Proof of Keys Explained: Bitcoin’s First Planned ‘Bank Run’ Is Today

Proof of Keys Explained: Bitcoin’s First Planned ‘Bank Run’ Is Today

Do your bitcoins really exist? The answer might seem like an obvious “yes,” but the brewing “Proof of Keys” movement, launching today, argues the answer is not so clear. How in control a person is of their coins depends on where and how the bitcoin is stored. So participants will be taking their money out of third-party bitcoin services, moving it to accounts only they themselves control. “We’re going to withdraw all our bitcoin from any third party services just to prove that they’re there,” said Trace Mayer, Proof of Keys leader and bitcoin podcast host, in a video announcing the project, adding: ”It’s on the blockchain or it didn’t happen.” As described by Mayer, the motivation is simple. Many bitcoiners leave their bitcoins on exchanges. This is risky, as millions (er, billions) of dollars have been stolen from exchanges by way of hacks over the years. Not to mention, it means users don’t really have full control over their money — a fact many might not realize. The movement debuts on the 10th anniversary of bitcoin’s first-ever block, the day bitcoin’s anonymous creator turned his or her theory into a living, breathing digital currency. Proof of Keys has been compared to a “bank run,” where a flood of people withdraw their money from a bank, worried that the institution is going under. But unlike old-fashioned runs, this one is pre-planned and deliberate. If enough people pull their money off exchanges, advocates argue, it’ll expose, and perhaps topple, the ones that are operating like fractional-reserve banks (i.e. keeping only a sliver of depositors’ cash on hand and available for withdrawal). Big names such as former Symbiont president Caitlin Long, smart contract pioneer Nick Szabo, Coinbase CTO Balaji S. Srinivasan, and CoinKite CEO Rodolfo Novak have all etched the Proof of Keys symbol prominently in their Twitter profiles. Even bitcoin companies like Shapeshift and Casa have thrown their support behind the effort. Taking control So, what do participants have to do? Not much or a lot, depending on the user’s point of view. The first task is for users to take control of their private keys. While bitcoin is “trustless,” most users hand their bitcoin to a third party who takes care of it for them.…

10 Years Ago Bitcoin’s Genesis Block Changed the Course of History

10 Years Ago Bitcoin’s Genesis Block Changed the Course of History

Blockchain Over the last 12 hours, cryptocurrency supporters across the globe have been celebrating the 10-year anniversary of the Bitcoin genesis block which was mined at approximately 18:15:05 UTC. Die-hard crypto enthusiasts believe the software released by the anonymous creator Satoshi Nakamoto has forever changed the way people look at money, and that the technology’s effect on the global economy will transform the course of history. Also read: 2018’s Top Cryptocurrencies Ranked by Github Activity 10 Years of Dust Sent to the Genesis Block’s Wishing Well On Halloween 2008, an anonymous developer named Satoshi Nakamoto announced a paper called Bitcoin: A Peer-to-Peer Electronic Cash System. Two months later, on Jan. 3, 2009, the network officially launched when Nakamoto mined block 0, bringing the Bitcoin blockchain into life. The genesis block is special for a few reasons as it has characteristics that the thousands of subsequent mined blocks do not. For instance, the genesis block is hardcoded into a great majority of software clients that use the chain for reference and for infrastructure. Furthermore, at the time of creation, block rewards gave miners 50 BTC, but the genesis block is an unspendable sum that will forever contain those 50 coins. To this day nobody knows whether Satoshi made these coins unspendable for any specific reason. Over the years, many fans have also sent funds to the genesis address, and at the time of publication, there’s a total of 66.9 BTC sitting there. Scrolling through the list of dust transactions sent to the genesis address, one can find messages to Satoshi asking the creator for coins, as many of the senders hoped the creator would send additional funds back to them. The original cover from The Times on Jan. 3, 2009.Like the Beatles, Satoshi Left a Backward Message in Block 0 Another interesting fact about the genesis block is that many historians believe it was mined with a Windows-powered PC. Bitcoin version 0.1, the first original implementation, is written in the coding language C++ and was a Windows GUI application at first. This means the first block Satoshi mined was processed solely with a PC’s CPU. People mined BTC this way for two years after block 0 was created. Satoshi’s message located in block 0. The genesis block’s…

