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A company from Japan will pay its employess in Bitcoin

I met with a man doing business around the world and paying his team of virtual assistants in bitcoin. 

He told me that once he required each employee to set up a wallet and get paid that way, they found it easier and much cheaper than getting paid in his fiat currency and converting that to the local currency in their country. 

Crypto need not skyrocket in value to improve future economies. It’s the power of faster global transactions that will be the real revolution.


A Japanese internet company with the bitcoin bug will soon allow its employees to receive some of their salaries in the form of cryptocurrency.

According to Fortune.com, Tokyo-based GMO Internet Group announced the new payment option will launch in February 2018. GMO said the option will gradually be opened to all of its more than 4,000 full-time employees.

Those opting in to the new scheme will be able select what portion of their monthly salary to receive in bitcoin between a minimum of 10,000 yen (around $88) and a maximum of 100,000 yen ($882), according to coindesk.

GMO is even reportedly offering an incentive for those who join the new payroll system—a bonus of 10 percent of the selected bitcoin amount.

While Japanese labor laws stipulate paying salaries in yen, GMO told Kyodo News that it was not breaking any regulations since the bitcoin payment would be optional, based on mutual agreement and deducted from an employee’s monthly paycheck.

The tech company, which registers domain names and offers web hosting and other services, joined the bitcoin spree this past May with the opening of an exchange, GMO-Z.com Coin, which was later rebranded as GMO Coin. In September, GMO announced it would invest $3 million in mining bitcoin — the process of obtaining the coin through powerful computers — starting in the first half of 2018.

The firm says it believes cryptocurrencies like bitcoin will evolve into “universal currencies” available to anyone globally, leading to a “new borderless economic zone.”

But not everyone is so optimistic about the rise of digital currencies. A mounting number of experts have warned of a potential bubble effect.

Earlier this week, Nobel Prize-winning economist Robert Shiller compared bitcoin to a “contagion” with rapid price fluctuations reflecting the “intensity of the epidemic”.

According to Japanese bitcoin monitoring site Jpbitcoin.com, in November, yen-denominated bitcoin trades reached a record 4.51 million bitcoins, or nearly half of the world’s major exchanges of 9.29 million bitcoin.

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Even China can’t destroy Bitcoin

It was only a matter of time before Bobby Lee, CEO of China’s longest-running Bitcoin exchange, found himself in the crosshairs of Chinese regulators. His exchange, BTCC, had occupied a gray area of Chinese law, neither licensed nor explicitly illegal. Bitcoin is a decentralized digital currency that can be sent electronically around the world, and its growing popularity made Chinese authorities nervous. In 2016, most Bitcoin trades worldwide were in Chinese yuan. 

In January 2017, BTCC was investigated by China’s Central Bank. In September, China announced that it was banninginitial coin offerings (ICOs), a popular fund-raising method for startups that use digital coins or tokens. Even then, Lee thought exchanges like his were safe. Later that month, Chinese regulators made it clear that BTCC and other domestic virtual-currency exchanges had to close, an attempt to make it harder for the general public to enter the market and buy bitcoins.

Lee says that he was neither shocked nor panicked, just dismayed. “Ah, finally, the party’s over,” he thought. “The party has to end sometime.”

Bitcoin, introduced by a mysterious and since vanished character named Satoshi Nakamoto, came into the world around the time of the 2008 financial crisis. The fact that it was not backed by any central authority appealed to those who distrusted governments and big banks. Since then, the currency’s rise—especially its popularity among speculators, who helped push the value of one bitcoin from under $1,000 to more than $10,000 during 2017—has presented governments with a challenge. Should they allow this new kind of money, even though it makes it easy for people to send funds relatively anonymously—a feature that is attractive to money launderers and other criminals? Should they try to suppress it, in hopes of maintaining full control over monetary policy? Or should they embrace it, as the Japanese government has done, even passing a law to recognize Bitcoin as a legal payment method? 

Bitcoin transactions are recorded on a blockchain, which is a public, censor-proof ledger that is continually being updated by a network of computers throughout the world. The decentralized nature of virtual money should make it impossible for any one country to shut it down. China’s crackdown put that foundational belief to the test. The news of BTCC’s shutdown briefly caused the price of a bitcoin to plunge. China, after all, is known for trying to control seemingly uncontrollable things. Beijing has been surprisingly effective at fencing off the Internet with an army of censors and a Great Firewall that blocks sites like Facebook and Twitter, and yet its online communities and commerce flourish. China is now developingits own digital fiat currency,an apparent attempt to make financial transactions cheaper and more traceable, as well as to combat counterfeiting. 

