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Is Bitcoin Cash (BCH) Losing Value Due to Bitmain’s Alleged Financial Woes?

The crypto community breathed a sigh of relief after the Bitcoin Cash (BCH) hash wars reportedly ended on the 23rd of November. The Hash Wars that had officially started on the 14th of the same month, were due to two factions of the BCH community not agreeing on which upgrade to implement. This then led to a bitter battle between one camp led by Craig Wright (Bitcoin SV) and another by Roger Ver and Jihan Wu. The two camps eventually settled to fork the BCH blockchain.

Mr. Wu is the current CEO of Bitmain which is a company that specializes in designing ASIC chips for Bitcoin mining. The company also operates two of the largest Bitcoin mining pools: BTC.com and Antpool.

Signs of Trouble at Bitmain

The initial signs of trouble at Bitmain started right before the Hash Wars when it was reported that Jihan Wu had lost his seat as the company’s board executive director after a board reshuffle. Jihun was reportedly replaced by Zhan Ketuan. The reason for the reshuffle was not explained but on the same day, 90,000 miners were hurriedly deployed in China’s far-western region of Xinjiang to mine Bitcoin Cash ABC – the current BCH.

After the Hash Wars were over, it was rumored that the Q3 financials of Bitmain indicated that the company had made losses amounting to $740 Million. This amount excluded the cost of financing the hash wars. The unconfirmed losses by the company has led many to speculate that the pending IPO is an exit strategy by execs at Bitmain.

According to research by a team at Bitmex, the joint loss by both camps due to the BCH hash wars could well have exceeded $10 Million. Bitmain has also closed down its Israeli Blockchain development center, citing crypto market conditions.

Pending Law Suit Against Bitmain

Soon after the hash wars, UnitedCorp launched a suit against Bitmain, Bitcoin.com, Roger Ver, Kraken Bitcoin Exchange and others, claiming they had hijacked the Bitcoin Cash Network after the November 15th hard-fork.

Rumors that Bitmain is Liquidating its BCH

Additional rumors circulating on Crypto Twitter indicate that Bitmain might be liquidating its BCH stash to pay off supplier debts totaling $600 Million. One such tweet can be found below.

The same twitter user was the one who informed the crypto community about the potential $740 Million in Q3 losses made by Bitmain. The user also had this to say in a recent tweet.

PREDICTION: Bitmain will finish the year with NEGATIVE $1,2-$1,5 BLN NET INCOME and cement its place as most money losing company in the industry #BitmainIPO @HKEXGroup

If the reports of Bitmain’s financial woes turn out to be true, it explains why Bitcoin Cash has continually fallen from the number 4 spot on coinmarketcap.com, to its current number 7 ranking. Before the hash wars, BCH was trading at around $500. The digital asset is now valued at $86 indicating a 83% drop in value in a period of one month. 

What are your thoughts on the drop in value of BCH? Could it be linked to the ‘troubles’ Bitmain is facing? Please let us know in the comment section below. 

[Image courtesy of stuff.co.nz]

Disclaimer: This article is not meant to give financial advice. Any additional opinion herein is purely the author’s and does not represent the opinion of Ethereum World News or any of its other writers. Please carry out your own research before investing in any of the numerous cryptocurrencies available. Thank you.

The post Is Bitcoin Cash (BCH) Losing Value Due to Bitmain’s Alleged Financial Woes? appeared first on Ethereum World News.

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Fortune Releases First-Ever Crypto-Focused '40 Under 40' Annual Rankings

For the first time, Fortune has created a crypto-focused version of its prestigious “40 under 40” honor roll for the most impressive young disruptors in the finance and technology industry, published July 23.

Dubbed “The Ledger 40 under 40,” the list is dedicated to innovators at the helm of the “financial revolution” ushered in by cryptocurrencies, blockchain, and other distributed ledger technologies.

Last week, five crypto industry representatives had already clinched four spots on Fortune’s existing “40 under 40” — all of whom reappear in the inaugural Ledger list.

These include the CEO of major U.S. crypto exchange and wallet service Coinbase, Brian Armstrong, 34, who is ranked first by the Ledger for “catapulting” crypto into the mainstream. “Skinny visionary” Ethereum (ETH) co-founder Vitalik Buterin, 24, has been thrice-celebrated on Fortune’s established list and now seals the second spot on the Ledger list.

In third place is Jihan Wu, 32, the co-founder of Beijing-based mining hardware titan Bitmain — reportedly now valued at $12 billion after a recent round of funding. Fortune notes Wu’s support for the “controversial” Bitcoin (BTC) fork, Bitcoin Cash (BCH), as well as his interest in stablecoins and aspiration to develop artificial intelligence (AI) mining chips.

The list includes figures who have decamped from the traditional financial sector to become crypto industry front runners, alongside those who aim to lead the “revolution from within.”

Amber Baldet, 35, former blockchain program lead at JPMorgan Chase, is ranked eleventh for co-founding blockchain startup Clovyr, her former position as lead developer of Quorum, and her recent appointment to the board of the Zcash Foundation — the nonprofit that governs anonymity-oriented altcoin Zcash (ZEC).

Christine Moy, Baldet’s successor at JPMorgan’s blockchain program, is ranked 18th, and in the sixth and 20th spots are Goldman Sachs’ Rana Yared, 34, and Justin Schmidt, 38, for spearheading the Wall Street giant’s future Bitcoin trading operation.