Bitcoin Turns Ten on Anniversary of Genesis Block

Bitcoin Turns Ten on Anniversary of Genesis Block

Today, Jan. 3, marks ten years since the creation of the very first block on the Bitcoin (BTC) blockchain. Known in more technical parlance as a “genesis block,” the first block on a blockchain is unique in that it — logically — contains no reference to any previous blocks, and is always hard-coded into the network’s software, establishing all of the necessary variables required to create the ensuing blockchain. Whereas Bitcoin’s theoretical foundations were laid with the publication of the Bitcoin whitepaper on Oct. 31, 2008, Jan. 3, 2009 heralds the first practical implementation of the world’s first cryptocurrency — the realization of a peer-to-peer and cryptographically secure system for transacting in digital cash. As data from the Bitcoin Block Explorer tool indicates, block 0 — counted as block 1 in very early versions of the blockchain — was mined on Jan 3, 2009 at 1:15:05 p.m. EST, with a reward of 50 BTC. Today, the reward would be worth about $191,350, but at the time its value was inestimable — Bitcoin’s first ever recorded trading price was noted on Mar. 17, 2010, on the now-defunct trading platform bitcoinmarket.com, at a value of $0.003. The cryptocurrency’s inventor — the still-mysterious person or collective identified only as Satoshi Nakamoto — embedded the hexadecimal code of the genesis block’s coinbase with an encrypted Times headline from Jan 3, 2009, referencing the bailout of the United Kingdom’s banks. When decoded, this covert nod to the economic and political context that gave the impetus for the coin’s invention reads as follows: “The Times 03/Jan/2009 Chancellor on brink of second bailout for banks” The aftermath of the Lehman Brothers bankruptcy in fall 2008 had been the tipping point for economic turmoil, global recession and, subsequently, the controversial “too big to fail” rationale for state intervention. In the midst of this context, Nakamoto’s innovation proposed a bold alternative — a disintermediated, non-state-controlled digital exchange and store of value — to the ailing incumbent system. Ten years on, the mystery enshrouding Bitcoin’s inventor remains as impenetrable as ever. Those both within and without the crypto community began attempting to determine Nakamoto’s identity as early as October 2011, just a few months after the mysterious figure first went silent.   As of press…

Overstock Will Pay Some of Its 2019 Taxes in Bitcoin

Overstock Will Pay Some of Its 2019 Taxes in Bitcoin

Digital retail giant Overstock.com plans to pay at least some of its taxes using bitcoin this year. The company announced on its investor portal Thursday that it would pay some of its state commercial activity taxes in Ohio using bitcoin, becoming the first major business to do so. Ohio announced last year that it would allow businesses to pay taxes in bitcoin, though the payments would be converted into dollars by a third party before the state accepted them. In a statement, Overstock CEO and founder Patrick Byrne said the company was “proud to partner” with the Ohio government “to help usher in an era of trust through technology for our nation’s essential financial systems,” adding: “We have long thought that thoughtful governmental adoption of emerging technologies such as cryptocurrencies (when accompanied by non-restrictive legislation over these technologies) is the best way to ensure the U.S. does not lose our place at the forefront of the ever-advancing global economy.” Ohio announced in November 2018 that it would accept bitcoin for tax payments through a three-step process, where businesses sign up on the OhioCrypto.com portal, enter tax details and transmit the payment using a compatible bitcoin wallet. Bitcoin processor BitPay would then convert the cryptocurrency into a U.S. dollar equivalent, which would be passed to the office of the Ohio Treasurer. Ohio state treasurer Josh Mandel praised Overstock’s move, saying the company’s “embrace of blockchain technology was ahead of its time” in a statement Thursday. Overstock has been accepting bitcoin as payment for purchases since 2014, and a subsidiary, Medici Ventures, acts as an investment wing in blockchain startups. The company is also developing a security token trading platform called tZERO. Byrne has said he plans to sell the flagship retail business early this year, which would leave the company with Medici and a chunk of change. Overstock did not respond to a request for comment by press time. Patrick Byrne image via CoinDesk archives