None of this would seem to bode well for Bitcoin. Yet weeks after the crackdown, nearly everyone I spoke to in China’s cryptocurrency community was in strikingly good spirits. They were optimistic about the future of Bitcoin and other virtual currencies in China, whose crackdown wasn’t as all-encompassing as it might have seemed.

Speed limits

China’s cryptocurrency world resembles a Silicon Valley of the East. People dress casually, work in shared maker spaces, and scribble on whiteboards. They are global, ready to jump on a flight to New York or Tokyo to seek out a business opportunity. “It reminds me of the Internet community in 1995. Everyone knows each other,” says Gao Dongliang, a blockchain investor. Similar to early devotees of the Internet, Gao explains, people in China’s blockchain community share a belief in a world-changing technology. 

One member of this community is Lu Bin, the CEO of a Shanghai-based blockchain startup called Andui. The energetic Lu, who got a PhD from Louisiana State University, says he helped come up with the term yitaifang, the Chinese name for Ethereum, a Bitcoin-inspired virtual-currency network built for more complicated financial transactions. 

In late August Lu did an ICO to raise money for Bihu.com, a communications platform that uses blockchain technology. In ICOs, startups issue a new virtual token to the public, sometimes on the premise that the token will be necessary for use of the startup’s product. High demand for that product should, in theory, make these virtual tokens gain value. Bihu.com aimed to be like Twitter or Reddit, except that users could reward good content with “keys,” the platform’s own token. 

Lu was thrilled by Bihu’s ICO. He says he raised over $20 million in a matter of hours. He believed there was no way that venture capital would deliver that kind of result. Then the following month China’s ICO ban came down, and Lu had to give all the money back. 

He took it in stride. Lu acknowledged there was “frustration within the team” and a general “waste of energy.” But nonetheless, he felt that the ICO ban protected average investors against fraud.

In China, if something is not explicitly verboten, then it’s full speed ahead.

In fact, everyone I spoke to in China’s cryptocurrency  community supported, or was at least sympathetic to, the ICO ban. I repeatedly heard that 90 percent of Chinese ICOs were scams. The whole model, in which you buy tokens to use on a platform that does not yet exist, might never exist, or could be a total flop, can be a magnet for fraudsters.

Fraudulent ICOs are not limited to China, of course. In 2017 the U.S. Securities and Exchange Commission charged two ICOsthat were supposedly backed by investments in diamonds and real estate. Neither had “any real operations,” the government alleged. In China, the fraud problem appears to have been exacerbated by the participation of relatively new and inexperienced investors. 

Da Hongfei, founder of an alternative cryptocurrency called NEO, says the ICO crackdown was necessary for China. NEO had its first ICO in 2014 and has since risen to become one of the top cryptocurrencies in the world by market value, at over $2.5 billion in December. The company says it offered to refund investors after the ICO ban, but they preferred to keep their NEO tokens.

To illustrate why he supports the ban, Da describes a recent trip he took to Germany. He was struck by the experience of driving on the autobahn, which has no speed limit. Germany is able to do this, he says, because “they have good-quality roads, they have a very strict test for a driver’s license … Everybody is obeying the traffic rules, and they have very good-quality cars.” He adds, “If we don’t do a speed limit in China, or even maybe the United States, that would be a disaster.”

Can a booming “crypto-currency” really compete with conventional cash?

China didn’t just impose a speed limit on virtual currency, however. It shut down the entire highway. Perhaps Chinese officials banned ICOs until they figure out how to regulate them. Lu, the entrepreneur who had to return $20 million to investors, hopes that this is the case. He says ICOs present a new business model in which users are stakeholders in the company, which gives them an incentive to invite their friends to join the platform. Lu believes that the virtual-currency exchanges will reopen but be run by the government. He says China will take regulation cues from the outside world, particularly the United States. The SEC recently signaled that it would take a more aggressive stance toward ICOs, perhaps by requiring ventures to register with the commission and disclose extensive information to investors.

For now, Lu will continue to work on Bihu.com from Shanghai, raising capital with private investment. “We are believers,” he says. “We believe the Chinese market is eventually going to open.” If cryptocurrency is going to be a real thing, he says, “China does not want to miss the train.”

