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A Fight Is Breaking Out Over Bitcoin Cash – And It Just Might Split the Code

With bitcoin cash developers at each other throats, the year-old cryptocurrency might just split into two.

Created from a hard fork off the original bitcoin network after the scaling debate boiled over last year, bitcoin cash stakeholders seemed unified in their goal of boosting the cryptocurrency’s block size parameter in the hopes of attracting more users and enabling more transactions.

But a few cracks started to pop up in this united front over the past year, as bitcoin cash developers had one technical disagreement after another.

And a new software release by leading bitcoin cash implementation, Bitcoin ABC, has been perceived by some as a subtle declaration of war within the developer community.

The software includes a suite of upgrades, including a smart contract feature that would support atomic swaps, a way of trading one cryptocurrency for another without traditional exchanges. And while many cryptocurrency projects are excited about the idea of interoperable coins, some big names in the bitcoin cash community don’t agree with the changes and have – no surprise – been very vocal about it.

Leading the opposition is Craig Wright, nChain CEO and the cryptographer who claims to be bitcoin’s pseudonymous creator Satoshi Nakamoto, though he’s not provided any proof of this claim so far. And he’s teamed up with Calvin Ayre, an entrepreneur and founder of crypto news site CoinGeek, to lead the resistance with a new bitcoin cash implementation called Bitcoin SV.

Bitcoin SV scraps Bitcoin ABC’s scripts for its own – as well as pushes the block size parameter to 128 MB (bitcoin cash’s block size is currently at 32 MB).

Taking a dig at Bitcoin ABC developers, the Bitcoin SV release announcement reads:

“Bitcoin SV is intended to provide a clear bitcoin cash implementation choice for miners who support bitcoin’s original vision, over implementations that seek to make unnecessary changes to the original bitcoin protocol.”

While infighting about the technical direction of a cryptocurrency is no out of the ordinary occurrence, this particular disagreement could have big repercussions for bitcoin cash.

Bitcoin ABC and Bitcoin SV are incompatible software, and both groups behind the implementations are seeking to trigger new code changes in November. As such, if some bitcoin cash users run one software and others run the other, it’ll cause a chain split and create a new competing cryptocurrency.

All about ‘fake Satoshi’

The fire underlying this technical debate was fueled by none other than one of bitcoin cash’s more prominent supporters – Wright.

After ethereum creator Vitalik Buterin took the mic at a cryptocurrency conference to call Wright a “fraud,” many developers and other stakeholders in the industry started taking sides. For instance, many devs argue against nChain’s Bitcoin SV partly because they’ve started to distrust Wright’s judgment.

Even Jihan Wu, the co-founder of mining hardware manufacturer Bitmain, who has been a proponent of bitcoin cash (his business holds a substantial stake in the cryptocurrency), joined many others on social media calling Wright “fake Satoshi” since they don’t believe his claims that he created bitcoin.

Following up on his earlier condemnation, Buterin later tweeted:

“The bitcoin cash community should not compromise with Craig Wright to ‘avoid a split’ and should embrace it as an opportunity to conclusively ostracize and reject him.”

Despite all this, though, Wright is far from alone in supporting the nChain implementation. Ayre promised in a statement to put all CoinGeek’s mining power towards it (the mining pool is the largest for bitcoin cash at press time), and Cobra, the pseudonymous owner of Bitcoin.org, took to social media to voice his opinion that those behind Bitcoin ABC are in the wrong.

“This is what happens when you have incompetent rogue developers like Bitcoin ABC lead developer [Amaury Sechet] pushing their agenda instead of compromising,” Cobra tweeted. “Tired of these fucking amateurs and morons screwing around with bitcoin cash. Upgrade with consensus, or don’t upgrade at all.”

Attempts at compromise

What’s getting lost in the debate, though, is that several notable bitcoin cash developers actually think both sides are acting out and would instead prefer to compromise.

Besides BitcoinABC and nChain, there are still other bitcoin cash implementations, including Bitcoin Classic and Bitcoin Unlimited, two software implementations that actually predate bitcoin cash.

And these veteran developers are skeptical about the two proposals getting the most attention.