The list’s crypto stalwarts include the Bitcoin billionaire Winklevoss twins, 36, (eighth) and Bitcoin Cash “evangelist” Roger Ver, 39, (36th), as well as “serial” cryptosphere innovator and now Block.one CTO Dan Larimer, 36, (12th) and Bitstamp’s CEO and co-founder Nejc Kodrič, 29, (29th) — hailed as a garage-born passion project that became Europe’s first licensed Bitcoin trading platform.

Prior to this week’s full-fledged crypto incarnation, Cointelegraph has followed the burgeoning representation of industry pioneers in Fortune’s 2017 and 2018 established rankings.

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Mining Giant Bitmain’s CEO Wu ‘Open’ to Hong Kong IPO, Report Says

The CEO of crypto mining hardware giant Bitmain, Jihan Wu, has confirmed he is “open” to conducting an overseas initial public offering (IPO), Bloomberg reports today, June 7.

Speaking in an interview in Hong Kong, Wu, who claims to own up to 28 percent of China-headquartered Bitmain, said an IPO in the region –  or any market which U.S. dollar-denominated shares – would be suitable  as a means of allowing early backers to cash in funds.

The potential move would mimic Canaan, one of the company’s main competitors, which announced its intention to launch an IPO last month.

Canaan occupies around 15 percent of the Bitcoin mining chip market, while Bitmain’s share is still easily the largest at 75 percent. “Bitmain is trying very hard to maintain its advantage,” Wu told Bloomberg.

Should it go ahead, the company could attract a significant valuation from Hong Kong investors due to first move advantage, Mizuho Securities Asia analyst Kevin Wang added to Bloomberg. “They’ll have a premium for their valuation because there are very few” other options, he said. “But the sustainability of the business is the question mark.”

Bitcoin mining remains an industrial-scale business attracting major costs. In May Cointelegraph reported on research that forecasts the crypto mining industry will consume 0.5% of the world’s total energy by the end of 2018.

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The Crypto 'Kill Switch': Monero Is Going to War Against Big Miners

Developers are preparing to go to lengths to keep one of the world’s largest cryptocurrencies free from the encroaching interests of big business.

While a high-speed hardware known as an ASIC has been used to secure bitcoin transactions for years, mining hardware manufacturer Bitmain recently announced a new model, the Antminer X3, that has been purpose-built for mining the privacy-oriented cryptocurrency monero.

Yet rather than greeting the hardware as a welcome sign of increased interest, monero will go so far as to enact an emergency software upgrade in April meant specifically to change the rules of the system so as to block the effort entirely.

Largely referred to as monero’s first move in a “war” against ASICs, the upcoming software upgrade will render the Antminer X3 ineffective. Not only that, but to keep hardware manufacturers from catching up, these algorithm edits are planned to continue with bi-annual networks upgrades.

Stepping back, the move is a defense of the mining made possible by monero’s current algorithm, Cryptonight, which can successfully mine monero on consumer-grade laptops. Faced with competition by highly efficient ASICs, the fear is affordable laptop mining would be silenced.

And that’s not a development developers are taking lightly.

“I will do everything in my power to help the community prevent the proliferation of centralization-inducing ASICs on the monero network,” core developer Riccardo “Fluffypony” Spagni declared on GitHub.

Currently issued by a sole supplier, Bitmain, concerns exist that the Antminer X3 could lead to certain kinds of attacks, namely ones in which a mining pool takes over the majority of a cryptocurrency’s hashrate, creating false transaction histories, double spending coins and censoring payments.

And while there’s debate that highly efficient ASICs are, by and large, good for security, many in the monero community are standing in opposition.

“If you’re worried about an attack from, say, someone using lots of Amazon servers to 51 percent the coin, then forking away from ASICs is a bad move,” core developer “moneromooo” told CoinDesk.

The developer continued:

“If you’re worried about an attack from someone like Bitmain, then not forking away from ASICs means you’re already pwned, since Bitmain will likely have 51 percent very, very soon.”

Bitmain doubts

Influencing the decision is, of course, the long-standing distrust between developers and Bitmain (as well as its co-CEO and principal figurehead Jihan Wu).

Last year, concerns were raised that Bitmain was secretly exploiting a weakness in bitcoin’s proof-of-work algorithm, through a process called ASICBoost, which supposedly enabled its three mining pools to mine roughly 20 percent faster than competitors. Not long after this controversy came the discovery of a mining chip vulnerability called Antbleed, which some believed Bitmain had implanted purposefully so it could forcibly shut down any of its miners at will.

Then, late last year, Bitmain produced an ASIC that was capable of mining siacoin, a small cryptocurrency, in a move that was widely regarded as a takeover.

All these things allowed monero creator Ricardo Spagni to defend his cryptocurrency’s ASIC-resistance on Twitter, writing, “Their actions with the bitcoin community and more recently the sia community are clearly those of a bad actor.”

But even without the concerns about Wu and Bitmain, enabling ASICs to be used to mine monero could potentially pose a bigger risk, since censorship-resistance is so key to its success, monero core developer “binaryFate” explained.

“Maybe even more so than for other cryptocurrencies, decentralization is key to monero for ensuring censorship resistance,” binaryFate said.

For instance, censorship would destroy a key promise of the private cryptocurrency – fungibility, or the ability to use one coin just as any other.

In an announcement, the monero team extrapolated on the risks of ASIC centralization, writing that until ASIC hardware is widespread, it is of high-security risk, including the potential of government bribery or even the introduction of a “kill switch” that could shut down miners remotely.

