UK regulatory authorities have started looking into the impact of digital assets on the country’s economy, with the view to regulating the crypto ecosystem in a way that will be advantageous to all stakeholders.

Regulation that Supports Innovation

According to Investment Week, the investigation will study the effect of virtual currencies and blockchain technology on financial institutions as well as other areas of the economy.

The inquiry will also carefully formulate guidelines that will protect businesses and consumers without “Stifling innovation.”

The exercise will also cross-examine the regulatory stance of the government and key authorities like the Financial Conduct Authority (FCA) and the Bank of England.

Nicky Morgan MP, chair of Treasury Committee said, “People are becoming increasingly aware of cryptocurrencies such as Bitcoin, but they may not be aware they are currently unregulated in the UK, and there is no protection for individual investors.”

She also noted that:

“Striking the right balance between regulating digital currencies to provide adequate protection for consumers and businesses, whilst not stifling innovation, is crucial. As part of the inquiry, we will explore how this can be achieved.”

Cryptocurrency is a Double-Edged Sword

MP Alison McGovern, a member of the Treasury committee, opined that the government needs more enlightenment on crypto because as bitcoin and other digital assets offer great gains to investors, there is also a substantial level of risk involved.

In her words:

“This inquiry comes at the right time, as regulators and governments wrestle with recent events in cryptocurrency markets. New technology offers the economy potential gains, but as recently demonstrated, it may also bring substantial risks. It’s time that Whitehall and Westminster understood cryptocurrency better and thought more clearly about the policy environment for blockchain technology.”

Regulation is Inevitable

While the chairperson of the Treasury committee and some members are on the same page concerning the fair regulation of the blockchain ecosystem, some other officials see cryptocurrency as a distraction that needs to be taken care of as fast as possible.

Regulation Counsel at law firm Ashurst Lorraine Johnston reiterated that the inquiry, “Signals yet another step towards the what-seems-like inevitable regulation of digital currencies,” adding that, “Yet again the conflicting interests of supporting innovation versus consumer protection are being put under scrutiny, this time by the Treasury. But surely this is a crypto-conundrum that no country has yet solved adequately? I wouldn’t, however, bet against some form of quasi-regulation of digital currencies coming out of this.”

Meanwhile, the CEO of BrokerNotes, a trading comparison site, Marcus Taylor, is of the opinion that the virtual currency market is a distraction:

“The cryptocurrency market is, quite frankly, a distraction. Until we move beyond viewing cryptocurrencies purely as a tradable asset, to understanding the different applications of the underlying technology and the potential to make cryptocurrencies a viable alternative to fiat currency, it’s going to be difficult to make any meaningful progress.”

He also stated, “The UK has a great opportunity to embrace blockchain technology and lead the way in building innovations that can help the UK economy. The is inevitable with or without government intervention. However, with the right level of regulation, funding and support the government can certainly make things happen faster.”

A fair regulation of the crypto market is a step in the right direction as trying to stifle the growth of the virtual currency ecosystem might be met with stiff resistance from the masses, just as it happened in South Korea, where the Justice Minister was petitioned for initiating a ban on virtual currencies.

Bitcoin and altcoins are slowly but steadily becoming a part of life especially for the younger generations and blockchain technology only make the crypto revolution a more achievable feat.

The post U.K Government Set to Create Favorable Regulations for Cryptocurrency appeared first on CryptoVila.

No aspect of a cryptocurrency project is more representative of its worth than its whitepaper. It acts both as a symbolic milestone and carefully designed laying out of objectives. Those familiar with the market and blockchain projects should have an educating experience when reading whitepapers. However, whitepapers remain largely unapproachable, due to their esoteric nature and a broad inability to express technical concepts in terms accessible to the average reader.

The whitepaper is undoubtedly one of the most critical aspects of a blockchain project as it comprehensively sums up the goals, techniques, processes and resources necessary to run it successfully. Despite the important role it plays, in the vast sea of cryptocurrencies that are now flooding the market, there is a disconcerting number of projects that do not effectively communicate their raison d’etre in their whitepapers.

Oftentimes, such basic errors as spelling, grammar and contradictory information will be present – a sure sign that something is not quite right with the project. The task of constructing a whitepaper is a difficult one – it must cover the technical aspects of a project in detail while also remaining relatively comprehensible to the general public. This is especially true for cryptocurrencies, where many of the readers are not trained to deconstruct academic writing, and are only fresh enthusiasts seeking to gain knowledge about a particular technology.

Balancing these needs is one of the major challenges for those tasked with writing a whitepaper. To help both writers and readers of whitepapers, we examine the characteristics of a solid whitepaper and identify the necessary pillar elements that simultaneously educate and enlighten potential investors on the key information of a cryptocurrency project.

What is A Whitepaper?

Broadly speaking, whitepapers are detailed guides to a project, product or service that places an emphasis on technical and industry-specific details. It is not intended for the lay audience, but for one more familiar with the particular industry. It is a report that presents an unresolved challenge with solutions to overcome it.

In cryptocurrency, a whitepaper is a comprehensive report, often highly technical in nature, that a project usually releases in the lead-up to their ICO, though it may be released at any point. While the details may vary from project to project, it is ordinarily composed of technical, commercial, financial and employee information, presenting the reader with a complete overview of what the project sets out to accomplish, and how and why they plan to do it.