Miner threat

Before Bitcoin got too hot in the country, Chinese authorities were cautiously accepting of the technology. In May 2013, state-run CCTV even aired a short documentary about it. That same month, Zennon Kapron notes in his 2014 book, Chomping at the Bitcoin: The Past, Present and Future of Bitcoin in China, more Bitcoin wallets—the software that holds and manages people’s private cryptographic keys—were downloaded by computers in China than in the rest of the world put together.

It’s easy to understand why many Chinese people would be attracted to Bitcoin. In China’s heavily regulated financial environment, speculating on the currency represented one of the few investment options for the retail investor, Kapron observes. In 2013, the Shanghai stock exchange had been underperforming for years. Real estate prices were too high for many ordinary people, but you could buy a fraction of a bitcoin for as little as one dollar. By mid-2013, Chinese exchanges were moving more than $35 million in bitcoins each day. 

Pablo Delcan

The speculative fervor threatened to get out of hand. Beijing was also worried about yuan leaving the country. China caps yuan outflow at $50,000 per person per year. While it’s not clear that large numbers of people were using Bitcoin to evade Chinese capital controls, the potential was there. People in China could buy bitcoins in yuan, sell them on an American exchange, and then withdraw the sum in dollars. In late 2013 Chinese authorities struck back, banning financial services companies from dealing with Bitcoin exchanges. People could no longer withdraw yuan from their bank accounts to directly buy bitcoins on Chinese exchanges.

It wasn’t long before Chinese people figured out how to get around this obstacle. Instead of paying exchanges directly from their bank accounts, they used cash to buy vouchers that could then be traded on the exchanges. Alternatively, purchasers could send money to the personal bank account of someone who worked at an exchange. 

The latest restrictions are more draconian, with cryptocurrency exchanges now shut down. But once again, workarounds have emerged. Some people have turned to online and offline peer-to-peer trading. People can also buy and sell digital currencies on the encrypted messaging app Telegram, which is blocked in China but can be accessed by virtual private networks (VPNs) that get around the Great Firewall. People who already own coins can just go online and trade them on an exchange that is based overseas. There was even some trading on WeChat, China’s massively popular but heavily monitored messaging app.

“People who don’t know blockchain or digital currency shouldn’t be participating in this market. The risks are too great.”

James Gong, cryptocurrency expert

After all, China did not ban Bitcoin itself, nor did it explicitly prohibit peer-to-peer trading. And importantly, China hasn’t banned the mining of bitcoins, in which people have their computers race to solve difficult mathematical problems in exchange for coin rewards. As of September, more than two-thirds of bitcoins were made in China. Much of the computer hardware used for mining is manufactured there. Miners use a great deal of computing power, and some Chinese computer clusters used for the process enjoy access to relatively cheap electricity. The growth and dominance of Chinese mining has led to fears among some that the country has too much influenceover the future development of blockchain technology.

A founder of a pool of miners, a person who goes by the name of Discus Fish, says that China’s local governments once encouraged mining, particularly in mountainous areas that produce hydroelectric power. The mines were using energy that would otherwise have gone to waste. Then in September the political environment changed, and he feared some local governments would no longer welcome mining. But others in the mining community were unconcerned. Zhao Qianjie, a vice president of BTCC, notes that the company’s mining pool was not influenced by the crackdown on its Bitcoin exchange. And in China, if something is not explicitly verboten, then it’s full speed ahead.

Getting around control

What is clear is that China has made it more inconvenient for newcomers to enter the Bitcoin market. But maybe this isn’t such a bad thing. At least so would argue James Gong, a Shanghai-based cryptocurrency expert who founded ICOage, an online platform through which ventures could promote and raise money for their ICOs. Launched last January, ICOage closed down in September. He says that most of the ventures on his platform were not Chinese, and that the overseas projects were generally higher in quality than the Chinese ones. “People who don’t understand blockchain or digital currency shouldn’t be participating in this market,” Gong says. “The risks are too great. Raising the threshold for ordinary people to trade digital currency is good for the industry as a whole. Some Chinese people were blindly investing. They would buy anything.”

Even now, Chinese people who want to trade cryptocurrency are likely to find a way. China is making trading difficult but not impossible. Beijing employs a similar strategy for censoring the Internet. It’s possible to use a VPN to jump over the firewall, but for many people it’s too much mafan, or trouble. Besides, they are happy with domestic platforms like WeChat. Yet even if China introduced its own digital currency, people might be willing to go the extra length to use Bitcoin.

