“There’s no such thing as a safe hard fork,” Electrum lead developer Thomas Voegtlin corrected an audience member at the Breaking Bitcoin conference in Paris last weekend. “I would recommend to have replay protection, of course,” he added.
Community support for SegWit2x, the Bitcoin scaling proposal spearheaded by Barry Silbert’s Digital Currency Group, was virtually absent in Paris. Whenever the “2x” part of the New York Agreement was discussed in the French capital, speakers and visitors overwhelmingly considered it a risk to defend against — not a proposal to help succeed.
Electrum users, for example, will not blindly follow hash power in case of a chain-split, Voegtlin explained throughout his talk; instead, they’ll be able to choose which side of such a split they want to be on. And importantly, the lightweight wallet will implement security measures to prevent users from accidentally spending funds on both chains: “replay protection” that seems unlikely to be implemented on a protocol level if SegWit2x does fork off.
“We are ready,” Voegtlin said. “If [SegWit2x] doesn’t include replay protection, the fork detection we have in Electrum will be useful.”Breaking Bitcoin
Inspired by the successful Scaling Bitcoin conference format, the French Bitcoin community hosted the first edition of Breaking Bitcoin two blocks from the Eiffel Tower last weekend. Bitcoin developers, academics and other technical-minded Bitcoiners gathered for a diverse program, but with the common denominator being Bitcoin’s security.
“For the past two years, the Bitcoin community has been obsessing with scale and scalability,” Kevin Loaec, managing director at Chainsmiths and co-organizer of the event, told Bitcoin Magazine. “But I’m not so worried about scale, I’m worried about mining centralization, a lack of privacy and fungibility ... these kinds of things. As an industry we need to recognize there are more challenges than just scalability; hopefully this conference reflects that.”
Whereas the first Scaling Bitcoin conference two years ago was a very specific reaction to a looming block size limit increase hard fork — then put forth by Bitcoin XT — this wasn’t necessarily the motivation behind Breaking Bitcoin. Yet, once again, a controversial hard fork is looming on the horizon. This time imbedded in the BTC1 implementation developed by Bloq co-founder Jeff Garzik, the New York Agreement’s SegWit2x is scheduled to increase Bitcoin’s “base block size limit” to two megabytes by November — an incompatible protocol change that could split the Bitcoin network in two.
And it did not take much to recognize how unpopular the proposal was in Paris. Perhaps most vividly, Italian Bitcoin startup ChainSide led a protest campaign by distributing NO2X stickers; the Twitter hashtag was proudly added as a piece of flair to the by now well-known Make Bitcoin Great Again and UASF hats. And voices critical of the project — like Voegtlin and his call for replay protection — could consistently count on rounds of applause. From a technical perspective, the proposal is often considered — quite frankly — to be reckless.
Arguments against the 2x hard fork are diverse.
Perhaps its biggest problem, SegWit2x currently lacks basic safety measures to prevent unsuspecting users from losing funds. This includes, most importantly, the aforementioned replay protection, but a new address format would be similarly helpful.
Additionally, the three-month lead time for this specific hard fork is considered extremely short — assuming the goal is to prevent a chain-split in the first place. “If you ask any of the developers, they will typically want to see 18 months or two years lead time, for something with as wide an impact on all the software and hardware out there as a hard fork,” Blockstream co-founder and Hashcash inventor Dr. Adam Back noted during a Q&A session.
And if the chain does split into different networks and currencies — one following the current Bitcoin protocol and one adopting the hard fork — the question becomes which of the two gets to use the name “Bitcoin.” So far, proponents of the SegWit2x hard fork have shown no willingness to pick a new name.
“My personal opinion is that whomever is proposing the change, the onus is on them to demonstrate widespread support,” Lombrozo said during his talk on protocol changes. “The people that want to keep status quo don’t need to show anything. It’s the people who want to change the stuff that actually need to demonstrate there is widespread support.”