In the blockchain world, whitepapers can be found at various points on the readability spectrum. Some may be far too academic in nature, limiting itself to all but the most educated of readers, while others may omit critical technical information and instead read more like a marketing brochure. Ostensibly, this is for the convenience of the less technically-oriented audience, and to possibly attract a larger readership.

Ideally, whitepapers should be given much thought as they act as an everlasting repository of information for all of the essential details of a cryptocurrency project. As far as investment consideration is concerned, there is nothing more significant than the whitepaper and the wise investor knows that no decisions should be made without a thorough analysis of it.

You will notice how highly projects value their whitepapers by the heavy efforts put in to publicize them. Whitepaper links are proudly displayed in noticeable spots on the website, Twitter is used to announce that the whitepaper is released and excited discussions on Reddit is encouraged.

Why Investors Scrutinize Cryptocurrency Whitepapers

What specific role does a whitepaper play from an investor’s point of view? This will give a better perspective on the ideal whitepaper, as investors form the bulk of the intended audience.

A whitepaper forms the deepest impression, indicating a team’s willingness to sincerely communicate its very reason for existence. A good whitepaper will reveal how well-prepared a team is and the conviction placed in the project. A whitepaper is a document that a team must stand by as it undergoes vigilant examination from its backers and potential investors.

Ambiguous wording and misleading information will not survive public examination from the devoted cryptocurrency community. Several ICOs have already fleeced naive new investors, and there has been growing discontent from both inside and outside the community with regards to the exploitable loopholes of ICO launches. Whitepapers serve as a bulwark against this unethical behaviour.

Veteran cryptocurrency participants know that one can sense the smell of anything fishy from a whitepaper. It is easy to discern the logical, commercial and financial sensibility of a project from its whitepaper. Questions relating to the financial demands of an ICO, robustness of technological architecture and the sheer common sense practicality of a project are all made clear in the documentation.

These latter points prophesize the potential success, or lack thereof, of a project; they are criteria that must be soundly addressed if a project is to be taken seriously.

For these reasons, the experienced investor scrutinizes whitepapers with a magnifying glass. Granted, it is not easy for a beginner to sift through the technical jargon that fills the documentation. However, the technical language of cryptocurrency is something that a crypto enthusiast will learn over time. And one begins to sense, roughly, the adequate technical capability of a project and team by second nature in due time.

Thus, whitepapers are persuasions that a team must convincingly construct to mark off the criteria of logical existence, commercial viability and technical robustness. These criteria must be met, at the very least, to earn investor trust – and much more, if it seeks long-term survival in the long marathon that is the cryptocurrency race.

Of course, this is far from simple, because, as we said, a whitepaper must juggle authoritative information on the project while also remaining accessible to the less knowledgeable minds of public investors. It serves both as an introduction and as an encyclopaedia.

How do we do that? Let us examine what is necessary for a good whitepaper and how to write it.

The Format of a Cryptocurrency Whitepaper

A whitepaper is a formal document that follows a strict format. The general outline is typically as follows:

• a problem being presented
• solutions to the problem
• the technology
• platform and processes that execute the solution
• the applications (use cases) of the solution,
• the team
• resources

Verifiable statistical information is greatly valued and adds authority to a whitepaper. It is not uncommon to see complex mathematical and scientific calculations in whitepapers. These are likely to only be understood by a select few.

However, it is a sign of further commitment by the team to stand by their project, as the calculations are not easily faked proofs. You cannot expect to fool discerning readers with false calculations.A

A whitepaper should generally be formatted as a PDF. This is because PDF files can be distributed, yet are difficult to edit. It compels the author(s) to expend energy and pay attention to its construction, for if a mistake is made, it suffers a blow to its reputation. The work is likely to have been disseminated and the PDF format does not lend itself to easy corrections.

The length of a whitepaper is dependent on the information there is to offer. It is not necessary to have a lengthy whitepaper in excess of 30 pages – more words does not mean better information. Quality of information is paramount and often it can be condensed to a reasonable length. It is easy to spot fluff and redundancy.

To reach the broadest audience possible, it would be helpful to provide the whitepaper in multiple languages. This can be a time-consuming process, but if a little extra is spent on professional translations, the whitepaper would receive much appreciation from the community, particularly from those who do not speak English fluently.

Common languages are Mandarin, Korean, French, German, Spanish and Russian. This is also another indication that the project is making a strong effort to be heard. It is essential to be as accessible as possible in every aspect of the whitepaper, without having to compromise on the technical details.

As for the tone of writing, it should not veer too much in either direction. It is true that technical jargon and academic phrasing suit the nature of whitepapers better, but there should exist some consideration for more plain exposition.

Academic explanations by their very nature suit technical architecture and solutions better, but the essence of it should also be summarized and communicated in comprehensible analogies or newbie-friendly wording at some point in the paper. It would be remiss to limit the understanding of a critical part of the project to a select few readers.

It goes without saying that a whitepaper must not be plagiarized. It is lazy, dishonest, and a disservice to the readers. Even if it’s to recap some popular facet of whitepapers, such as blockchain basics or history, it does not do well to plagiarize.

One would assume that the team has the expertise and writing competence to explain what a blockchain is, given that they have experience and knowledge in the space. The crypto community is not easily fooled, and sheer laziness and incompetence will be picked up on quickly.

Key Elements of a Cryptocurrency Whitepaper

A more detailed outline of the format of a whitepaper is listed below. These are the elements that make up a whitepaper. A cursory scan of a few whitepapers will showcase variance from one to the other. The form and style will largely depend on the nature of the talking points but, for the most part, the following elements are common to all whitepapers.