“With Bitcoin, people will be more motivated to get around control,” explains Duan Xin-Xing, former vice president of the global Bitcoin exchange OKCoin and now executive president of the Hangzhou-based blockchain startup 8btc. “The Internet is a network of information; Bitcoin is a network of money. It has real value.”

The word “Bitcoin” may have become more nearly taboo in China, but “blockchain” has not. Han Feng is the Beijing-based cofounder of the Elastos Foundation, which ambitiously plans to build a whole new Internet powered by blockchain technology. This fall, Han planned to teach a Tsinghua University course that would be webcast all over the world. He prepared for months. The camera stands were already arranged. Then the university promoted the course on WeChat and called it “the first course on Bitcoin at Tsinghua University.”

Han was upset by Tsinghua’s lack of political instincts. Why would you use the word “Bitcoin” at such a sensitive time? Sure enough, the online course was canceled, but Han wasn’t deterred. He proceeded to teach the class on Tsinghua’s campus in Beijing under a more politically correct title, “The Smart Economy and Blockchain.”

Bitcoin presents China with the same challenge that the Internet once did.

Chinese authorities clearly see blockchain as a technology of the future. Blockchain development is evenpart of the Communist Party’s 13th five-year plan. The technology provides a tamper-proof, intermediary-free ledger for payments and various other kinds of transactions. Michael Casey of the MIT Media Lab’s Digital Currency Initiative has argued that China sees blockchain as a useful tool for advancing its regional interests,especially in trade. 

China would prefer to take blockchain without Bitcoin. “The central government wants to use blockchain to ensure the trustworthiness of public and administrative data, but they don’t want people to print their own money,” says Ben Koo, an engineering professor at Tsinghua University.

China may also hope to replace Bitcoin with its own digital currency, but Bitcoin enthusiasts in the country, like Bobby Lee, say that China’s version would be a “completely different animal.” He explains, “It’s going to be a controlled, centralized currency that happens to be digital; it happens to have some encryption technologies in it.” If the new currency is subject to the same monetary policies, interest rates, restrictions, limits, and regulations as traditional currency, Lee says, “then it’s going to not compare to something, like Bitcoin, that’s truly free.”

When winter ends

China’s crackdown has demonstrated that no one country can stop Bitcoin. That’s the beauty of the decentralized network: if one nation bows out, others pick up the slack. After China clamped down, much of Bitcoin trading moved to Japan and South Korea. “Blockchain is a global technology,” says Han, cofounder of Elastos. “Different functions work in different countries. If you want to exchange, you go to countries with friendly laws, like Japan. If you want customers, you go to China. If you need a technology community, you go to the U.S.”

Cryptographers have researched zero-knowledge proofs for two decades, but the technique is only just now poised to redefine the concept of online privacy.

Not only has the Chinese ban failed to stop Bitcoin, but the price of a bitcoin rebounded and continued to hit record highs. Chinese regulations may even have contributed to the surging price. “When China started regulating Bitcoin, it sent a message that China takes this currency very seriously,” says Yan Chen, CEO of NBL, a service for storing cryptocurrency wallets. “The market sees that Bitcoin is something that governments are afraid of, so it must be really powerful.”

NEO’s Da thinks that China’s crypto community will shrink over the short term, and that there will be a “winter” for some time. But he sees the overall outlook as bright. He believes that Chinese capital controls will not be around forever, and their removal will give the Chinese government one less reason to be wary of Bitcoin.

Bitcoin presents China with the same challenge that the Internet once did. The Chinese government was initially suspicious of the Web, because letting it in would mean relinquishing some degree of control. But Beijing ultimately decided that keeping the Internet out would be worse, since that would cut China off from the global economy. The dilemma posed by Bitcoin has one key difference: it’s way too late to isolate China from the rest of the world. “Bitcoin cannot be forbidden in China,” says BTCC’s Zhao. “As long as there is one cable available from China to the outside, then Bitcoin will survive.”

That means for now, Bitcoin has passed the China test. “Bitcoin itself did not break after China banned it,” Lee says. The virtual currency has delivered on its promise that it could not be defeated by any government, even one as powerful as China’s. Or, as Lee puts it, “Every time you try to whack Bitcoin and it doesn’t die, it becomes stronger.”