Analysis: Why Crypto Derivatives Are Considered Dangerous

Analysis: Why Crypto Derivatives Are Considered Dangerous

Finance There is a new generation of cryptocurrency-based derivatives being launched in 2019 which could significantly increase overall trading flow and attract a new breed of investors. Derivatives are not without their controversies however. Over the years, they have acquired a negative reputation in some quarters, exacerbated by movies such as “The Big Short.” Also read: Market Slump Puts Crypto Derivatives in the Spotlight Understanding the Danger of Derivatives The Big Short, 2015.Derivatives are financial securities that are based or tied in some way to another asset. The majority of derivatives are sold over-the-counter (OTC) and the primary danger associated with trading these is counterparty and liquidity risks. The movie “The Big Short,” released in 2015, is useful in understanding the hazards of derivatives. But in that particular case, the mechanism under scrutiny was credit default swaps (CDS), a type of derivative which helped upset the global economy in 2007-2008. Due to the opaque nature of derivatives, as well as other inherent risks, world leaders have been taking increased interest in the products.  Currently there are a number of major players in finance offering crypto derivatives. These include NASDAQ, Cboe Global Markets, and Goldman Sachs. Lars Seier Christensen, chairman of Concordium and founder of Saxo Bank, has said that the introduction of new cryptocurrency-based derivatives in 2019 will hinge on the overall trading flow. Christensen said: “If the primary cryptocurrency exchange market continues to be in trouble there will be little appetite for launching new trading vehicles. On the other hand, if trading picks back up, it is quite likely that we will see a slew of new initiatives being launched — perhaps even some that have already been planned and gone through due diligence but where the offering party have been waiting for a better time to launch.”  UK’s FCA Is Considering Banning Crypto-Based Derivatives Before the crypto market gets ahead of itself with further launches of complex products, financiers should note that regulators are cracking down in some quarters. The U.K.’s Financial Conduct Authority has expressed concern and is considering banning some cryptocurrency-based derivatives. This move by the U.K. regulator has been noted as the first major intervention in the cryptocurrency market.   Christopher Woolard, executive director of strategy and competition at the FCA, delivered a speech at the Regulation of Cryptocurrencies event…

The Daily: New York Establishes Crypto Task Force, Novogratz Buys More of Galaxy Digital

The Daily: New York Establishes Crypto Task Force, Novogratz Buys More of Galaxy Digital

The Daily In Thursday’s edition of The Daily, we cover a new task force established by the state of New York to explore the cryptocurrency market and its regulation, a move by Galaxy Digital’s Mike Novogratz to buy more of the business, and an interesting way to mark the anniversary of Bitcoin’s genesis block. Also Read: Bakkt Completes First Round of Funding With $182.5 Million State of New York Establishes Cryptocurrency Task Force New York State Assemblyman Clyde Vanel, the Chair of Subcommittee on Internet and New Technologies at the legislator, has publicly announced the creation of a cryptocurrency task force. The reports produced by the task force will likely be used to update the state’s regulation of the industry, as the announcement notes that “It has been nearly four years since the implementation of the Bitlicense. In the cryptocurrency space and technology in general, a few months is equivalent to years.” According to the announcement, the members of the task force, appointed by Governor Andrew Cuomo, the Senate, and Assembly, are to study how to regulate, define and use cryptocurrency and submit their reports by Dec. 15, 2020. They will include different stakeholders such as technologists, consumers, institutional and small investors, large and small blockchain enterprises, and academics. “New York leads the country in finance. We will also lead in proper fintech regulation,” Assemblyman Vanel added. “The task force of experts will help us strike the balance between having a robust blockchain industry and cryptocurrency economic environment while at the same time protecting New York investors and consumers.” Mike Novogratz Increases Stake in Galaxy Digital Michael Novogratz, Founder and CEO of Galaxy Digital Holdings Ltd. (TSXV GLXY; Frankfurt: 7LX) reported on Wednesday that he acquired 7,500,768 more shares of the company for approximately $7.4M Canadian dollars (U.S.$5.4M) during December 2018. This amount represents about 2.7 percent of the company’s shares, bringing Novogratz’s estimated stake in the company from an already high 76.6 percent to approximately 79.3 percent. The former hedge fund manager created his cryptocurrency merchant bank in the hope it would eventually become the “Goldman Sachs of crypto.” The crypto bear market of 2018 has been hard on the company’s stock, but Novogratz claimed in November he still believes that institutional demand for cryptocurrencies…