And for now, not everyone is convinced that SegWit2x does indeed have this level of support — or anything close to it. While several large mining pools, as well as a significant number of companies, have signed on to the New York Agreement, this agreement was itself drafted without any feedback from Bitcoin’s technical community nor — even more important — a reliable gauge of user sentiment.
And while some Bitcoin companies claim to represent their customers, this is — once again — not taken for granted by everyone.
“One debate I want to draw attention to,” venture capitalist Alyse Killeen pointed out, “is the debate whether businesses speak for their users. I think this is probably a debate you would only see now in this space because it’s pretty well established that businesses outside of this space do not speak for users, but it’s a debate we still have in our community. Of course they don’t.”NO2X
If Breaking Bitcoin in Paris can be considered at all representative of SegWit2x’s community support — which, it should be noted, is not necessarily the case — the proposal will face an uphill battle to be widely accepted in November.
Indeed, some signatories of the agreement are not so sure about the hard fork anymore: Bitwala and F2Pool have publicly backed out of the agreement. And, during a mining panel in Paris, Bitfury CIO Alex Petrov ever so slightly opened the door to potentially withdrawing support as well, if both the original and the 2x chain manage to survive.
In fact, it’s not just that contentious hard forks are considered a threat to be defended against by Bitcoin’s technical community. It goes beyond that.
In the words of Bitcoin developer Jimmy Song, at the conclusion of his opening talk of the event:
“What doesn’t kill Bitcoin makes it stronger. And conferences like this prove that we’re getting better at this. We’re getting immunized to all these hard forks, and it’s creating a better Bitcoin as a result, and that’s a very good thing. We’re securing against a lot of these attacks, and figuring out ways to mitigate these threats.”
Image courtesy of Federico Tenga
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GMO Internet Group, a Japanese provider of a full spectrum of internet services for both the consumer and enterprise markets, is launching a new Bitcoin mining business utilizing next-generation 7 nanometer (7 nm) semiconductor chips. “[We] believe this new business has high potential for increasing corporate value in the future,” states the company.
Headquartered in Tokyo, GMO IG comprises more than 60 companies in 10 countries. GMO IG’s size and financial muscle, as well as the novel technologies it wants to leverage, will make it a serious entrant in the Bitcoin mining industry, and one that could have a disruptive impact.
“We will operate a next-generation mining center utilizing renewable energy and cutting-edge semiconductor chips in Northern Europe,” GMO stated, emphasizing that they will invest in R&D and manufacturing of hardware including the next-generation mining chip. “We will use cutting-edge 7 nm process technology for chips to be used in the mining process, and jointly work on its research and development and manufacturing with our alliance partner having semiconductor design technology.”
The International Technology Roadmap for Semiconductors defines 7 nm semiconductor chip technology as the next technology iteration following 10 nm technology, which, in turn, follows the 14-16 nm technology that currently represents the state-of the-art hardware in the Bitcoin mining industry. Commercial production of 7 nm chips is still in the development stage with GlobalFoundries, IBM, Intel, Samsung and Taiwan Semiconductor Manufacturing Company (TSMC) competing for market leadership.
According to a recent article in Android Authority, TSMC seems to be in the pole position in this race, having already showcased a preliminary 7 nm SRAM chip — not yet a full system on a chip (SoC) but an important milestone. Intel is said to be planning the upgrade of a manufacturing plant in Arizona to start building 7 nm SoCs. Samsung and GlobalFoundries are also striving to catch up.
According to Quartz, 7 nm technology would be four times more energy efficient than the current Bitcoin mining industry standard. Therefore, once 7 nm chips are in use, all other miners will have to upgrade to stay in the game.
“It’s clearly the next generation of miners,” Diego Gutierrez, CEO of mining software developer RSK Labs, told Quartz. “The other [mining chip makers] will surely follow and create their own 7 nm chips if they are not already doing it. As [chip manufacturers] get the new technology, everybody can access it.”