The blog post states:

“This threat has the potential to destroy the whole network.”

Critics of Cryptonight

As such, monero will continue to fight against the hardware.

“I believe this has set a precedent that we are serious about ASIC resistance, can react quickly if we are forced to and do not mind manufacturers losing money,” BinaryFate said. “In the foreseeable future, I doubt any ASIC manufacturer will want to give a try at monero again.”

However, the move has shown to be divisive as well, primarily because monero’s proof-of-work algorithm is not without its critics. While it’s key to the cryptocurrency’s accessibility, others feel that the low barrier to entry lowers the cost of attack.

For one, a javascript implementation of the protocol, named Coinhive, was labeled the sixth most popular malware worldwide in a study by cybersecurity firm Check Point last November. Further, in February this year, the algorithm enacted botnet attacks to the scale of over half a million mining machines.

“In which a small-cap cryptocurrency desperately tries to destroy their security by fighting actively against economies of scale,” Philip Daian, an ethereum researcher, wrote on Twitter, about the community’s moves to stop ASICs.

Echoing a similar sentiment, Andrew Poelstra, a mathematician at Blockstream, argued in a 2015 research paper that while anti-ASIC code can delay manufacturers, “ultimately ASIC resistance is futile.”

Plus, there are concerns that ongoing edits to the underlying algorithm could weaken the code, opening doors to vulnerabilities. Addressing this, developer “iamsmooth” suggested an “ASIC-friendly” approach, that would focus on lowering the cost and accessibility of the hardware.

In conversation with CoinDesk, even moneromooo agreed, stating that bi-annual edits “is a bit of a shitty method, so hopefully, a better algorithm can be found.”

But until then, Spagni and many others defend monero’s actions.

“This is a matter of choosing the lesser of two evils,” Spagni wrote on Github, weighing botnets against ASICs.

And ultimately, Spagni took to Twitter to say:

“It might entirely be less secure, but the community has made the hard call. I don’t decide anything, the community does.”

Red button image via Shutterstock

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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Jihan Wu to Talk Central Bank Crypto at DC Blockchain Summit

Sparks, meet lighter fluid.

Jihan Wu, the controversial co-CEO of bitcoin mining hardware maker Bitmain, will discuss the idea of central bank digital currency in a speech Wednesday, a source told CoinDesk.

Wu is perhaps the most highly-anticipated speaker at the three-day D.C. Blockchain Summit, which kicked off on Tuesday with a developer event.

Named as one of CoinDesk’s Most Influential in Blockchain for 2017, Wu is at the head of the world’s largest provider of bitcoin mining hardware, which analysts have estimated made as much as $4 billion in profits last year, according to Fortune. Depending on who you ask, Wu is either Enemy Number One or, in the words of Roger Ver, someone who has “poured his life and soul into this for years.”

Wu’s chosen topic – central bank-issued digital currencies – is perhaps just as controversial. A number of institutions worldwide have looked at the question of a central bank using the tech that underlies bitcoin to further digitize their money. Yet despite support from quarters of the finance community, observers say that 2018 is unlikely to be the year that such a launch takes place.

DC set for summit

Wu’s appearance forms part of a wider event in D.C., which will see regulators, government officials, startups and business leaders converge to talk blockchain and cryptocurrency.

The conference is being organized by Digital Chamber of Commerce and Georgetown University’s Center for Financial Markets and Policy. In anticipation of the three-day event, the Chamber also released a white paper regarding intellectual property issues and blockchain.

Government officials are also among the notable attendees, including James Sullivan, the deputy assistant secretary for services at the International Trade Administration, which falls within the purview of the U.S. Department of Commerce.

Other officials scheduled to speak will be familiar faces to the crypto industry by now, including CFTC Commissioner Brian Quintenz and Representatives Emmer and Schweikert of the Congressional Blockchain Caucus, all of whom have previously weighed in on crypto regulation.

Washington, DC image via Shutterstock

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.

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Bitcoin to Get Severely Forked in 2018

The fear and build up towards Aug. 1, 2017, and the creation of Bitcoin Cash which forked off the original chain was monumental. However, it was a damp squib for the future of Bitcoin as it actually spiked in value.

Since then, forks on Bitcoin have become almost as common as ICOs, and in fact, forks on the Bitcoin chain look to be the latest trend for 2018 as new companies look to cash in on the familiar Bitcoin name.

Already a forking mess

Bitcoin Cash is, of course, the most well known Bitcoin fork out there, sitting comfortably in the top five coins in terms of market cap. However, in 2017, there were 19 registered Bitcoin forks. Still, that pales in comparison to the 50 that are expected this year, according to Lex Sokolin, global director of fintech strategy at Autonomous Research.

That number could still rise further as there is even services out there that are providing rudimentary programming skills to launch a clone. This will of course have a big effect in the cryptocurrency market as hedge fund manager Ari Paul predicted in a tweet:

What the fork?

There are a number of reasons to fork off the Bitcoin Blockchain, some do it, in the case of Bitcoin Cash, to seemingly improve facets of the old coin, while others may have different motives. As George Kimionis, chief executive officer of Coinomi puts it:

“Unfortunately, most fork-based projects we see today are more of a sheer money grab. Looking back a few years from now we might realize that they were just mutations fostered by investors blinded by numerical price increases rather than honest attempts to contribute to the Blockchain ecosystem.”