BitTorrent Is Launching Its Own Cryptocurrency on the Tron Network

BitTorrent Is Launching Its Own Cryptocurrency on the Tron Network

BitTorrent, which pioneered peer-to-peer technology for sharing files on the internet, is creating its own cryptocurrency. Issued by the Singapore-based BitTorrent Foundation, the new BitTorrent Token (BTT) will run on the tron protocol, developed by Tron, which acquired BitTorrent in June of last year. The file-sharing software company claims to have 100 million users. Justin Sun, founder of Tron and CEO of BitTorrent, said in a press release: “In one giant leap, we can introduce blockchain to hundreds of millions of users around the world and empower a new generation of content creators with the tools to distribute their content directly to others on the web.” The plan to issue a token follows the announcement of Project Atlas, which BitTorrent revealed at the end of August. Project Atlas is a new iteration of the P2P software. It provides users with a way to spend and earn crypto while sharing files. Under the existing system, users need to put a file on the system in order to download something. As Sun explains in a YouTube video, the user has no incentive to keep a file on the network once they have finished downloading. With BTT, users can pay someone with the file to send it to them and they can pay for more bandwidth, so it downloads faster. With the prospect of payment, file hosts have an incentive to keep more files available to the network, making it more likely that a given user will be able to download something they want more quickly. A Tron spokesperson confirmed that the company will not be taking a cut of those transactions. BTT will be a TRC-10 token (comparable to the ERC-20 tokens that run on top of ethereum). According to the token’s white paper, shared with CoinDesk, a total supply of 990 billion BTT will be minted. BTT will be available to non-U.S. accounts through Binance Launchpad, a listing service for entrepreneurs looking to raise funding via token sales. The tokens will also be distributed through airdrops of some kind that will be announced on Sun’s Twitter feed. A spokesperson for Tron declined to give more details about the airdrops. The token will work first through the Windows-based µTorrent Classic client, which has the most users on it. The company says…

The First Cryptocurrency to Use Mimblewimble Privacy Tech Is Now Live

The First Cryptocurrency to Use Mimblewimble Privacy Tech Is Now Live

Today marks the debut of a new cryptocurrency, called Beam – one of two highly-anticipated privacy coins implemented with the so-called “mimblewimble” protocol. The mimblewimble protocol, which is touted as a way to make transactions confidential and virtually untraceable, first appeared in the summer of 2016, and has been widely anticipated ever since. While another cryptocurrency, called Grin, was first theorized for the protocol at the end of 2016, Beam, which was conceived of only in March 2018, launched ahead of Grin, today at 1:40 UTC. Yet Grin developers have said they’ll be releasing their coin in the next couple weeks, on January 15. Beam, like Grin, champions a new privacy-enhanced alternative to the original bitcoin blockchain, and as such garners the support from several early bitcoin developers such as Jameson Lopp, who tweeted in September about these two projects and their upcoming release. He tweeted: While the two technologies are relatively similar, Beam is being run by a startup with the intention of eventually handing over operations to a dedicated non-profit foundation, whereas Grin development has been entirely community funded through donations. As explained on Beam’s official GitHub, users will be able to decide for themselves “which information will be available and to which parties, having complete control over his personal data in accordance to his will and applicable laws.” In short, this means that Beam has the optional feature of transparency, which could be beneficial to businesses that want to use the coin but need to have some insight into who they’re transacting with. In addition, Beam also builds upon an additional piece of technology known as Dandelion that was released a year after the infamous mimblewimble white paper. Dandelion focuses on obscuring network traffic activity by randomizing the pathways through which transactions get dispersed on a decentralized network. Following Beam’s launch, 20 percent of the overall block reward with be sent to a treasury that consists of founders, investors and the Beam Foundation. Similar to the privacy-oriented cryptocurrency zcash, this block reward will be phased out after a five year period. Neither of the two cryptocurrencies built on mimblewimble have any intention of holding an initial coin offering (ICO) – a sale of coins to fund development work before an official launch –…

HitBTC Dismisses Allegations It Froze Accounts in Response to Proof of Keys Event

HitBTC Dismisses Allegations It Froze Accounts in Response to Proof of Keys Event