“Both ABC and nChain are trying to hard fork. Both of them are not giving any rationale why. Both of them are completely not responsive to any feedback or any compromise requests from the rest of the ecosystem,” wrote Bitcoin Classic lead developer Thomas Zander.

And Bitcoin Unlimited lead developer Andrew Stone agrees.

He’s not particularly swayed by either side, arguing that both developer groups don’t have the best interest of the end user in mind.

“Given the ‘no changes, no matter how reasonable, except mine’ strategy being pursued by both of these organizations, I can only sadly conclude that this is again about power and ego not about technical merit and end-user adoption,” Stone wrote on a popular bitcoin cash forum.

Instead, he believes bitcoin cash proponents need to “stick together,” and to that goal, he’s working on a code change that would allow Bitcoin Unlimited users to effectively vote on which set of changes they’d like to see activated.

This voting system, he hopes, will help resolve not only this caustic debate but also similar situations in the future.

Meanwhile, on Thursday, Cobra announced a similar effort called the Cobra Client. But rather than allow users to vote, the client simply removes all contentious code changes and replaces them with replay protection, a code change that will protect users from accidentally losing their money in the case bitcoin cash does indeed split into two.

Yet, others, such as long-time crypto enthusiast and Bitcoin Magazine reporter Aaron Van Wirdum, remain pessimistic that a compromise will be reached.

Van Wirdum recently tweeted:

“Turns out if you start a coin by hard fork without consensus, precedent is to hard fork without consensus.”

Photo by Ivan Vranić on Unsplash

The leader in blockchain news, CoinDesk is a media outlet that strives for the highest journalistic standards and abides by a strict set of editorial policies. CoinDesk is an independent operating subsidiary of Digital Currency Group, which invests in cryptocurrencies and blockchain startups.

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Into the Dark Pool: $30 Million ICO Could Pave Way for Huge Crypto Trades

The term dark pool might sound ominous, but investors think building one could prove to be a boon for the crypto market.

Announced today, Republic Protocol has officially completed an initial coin offering (ICO) for its REN token, raising 35,000 ether (roughly $30.5 million at current prices) from lead investors Polychain Capital and FBG, as well as funds like Huobi, Hyperchain Capital and Signal Ventures.

Along with retail investors, the participants above are betting big on a way to execute large trades without spooking the market. At least, that’s the argument advanced by Taiyang Zhang, CEO of Republic Protocol, who sees the project as a trustless alternative system for crypto trading.

Zhang told CoinDesk:

“One of the biggest problems is there is a huge price slippage with any of these cryptocurrencies, especially when you are trying to trade large amounts.”

In other words, if a whale goes to move an unusually large quantity of bitcoin or ether today, that sell order will likely hit an exchange or a broker, thereby inspiring other traders to start selling as well. If the trade ends up getting broken into pieces over time, the market will start seeing those large sales, and it will drive the price down even further.

Not only does this contribute to general volatility, but it means the whale’s last trades go for significantly less than the earlier ones. This is, of course, non-optimal, especially for investors. So, it’s little wonder that major crypto investors would be eager to find a solution.

In total, Polychain and other large investors picked up 60.2 percent of the total supply of 1 billion REN tokens. Roughly 15 percent were set aside for the team, advisors and early partners, with another 5 percent set aside to build the community. (Republic Protocol has 19.9 percent in a reserve to provide liquidity in the early days.)

This is notable, as participants in the network will need REN to pay nodes and run the computations that find trading partners. Nodes will need to stake REN to guarantee non-malicious behavior.

For the whales

Stepping back, Republic’s platform will allow traders to send very detailed parameters to the dark pool about the trades they would like to make.

The pool will then break trades up into pieces and either find the best trades that meet those parameters or boot the trade back out if the terms can’t be met – all without the wider world ever knowing the full details of what the trader was willing to do.

So, for example, someone could say that they had 1,000 ETH that they wanted to sell for between 0.095 and 0.125 BTC, and the sale could close providing it found partners for at least 80 percent of positions within 24 hours.

The process uses something called Shamir’s Secret Sharing, a cryptographic algorithm for splitting up a reconstructable secret, to divide the orders into parts and share them out to nodes on the Republic platform.

