Day: July 13, 2017

If you’ve been listening to the bitcoin ‘community,’ you’d know in about two weeks the bitcoin network may face some protocol changes. Due to the possible user-activated soft fork (UASF) planned and the chance some groups may counter this plan, this has created thousands of discussions concerning August 1. Now the bitcoin-focused web portal Bitcoin.org has issued a warning on the site that informs users of a “potential network disruption.”

Also read: Mining, Merchants, and Traders—Thailand’s Got the Bitcoin Fever

August 1st and the Potential Network Disruption

Bitcoin users everywhere are getting prepared and heavily discussing the possibility of a blockchain split. The subject was discussed a lot this past March when bitcoin proponents and cryptocurrency businesses feared a potential split when the Bitcoin Unlimited implementation was seeing strong support. Now the conversation has resurfaced, but the topic of UASF or BIP148 is an entirely different scenario.

UASF (BIP148) is a mechanism designed to start on August 1st, at 00:00 UTC that activates a soft fork enforced by full nodes. After this point, full nodes participating in this plan will reject blocks that have not upgraded to BIP141 otherwise known as Segregated Witness (Segwit). At press time there are 1095 total UASF nodes out of 7896 reachable bitcoin nodes globally according to Bitnodes. UASF requires a lot of industry support and miners to activate Segwit, by this point if they do not support the activation the chain could diverge into two.

Currently, there are businesses that have announced initial support for BIP148 such as Abra, Trezor, Samourai Wallet, Electrum, Coinomi, Mycelium and roughly 37 other organizations. However, there are many wallets and a vast majority of exchanges that have not announced any support or issued warnings about the upcoming August 1st Segwit enforcement. This includes a significant amount of wallet providers and exchanges including Bitstamp, Kraken, Bitfinex, Gemini, BTCC, Poloniex, and many more. One relatively small exchange in Switzerland called Bity has warned its customers the platform will be halting trading on August 1st.  

Bitcoin.org’s Warning

On Wednesday, July 12, 2017, 08:00:00 GMT Bitcoin.org issued a warning in regards to the potential network disruption that may take place on July 31, 20:00:00 GMT/August 1st, 00:00 UTC.

“Bitcoin confirmation scores may become unreliable for an unknown length of time,” explains the network disruption warning. “This means that any bitcoins you receive after that time may later disappear from your wallet or be a type of bitcoin that other people will not accept as payment.”

Once the situation is resolved, confirmation scores will either automatically return to their normal reliability, or there will be two (or more) competing versions of Bitcoin. In the former case, you may return to using Bitcoin normally; in the later case, you will need to take extra steps in order to begin safely receiving bitcoins again.

The warning gives users some preparation guidelines and possible outcomes for during and after the UASF event. This includes not trusting payments during this time, and not sending payments until after the dust has settled. Even the maintainer of the website Bitcoinuptime.com says that there may be “potential bitcoin downtime from the upcoming BIP148 fork” and the network’s 99.991523267% uptime will have to be updated. Further, there was an issue concerning the Bitcoin.org alert over the wording “Bitcoin may be unsafe to use starting July 31st” in contrast to saying “potential network disruption.” The developer who made the change writes;

Note: I object to this change, which I think makes the alert less clear, less forceful, and degrades alert usability.  I make this change only because the Bitcoin.org site maintainer insists upon it.

GDAX Issues a Statement Concerning UASF

Following Bitcoin.org’s disruption alert one large bitcoin exchange has come forward issuing a warning and how the company will handle the August 1 situation. The cryptocurrency trading platform GDAX, a subset of Coinbase announced there will be a temporary suspension of deposits, withdrawals, and possibly trading on August 1. GDAX executive Adam White says, “the activation of UASF may create two blockchains,” and outlines how the company plans on handling the possible fork. If August 1 results in two chains, GDAX states;

1. One blockchain becomes dominant, resulting in the other blockchain having low community adoption and value.
2. Both blockchains are adopted, co-existing and operating independently of one another with roughly equal community adoption and value.