Cryptocurrency exchange HitBTC has rejected allegations by some of the industry’s best-known figures that it was deliberately freezing user accounts, the company told Cointelegraph in an email Jan. 3. Responding to a request for comment, Peter Swen, a representative from the exchange’s marketing team, denied any link between account freezes and Thursday’s ongoing Proof of Keys event. After user complaints on social media, Proof of Keys’ organizer Trace Mayer had publicly suggested that HitBTC may be deliberately disabling withdrawals in response to the event. He was subsequently joined by others in his suspicion, including John McAfee, wallet manufacturer Bitfi and entrepreneur Tuur Demeester. Mayer’s Proof of Keys event advocates a mass withdrawing of all funds from exchanges and other centralized third parties today, Jan. 3. The event was reportedly created to promote responsible use of decentralized cryptocurrency by users demonstrating their control of their own private keys. HitBTC has not released a public response to the allegations, while Swen flatly refused to acknowledge any link between the withdrawal freezes and Proof of Keys, which he described as a “flashmob.” “These temporary, safety-related withdrawal freezings are a direct consequence of our international KYC and AML measures. These rules exist and apply to us and everybody, 24 hours a day, 365 days of the year,” he wrote in the email, adding: “Therefore, we do not turn off any security tools or checks, ever. Not on regular days, and not on special days; including events and flashmobs such as Proof of Key Day (January 3rd).” On Twitter, exchange officials were working to counter unease expressed by users after the suspicions were aired. In one message Jan. 2, the exchange hinted it would publish an official statement shortly. HitBTC is currently the world’s 14th largest crypto exchange by adjusted daily trade volumes, seeing $208.9 million in trades over the past 24 hours to press time.

Indian Cryptocurrency Exchange in 45 Countries Sees Strong Demand in Venezuela

Indian Cryptocurrency Exchange in 45 Countries Sees Strong Demand in Venezuela

Exchanges An Indian cryptocurrency exchange, which is now live in 45 countries, reports that it is “seeing immense enthusiasm and buyer activity in Venezuela,” a spokesperson for the exchange told news.Bitcoin.com. Compared to other countries, “Venezuelans are looking more at the longer-term yield of bitcoin.” Also read: Indian Supreme Court Moves Crypto Hearing, Community Calls for Positive Regulations Live in 45 Countries Indian cryptocurrency exchange Instashift is now live in 45 countries. After launching in India and Canada in February, the exchange began to roll out service in a slew of countries in November, offering support for 45 fiat currencies. A spokesperson for the exchange told news.Bitcoin.com on Thursday: Presently, in the 45 countries we have launched [in], we are seeing immense enthusiasm and buyer activity in Venezuela … Venezuelan users were on a buying spree. “We partnered with [a] few good local sellers,” the spokesperson said, confirming that his exchange plans to add “another 45 countries by April 2019.” Other than Venezuela, “We see demand from Panama, Thailand, Nigeria, Romania, Cameroon, Argentina, Colombia, Mexico, and Ukraine,” he detailed. The 45 countries that Instashift is live in are Argentina, Australia, Brazil, Cameroon, Canada, Central African Republic, Chile, China, Colombia, Dominican Republic, Egypt, Ghana, Hong Kong, India, Indonesia, Japan, Kazakhstan, Kenya, Kuwait, Malaysia, Mexico, Morocco, New Zealand, Nigeria, Panama, Peru, Republic of Congo, Romania, Russia, Saudi Arabia, Singapore, South Africa, South Korea, Sri Lanka, Sweden, Switzerland, Tanzania, Thailand, UAE, Uganda, Ukraine, the U.K., the U.S., Venezuela, and Vietnam. Citing similarity to Localbitcoins, the spokesperson claims, “As we are [a] pure peer-to-peer exchange with an instant coin conversion feature, there is no specific licensing for it at the moment.” Strong Demand in Venezuela The spokesperson shared with news.Bitcoin.com that, compared to other countries, “Venezuelans are looking more at the longer-term yield of bitcoin.” He elaborated, “Venezuelans, in general, are of the thought that cryptocurrency is a safe haven to keep their store of value rather than keeping it in their own currency where inflation is peaking at the top.” Furthermore, he described that “awareness amongst the crypto-communities” in many of the 45 countries “is quite low” compared to Venezuela. Venezuelans can buy and sell over 120 coins on the Instashift platform. In addition to purchasing cryptocurrencies with the sovereign…