Abstract

In a research paper, an abstract sums up the purpose of the project, problems and solutions in the field, and the techniques employed to achieve that solution.

Abstracts are not present in every whitepaper. It is a more formal inclusion, present in academic papers, and is often missing from cryptocurrency whitepapers. A notable exception is the Bitcoin whitepaper, written by Satoshi Nakamoto, which included an abstract that succinctly addressed the problem of centralized systems, solutions to the double-spending problem, a brief description of the method and how it works.

While it is not absolutely essential, an abstract offers readers a quick overview of the bare basics of a project’s problem and solutions. If it piques their interest, they may choose to continue reading the entire whitepaper. These opening statements save a lot of valuable time and lend credibility to your project.

Introduction

It is helpful to brief the reader on the particular industry that the project is operating in. While some may know the technology supporting the project, perhaps being tech-insiders themselves, far fewer are likely to know about the dynamics of the industry. This includes its current standard of operations, the challenges it faces, revenue models, global market share and so on.

The introduction can inform readers of the status quo of the industry and the obstacles for growth. The case for blockchain technology is made here, and should include how it would eliminate the hurdles and help the industry flourish. Specificity and factually correct information are necessary. Naturally, there must be evidence to back up any claims.

Listing the specific factors that hinder the growth of the industry and explaining them in a manner that is accessible gives potential investors a sense – of the common sense kind – of the use of the project. A solution to the problem in brief, without going into the technicalities, can also be included.

The introduction doesn’t call for an academic tone. Rather, it is used to gently inform readers of the outline of the problem and possible solutions, and table detailed technically-worded expositions for a later section. This will help the reader gain a general idea of what the scenario is like and will make the technical aspects more approachable.

Ripple’s whitepaper on its consensus protocol is an excellent example of an introduction balancing information and accessibility. On the whole, Ripple’s paper is short and sweet.

Definitions

To further aid understanding, it is recommended to define a list of significant and commonly occurring terms in the whitepaper. These will be the technical terms and/or those unique to the project in question. This will act as a sort of appendix for the reader, who can return to it for clarification when reading the technical sections of the whitepaper.

For example, the definitions of the specific components involved in the platform’s processes would be listed here. ICON’s (ICX) definition of the NEXUS and C-Rep are well-written definitions that clearly define their roles and functions while also being quite readable.

For an instructive lesson on how to tackle this deftly, consider how Zcash has defined terms both formally and informally in their whitepaper. It gets quite heavy on the mathematics, but they have also included simpler definitions for the lay reader.

Consensus Algorithm

As an essential part of a blockchain network, the consensus algorithm requires detailing in the whitepaper. This section is typically written in a technical manner, with mathematical proof accompanying it. If a consensus algorithm is unique in any way, it can be compared to other algorithms, allowing its salience to be highlighted. The advantages can be emphasized.

This section should also describe the actual working mechanism of the algorithm – how the agreement is reached. Other concerns include how the system protects itself from externals attacks, such as a 51% attack. If the project is fortified against these in some way, then it is relevant to communicate them.

Solutions

This is where the real technical speak begins. Every blockchain project has different elements which make up its overall solution to the problem at hand. This section, put under the umbrella term “Solutions” will need subsections which deal with each individual component of the solution.

IOTA academically runs through their solutions in their whitepaper. Dense with technical terms, even an expert in the field will need much re-reading to make sense of it.

OmiseGo’s whitepaper (OMG), on the other hand, juggles clarity and technical exposition. Pay particular attention to how they have used a step-by-step example in the section “Bitcoin Clearinghouse” to explain the transaction process. It is preceded by what a clearinghouse is and why it exists, along with its role in the project’s platform.

This section is an examination of the research and technical proofs. A solid project, like IOTA, confidently explains all of its mechanisms with scientific and mathematical arguments – something which cannot be faked.

There is no dressing up of concepts here – just an explanation of the facts. If there is room for a simplified and reasonably diluted translation, it is worthwhile to communicate.

Technical Architecture and Platform Operation

After having offered the solutions to the problem, it is time to present how they will be applied in an actual system. The core components of the network protocol and each of their functions are to be discussed, with the motivations for their existence. Not every project goes into detail about the exact architecture of their network, but all of repute do so.

The previous two sections conclude the bulk of the technical material of the whitepaper. This can now be followed with an explanation of how the platform works between the various stakeholders in the ecosystem.

It would be good to list the stakeholders and components of the ecosystem. Diagrams can help make it easy to understand the flow of the system. How are the tokens involved in facilitating interactions between the various stakeholders?

IOTA is again a good example of technical architecture well explained.

Token Information

To ensure complete transparency, projects often list their funding sources and allocation in their whitepapers. Investors get to see where their money will be spent and the details of the token system.

This portion of the whitepaper offers purely financial information about the project. List the details of any financial backing that has been received and go into the numerical figures of the token. Take a look at TenX’s whitepaper, which explains in detail its token sale and funding allocation details.

Roadmap

Having described the project and its technical aspects, it is now time to explain to potential investors the path forward that has been mapped out by the team.

What are the technical and business milestones of the project? How and when are iterative changes to the blockchain being planned? When will the platform go fully public? These are just some of the points to be addressed in the roadmap section.

Golem Network Token offers a nice roadmap section that deserves emulation.