“I think what’s really important is it’s provable that no one can see inside this dark pool at all,” Zhang said, not even his own team. “There’s no information asymmetry. Everyone gets the same information.”

Using multi-party computation, the nodes find the best possible trading partners within the bounds of the order. It’s designed so that all anyone can ever know is the details of the final trades, but it still won’t reveal either party’s total offer (such as how low they might have gone, or how much they would have been willing to buy at a given price).

“Where a dark pool could be very handy is, instead of negotiating prices or even trusting OTC (over-the-counter) brokers, it’s a way to place an order trustlessly,” Zhang said.

If the criteria are met, the orders would be settled among the relevant parties using peer-to-peer atomic swaps.

A lot of attention has been paid to cross-blockchain trades using atomic swaps in recent months. For Republic, it functions as a settlement layer, but that part of the system ends up being one of the simpler parts.

For the big orders, “a lot of times people are not expecting it to happen instantly,” Zhang said. So it’s not a problem to move the currencies into smart contracts that trade directly between wallets.

For the minnows

So, Republic can help out the whales who want to move big positions and don’t want to see $20,000 shaved off their net profit, but won’t the final sale have roughly the same effect on market?

Zhang admits we can’t really know until the platform is live, and that it can be argued both ways, but his company has been studying the issue.

“We do have a paper coming out on the impact of price exchanges,” he said.

And there are some real-world examples to look at. In the stock market, there are estimates that something like one-seventh of all trading happens on alternative trading systems.

“What we find is it does impact the LIT exchanges but it doesn’t impact them nearly as much,” Zhang said. By “LIT exchange,” he means one where the full order is transparent, the sort of trade where a retail or more modest traders will be active.

This could simply be psychological. It’s one thing to see a big trade execute all at once, but another to watch a giant, looming order sitting there on the books, waiting to close. Instead, with this system, a trader looks up and a giant trade is just done. They never saw the spread offered. They never sat there watching the price fall as it went through. It’s just over.

If Zhang’s thesis about the pool quelling volatility proves correct, it should benefit traders even if they never move volumes large enough to use Republic. That’s because fewer big price swings will mean fewer margin calls for leveraged trades.

Furthermore, the market will have time to adjust to the dark pool before it reaches its full trading potential, because when the platform hits the mainnet in Q3 2018 as planned, it’s likely to be missing a key feature: a seamless way to move from crypto to fiat.

“We are working to see which partners we can bring in on this, but that’s the real pain point,” Zhang granted. The most obvious solution is “stablecoin,” one that people can really trust to trade smoothly with fiat at a consistent rate. There’s not one on the books to do that yet, however.

Nevertheless, the pre-sale met with what the company has called “overwhelming interest,” suggesting that major crypto asset holders see uses for the platform with or without a way to trustlessly trade into fiat.

As Gordon Chen, a partner at FBG Capital, said in a press release:

“We couldn’t wait to be the pioneer user of Republic Protocol and help expand this alternative liquidity network.”

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The leader in blockchain news, CoinDesk is an independent media outlet that strives for the highest journalistic standards and abides by a strict set of editorial policies. Interested in offering your expertise or insights to our reporting? Contact us at news@coindesk.com.

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What the Data Tells Us About Bitcoin in 2017

Jameson Lopp is an engineer at BitGo and the creator of Statoshi.info.

The following article is an exclusive contribution to CoinDesk’s 2017 in Review.


I’ve always been fascinated with the raw numbers relating to the operational status and growth of bitcoin, especially as we ride the rollercoaster of the adoption life cycle.

That’s why I created Statoshi.info in 2014 to track bitcoin metrics from the perspective of a full node.

To that same end, I’ve compiled statistical measurements of bitcoin’s growth in 2017 from a variety of sources.

A couple things are clear: bitcoin is at the forefront of an increasingly complex ecosystem that continues to grow in a variety of ways. And for the ninth straight year, it stubbornly refused to die.

While 2017 is well known as the year that institutional investors started showing interest in bitcoin, it was also picking up steam in smaller countries.