Kimionis also sees a new phase in the ICO marketplace with the original hype simmered down somewhat. Forking adds a little edge to a new coin. And Rhett Creighton, who’s working on the upcoming Bitcoin Private fork, predicts:

“Bitcoin forks are kind of the new altcoin. We are going to see now a bunch of Bitcoin forks. And they are going to start replacing some of the top hundred altcoins.”

Danger to the vision

It is hard to see these minor forks, even the likes of Bitcoin Gold and Diamond which reached the news, really, truly, adding much to the Blockchain environment. Even Bitcoin Cash has been linked to a money making scheme for the likes of Jihan Wu and Roger Ver. The difference between trying to improve the Blockchain, and to make money off a name, is a very blurred line.

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John McAfee: We’ll Screw up the Future, But It’ll Still be Better Than What We Have Today

John McAfee has already established himself as a prominent figure in the cryptocurrency world. With his background in programming and cybersecurity, he seems to be pretty fascinated by the decentralized technology and what it has to offer to the world.

We had a talk with him during the Cruise Asia, that took place Jan. 15- 19, and found out how he researches the coins to promote, whether he has any regrets about them and why Blockchain is the best thing that happened to the humanity.

Crypto Daria: You’ve got 700,000 followers on Twitter. Do you realize how big of an influence you have in the crypto market and do you think it’s positive?

John McAfee: Of course! I mean for the cryptocurrency community that’s a fairly large number of followers. But it’s not just that. I also speak at all the major conferences, I’m close friends with Jihan Wu of BITMAIN – the main manufacturer of, virtually, all the Bitcoin miners, Roger Ver, for instance, or Brock Pierce is my party animal that I party with. I have as much influence in that arena as I do with my followers. In fact, even more. To sit down with Roger Ver and Jihan Wu and talk about Bitcoin Cash – I think vastly is much more influential than tweeting to 700,000 people.

John McAfee

John McAfee speaking in front of the public during the Cruise Asia, January 2018

CD: How do you decide which coin to promote? How do you research them?

JM: First and foremost are the principles able to actually produce what they say. Can you develop the product in a timely fashion? Do you have the team in place that understands the Blockchain, the software, the marketplace? But more importantly is something that I would like to use myself. Like Outings – hell, yes! I would love to use that program. Okay, I’ll pay a dollar to get the info I can get from the app. The same with coins. I would love to have that facility – the KWHCoin. I mean I’ve had a lot of homes that were off the grid. There’s no greater nightmare than having more electricity than you can use and this goes to waste; or not having enough. So to be able to transfer back to the electric company through tokens and someone in a place that has access to let me buy from them. Who wouldn’t want that facility? So if it’s something I personally want – yes, if they can do it, it’s a great idea, if it’s helpful to the society – there is something I would like to pass on to my children. Then, yes. I would talk about it. Because if I don’t talk about it, then who else? Nobody’s reading those white papers.

CD: Do you evaluate coins differently with time?

JM: Yes, of course. Everybody makes mistakes, you know. In the beginning, they said that’s a great idea and then they don’t pull this through.

CD: Has anyone ever tried to pay you for mentioning their project and if yes, what were the projects?

JM: I would say definitely they tried to pay me. I’m not going to talk about my personal finances where I make my money or from who. I set up on stage as it’s my business and it should be everybody’s business. And actually, I think it’s rude to even ask such questions of people. No offense.

CD: Do you feel responsible for the weight of your words and subsequent pump-and-dumps that follow?

JM: Absolutely not. Let’s imagine: if I see something that I think the world needs to know about – I’m gonna say it. No sense in me being the only to know. I don’t want to whisper it to my friends. Isn’t it far worse? The fact that people take that and pump it, and dump it – that’s their business, not mine. I mean look at on the Verge token. I said Verge would probably double in price in the next few months, well it went up fifteen thousand percent.

It wasn’t my fault that people go and buy it at twenty cents. I thought two cents was a lot of money! It’s not my problem, you know, I’m just recommending. Because it [company] does have some privacy things to it [coin] and it has the possibility with the race protocol to actually become a real privacy point. When it’s going to happen now, I don’t know. But it’s sure not worth what it is.

Verge Charts

Coinmarketcap

And for the other people: if people want to be greedy and to look at this arena as simply a way to make money – well then they deserve what they get. They could look underneath this and say: this is a revolution! Unlike anything that the world has ever seen. Then forget the money! Why don’t you look at the utility, the power of the specific token or coin and how it could change your life and the life of your friends, your loved ones and your children. I’m not gonna stop doing that. You can throw as many rotten tomatoes at me, as you want; call me any names you want – names don’t hurt me. You think I’m gonna care what people call me, what they say about me? I could care less.

CD: Of course. Do you have any regrets or disappointments about the coins you’ve mentioned?  

JM: Yes, of course. I regret about FINA coin.

I found out later that one of the founders was a member of a Nigerian criminal organization. It’s hard to know all the facts until someone says “By the way, we resources and found this out.” I immediately tweeted and said that I apologize and I took back my recommendation.

But this is the nature of the business. I mean if we’re in a brand new economy, brand new paradigm if I don’t step in mud bubbles than I’m not doing my job.

CD: What’s your number one piece of advice for the crypto investors?