In either scenario, we will implement safeguards to ensure the safety of our customers’ funds. For example, we will temporarily suspend the deposit and withdrawal of bitcoin on GDAX and may pause the trading of bitcoin as well. This decision will be based on our assessment of the technical risks posed by the fork, such as replay attacks and other factors that could create network instability.

Bitcoin ABC

Another possible scenario to think about is the “Bitcoin ABC” (Adjustable Blocksize Cap) implementation that was revealed by the software engineer, Amaury Séchet at The Future of Bitcoin event in Arnhem. The project has released its latest client Bitcoin ABC 0.14.2 and says it’s a full node implementation of Bitcoin that removes Segwit code and replaces it with an adjustable block size cap. During the initial announcement, Séchet detailed that Bitcoin ABC is part of the user-activated hard fork contingency plan against BIP148.

In essence, the ABC protocol prepares for any disruptive risks associated with UASF activation and could also activate during the August 1st “Flag Day” as well. Besides being a contingency plan, the UAHF protocol will move the block size cap towards the activation of emergent consensus where users can decide block size themselves. Bitcoin ABC could counter the BIP148 soft fork which could cause network disruption, and a possible blockchain split as well.

Meanwhile, the Segwit2x Plan Moves Forward In the Midst of Egos and Constant Bickering

Alongside these two alternative plans, the Segwit2x working group has also been steadily preparing the compromise idea announced called the “New York Agreement.” The group released beta code and have been experimenting with the Segwit protocol and a 2MB hard fork on a Bitcoin testnet. So far there has been a lot of bickering about Segwit2x between the project’s lead developer Jeff Garzik, Bitcoin core developers, and the Blockstream CEO Adam Back. Many core supporters refuse to compromise on Segwit2x calling it “Franken-segwit” and a great majority of core developers have rejected supporting the idea. However, some core maintainers have been making comments on Segwit2x’s Github and the working group’s Slack channel. There is still uncertainty concerning the New York Agreement plan, but the working group is still moving along as August 1st gets closer.

As far as August 1st is concerned users should make sure they hold their private keys. There is a possibility of network disruption and Bitcoin.com will inform our readers of everything people need to know, including exchange updates, trading, withdrawal and deposit suspensions, and any other important information that arises in regards to this specific date.

What do you think about August 1st? Do you think there will be any potential network disruption or do you think nothing will happen at all? Let us know what you think in the comments below.

Images via Shutterstock, Pixabay, Saltylemon.org, Bitcoin.org, and Bitcoin ABC. 

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Local reports indicate that India may put in place a goods-and-services tax on bitcoin purchases.

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The People’s Bank of China (PBOC) has recently provided further detail regarding the cryptocurrency regulations that China is currently formulating. On ICOs, a PBOC counselor described ‘moderate regulation’ as necessary, whilst stressing the desire of China not to prematurely stifle bitcoin innovation and growth within the Chinese cryptocurrency markets. China’s central bank has also rejected the notion of cryptocurrency comprising a currency.

Also Read: BTCC Founder Bobby Lee Says Cryptocurrencies Need Regulation

PBOC – “Moderate Regulation Should Be Applied, but It Should Not Stifle Innovation”

The People’s Bank of China has this week revealed further details pertaining to the high anticipated cryptocurrency regulations that are currently under development. On July 7, Yicai Global reported that a PBOC representative had advised investors to exercise great caution before participating in Initial Coin Offerings (ICOs), whilst prescribing moderate regulations for virtual currencies generally.

Sheng Songcheng, a counselor at the PBOC, told Yicai Global “Only time and market dynamics will tell how popular blockchain technologies and ICOs will become in the future. Moderate regulation should be applied, but it should not stifle innovation.” Songcheng also discussed the investor risks that stem from the current unregulated ICO industry, emphasizing the absence of disclosure standards and procedures, and the present potentiality for ICOs to comprise the sale of unlicensed securities.