Use Cases/Commercial Application

This is one of the most significant aspects of a whitepaper, and not just because it covers how the project will manifest itself in the real world. It is significant because it is one of the few sections that will be instantly accessible to every reader, and the most attractive as well.

It is imperative to describe how the project will find its way into commercial use. After all, a project may be backed by foolproof technical and mathematical features, but the benefit of that is lost if it is not expressed in a relatable manner, with clear tangible applications. What revenue generating capability does it have? What results, in statistics, does the introduction of the technology bring?

Potential business partnerships that would accelerate adoption and help spread the use of the platform can also be stated, as they are also two very crucial aspects of a project’s potential. Essentially, this is the section that persuades investors from a business point of view.

Team

The community is happy to hear about the individuals behind a project. It helps an investor learn about the experience and expertise of the individuals running the project. This extends to project advisors. Having a group of renowned advisors can raise the credibility of a project in the eyes of investors.

References

This is self-explanatory. The reference section credits the various resources that have been used and is the citation for the statements made over the course of the whitepaper.

Source Code is Like a Second Whitepaper

Many educated members of the community, and certainly the developers among them, know that what makes or breaks a blockchain project is the underlying technology which is built on programming.

Reading the source code is an irreplaceable method of learning about a project. In a sense, a whitepaper exists to translate what is present in computer languages into human language. That said, it’s important to know that there is a lot that can be lost in translation.

In blockchain (and many other industries, given that the world is becoming increasingly digital), knowing programming is an indispensable skill. It offers greater clarity into a project and it helps one spot the inconsistencies between a project’s supposed characteristics and its actual technical buildup.

For anyone writing a whitepaper, remember that the source code of the project functions as a second whitepaper. The source code should reflect the transparency that is claimed and executed in the whitepaper. GitHub can serve as a public profile and it will receive criticism, both constructive and destructive, from those knowledgeable about code.

The point is that the clarity, transparency and approachability people expect in a whitepaper is not limited to just the whitepaper. These are core principles and the team that should reflect these values in all the work they do in the project.

A dishonest project will be caught out on this but a sincere one will exhibit this. Not because they are making a conscious effort to possess these qualities, but because they embody these qualities naturally and it shows in their work. In other words, it is something that cannot be faked.

Why Cryptocurrency Whitepapers Matter

At this point, it should be clear that a whitepaper is an indispensable element of a cryptocurrency project. It is a written commitment, on the permanent and global publication platform of the internet, to the disruptive and future-shaping effects that a project aims to accomplish. It is the act of putting money where one’s mouth is.

From a practical point of view, a whitepaper is meant to attract investors. If a project and whitepaper is solid, it is assured that investors, particulary well-informed ones, will spread the word about high potential projects.

Finally, a whitepaper also acts an effective method of marketing a project. For one thing, the cryptocurrency community demands the existence of a whitepaper to even consider the viability of a project. Given the explosion of the market in the past year, whitepapers have become both a mark of authenticity and a form of validation for new projects.

Whitepapers are also enthusiastically distributed over internet forums and social media, giving a project a scale of outreach otherwise unavailable without one. This is another significant reason to publish a whitepaper when launching a new cryptocurrency project.

Conclusion

Whitepapers may seem like a daunting challenge, but they are very much necessary and basically mandatory in today’s crowded crypto space.

However, a genuine team should have no problem assembling the information they need to construct a whitepaper. With feedback and deliberation, that fine balance between accessibility and technical exposition can be found. To examine different cryptocurrency whitepapers, visit whitepaperdatabase.com, which is an extremely thorough resource.

Fortunately, the development of a blockchain project is quite open and inclusive – it is possible for one to become a blockchain developer and even create a own blockchain in half an hour. While that may be something of a double-edged sword because it raises the probability of low quality and shady projects, it also empowers the individual – any individual – to start a dream project that may just benefit society greatly. In such a case, writing a whitepaper would ease the process of establishing a foothold in the blockchain industry while also educating the general public about the project.

It can’t be said enough: whitepapers matter.

Are you starting a blockchain project that is in need of a whitepaper? Invest In Blockchain can help! Email us to enquire.

Related: How To Run A Successful ICO (Part 1): Should You Even ICO?

The post How to Write a Great Cryptocurrency Whitepaper appeared first on CryptoVila.

Faster, cheaper bitcoin transactions? Check. But at what cost?

For bitcoin users, many of whom were drawn to cryptocurrency for its promise of financial sovereignty, bitcoin is still synonymous with privacy. But the gap between the vision and the reality, in which user transactions today must be published to a globally distributed ledger, has long been one of the technology’s biggest points of controversy.

“Bitcoin is Twitter for your bank account. Everything is public to everyone,” Ian Miers, the co-founder of the privacy-centric cryptocurrency zcash, told CoinDesk.

Compounding matters, however, is that as bitcoin users get closer to gaining a whole new way to send transactions, powered by an innovation called the Lighting Network, concerns are spreading that privacy could degrade from its already imperfect state.

On the surface, the idea might seem promising – because Lightning payments occur “off-chain,” the information isn’t included in the blockchain that all nodes store.

But while there is no Lightning ledger so to speak, payments in the scheme are still broadcast across nodes within the network. Essentially, to ensure routing is always available, those using Lightning channels need to trust other network users to help relay transactions.

Conceptually, this means that participants within the system could pry on a transaction, or even potentially sell that information to governments or advertisers. This is a risk that’s worsened if the network becomes centralized into a “hub-and-spoke” type structure, where hubs are large, well-known and often-used entities.