Academic interest continued to increase, which is great for the long-term prospects of this industry as we continue to gain a greater understanding of what we’re building.

Funding and forking

Venture capital funding continued to flow it in at pretty healthy levels, though there’s more to this story.

It may be that VC funding did not accelerate because new funding avenues have opened up for entrepreneurs in this space. The initial coin offering (ICO) boom of 2017 saw unprecedented levels of funds raised in a non-traditional form. CoinDesk’s ICO tracker logged over $3.5 billion in funds raised via ICOs!

On top of the ICO explosion we also saw another type of boom: in a new type of bitcoin fork that has come to be known as an “altcoin airdrop.”

While most of the crypto assets in existence have been created via software forks of Bitcoin Core, they have historically started with a new genesis block and thus a new distribution scheme for the tokens themselves.

You can see a fairly complete list of the airdrops at btcdiv.com, but many of them don’t even show up on market cap lists because they have little value.

From looking at the top few forks you could claim that about $50 billion in value was created/raised via bitcoin forks in 2017.

As an engineer who had to deal with the fallout from the fork frenzy, it became tiring pretty quickly as it was clear that the vast majority of these forks would not have sufficient value to warrant spending scarce developer resources trying to support them.

Technical development

At a protocol level, there was a great deal of work done in 2017. The Bitcoin Core repository in particular was a hive of activity.

Bitcoin usage

While you may think of bitcoin as being a cryptocurrency, some users think of it as a trust anchor. By embedding data into bitcoin’s blockchain, other systems can gain new properties such as tamper evidence and immutability.

The amount of outputs that embedded data into the blockchain more than doubled year over year, due to the increased popularity of platforms such as Blockstack, Colu, and Omni.

As adoption continued to increase, so did the size of the unspent transaction output (UTXO) set, AKA the state of all bitcoin ownership.

A more controversial aspect of the changing nature of bitcoin is the transaction fees.

While rising fees have caused significant frustration for users trying to transact in smaller amounts of value, an optimistic view is that the network security is on the right path toward sustainability.

If fees don’t eventually replace the block subsidy, then either the thermodynamic/computational security of the network will have to drop or perpetual inflation will have to be introduced in order to pay miners to maintain the same level of hashing power.

Bitcoin’s privacy properties are still pretty terrible, but at least we’re seeing some improvement on the address reuse metrics.

Network security and health

The size of the network mesh of nodes that validate and propagate bitcoin data is back on the rise after stagnating for several years.

As bitcoin becomes more valuable, miners are able to expend more energy securing the system from computational attack.

Technical improvements to block propagation continued to decrease the latency at which new blocks are seen by most peers across the network. This means that nodes come to consensus about the state of the blockchain faster, which reduces the occurrence of orphaned blocks.

Bitcoin economics

With an exchange rate increase of over 1,300 percent, bitcoin’s market cap increased past $230 billion, earning it 19th place globally in terms of M1 money supply.

While 30-day BTC/USD volatility was on the decline in 2015 and 2016, it began rising again in 2017.

On average, an estimated $12,000 per second was transacted via BTC in 2017 compared to ~$2,000 per second in 2016.

Interestingly, the output value of the average transaction (without trying to guess and subtract change outputs) appeared to rise along with the exchange rate. Almost as if BTC is being used as the primary unit…

And indeed, we can see from the raw UTXO value being spent that it was pretty consistent in BTC terms.

Bitcoin in 2018

Looking forward to 2018, Lightning Network development has been progressing nicely. I wrote about the promise of Lightning Network two years ago and it’s finally coming to fruition, though there are still plenty of challenges to overcome.

We’ve even seen Lightning Network payments conducted on the main network!

The next phase of development in the ecosystem will be speeding up economic interactions.

Payments via second-layer networks will be one leap forward, but the “atomic age” will usher in even greater innovations such as trustless, decentralized, real-time peer-to-peer exchanges.

I expect 2018 to be another exciting year with plenty of development and drama. Stay tuned!

Disclosure: CoinDesk is a subsidiary of Digital Currency Group, which has an ownership stake in Blockstack and Colu.

