends. NameCoin is a great proof of concept way forward for solving the perceived problems with ICANN specifically and Internet governance in general. The better angels around the world decry ICANN because of a US-centric worldview, and given the revelations by Edward Snowden in recent years, that the US has everyone’s best interests at heart is no longer the prevailing theory.
I think the true fear in Chehade’s decision to head this new organization is that every negative prediction he made to the audience at #MITECIR is now come to pass.
Michael Dell on theCUBE with John Furrier and Dave Vellante at DellWorld 2012.
Maybe I nicked this statement from someone, or maybe I come up with it, but a phrase I use a lot when I talk to people about Digital Autonomous Organizations is “.. the economy and the state are engineering problems, not political ones.”
In late 2012, Michael Dell came on my show(theCUBE) to talk about the changes in the industry and at Dell, and had this to say:
“When I look at the big opportunities that exist in the world and the big unsolved problems, be they in medicine, in education, in energy or the environment, I think that these are problems that technology will solve.”
“I think about the innovation that’s occurred over the last couple decades that I’ve been in this industry where IT used to be this sort of back room activity with a couple of guys wearing pocket protectors involved in, and now you essentially can’t even run a business if technology isn’t involved.”
A few months after he said this on our show, he went on to take Dell private, a move that’s allowed them to go deep into bleeding edge technology moves like Bitcoin and 3D printing.
Dells moves in 3D printing have forced competitors to get serious about the business as well (like HP).
We might be at the knee of the curve here; Dell’s acceptance of Bitcoin just might push other major enterprise players to start thinking about Bitcoin in the same way.
[Originally posted by me to /r/bitcoin. Feel free to upvote it there if you like it.]
A common misconception is that Bitcoin is an anonymous currency. What it offers is a kind of ‘pseudo-anonymity’ (or ‘pseudonymity’), which means that if the someone were inclined to trace Bitcoin transactions or investigate Bitcoin addresses, they can do so just by looking at Blockchain.info, BlockExplorer, or any a number of open source tools used to perform forensics on the blockchain.
The blockchain is a ledger wherein all Bitcoin transactions are recorded. It offers pseudonymity, since people’s names and addresses aren’t reflected in the ledger, but the Bitcoin addresses can still be tied to a person through good old detective work. It might entail a little digging around, but as Silk Road founder Ross Ulbricht was unfortunateenough to discover, the owner can certainly be traced.
A new Bitcoin wallet, ‘Dark Wallet’, aims to protect the identity of users by taking pseudonymity to anonymity. Dark Wallet is a project created by Cody Wilson and Amir Taaki. Wilson gained attention last year when he fired the first-ever printed gun, while Taaki is the anarchist developer behind the DarkMarket, a decentralized online black marketplace that aims to become the next Silk Road.
Wilson and Taaki launched an Indiegogo campaign last October for their Bitcoin wallet, and it was quickly funded in cash and Bitcoins. Dark Wallet can be downloaded and run with the Chrome browser.
Just go to https://github.com/darkwallet/darkwallet, click ‘Download ZIP’, unpack the ZIP file, go to ‘chrome://extensions,’ enable Developer Mode, click ‘Load unpacked extension’ and select the unzipped folder. This is a pre-alpha preview which means users can expect glitches and instability from the software.
How Dark Wallet works
So how can software protect one’s identity? Dark Wallet uses a technique known as CoinJoin, which has been around since the early days of Bitcoin. CoinJoin makes it possible to anonymize transactions by combining random Bitcoin transactions so the blockchain records two transactions as one. Before, you’d have to have coding skills or crypto-prowess to use CoinJoin, so not everyone enjoyed the anonymity it offers. Dark Wallet makes it simple for any Bitcoin user to mask their identity.
For example, Mike is buying a My Little Pony stuffed toy from an online seller, and at the same time, I could be buying a truck of weapons-grade plutonium from an online black market to power a new alternative-energy car battery I’m working on. Both Mike and I use Bitcoins to pay for our purchases. What Dark Wallet will do is combine the two transactions so it will be reflected as one on the blockchain (along with many other wallet users). This makes it impossible to determine who bought what. Dark Wallet will also allow users to run CoinJoin even when they’re not making any purchases or payments, in order to mix their Bitcoins and send them to another address owned by them. This makes it harder to determine the identity of Bitcoin owners.