Emily Parker has covered China for the Wall Street Journal and served as an advisor in the U.S. State Department. She is the author of Now I Know Who My Comrades Are: Voices from the Internet Underground.

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Is Litecoin The Future of Cryptocurrency?

Litecoin’s Origins

Litecoin was launched in the shadow of bitcoin, yet was inspired by the ‘King Coin’, particularly by its decentralized approach to currency. The founder of Litecoin, Charlie Lee, is a former Google employee and Director of Engineering at Coinbase, one of the largest exchanges and the first to list Litecoin alongside bitcoin and Ethereum. Though many see Litecoin as a bitcoin clone, it has technical differences that separate the two in the eyes of many. It is largely these differences that inform Litecoin’s price alongside the favorable image it maintains with traders and businesses alike.

Made in the image of bitcoin in its early days, Litecoin was one of the first to take its predecessor’s formula and tweak it. The first change relates to Litecoin’s blockchain, which uses the Scrypt protocol instead of SHA256. While this matters little to traders, miners who use hardware to run bitcoin’s network cannot switch over to Litecoin. This keeps bigger mining conglomerates away from Litecoin because they cannot easily optimize their profits by swapping to another coin, contributing to a more decentralized experience. Litecoin also has bigger blocks, and more coins in circulation, making it more affordable and swift when transacting. Naturally, Litecoin has enjoyed an increasing rate of adoption within cryptocurrency services and in the retail market as well that corresponds with its distinct advantages.

Litecoin Gains Momentum

The most prominent characteristic of Litecoin is also one that gives it the most potential for disruption and inspires much confidence within the cryptocurrency community. As soon as Segregated Witness was released as a proposed blockchain upgrade to allow speedier off-chain transactions, Litecoin threw its full weight behind the proposal and was the first to integrate it. SegWit will allow Litecoin and others who adopt it to use the Lightning Network, which is nearing completion, empowering participants to exchange cryptocurrencies at virtually no cost.

Developers are quickly making headway on the Lightning Network, and it has recently passed almost all the quality assurance tests required to be released to the public. In a recent dry run, an alpha version was used to purchase coffee in Starbucks with no fees: a result hard to obtain with any other payment solution.

Cryptocurrency enthusiasts with many coins to explore have increasingly highlighted Litecoin due to its speed. In tests where one user compared the speed of coins being transferred from an exchange to a hardware wallet like Trezor, Litecoin performed best, transferring 23 coins in under 10 seconds. Businesses paying attention to Litecoin’s fast advancements on the payment front are increasingly adopting it into their own ecosystems as well.

The ease of transacting with Litecoin makes eCommerce one of the most suitable environments for adoption, and stores like BTCTrip, Bitify, AllThingsLuxury, and Bitcoin.shop (as well as others) have joined in. Even popular retail ecommerce giant Overstock.com is accepting Litecoin as a form of payment.  People can easily pay for gifts, vacations, household appliances, and even precious metals and gems with their Litecoin. While retail adoption is encouraging, cryptocurrency, merchants, exchanges, wallets and other infrastructure are also integrating Litecoin in growing numbers.

How It’s Viewed by Participants

Ultimately, any cryptocurrency’s success is the function of its applicability and the problems it solves.  Even though traders may not fully understand the differences between Litecoin’s and bitcoin’s DNA, they are increasingly moving to Litecoin, regardless. All they see is how prices behave relative to other coins. Litecoin is just as accessible as bitcoin in this regard because it’s been a centerpiece in the market for almost as long, meaning that any service leaving Litecoin out of the equation is ultimately limiting their own audience and appeal.

Apart from the obvious advantages from a design perspective and trading appeal, participants themselves are benefiting from the ecosystem thanks to growing adoption in ecommerce.  As one of the major cryptocurrencies, Litecoin is quickly becoming a contender for the top three spots, even as a funding tool. Bankex, a unique platform designed to validate and tokenize more illiquid assets like real estate and venture capital portfolios, is accepting Litecoin alongside bitcoin and Ethereum during its token sale.

Platforms like Bankex almost unanimously accept Litecoin because many customers will exchange their other cryptocurrencies for Litecoin in anticipation of a transaction. Until the Lightning Network levels the playing field, investors who want to participate in Bankex’s plethora of autonomously evaluated Smart Assets may prefer to fund the ICO with Litecoin to save on fees.