The PBOC Statements Also Give Clues as to What the Future PBOC-Issued National Cryptocurrency May Comprise

Songcheng also confirmed that the PBOC will not classify bitcoin and other cryptocurrency tokens as ‘currencies’, describing bitcoin as lacking the inherent value basis of a legitimate currency. The PBOC counselor stated that virtual currencies have ‘technical value’, and thus comprise an asset. Songcheng also implied that a currency must be a stable measure of value backed by a nation state, stating that “Virtual currencies are highly volatile, and fluctuations in their prices can easily reach 10 to 30 percent. If a country accepts one of them as its national currency, the entire national economy could collapse due to currency volatility. Project financing based on a volatile virtual money also entails risks.”

The PBOC statements also give clues as to what the future PBOC-issued national cryptocurrency may comprise. The definition of a ‘currency’ given by the PBOC creates a potential rhetorical pretext for the promotion and legitimation of a PBOC-controlled cryptographic currency. The wording of the above PBOC statement suggests a currency can only attain legitimacy through its adoption by a centralized government, which is dubiously suggested as the only basis through which a currency can attain price stability – and see generalized use as a means of exchange. Greater price stability is argued to likely greater facilitate the use of cryptocurrency as a generalized means of commodity exchange. For the PBOC, said pretext could be used as the basis for launching a crack-down on undesired bitcoin use, whilst the PBOC provides a centralized alternative cryptocurrency that purports to offer the same use-value functionality as bitcoin.

Do you think that China’s statements are designed to create a rhetorical pretext that favors a PBOC-backed national cryptocurrency? Share your thoughts in the comments section below!

Images courtesy of Shutterstock

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The post Ether Price Analysis: Double Bottom Fake-out Leaves Bulls Trapped appeared first on Bitcoin Magazine.

Despite Bitcoin’s boom into the mainstream it is less accepted by online retail stores due to scaling fears and unsuitability as a currency.

It was only a matter of time until one of the recent cryptocurrency ICOs would pose a problem. Rumors are circulating about the InsureX ICO being compromised by scammers. Someone hacked the team’s website and slack to host an early token sale and steal around 1,100 ETH in the process.

The InsureX Incident is Quite Problematic

These cryptocurrency ICOs can cause issues for a lot of people. Either they clog up the Ethereum blockchain, or their smart contracts contain some issues which need to be resolved. However, there is also the risk of people getting scammed. Unfortunately for the InsureX team, their particular ICO has been affected by such a hack, which caused people to send around 1,100 ETH to a bogus Ethereum address.

This whole ordeal started when an unknown assailant somehow took control of the InsureX Twitter account. He or she also gained access to the website and the Slack channel. The assailant then went on to “host” a special early token sale combined with some nice -but obviously fake- bonuses. Sadly, a lot of people fell for this golden opportunity and lost a lot of money in the process.

Etherscan shows the address received in excess of 1,100 Ether over the course of a few hours. Half of that money has already been transferred to a different wallet. The rest of the money, around 558 ETH, is still in the “early token sale” account, which is worth $113,784 at the time of writing. This brief, but successful, scam allowed someone to earn nearly $250, 000 worth of Ether, which will be dumped on the market sooner or later.

Many are outraged by this turn of events. It is impossible to explain how someone gained access to the InsureX website and was capable of successfully modifying it in such a manner the early token sale seemed completely legitimate. For a company with “Insure” in the team, they certainly failed when it comes to having a secure website. That does not bode well for the future of this project.

Hacks like these demonstrate why using a basic WordPress template for a company website -especially one with ICO plans- is absolutely unacceptable right now. WordPress in its raw form is not all that great at preventing people from gaining unauthorized access. It is up to the webmaster to ensure security is beefed up. In the case of InsureX, that apparently has not been done well and allowed an assailant to take full control of the platform for a brief period of time.

The people who actually believed in this “early token sale” are not without blame either. InsureX has already held its pre-sale, which concluded over a week ago. Anyone would know if they bothered to do some research. Due diligence is a necessity for any investing. It is highly unlikely a company does two pre-sale with their ICO coming closer.  Cryptocurrency ICOs attract a lot of people, but very few ‘investors” adhere to “due diligence” these days.

CoinDesk compiles the news, guides, explainers and real-time updates to keep you up-to-date on everything bitcoin scaling.

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Coinbase has an extra month to file its appeal arguments in a legal dispute tied to the now-defunct cryptocurrency exchange Cryptsy.

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