JM: There is none. Because whatever I recommend today will change tomorrow. There’ll be something that comes and replaces it. I believe that the future of cryptocurrency is in the new emerging coins technologies and creative ideas that are coming out to through the ICOs. And everybody’s overlooking this. People seem to be only concerned with making money – “Is Bitcoin going to rise or fall?” “Is Ethereum going to rise or fall?” “Is there going to be another fork in Bitcoin?”,”What’s that gonna be?” “Is it Bitcoin or a Bitcoin Cash?” Screw that, this has nothing to do with these things. It has to do with what’s coming behind us, what’s emerging from the ground and what is going to change our future. We’re forgetting that these are real, life-changing, culture-changing events, attitudes, products, creations. And we have got to watch them. If not – we’re gonna miss out on something and the good stuff is gonna get swamped and drowned in the garbage. That is the overall sea of ICOs. We already know, what Bitcoin is, we know what Ethereum is. Fine, do what you want with it. Start digging into the new technologies in there. There’s going to be a Henry Ford, there’s gonna be the concept equivalent to the railroad, there’s going to be something that will change our lives in such a beautiful way, that if we miss it, we will regret it for a lifetime.

CD: Are you worried about the recent Bitcoin price dip, given your promise in case it falls?

JM: Not at all. When Jamie Dimon announced that Bitcoin was a fraud, Bitcoin dropped 40 percent in a matter of hours. I didn’t worry then, I’m not worried now. It has its own life.

CD: What made you make that promise in the first place?​

JM: I was on television and it just came out. They said “Will the Bitcoin fall?” And I said: “I’m gonna eat my eat my genitals if it’s not five hundred thousand dollars. And this is back when Bitcoin was four thousand dollars. It’s since gone way beyond what I thought it would go. I thought i was wrong, so my projections are way wrong, I changed it to a million dollars. You will see, it will happen.

CD: In your opinion, what prompted the recent market fall and what to expect next?

JM: The same thing that prompted the original crash of Bitcoin, which was JP Morgan, one of the world’s largest banks and certainly America’s largest bank. All banks all terrified. Everybody’s wallet is a bank now and we won’t need banks anymore. Banks are going to disappear, if they do not do something.

CD: Your Twitter account seems to be a constant victim of hacks. How does it happen?

JM: It’s only been hacked once. I know exactly how it happened, because the people who did it contacted me. They used a new technique called SIM Swapping. At first I thought they didn’t hack my account – I can’t be active. I thought they hacked Twitter, but what they did, they hacked my carrier AT&T, which is the largest carrier.  So what they did, using social engineering, kept calling local offices until they found the sympathetic hero. “Oh, my name is John McAfee, I lost my SIM cards, I have a new one. Can you please change my account to this?” And eventually someone did. My phone stopped working. Then they went into Twitter and say I forgot my password, please, send it to my phone.

And so they sent a code to what is supposed to be to my phone but it’s their phone. They use that code, change my password and they were on for two and a half hours while I struggled to get back in. I finally hacked myself back in and through the mail. I’ve never heard of that technique before. It’s a brand new social engineering technique of hackling. So it was not Twitter, it was AT&T. I complained to AT&T; they did nothing. What I did is that I took off two-factor authentication, if I had not had  two-factor authentication, they could not have hacked me. So now, what used to be the best way to protect yourself, turned out to be the worst, because if you have your phone number in there, then they can get it; they can go in and send that. If you don’t have a phone number, they can’t send the code anywhere, and they’ve got to figure out my password, which is impossible.

CD: How do you perceive the core philosophy behind cryptocurrency?

JM: Well the core philosophy is one of the greatest in the world – “let’s take power away from the centralized agencies!” When power coalesces, when it compresses into a large entity, it always becomes corrupt. And power always corrupts whether you’re an individual or a corporation. So it [the Blockchain technology] takes that away and distributes that power to us. So what this means is that the entire structure of civilization is going to unwind and will reassemble itself in a way that it should have been from the very beginning. We, as people, having our own freedom, our own power. Not having to ask you permission or the government’s permission before I can do something. Like send somebody money or receive money, or buy something as long as I’m not harming you or my neighborhood. Then why the hell should I ask permission from anyone to do anything? So this is what’s happening, we’re entering a permissionless world, where when you reach adulthood, wherever that is, in whatever country and it’s different, in Central America, it’s the age of 12 (*note: in the countries of Central America the legal age varies from 14 to 18), in America it’s 21, when you become an adult, you become your own master. You don’t need to ask anybody’s permission to do anything. This is the change and this is what’s going to take this world and give us finally the opportunity to create Eden, to create perfection. Now we will screw it, we always do, but even in screwing it up – it would be far better than what exists today.

CD: And how do you see the future of the crypto industry?

JM: It’s going to explode. I mean we’re just in the infancy right now. As I mentioned every aspect of life is getting its own coin and it should have its own coin. It needs its own coin. Because every coin has a different function or should have. So it’s going to be like the Internet when it first began. Only a hundred times more profound, more deep and will have an impact that I cannot possibly ignore you foresee even five years out.

CD: Thank you for taking the time!

*Note from the Cointelegraph editorial team

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Jihan Wu

This is an entry in CoinDesk’s Most Influential in Blockchain 2017 series.


“Free! We’re free!”

Jihan Wu may not have created the “BCH Talk” WeChat thread, but he was among the first to celebrate the formal creation of the blockchain for which the channel was named, making his feelings known on August 1 to the more than 500-member channel.

But then again, those in the messenger chat were already well aware of how Wu, the co-founder of Bitmain, one of the world’s largest providers of bitcoin mining hardware, software and related services, felt about bitcoin cash.

In the days before the cryptocurrency had formally forked from bitcoin, creating a $5 billion network from a few changes to its code, Wu was a not infrequent participant in the chatroom.