“Lightning likely won’t improve privacy, it may make it much worse from an average consumer’s perspective,” Miers added.

And like many, more speculative concerns surrounding the upcoming tech, the risk to user privacy may not be obvious until the network is deployed – an uncertainty that, combined with a wave of efforts on behalf of Lightning developers to include privacy features, has led to mixed sentiments as to what the future of private bitcoin transactions might be.

According to privacy researcher Kristov Atlas, in a worst-case scenario, privacy attackers could “thrive” on hubs “vampirically feeding off” the data as he wrote in a blog post.

However, the upcoming Lightning release does have some privacy features embedded, and there’s reason to believe that developers are at least making advances on the problem.

Onion-routing

To date, the most advanced privacy feature included within Lightning is called “onion routing,” and it’s part of the Basics of Lightning Technology (BOLT), a series of protocols that ensure the multiple iterations of Lightning can interoperate.

In onion routing, payments are passed through multiple channels, and only the minimum of information about that payment is exposed.

For instance, upon receiving an encrypted payment, a node can only know where that payment came from and to what node that payment should be relayed.

According to Olaoluwa Osuntokun, a leading figure in Lightning development who first suggested the scheme on the developer mailing list, the importance of this is that nodes can’t be selective when it comes to what payments they’re willing to take.

“Nodes shouldn’t be able to arbitrarily censor certain payments, or blacklist certain destinations within the channel graph,” Osuntokun explained.

Often compared to the Tor network for its use of onion routing, Lightning has occasionally been celebrated as a darknet for bitcoin payments – however, it’s comparatively untested, and could face some of the problems native to Tor as well.

“Similar to Tor, there exist known possibilities of timing leaks, and also unknown active attacks that may be viable,” Osuntokun said.

And according to some, there’s ways that onion-routing could be manipulated, leading to the loss of privacy, especially in an early Lightning network.

For example, the last node within a route, as well as whoever sent that payment, will know the transaction information, and theoretically, nodes could collude to break privacy, piecing together each layer of the payment in order to create a complete picture.

On top of this, there’s the risk of a “global adversary which is able to instantaneous monitor all channels on the network,” something that the current privacy protocol doesn’t address, Osuntokun continued.

Fixed identifiers

And there’s further defects to privacy on Lightning today as well.

For example, Lightning payments are currently given a fixed identifier that is repeated throughout the entire route. “This means that if an adversary has two non-contiguous nodes on the route, then they can trivially link a payment flow,” Osuntokun said.

That said, Osuntokun assured that there’s ways to correct this in future.

For example, if Schnorr signatures, a scaling method that works by aggregating public keys, are adopted into bitcoin, it could correct this issue in a “simple and attractive” way, Osuntokun said.

Plus, there’s other, “more heavy weight solutions” such as using zero-knowledge to encrypt payments. However, because this encryption device is heavy, it will “significantly increase the amount of data one needs to send in order to complete a payment,” Osuntokun said.

According to Osuntokun, the “lowest hanging fruit” is to obscure this payment identifier with random numbers as the payments pass through the network.

Hub and spoke

Even more speculative risks exist as well, but according to Miers, it’s all highly contingent on the structure that the Lightning network will take.

“Some people think the amount of money you need to lock up in a channel and the costs of running nodes will inevitably lead to centralization,” Miers said. “And then there’s clearly no privacy.”

Because onion routing works by passing payments through multiple nodes, in the case of a highly centralized network, active nodes could have perfect visibility of the payments.

However, Blocksteam engineer Christian Decker told CoinDesk that the development teams are  creating “counter measures” against this risk of centralization.

Programming the system to open channels at random, Lightning “tries to avoid having hubs that can observe traffic,” Decker explained, which has the added benefit of “strengthen[ing] the network as a whole against single points of failure.”

Decker said that this randomness could be extended to how routes are formed on the network, making payment paths less predictable but potentiality increasing fees.

Other researchers maintain the risk involved in maintaining a node with high throughput will stave off the formation of centralized hubs.

Miers concluded:

“We will see which one actually ends up happening.”

The post Will Lightning Help or Hurt Bitcoin Privacy? appeared first on CryptoVila.

The commercial, state-run Bank of China, not to be confused with the People’s Bank of China, the country’s central bank, has filed a patent with the Chinese State Intellectual Property Office (SIPO) for a solution to scale Blockchain technology systems, according to local news outlet tech.ifeng.

The bank originally applied for the patent on Sept. 28, 2017, with a Zhao Shuxiang indicated as the patent’s inventor, but SIPO only released news of the patent on Feb. 23, 2018.

The patent contains a method for compressing Blockchain data that seeks to solve the problem of storage space in new blocks without compromising on traceability and immutability.

As described in the patent, the amount of data stored in in new blocks would be reduced in the following way: when a full-size node receives a compression request from a client, it compresses transaction data from multiple blocks into a single “data block”, which would then be temporarily hosted on a different data storage system.

This data would then be run through a hash function with the data block hash value, and the compression transaction would map the relationship between the compressed block, the data block, and the compression event, which would all be recorded on the Blockchain.

While China has been one of the stricter countries globally in terms of cryptocurrency regulation, having banned Initial Coin Offerings (ICO) and foreign exchanges from operating within the country, the South Korean Finance Minister spoke earlier this month of a need to cooperate with China in the sphere of Blockchain during a meeting with the governor of the People’s Bank of China.