Network image via Shutterstock

The leader in blockchain news, CoinDesk strives to offer an open platform for dialogue and discussion on all things blockchain by encouraging contributed articles. As such, the opinions expressed in this article are the author’s own and do not necessarily reflect the view of CoinDesk.

For more details on how you can submit an opinion or analysis article, view our Editorial Collaboration Guide or email news@coindesk.com.

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Atomic Action: Will 2018 Be the Year of the Cross-Blockchain Swap?

What if there were no exchanges to hack?

As a new generation of crypto users begin to invest in the technology, developers are growing concerned about its infrastructure. They’ve seen this happen before – new users enter the space attracted by big gains, then suddenly, a catastrophic failure, usually at the very exchanges designed to hold and custody those funds.

But out of adversary, inspiration is taking hold, with high-profile coders turning their focus to atomic swaps, a concept that claims to allow for the direct, peer-to-peer transfer of cryptocurrencies across different blockchains. In the place of the vulnerable exchanges we use today, the idea behind atomic swaps is that these large repositories of customer money could be rendered obsolete by code.

And seasoned blockchain developers like Alex Bosworth believe this is all too necessary, especially given that users today need to effectively give up custody of their assets if they choose to hold funds on exchanges.

He told CoinDesk:

“Putting users in control of their own private keys has the best aggregate track record for security despite individual cases of loss. Funds under centralized control on exchanges have led to the most massive security failures we’ve seen.”

Andrew Gazdecki, CEO and co-founder of Altcoin.io, which recently launched a beta wallet for atomic swapping between crypto tokens, describes the problem in similar terms, arguing that users should be empowered to hold their own private keys (the alphanumeric strings that allow users to unlock, access and spend their funds) without relying on others.

“There are literally billions of dollars being held within these digital honeypots, and it’s nearly impossible to find the perpetrators,” he said.

Early examples of atomic swaps technology emerged in various stages in 2017, and while there’s disagreement as to the timeline they’ll be available to the public, some believe 2018 will be their year.

As Jameson Lopp, a BitGo software engineer, recently tweeted:

“Nearly instant atomic swaps … are coming sooner than everyone thinks. Definitely not a year away, but mere months.”

Atomic swaps already?

In some ways, atomic swaps are already here – depending on the kind of atomic swap you’re looking to make.

For instance, last year saw swaps between different blockchains built on similar code – the cryptocurrencies decred, litecoin and bitcoin – executed. Meanwhile, atomic swaps between cryptocurrency tokens on the same blockchain became more commonplace, with decentralized exchanges such as 0x and, as mentioned above, Altcoin.io, adding instant trades between tokens on ethereum compatible protocols.

Cryptocurrencies running on blockchains with much different codebases, though, must rely on purpose-built tools to facilitate these kinds of transfers today.

Toward this goal, a tool for exchanging zcash for bitcoin called ZBXCAT was developed last year. Described by co-developer Jay Graber as the “walkie-talkie of payments,” the tool will soon be accompanied by a simplified web interface.

Indeed, atomic swaps “could always be done manually,” Graber said. However, because this requires a degree of technical skill, before atomic swaps see mainstream use, easier to use platforms will need to be developed.

At the same time, Lightning Labs, a company devoted to promoting bitcoin’s Lightning Network, recently conducted its first off-chain atomic swap on its test blockchain. Completed in November, the transaction saw litecoin and bitcoin swapped on an off-chain payment channel.

Off-chain hurdles

Off-chain atomic swaps of this type are highly anticipated since trading would be automatic, not reliant on the processing times of different blockchains, but the technology needed to implement off-chain atomic swaps – things like the Lightning Network and Raiden Network on ethereum – are still under development.

Which is why some, like Lightning Labs CEO Elizabeth Stark, are less optimistic about cross-blockchain atomic swaps.

Stark recently discounted the hype, writing on a development channel, “Anyone telling people that Lightning swaps will be ready in months doesn’t know what they’re talking about.”

And in interview with CoinDesk, Stark said:

“There’s still a good amount of infrastructure to build.”

One website, swapready.net, provides a breakdown of how close each cryptocurrency is to supporting cross-chain atomic swap capabilities – and to date, there’s very few that can interoperate.