“We believe that cryptocurrencies will develop into ‘new universal currencies’ available for use by anyone from any country or region to freely exchange ‘value,’ creating a new borderless economic zone,” notes GMO IG. “[Bitcoin] can be regarded as a distributed system whose credibility is secured by mutual monitoring by network participants, as opposed to legal currencies which are a centralized system whose credibility is secured by the issuer. And management of a distributed system such as [Bitcoin] requires a mining process.”
The entry in the Bitcoin mining sector of these new Japanese players with relatively deep pockets is likely to be welcomed by those concerned about China’s dominance of the mining industry. For example, Chinese mining operator and hardware manufacturer Bitmain plays a dominant role in the $70 billion Bitcoin economy. Its mining pools, Antpool, BTC.com and ConnectBTC, account for around 30 percent of all the processing power on the global Bitcoin network, while the company is also the market leader for specialized mining hardware, including ASIC chips.
In related news, another large Japanese company, DMM, announced the launch of its own Virtual Currency Division, scheduled to begin operation of a virtual currency mining business “DMM Mining Farm” in October 2017. According to the company, which hasn’t released further information, DMM will operate one of the 10 largest mining farms in the world before the end of 2018.
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Startup company Bloom seeks to take advantage of blockchain technology’s perks to create a platform where the participants will have global access to credit services.
According to Bloom, the traditional methods of credit checking leaves billions of people without basic credit services. The stats of the company show that fewer than 9 percent of the citizens in developing countries have ever taken a loan from a financial institution. The lack of access to credit services forces numerous people to take loans from the shady underworld of illegal lending, the company states. Bloom believes that, no matter the country or the region, access to credit “is a fundamental cornerstone of social mobility” since it is the key for individuals to reach their economic goals.
Bloom also pointed out the problem of governmental monopolies in credit checking. According to the startup, 90 percent of the top lenders in the United States use the FICO score, which is in the hands of the U.S. government. Bloom stated that, despite the popularity of FICO, the credit system leaves over 45 million U.S. citizens with no credit score, thus, they are not allowed to — or they have to work hard to — take loans from financial institutions. The blockchain startup also highlighted the issues of other countries:
“In China, your credit score is affected by your political opinions. France, Portugal, Spain and the Nordic countries do not have credit scores, opting to only report negative information to your file. In the United Arab Emirates, religious restrictions on lending have prevented the development of a consumer credit reporting system. In the United Kingdom, you will have trouble getting a high credit score if you are not registered to vote.”
With its Ethereum-based platform, Bloom seeks to migrate all lenders to the blockchain. The company is currently developing an end-to-end protocol for identity verification, risk assessment and credit scoring, all kept on the blockchain. By implementing blockchain tech, Bloom strives to find solutions to the issues within the credit system. Furthermore, the Bloom platform will offer cross-border, global services for 7 billion individuals, the company wrote.
Implementing blockchain technology within the credit system would also provide solutions to security issues. Equifax, one of the three largest U.S. credit agencies, was recently breached by cybercriminals, leaving approximately 143 million Americans exposed. The FBI is currently investigating the hack; however, the Equifax cyberattack ranks among the three largest data breaches of all time, according to The Wall Street Journal. The publication reported that the current breach could be the most dangerous of all since the attackers were able to acquire key personal identification documents — names, addresses, Social Security numbers and dates of birth — all at once.
“It’s certainly the worst single breach of personal information that I know of. This data is the key to everyone’s files and interactions with financial services, government and health care,” Avivah Litan, vice president of the industry-research firm Gartner Inc., said in a statement to the WSJ.
Equifax reported that the credit card details of approximately 209,000 U.S. customers were compromised in the hack. According to independent security researcher Andrew Komarov, the financial details could be sold for $500,000 on underground markets, such as dark net marketplaces.
Bloom published a blog post in response to the Equifax breach. The company seeks to solve the security issues within the credit industry by creating their own decentralized protocol. Bloom strives to implement globally federated, secure IDs on the blockchain. This way, according to the startup, they can “dramatically mitigate” the risk of identity theft by reducing their reliance on single-source forms of identity verification.
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