Although Ethereum still takes the cake in the fundraising sphere due to ERC20, Litecoin likely makes it to one of the top three spots on the Bankex token sale list because of its rapidly broadening appeal and more affordable transfer costs. Between high demand as both an asset and as a currency, it behaves as a hybrid with much more potential longevity than its aging brother.

Litecoin’s drama-free community and even keel give it less volatility and a steady trend, making it great for arbitration, trading, spending, or even fundraising. Savvy cryptocurrency enthusiasts have compared bitcoin’s market capitalization to Litecoin and done the math based on its maximum number of coins and other traits and have almost unanimously declared that it is undervalued. Even so, with much progress being made on the Lightning Network, Litecoin may one day soon evolve into the truest form of cryptocurrency yet, and leave the others in the dust.

This article originally appeared at: https://www.investopedia.com/news/litecoin-future-cryptocurrency/?utm_source=facebook&utm_medium=social&utm_campaign=shareurlbuttons.
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Cryptocurrency exchanges can be pretty sketchy places. The solution? A blockchain, of course

by Daniel Zender on Technology Review

If the future of money is decentralized, most of today’s cryptocurrency exchanges are still stuck in the past.

Satoshi Nakamoto created Bitcoin and its distributed accounting ledger, called the blockchain, so that people could trade units of value without the need to trust centralized authorities like banks (for more: “What Bitcoin Is, and Why It Matters”). But most cryptocurrency users still trust online exchanges to hold their money, leaving them at risk of being defrauded by the exchange’s operators—or having their digital coins stolen by hackers, which happens at an alarming rate.

Switching back and forth between fiat money and cryptocurrency will require a traditional point of exchange for the foreseeable future. But some technologists say an alternative model for trading cryptocurrencies that would give people more control over their wealth is possible. It’s meta: exchanges can be decentralized, they say, using a blockchain.

The idea hinges specifically on so-called smart contracts, software code that can be stored in a blockchain and set up to programmatically govern transactions. Imagine, for example, you want to send your friend some cryptocurrency automatically at a specific date and time. You could use a smart contract to do that. Sounds a lot like something you could do through your bank account online, doesn’t it? That’s on purpose. The main architecture underlying smart contracts is the Ethereum blockchain, and its creators have designed it as a way to, among other things, develop decentralized versions of apps that we already use in our everyday lives.

Ethereum smart contracts are also the basis for the thousands of new cryptocurrency tokens fueling the initial coin offering craze (for more: “What the Hell Is an Initial Coin Offering?”). Though traders today are dealing in relatively small volumes of these new tokens, the market is growing quickly, and it may not be too long before we are talking about large amounts of money.

Smart contracts make it possible for people to buy, sell, and trade those crypto-tokens peer to peer, says Michael Oved, founder of Airswap, a startup building a decentralized exchange for Ethereum tokens.

Airswap is not alone in this pursuit, either—there are a number of approaches people are using to build a secure and fair system that enables buyers and sellers find each other, agree on a price, and use a smart contract to complete the transaction. An early operational example, called EtherDelta, already accounts for about 4 percent of all Ethereum transactions.

It’s early days, though, and decentralized exchange tools face a number of challenges. They are relatively difficult to use, and much slower than their centralized counterparts. They can also introduce new kinds of security vulnerabilities. Perhaps most important, they face the same scalability challenges that their blockchains do. Recently a game for breeding digital cats using Ethereum smart contracts created debilitating congestion on the network, showing how immature it is.

Will Warren, cofounder and CEO of 0x, which is developing an open-source decentralized exchange protocol, says his group’s long-term thesis is that even if it’s not Ethereum’s blockchain, some technology like it will eventually power a “globally accessible financial network” to which decentralized exchanges will be crucial.

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Gold Mining Company’s Shares Jump 1,300% After Switch to Bitcoin – Bitcoin News

 

Gold Mining Company's Shares Jump 1,300% After Switch to Bitcoin

Gold Mining Company's Shares Jump 1,300% After Switch to Bitcoin

Natural Resource Holdings is a little-known company whose investments so far consist mostly of land and mineral assets of gold, silver, zinc, and lead deposits.

The company’s shares, which are publicly traded on the Tel Aviv Stock Exchange, have jumped about 1,300% in price since the company announced it is refocusing on blockchain and cryptocurrencies just a month and a half ago.

Now it appears that the company actually has a plan how to diversity into bitcoin mining and it is not just all hype. According to reports today in the Israeli financial media, Natural Resource has revealed its first step towards entering the market: acquiring a Canadian bitcoin mining farm.