Earlier this week, Chinese multinational PC company Lenovo also filed a Blockchain-based patent for verifying the integrity of physical documents, but with the U.S. Patent and Trademark Office (USPTO), rather than China’s SIPO.

The post Bank Of China Files Patent For New Blockchain Scaling appeared first on CryptoVila.

Raising money from Main St. investors has come a long way from the days of Initial Public Offerings. From IPOs to Kickstarters to ICOs… and now, it seems, we might be switching to DAICO.

In the cryptocurrency world we’re most used to Initial Coin Offerings and different variations such as the Initial Loan Procurement offered by Blockhive. But a new project, The Abyss (a gaming platform), is the first to trial a new funding concept called the Decentralized Autonomous Organization Initial Coin Offering.

To be able to understand the potential improvements that DAICO’s bring to the table, it is important to understand the current state of funding through ICO’s.

The ICO Model

The financial phenomenon of ICO’s redefined cryptocurrency ventures by giving them the ability to go directly to the markets and raise funds without regulatory restrictions.  Cryptocurrency projects issue tokens that may or may not have value tied to the actual operation of the issuer; these tokens are purchased by investors and held or traded. The tokens issued in ICO’s can vary in nature and can serve as utility tokens, or tokens that act as security (giving the token holder interest in the issuing company).

Yet, as with any other revolutionary concept, the overall function of the ICO does have some room for improvement. Issues include the ambiguity in the nature of the token, the lack of regulation, and concerns engendered by projects in which the founders perpetrate a PlexCoin-style ‘Exit Scam’, running for the hills with the money – leaving minimal recourse for a return of investor funds.

These concerns and critiques are shared by many in the regulatory and crypto community,  including the man who has been integral to the creation of the concept of ICO’s himself, Vitalik Buterin.

Vitalik Buterin, co-founder of Ethereum and the current head honcho behind the Ethereum network, suggests that ICOs have the potential to evolve into something more, specifically, by the usage of the decentralized autonomous organization (DAO) model.

He calls the initial concept DAICO, and hopes that the decentralization of an ICO could take the methodology to an increased level of effectiveness.

The DAICO Model

Simply put, the DAICO will use the most integral concepts from an ICO and a DAO, merging them together to leverage the most relevant features of each of these methodologies.

For instance, it will take the ICO’s single-project approach along with its preventability of a 51 percent attack, and have it combined with DAO’s crowd wisdom, eradication of control by a centralized team, and the ability to spread the release of funds over time rather than having them available to the ICO’s issuer all at once.

By allowing these functions and using them together, Buterin explains that DAICOs will provide user protection in a manner that has not been provided before, as a DAO mechanism will ensure that funds are not being misspent by the ICO’s issuer but are used for the intention for which they were invested.

Describing Buterin’s concept in simpler words, a DAICO will start with a smart contract by its executors, that can set whether it is a capped contribution or a Dutch auction among many other options, including additional know your customer (KYC) requirements.

After these settings are configured, the executors then present their DAICO to the public to fund, setting it in “contribution mode”. The contribution mode will work like a regular funding period, where investors would be able to pay in Ether in order to get their ICO tokens.

Once the contribution period has passed or the required amount is met, it will allow all investors the ability to set the “tap” for the collected funds. This tap will refer to the amount per second that is available to the executor to develop the promised project. This functionality will ensure that the funds are not misused and only spent where they are needed.

In case the investors change their mind about the effectiveness of the team behind the project, they can either raise the tap together to provide more funds to the team, or in the worst case scenarios, choose to “self-destruct” the ICO by voting on it, which will allow all unused funds to be refunded to their respective investors.

By allowing these functionalities, Buterin aims to put a stop to the way that bad actors are using ICOs to their advantage with practically no authority to really govern their offerings, which can cause unsuspecting investors to be duped.

Who’s Switching To DAICO First?

Ever since Buterin expressed the idea last month, various discussions have been held on its execution. Since it is considered as a natural evolution of the way the community is currently handling ICOs, and since a majority of Ethereum developers agree upon it and want to put it to execution as soon as possible, work is in progress for this mechanism to come to life.

The most recent reports came from gaming startup named The Abyss, which is currently working on deploying the first DAICO, taking Buterin’s concepts into consideration and building upon them to improve them further.

For instance, the team behind The Abyss is working towards establishing a “quorum” for the number of votes that would be needed to put a decision into action, and  they are also working to enhance the self-destruct or refund mechanism that Buterin explained last month by allowing several people to serve as the overseeing body of the DAICO, which would be able to allow a refund vote to go through and take investors’ opinion on it, depending upon the circumstances.

The DAICO for The Abyss is going to target $60 million, which is no small amount to play with. Therefore, it will be interesting to see how this high stakes experiment turns out to be for the company, and if it provides revolutionary functions to redefine the ICO crowdfunding model.

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As Venezuela embarks on a radical experiment, as Turkey trades with Russia through crypto payments, as Iran considers its own cryptocurrency, and as Saudi Arabia as well as Dubai announce plans to issue digital currencies, the ramifications of blockchain technology to the post world war two financial order are becoming clearer by the day.

And as they do, this space has to grapple with a response. Are we to play favorites? Can we play favorites? Do we consider wider implications? Or do we roll the dice and let the chips fall where they may?

The natural response is to see the technology itself as neutral. Coders have no insight into geopolitics just as arguably no one else does as shown by the fact those geopolitical games always end in war.