Mirroring Stark’s sentiments, Philippe Castonguay, developer relations manager at 0x, which offers on-chain atomic swaps of tokens on ethereum, told CoinDesk that developers looking to create atomic swaps between vastly different protocols are faced with “a lot of challenges.”

The infrastructure needed to interface between bitcoin and ethereum, for example, is still in development, and “to make it even worse, these cross-chain platforms also need to solve some of the main problems other blockchains are trying to solve, such as scalability,” Castonguay said.

Still optimistic

Yet, even with a lot a work still to do, many remain assured advances are close.

Bosworth, whose work has focused mostly on developing applications for bitcoin’s Lightning Network, for one, made his excitement about a new era public, tweeting: “The atomic age is coming, what cannot be swapped will be left behind.”

And Castonguay, whose work focuses on ethereum, also remains encouraged by the development happening within that ecosystem. Even if swaps between blockchains with different code bases prove cumbersome, he believes the blockchain could yield other solutions given the expansive capabilities of its code.

“Eventually the ethereum blockchain will be able to communicate with other blockchains,” he said. “Once this happens, all the different coins from different blockchains will be representable on the ethereum blockchain.”

For example, if bitcoin and ethereum blockchains can communicate with each other in a trustless way, then users could have an ERC-20 bitcoin on the ethereum blockchain, pegged one to one with bitcoin on the bitcoin blockchain, he posited.

Such short-term solutions, he thinks, could help advance the atomic swaps concept overhaul.

Castonguay concluded:

“I do believe it is possible that some blockchains might be able to interact with one another this year, but I think 2019 through 2021 would be a safer bet.”

Disclosure: CoinDesk is a subsidiary of Digital Currency Group, which has an ownership stake in BitGo. 

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The leader in blockchain news, CoinDesk is an independent media outlet that strives for the highest journalistic standards and abides by a strict set of editorial policies. Interested in offering your expertise or insights to our reporting? Contact us at news@coindesk.com.

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Bitcoin-Ethereum Atomic Swap Code Now Open Source

A team of cryptocurrency startup developers is open-sourcing technology that enables trustless trading between the bitcoin and ethereum blockchains.

Now available on GitHub, the code has already been used to execute what startup Altcoin Exchange claims is the first so-called “atomic swap” between the largest cryptocurrencies by market value. As a result of the release, a now larger community of developers can play around with and build on top of the code.

For example, using Altcoin Exchange’s tech, developers can lock ether tokens in an ethereum smart contract that specifies the funds will only be sent if an equal amount of bitcoin is sent to a bitcoin address during a specific time window.

At a high level, that’s how the developer team at Altcoin Exchange executed the trade (the ethereum code for the transfer can be viewed on the ethereum block explorer Etherscan), which shows how 0.12345 ether was traded for 0.12345 bitcoin.

But while that might seem experimental or complex, developers instead see the milestone as another step toward the tangible goal of replacing centralized cryptocurrency exchanges with the ability to swap assets directly between blockchains.

Long theorized, the idea of atomic swaps has been around since at least 2013, but it’s seen a burst of new activity of late, with developers testing the technique to trade bitcoin for litecoin and bitcoin for zcash.

‘Stepping stone’

Still, it’s important to note the technology is in its early stages.

This means there are practical reasons atomic swaps might not be viable today, including the fact that one-to-one bitcoin-to-ether exchanges aren’t exactly fair trades given the price disparity between the assets.

To this, Altcoin Exchange CEO Andrew Gazdecki told CoinDesk that the team set up the demonstration this way for “testing purposes,” though the likely next step will be to trade bitcoin to ether for their respective U.S. dollar amounts or another fiat currency equivalent.

Further, though Gazdecki believes this marks a “milestone” for atomic swaps, he admitted developers still have plenty of problems to iron out before this new type of trade sees everyday use.

As such, he framed today’s release as a small step toward a better alternative, adding:

“Decentralized trading is the next step forward in this industry.”

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The leader in blockchain news, CoinDesk is an independent media outlet that strives for the highest journalistic standards and abides by a strict set of editorial policies. Have breaking news or a story tip to send to our journalists? Contact us at news@coindesk.com.