Designed to serve as a forum about the new effort to boost bitcoin’s block size (the rule in the code that effectively puts a constraint on the volume of transactions), Wu had already weighed in by posting everything from news articles to technical tools to advice on when users should sell their bitcoin in exchange for bitcoin cash.

“Don’t fall into the trap. Don’t pay too much. Don’t give Core too much money,” he wrote.

In this way, the comments give nod to the central controversy surrounding Wu – his outspoken antagonism of bitcoin’s developer team, and the influence he wields that effectively puts him in a rare position to wage such a public conflict.

Indeed for much of the internet, Wu emerged as the arch-nemesis of the developers working on the Bitcoin Core software for his views on the cryptocurrency’s technical roadmap, ones that would not only lead to outsized scrutiny on his business practices, but grow to ensnare all projects and efforts affiliated with Bitmain’s brand.

At points, it was hard to tell fact from fiction, or which was more instructive.

Take ASICBoost, a theory that aimed to link Wu’s public stance against the group’s preferred scaling path, Segregated Witness, to technologies designed to boost Bitmain products. Or AntBleed, a supposed piece of code that would enable the company to control all its miners, making them run software that would block the update.

As the fight progressed, worsening over the course of 2017, public debate turned to vitriol, with Wu often relegated to shouting obscenities at perceived enemies on Twitter, Reddit or wherever else there was dialogue.

Issued in the heat of passion, “Fuck your mother if you want fuck,” emerged as perhaps Wu’s most infamous tweet.

It’s telling that a sentence so inarticulate could say so much about the state of debate.

Two sides to the story

But those reading the above might be left with the obvious question, how could the co-CEO of one of the largest companies in one of the hottest global technology sectors be driven to public profanity? And to not only supporting, but helping popularize a competing software?

Wu, who declined to be interviewed for this piece, appears to want to say little on the subject, keeping dialogue short and apologetic in a mainstream press push this summer.

Yet, industry representatives who have worked with Wu suggest a nuanced explanation for his public perception, one deeply interwoven with the history of cryptocurrency itself.

In a way, they contend that he seems to epitomize two of the technology’s underlying sociological conflicts.

As a native of China, Wu’s public persona has been impacted by bitcoin’s east-west culture clash, one that has pitted Western bitcoin developers brought up in a democracy, against bitcoin’s miners, often business people, hailing from one of the world’s few powerful communist regimes.

Like other founders and entrepreneurs, Wu, who has an economics degree from Peking University, is also predisposed to a fail-fast mentality, one at odds with developers who favor a security-minded approach.

The latter disconnect is one that has played out in high-profile meetings between the groups, whether in New York, Hong Kong or across message boards, but is by no means unique to Wu. Neither is Wu’s involvement in scaling, which traces back to these early efforts by bitcoin businesses to lift its perceived capacity constraints, most notably the 1 MB limit on block space that can be added to the blockchain at intervals.

Originally viewed as a short-term way to prevent spam, its removal would nonetheless require all software users to upgrade and enact the change. Such a path was opposed by developers, who view bitcoin as a kind of opt-in sovereign money and have felt the change could disenfranchise users, and supported by businesses, who saw the limitation as a bottleneck on new users and funding.

Wu, however, wasn’t always so adamant about a larger block size.

Though he may have been most synonymous with an agreement forged this year in New York, he was also a signatory of the Hong Kong agreement, a controversial 2016 meeting, the failure of which was, those involved say, the root of the bad blood between the groups.

Yet, those who attended the meeting describe Wu as someone willing to stake out a middle ground, at least early on.

But as the Hong Kong Agreement broke down, SegWit testing went on for much of the year, straining relations between the two groups, and distrust began to mount.

“Wu became more and more radical after what happened to the Hong Kong agreement. His position was if the devs weren’t holding their side of the agreement, I don’t need to run SegWit,” said Guy Corem, whose former firm Spondoolies-Tech was considered an early contender for Bitmain’s crown.

The survivor

By the time business leaders assembled in New York this year, Wu wasn’t just another seat at the table. Not only was Bitmain one of the few companies left selling mining hardware, but it owned three mining pools: BTC.com, ConnectBTC and AntPool, its largest flagship offering.

Essentially, Wu’s firm had enough hardware to block any software change.

And the explanation for this was simple. While mining had become big business, there were few big businesses doing it.

From bitcoin’s release in 2009 until early 2013 when it eclipsed $100, bitcoin was just a plaything, a toy for the ultra nerdy. But as it continued its rise, people started researching – nobodies had just made hundreds of thousands of dollars interacting with bitcoin, and others wanted in.

And once they found out that they could get in, just by putting some computing power toward verifying transactions, or “mining,” it was all over – the race was on.

A slew of companies started up, selling graphics processing units (GPUs) to mine bitcoin, and as the price continued up, even more specialized hardware, ASICs, were created. Before you knew it, individual hobby mining was nothing but a cost suck. But not all the companies selling shovels, so to speak, were successful.

Butterfly Labs, an early U.S. market leader, was shuttered by U.S. regulators. KnCMiner succumbed to a combination of lawsuits, poor performance, and eventually, bankruptcy.

And these were just two of the more public meltdowns. The founders of China-based ASICminer actually disappeared without a trace in one of bitcoin’s true unsolved mysteries.

Bitmain, however, didn’t.

Instead, it became the largest bitcoin-specific hardware manufacturer in the world by not over-innovating on product and choosing to perfect their delivery model. For example, Bitmain’s competitors now cite an innovation credited to Wu called “franchise mining” as a game-changer.