Mining Is Booming

The company has announced that it is in negotiations with BACKBONE Hosting Solutions, operating under the commercial brand Bitfarms, to buy 75% of its shares in exchange for 75% its own stocks. In response to the report, investors have poured in, making the relatively small company the tenth most traded on the TASE by volume.

Gold Mining Company's Shares Jump 1,300% After Switch to Bitcoin

The Canadian company is said to have 4 server farms in the province of Quebec, providing services for mining bitcoin, ethereum, bitcoin cash and litecoin. It is also said to have two more server farms under construction that will come online early next year. The company supposedly brings in over $8.3 million a month, at an operational cost of just 12%.

According to its own website, BACKBONE started operating in 2016 with a primary focus to offer cost effective mining hardware hosting solutions for cryptocurrency hobbyists and professionals. Boasting an ‘eco-friendly’ operation, the company says its power is generated from an hydro-electrical plant located close to the facility and that it benefits from being in a Tundra Climate where cooling is not an issue 10 months a year.

This article originally appeared at: https://news.bitcoin.com/gold-mining-companys-shares-jump-1300-after-switch-to-bitcoin/.

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World Computer? New Protocol Could Supercharge Ethereum Blockchain

With scaling the center of attention in the public blockchain sector, an older but lesser known attempt to overcome the restrictions inherent in ethereum is getting a refresh.

Revealed in an exclusive interview with CoinDesk, a new TrueBit protocol is being released this December, one that removes the ethereum “gas limit,” which today puts an upper-bound on the number of computations the network can achieve, bringing the second largest blockchain by market capitalization closer to its oft-touted goal of becoming a “world computer.”

While TrueBit is one of many in-progress scaling solutions being engineered for the ethereum platform – working alongside mechanisms such as sharding, state channels and Raiden – it distinguishes itself by focusing on the computational power of the network at large, instead of just transaction speed.

Geared specifically towards heavy computations, such as those video broadcasting and machine learning would require, TrueBit could resolve the fact that ethereum is still about as fast as a “smartphone from 1999,” as ethereum creator Vitalik Buterin joked last year.

“In short, the new scheme would be a vast simplification of the current TrueBit protocol,” said Zack Lawrence, the co-founder of 1protocol, who developed the technology.

And these gains all came about after speculation that someone could exploit the protocol, after an amendment to its white paper was released last month.

Jason Teutsch, a mathematician and co-founder of TrueBit, framed the speculation, and the process for patching the vulnerability, with a silver lining:

“When so many people have eyes on the papers, over time, you get more and more confident that it’s correct, but it’s always an ongoing process for these things that are living systems… Now, we go another layer down the protocol rabbit hole, it’s this iterative process of getting deeper and deeper into this.”

Hit the jackpot?

And going deeper led the devs to the incentive mechanism used in the protocol.

TrueBit aims to remove the gas limit on ethereum by moving computations off-chain – outsourcing them to an external marketplace that rewards participants for solving and verifying the computations. Within the marketplace “task givers” pay “verifiers” to solve computations in exchange for rewards, while “validators” check that the computations are correct.

To make sure everyone runs effectively, Truebit relies on an incentive scheme dubbed the “forced errors jackpot,” which ensures validators are actively checking for correctness by requiring verifiers to occasionally submit incorrect information. If a validator finds these forced errors, they’re rewarded with a substantial payout: the “jackpot.”

But according to Lawrence, that process can be a lot less complicated.

Within the new protocol, instead of limiting the participants’ tasks, everyone can participate openly.

Those that verify correct computations still get paid, but if another participant finds an error, they can submit what they believe the computation should be and enter that into the verification game. All the potential answers are then pooled together until a consensus is reached.

Because that verification pool is costly to participants, the protocol incentivizes them to work together honestly so disputes do not occur, since the reaching consensus within that verification pool would be costly for everyone.

Not only does this iteration eliminate the security flaws pointed out when the amendment was released, but it’s also easier to implement and could increase the number of computations participants are willing to perform since it eliminates the once-every-so-often jackpot, Lawrence told CoinDesk.

Security challenge

Still, the new protocol may not be the last step in evolving TrueBit to achieve optimum efficiency.

Teutsch explained that both versions of the protocol will still hit against eventual limits when it comes to massive computations. If, for example, verification takes too long or gets too expensive, those who notice errors might be inclined to keep quiet, and just let them go.