But more importantly, no one can prevent state actors from using the internet, or cars, or electricity, or any other invention. It’s just impossible. Nor thus can anyone be prevented from using blockchain technology, whether of a public kind or private.

That too is impossible, for in the most abstract manner the blockchain isn’t a real thing, it’s an idea, and as soon as one knows of an idea they can not unknow it.

Neutrality, therefore, isn’t quite a choice, but a necessity. As such any response or position can’t be directed at the technology itself just as much as one can’t direct their policy towards the positive and negative discharge of electricity for it has no care of our views or policies.

At the same time, gradual transitions are preferable to instant shocks. Whatever the pros or cons of sanctions or blockades, you’d think they would be preferable to war. Just as you’d think in some cases they are a cause of war, or that in some cases they would be preferable to war for only one party.

Yet without dwelling into what we have no insight and we are sure no one else really does, it is probable sanctions are on a shelf life.

You simply can not have financial blockades when anyone can issue a decentralized digital currency that needs no third party permission and if you limit such blockades to only interconnections with traditional money you are simply precipitating the extinguishment of traditional money for the natively digital is clearly superior since it meets an obvious need.

What you need to do, therefore, is to engage in a race. Many western countries, and America in particular, are making a grave mistake in not seeing what they have in abundance of talent. It is the incumbent’s syndrome, and we know how that ends. Ask Kodak, Blockbuster, Nokia…

Instead of utilizing their advantages, many western countries are talking them down in a blunder that might go down in history. They listen to the bankers. Otherwise said, they’re listening to Kodak. Instead of listening to what now dominates the stock market, tech companies.

And in the process they’ve allowed Venezuela, and perhaps others, to do what, regardless of the politics and all the rest, to do what from a chess perspective is a brilliant move.

They are tapping into 21st century markets, into a new way to do finance, and if you just think about it for a second, the bonds, the stock market, by comparison they look so outdated.

Who… no one has bought bonds. Who buys stocks? They still issue paper certificates. Yet you tune into crypto, you just turn on some website, and you’re now rolling up or down.

Or you take the microphone, like Maduro has done, and now you have a global market. Plenty may say plenty. The markets never care.

In all this… ok, there’s Giancarlo, there’s London’s FCA, there’s Switzerland which is doing some great things, there’s Estonia which is doing some cool things, there’s Japan, but there isn’t really that embrace, that leadership of we must utilize this tech and we must do it better than anyone else.

There are gestures, but it’s all so cautious, it’s all wait and see, it’s all almost still at does this really work, and in some aspects it’s worse, with clueless idiots like bankers and China trying to wish it all ways, as if you can wish 2+2 away.

In some respects the caution is understandable, but at this stage it appear to come not from rational analysis but from outright denial that anything has changed.

Yet it has, it has. Get over it. Things won’t be the same, they can’t be the same. There’s an invention. Just as we can’t go back to candle light we can’t go back to pre-blockchain. It’s that simple, it’s like physics. And you know, physics doesn’t care what you think, or what you like. It just, if-thens.

So if you want to sit back while necessity breeds a jump to new technology for some locals, that’s your choice. And if you want to be even more foolish and try to deny reality or just wish it all away, well, you’re the king.

But if you want to reinvigorate your people and bring back optimism and a drive for better, then just take an open mind and see the capabilities, see what can be done, see how things could be better, see what advantages can be gained, see how all boats could be lifted, from Africa to the banking towers.

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Despite rumours to the contrary, the UK government have announced that they will not be following the likes of Venezuela in launching their own digital currency for now. Whilst the Bank of England are indeed studying the implications of centrally-issued electronic currency, a government minister has stated that there are no plans in the immediate future to launch their own.

Government Respond to Opposition Query

According to the Independent, the issue was raised by a Labour MP in early February. Barry Sheerman asked “whether the Government will introduce a fiat digital currency.”

John Glen, the Economic Secretary to the Treasury and City Minister, has since responded in the negative:

“The Bank of England does not currently plan to issue a central bank-issued digital currency… However, the Bank is undertaking research to better understand the implications of a central bank issuing a digital currency.”

As mentioned, the Bank of England is studying the area closely. It has produced its own digital currencies page. It states that they are “carrying out ongoing research” into electronic currencies and their underlying technology. On the website, they are careful to differentiate between what they strangely refer to as “private digital currencies” such as Bitcoin (the entirely permission-less, border-less cryptocurrency that has no central issuing authority and can be accessed and used by any member of the public across the globe) and “central bank-issued digital currencies”. The latter would likely require all transactions be authorised by the bank themselves and thus entirely miss the point (and therefore the revolutionary and transformative power) of truly decentralised cryptocurrencies.

The page goes on to say that the Bank of England perceives no immediate threat from digital currencies. They state:

“We have assessed private digital currencies and concluded that while they are interesting, they do not currently pose a material risk to monetary or financial stability in the UK. We continue to monitor developments in this area.”

Whilst the recent announcement from Glen clearly states that a centrally-issued electronic currency would not be launched in the UK anytime soon, the research by the central bank, along with the lack of an explicit ruling out of the possibility in the future leaves the door open for a  U-turn at a later date.

As part of the bank’s research, the institution will no doubt be carefully following the development of Venezuela’s El Petro. The South American nation recently launched their own digital currency that is backed by their oil reserves. It will provide financial institutions around the globe a useful case study for developing their own policies towards electronically-issued currency and whether or not they too will launch their own.