Effectively, Bitmain would guarantee that it would buy back miners if customers put up a certain amount of funds at purchase.

“It made mining much less risky for the miner,” Corem says.

As described by investor Roger Ver, such acumen has made Wu’s firm one of the “most successful” ever to base its business model on bitcoin. Ver goes so far as to claim Bitmain is the “largest bitcoin company in terms of revenue, employee headcount, customers around the world.”

The company did not respond to requests for comment on the matter.

Even long-time critics acknowledge the success, with Samson Mow, the former chief operating offering of BTCC, a bitcoin mining and exchange service that’s been criticized publicly by Wu, pinning the success on the strength of the company’s strategy.

“They had a more efficient miner than the other guys. Others over-engineered and made their miners too expensive, whereas Bitmain made it functional and efficient,” Mow says, adding:

“A slightly different direction killed one company and kingmade another.”

Corem agrees, pushing back against claims that any trickery led to Bitmain’s success over his former firm.

“Bitmain won over us. It was fair and square, nothing malicious. Nothing about patents; they were simply a better business,” he says.

Information asymmetry

But if Wu is a villain, it’s his handling of his influence on scaling where that transformation really started.

Often overlooked, however, is why it was necessary for miners like Bitmain to approve bitcoin software at all. Originally designed on the premise that all users would run the software on their own computers, developers argue the emergence of mining pools, like Bitmain’s AntPool, was never envisioned. As all the miners mining together, they also vote together, essentially selecting en masse the software they’d run.

Direct democracy in what changes would be made to bitcoin’s software, so to speak, had been replaced by collective representation, meaning miners now had power over decision-making.

Adding to those fears was that it remained unclear just how deferential mining pools were to the wishes of their users, or whether they could use their power to force an agenda.

On the ground evidence to accusations, though, appears inconclusive.

Mining pools like ViaBTC and BTC.Top, for instance, are often alleged to be “controlled by Bitmain,” though it seems in practice they’ve made decisions that put their business model over any ideology (ViaBTC still enables pool operators to mine bitcoin or bitcoin cash, along with a slew of other protocols, as does BTC.top).

But critics, like Mow, take issue with Bitmain’s practices and its relationship with customers of these pools, who have few options other than do business with them.

“You can say he’s a good business guy, but … at BTCC he would threaten miners in our pool. He would say that he wouldn’t sell to people if they didn’t leave our pool. If it’s a good ecosystem and we’re all friendly, we should be able to support software without fear of reprisal,” Mow says.

And it’s perhaps on this topic that Bitmain has faced the most damning criticism – that Wu doesn’t quite understand the balance that needs to be struck between furthering an open-source ecosystem and promoting his own private companies.

Case in point for some is that Bitmain now accepts bitcoin cash exclusively for new miners, a mandate that has come under fire by some, like Mow, who deem the move against the free market ideology Wu is said to support.

Interestingly, it’s something that Wu seems to have acknowledged, tweeting earlier this year that “open-source culture” is not only unfamiliar to him, but unpopular domestically in China.

Business today

But if Wu is the king of mining today, he might also have reason to worry about his crown.

While Bitmain is one of only two companies globally that develop, build and deploy mining chips (Georgia-based Bitfury being the only other present in three verticals), the same circumstances that created the company’s dominant position could quickly change, those familiar with the mining business say.

Mow, for instance, argues that bitcoin’s rising price is good for consumers, who are now making more than they were a few years ago. With this economic freedom, he argues buyers may be able to more freely make decisions based on ideology.

“Miner efficiency is going to be a bit less of a focus because of the price. It’s not about having the cheapest miner and the cheapest price,” he says.

Coupled with that, the capital expansion bitcoin’s price rise has caused has enabled new competitors to spring up, coming to market with millions in investment and alternatives that promise a more open-source ideology.

Others aren’t convinced about competitors, though.

Jiang Zhuoer, founder of BTC.Top, for one, isn’t phased by such boasts, arguing that even the $30 million raised by one new entrant, Haolong, is “too little” given the costs of researching, developing and prototyping miners. “In the chip industry, $30 million is not enough,” he says.

Haipo Yang, founder and CEO of ViaBTC, remarks similarly in statements that seem to nod to Bitmain’s success: “You know, building a miner and building a mining company are different. Selling is a very complex thing.”

Still, more hobbyist entrants aren’t the only competition. If announcements by Japan’s GMO Internet are any indication, large public companies may soon come for a slice of the mining pie.

Then there’s always the chance that one supply chain issue, or maybe even a chokehold at a foundry (Bitmain uses the Taiwan Semiconductor Manufacturing Company, also used by graphics cards and computer chip makers like Nvidia), could cause a blow to the company bottom line.

#Misunderstood

So, where some see a villain, others see an impassioned capitalist, much like Ver or Barry Silbert – Westerners who have funded no shortage of companies and offered no shortage of opinions on how bitcoin should develop.

Far from someone trying to corrupt bitcoin, they see Wu as simply a powerful supporter whose controversial opinions have been warped by misconceptions.

“He’s misunderstood, especially on social media,” says Yifu Guo, the creator of the first bitcoin ASIC.

According to Guo, Wu might not understand Twitter, at least to the degree other users do.

“Nobody in China does this Twitter thing. It’s not a part of the culture,” he says. “But the West does that, ‘I troll you all day, every day,’ and he can’t handle that. He gets triggered.”

Other defenders often cite the nature of free-market economics, the freedom and the frustration of permissionless innovation like the kind bitcoin provides, as a reason Wu is misunderstood.