The more CoinJoin is used, the harder it will be to trace who owns the Bitcoin.
“When you start to join transactions, it muddles them,” said Taaki. “As you start to go down the chain, you can only be 50 percent sure the coins belong to any one person, then 25 percent, then one out of eight and then one out of sixteen. The conditional probability drops very fast.”
Enticing for criminals
Since the inception of Dark Wallet, Wilson has been plagued with questions as to its purpose. Dozens of critics have suggested it will make money laundering even easier, encouraging more illegal activities.
By telling people you can buy things using Bitcoin and Dark Wallet anonymously, the obvious fear is it will be used to buy illicit drugs, illegal ammunition, or even fund pornographic sites catering to pedophiles.
Back in December, Jon Matonis, executive director of the Bitcoin Foundation, said in an interview that Dark Wallet’s effort is consistent with the foundation’s goal of promoting and developing Bitcoin into a private, government-free currency, but admitted that he is concerned with some of the aspects of the Bitcoin wallet. For one thing, even the name “dark wallet” has negative connotations which could cause people to assume it’s been designed for illicit activities.
Because of these concerns, some are wondering if the authorities may attempt to prevent the launch of Dark Wallet.
Stephen Hudak, spokesman for the U.S. government’s Financial Crimes Enforcement Network, declined to comment specifically on Dark Wallet, but stated that agency is “well aware of the many emerging technological efforts designed to subvert financial transparency.”
“It’s certainly our business to be interested and vigilant with respect to any activities that may assist money laundering and other financial crimes,” he added.
The ‘F’ word
Wilson knows that Dark Wallet will probably be used for illegal transactions like the purchase of drugs, but that’s not his intention.
In a previous interview, Wilson insisted there’s a need for anonymous cash online, and stated that, “It’s not that I want you to buy drugs. It’s just that I think you should have the freedom to do it.”
Yup, the ‘F’ word. Freedom. That’s what Dark Wallet is attempting to offer to Bitcoin users. Skeptics may wonder what anonymity has to do with freedom.
Sun Microsystems co-founder (and @theCube alumn) Scott McNealy famously said once that “You have zero privacy anyway. Get over it.” Much later on, Google CEO Eric Schmidt said “If you have something that you don’t want anyone to know, maybe you shouldn’t be doing it in the first place…”
The problem is that in these modern days, one never knows when one is breaking the law.
An interesting thought exercise is to attempt to imagine how many people (experts, if you will) do you think you’d have to gather into a room to understand the totality of just federally enforceable American law? How many people (again, trained experts in the law, so we can somewhat reduce the number) do you think would be required to understand the totality of federally enforceable American law that was passed for 2013? What about the totality of the tax code that was put into place in 2013?
Ignorance of the law excuses no man, as the axiom goes. I wonder if you can say that still truly applies when the number of experts required to know the totality of the law is hard to imagine, even for those with large imaginations?
When thought about in these terms, it’s not difficult to imagine how having a way to completely obfuscate one’s financial path can be handy. By providing a way to make anonymous purchases, people will be free to buy things they have longed for without worrying about being judged or prosecuted for committing a crime of ignorance.
The goodness that anonymity offers should not be overshadowed by how others can use it for wrongdoing.
Kevin Rose, founder of the famous Web 2.0 startups Digg and Rev3 Networks recently announced that one of his blockchain investments from his tenure at venture partner firm Google Ventures has raised even more money from some particularly unlikely sources: big banking. According to CNBC (and ostensibly confirmed by Kevin himself) the banking institutions include: Standard Chartered, Accenture Ventures, SCB Digital Ventures, the venture arm of Siam Commercial Bank, and Japan’s SBI Holdings.There are many other payment providers on the Ripple network.
Bob does a lot of business with other Justcoin customers, and so he wouldn’t mind a Justcoin balance. Because Bob agreed to this, the network will automatically transfer some of Bob’s Bitstamp balance to Alice, in exchange for an equivalent Justcoin balance from Brent.
So last night, as my team was readying itself for one of the most well-attended #