“Remember that the verification game is really slow compared to native computation, so my concern expressed here is more than just theoretical,” he said.

Plus, because TrueBit is a protocol built on game theory (rather than relying on more familiar security auditing processes), Teutsch said, its “security is an observational science,” in which devs try to put themselves in every position an attacker might be in.

Because of this, Teutsch said the developers may decide to run both the original protocol (now internally nicknamed TrueBit Classic) and the new protocol in parallel for better security.

But nodding to the fact that digital security is an immensely challenging prospect that takes continual work, Teutsch told CoinDesk:

“Full confidence happens once you have all the money in the world behind it, and it’s sat there for a few years.”

This article originally appeared at: https://www.coindesk.com/world-computer-new-protocol-supercharge-ethereums-blockchain/.
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Coming Soon: Get Your Undergrad in Cryptocurrency at NYU

NYU is ahead of the collegiate game when it comes to financial education. It was the first major US academic institution to offer a cryptocurrency course back in 2014, and now, it plans to offer a new option for undergraduates, as NYU professor David Yermack shared with the Financial Times.

The course is becoming something of a bullish offering already, with 300 grad students expected to apply next year. 

Challenges include keeping up with rapid developments and finding knowledgeable faculty. 

Professor Yermack says they will be ready to adapt: “Year over year we’ll change well over half the course material. It keeps you young to be reading half the night just to keep up with the test innovations.”

But you don’t necessarily have to attend NYU to become well-versed. Much of the material is found freely online, and if you want an Ivy League school credit, search out Princeton’s ‘Bitcoin and Cryptocurrency Technologies’ course on Coursera.

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The Fed and Trump are ‘Keeping an Eye on Bitcoin’

Bitcoiners from the U.S. may have some more stringent battles to fight ahead as multiple government agencies are looking into the use of cryptocurrencies and some officials seem somewhat cynical. For instance, the country’s Internal Revenue Service has been granted permission by a federal judge to review Coinbase accounts for people who transacted with $20,000 or more from 2013-2016. Then a couple of days later the Federal Reserve revealed it was contemplating its own digital currency, but launching the idea is a different story. The president of the Fed’s New York branch, William Dudley, explained he believes bitcoin and cryptocurrencies are “more of a speculative activity.”

Bitcoin Is Being ‘Monitored’ by Our Team

Following the statements from the New York Fed executive on November 30, president Trump’s press secretary, Sarah Sanders discussed bitcoin briefly at the White House press briefing. A reporter asked Sanders whether or not the president was following cryptocurrencies “specifically the major run-up with bitcoin,” explains the journalist.

“Does he have an opinion on it, and does he feel it is now something that needs to be regulated?” asks the reporter. The press secretary Sanders explains the government is watching bitcoin stating;       

The [Bitcoin situation] is something that is being ‘monitored’ by our team — Homeland Security is involved. I know it’s something that he’s [Trump] keeping an eye on — And we’ll keep you posted when we have anything further on it.

Trump and the Federal Reserve Are 'Keeping an Eye on Bitcoin'

Trump’s press secretary, Sarah Sanders.Members of the Federal Reserve Are Concerned About Cryptocurrency Spillover Effects

In addition to the White House press secretary’s comments the U.S. Federal Reserve vice chairman, Randal Quarles stated on the same day that the rise of cryptocurrencies poses a threat to “financial stability.” Discussing the subject at the 2017 Financial Stability and Fintech event, Quarles said retail investors and regulators need to watch out for threatening “spillover effects” tethered to the popularity of digital assets. The reason Quarles is concerned is because decentralized currencies are not backed by traditional reserves, and suffer from significant price swings.

“Risk management can act as a mitigant, but if the central asset in a payment system cannot be predictably redeemed for the U.S. dollar at a stable exchange rate in times of adversity, the resulting price risk and potential liquidity and credit risk pose a large challenge for the system,” explains Quarles during the Fed’s conference.

Like many U.S. officials and agencies, Quarles says research is needed and testing these cryptocurrencies to see if they can handle financial stress. “It is not clear whether the payment system would be able to function, in times of stress,” Quarles emphasizes.

Images via Pixabay, the White House, the Federal Reserve logo and Bloomberg.

This article originally appeared at: https://news.bitcoin.com/trump-and-the-federal-reserve-are-keeping-an-eye-on-bitcoin/.