“Jihan has been demonized by people who just make up bullshit,” according to an industry analyst who wanted to remain anonymous. “If Satoshi was allowed to create bitcoin, why can’t Jihan? If he didn’t need permission than why does Jihan?”

It’s not an unfair criticism of Bitmain’s detractors.

But for all the permissionless innovation bitcoin was built upon, the space has become more black or white, more right or wrong than many could have predicted. And whether you’re a hero or a villain depends from which side people are judging you from.

To bitcoin cash supporters who believe in a bigger block size, Wu is very much a hero, someone willing to stick up for what he saw as inequities and hypocrisies, and even better, put his money on the line.

With the advent of bitcoin cash, it seems the debate will only continue, this time with real-world results. So it’s likely the conspiracy theories will continue also, and that the mistrust of one of bitcoin’s most powerful people will go on.

According to Ver, that’s merely the nature of the human condition.

“Why do people love to conspire about things like the flat earth or bigfoot or stuff like that?” he tells CoinDesk, adding:

“It’s more likely the earth is flat than Jihan is trying to destroy bitcoin. He poured his life and soul into this for years.”


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Adam Back: Bitcoin Block Size Increase in Mid-Term is Possible

On Nov. 13 Blockstream CEO and HashCash inventor Adam Back, who remains as one of the few individuals cited in the original Bitcoin whitepaper released by Satoshi Nakamoto, explained Bitcoin block size increase in the mid-term is a possibility that has not been ruled out.

In response to a statement provided by Jihan Wu, the co-founder of Bitmain, the $3 bln Bitcoin mining equipment manufacturing company, regarding the necessity of a block size increase to reduce Bitcoin Blockchain congestion, Back stated:

“Probably mid-term with enough testing yes. But in the meantime it would be nice if people would stop spamming. Thanks.”

Bitcoin Core is not fundamentally opposed to on-chain scaling

As explained by Back, the Bitcoin Core development team has not been fundamentally opposed to on-chain Bitcoin scaling. In 2014 Back noted that a gradual block increase to 2MB, 4MB, and 8MB is a viable option in the mid-term, until second-layer payment channels are fully adopted by the industry, wallet platforms, and exchanges.

But, Bitcoin Core and the majority of the Bitcoin community remain certain that block size increase is not a long-term scaling solution, in contrast to public viewpoints, because there is a limit to which the block size of any Blockchain network including Bitcoin can be increased to.

One major reason Bitcoin block size increase is not a long-term scaling solution is because if the block size increases in proportion to the growth of the Blockchain network’s user base, inevitably the block size will achieve a point wherein individual node operators are left out and transactions are verified by a centralized group of nodes. Such is the level of centralization imposes danger to any Blockchain network apart from Bitcoin.

For instance, if the block size of a Blockchain network is increased to 10MB, to 50MB, and eventually to 100MB, it will create an ecosystem wherein individual node operators are essentially non-existent.

“If my block takes 11 minutes to validate, then I’m off the Blockchain, which means fewer people can validate independently, which means the system becomes centralized. With one of these increases, fewer people can participate in the validation process, fewer people can participate in storing the data, and fewer people can participate in being independent actors. We go from a system that is decentralized to a system that gradually gets more and more centralized,” explained Bitcoin and security expert Andreas Antonopoulos.

Hence, Bitcoin block size should be planned ahead, undergo rigorous testing, be carefully thought out, and conducted only when absolutely necessary, during a period in which the transaction fees on the Bitcoin network become too high for the vast majority to settle a payment.

Possibility of block size increase in mid-term

Recently the transaction fees have been substantially high, most of them being above $1 to $2, but the increase in the size of the Bitcoin mempool was triggered by the migration of Bitcoin miners to the Bitcoin Cash network. The instability in hashing power led hundreds of thousands of transactions left unconfirmed, eventually increasing the size of the Bitcoin mempool to over 100 million bytes.

As miners return to the Bitcoin network after the next difficult adjustment and more businesses adopt SegWit for around 35 percent reduction in fee,s according to Bitcoin hardware wallet development firm Ledger fees should be manageable in the short-term.

In the mid-term, if transaction fees become too high, as Back stated, block size increase is certainly a possibility with rigorous and thorough testing.

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What’s Mine Is Mine: China Spooks With Mining Legality Blunder

A Chinese electricity provider has caused confusion after it sent a notice to clients telling them to deny service to “illegal” Bitcoin miners.

According to multiple sources including local Caixin, Sichuan Electric Power Company had issued a statement deeming Bitcoin mining illegal in China and that the practice should stop immediately.

Subsequently, local news resource cnLedger confirmed the CEO had retracted the statement having made “mistakes” about legality.

“The head of that company has clarified that they made mistakes on the statement, as they are not a government administrative department, and have no rights to determine whether Bitcoin mining is illegal,” it wrote on Twitter Tuesday.

News of a potential ban on mining in China had caught many by surprise. Despite the country’s outlawing of Bitcoin-to-fiat exchanges and ICOs, mining continued without issue.

Indeed, Bitcoin’s thought leaders have expressed opinions that state-sponsored handshaking is so deeply entrenched in the industry that it would likely never disappear.

The impetus for this week’s notice thus remains unclear. If not illegal, any further reshaping of China’s mining landscape remains to be made clear.

Reports meanwhile that Bitmain CEO Jihan Wu skipped the Hong Kong Ethereum Classic Summit due to the events were dismissed online as “fake news.”