Meanwhile, it appears that other nations are following Venezuela’s lead. Both Turkey and Iran have been considering the possibility of creating their own national digital currencies. Meanwhile, Russia is also taking steps in a similar direction. It’s thought that the CryptoRuble will help the nation avoid various international sanctions levied against it.

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After reaching an all-time high at $1.12, Incent sharply corrected down to $0.16, losing 85% to USD. However, price found the support at $0.25 as the weekly closing price remained above that level and this is the price where the triangle was previously rejected after the breakout.

Currently, INCNT/USD is trading around $0.25 support, that could prove to be a good entry point for investors. The growth potential for Incent remains as high as 400% in the medium term, as the upside target is seen at $1.23, where double Fibonacci formed a strong resistance.

On the downside, the support area remains between $0.25 and $0.125 and Incent could get lower once again, but only break and close below $0.08 could invalidate bullish outlook.

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Litecoin price was not able to hold the $205 and $200 support levels against the US Dollar. LTC/USD traded towards $180 before starting a short-term correction.

Key Talking Points

• Litecoin price extended declines and traded below a major support at $200 (Data feed of Kraken) against the US Dollar.
• There is a key bearish trend line forming with resistance at $205 on the hourly chart of the LTC/USD pair.
• The pair may correct a few points in the short term, but it may face sellers near $205 and $210.

Litecoin Price Forecast

There was a no major recovery in litecoin price above $225 yesterday against the US dollar. The LTC/USD pair even failed to hold the $205 support level and declined below the $200 handle. It traded towards the $180 level and formed a low at $181.

The pair is now trading well below the $200 level and the 100 hourly simple moving average. It recently started an upside correction and is currently trading near the 23.6% Fib retracement level of the last drop from the $252 high to $181 low.

Cryptocurrency charts and prices provided by TradingView

However, there are many barriers on the upside for buyers above the $200 level. There is also a key bearish trend line forming with resistance at $205 on the hourly chart of the LTC/USD pair.

More importantly, the stated $205 level was a support earlier, and now it could act as a strong resistance. Furthermore, the 38.2% Fib retracement level of the last drop from the $252 high to $181 low is at $208 to act as another resistance.

Only a successful close above the $205 and $210 resistance levels could kick start a fresh upside wave in litecoin price in the near term.

On the downside, the recent low of $181 is a short term support. If the pair fails to hold the $181-180 support area, there is a chance of a slide back towards the $160 level. The overall price structure is bearish as long as the price is below $210.

Trade safe traders and do not overtrade!

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The current whirlwind of hard forks such as Bitcoin Gold, Bitcoin Diamond, Bitcoin Cash and others have worsened the confusion about the very idea of Bitcoin and thus harming it in many ways.

It is believed that many projects are unduly exploiting the liberal MIT open license which underpins Bitcoin’s core code to attack the blockchain network. Hence, confusing the public in order to gain personal profit in a way which is seriously hurting the Bitcoin ecosystem.

However, these exploitations may have a provided a trigger to look for new approaches to shield Bitcoin‘s core code from being abused.

What is the MIT License?

The MIT License (also known as the X11 license or MIT X license) is a permissive free software license that was originally developed at the Massachusetts Institute of Technology. Therefore, when an author makes the software accessible under the MIT License, they give the authorization to utilize, share and modify the product at no extra cost.

Proposed Changes

The new proposal, which has been recommended on a mailing list for Bitcoin developers maintained by the Linux Foundation, includes the inclusion of a wording on the MIT License that would make it difficult for subsequent forks to profit off Bitcoin’s brand.

In particular, the proposed changes disallows the use of any name associated with Bitcoin in any new project for marketing purpose, except it is compatible with the Bitcoin’s core blockchain.

Jose Femenias Canuelo wrote on February 13:

“…I’d like to raise the possibility of amending the MIT license in a simple way, by adding a line such as:

***
NO PART OF THIS SOFTWARE CAN BE INCLUDED IN ANY OTHER PROJECT THAT USES THE NAME BITCOIN AS PART OF ITS NAME AND/OR ITS MARKETING MATERIAL UNLESS THE SOFTWARE PRODUCED BY THAT PROJECT IS FULLY COMPATIBLE WITH THE BITCOIN (CORE) BLOCKCHAIN
***

(This is just an approximation. A final version would probably have to include a restriction to some soundalikes like BITKOIN, BIITCOIN,…).”

Mixed Views on The New Proposal

Developers in support of this new change believe that reusing Bitcoin’s license by other forks is an attack on Bitcoin.

For instance, Aymeric Vitte – a bitcoin-dev list contributor – highlighted major issues associated with reusing the cryptocurrency’s core code such as the Replay Attack, referring to the duplication of transactions that may occur on forked chains as well as Bitcoin’s original blockchain:

“Maybe people like to get ‘free’ coins, but they are misleaded (sic), they can lose everything, and there are some more vicious side effects, like replay protection collisions between forks.”

Other developers, such as Felix Wolfsteler, are opposed to the change partly because there are few issues with the solution. First of all, the ownership of Bitcoin’s core software is not clear. For example, the MIT Digital Currency Initiative which is maintained by a group of developers provides funding for development cost. Hence, it would be difficult for someone to assert possession and sue another individual for using the software.

Additionally, the MIT Licence which is widely used in open source software projects to encourage innovation and collaboration might discourage further innovations on Bitcoin’s blockchain, if there are changes to its licensing.

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