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Ethereum Has Already Scaled Quite Significantly: ConsenSys’ Joe Lubin

ConsenSys’ Joseph Lubin says Ethereum is already scaling and that Ethereum 2.0 is set to launch within two years.

Joseph Lubin could arguably be seen as a star at any blockchain event these days, but at the Ethereal Summit last month — organized by Ethereum-focused development company ConsenSys, which he co-founded — he was especially revered.

While inside the conference space, the co-founder of Ethereum was either listening intently to what was happening on stage or surrounded by a group of people between panels. Nevertheless, he found some time to speak with us during the two-day event.

So, on a sunny Saturday, we sat down on a quaint cast-iron bench in the garden area of the Brooklyn venue, Pioneer Works.

Lubin spoke about the current technical capacity of Ethereum and what awaits the ecosystem in the near future. Our conversation touched on scalability, consensus protocols and public vs. private blockchains for businesses looking to integrate the technology.

This interview has been edited and condensed.

Can Ethereum scale?

Olivia Capozzalo: Yesterday, Jing from Plasma Group spoke very enthusiastically about Ethereum’s ability to scale. Can you comment on that? Can Ethereum scale? And if so, what are the main developments right now in the ecosystem that are making that happen?

Joseph Lubin: So, I think the point, as she punctuated that panel quite brilliantly and entertainingly, was not so much about its ability to scale, it’s that it has already scaled quite significantly.

So, she’s part of the Plasma Group. It’s a group that is pioneering a class of different solutions for scalability. Essentially, recognizing that we have this base trust layer that can handle 15 to 27 transactions per second. And above that we have state channels of various different varieties in zk-STARKs and in zk-SNARKs and Truebit and Plasma.

And Plasma is this class of technologies that enable you to have less decentralized platforms sitting at layer two in the Ethereum ecosystem. They can benefit from the full trust in some cases — sometimes they benefit from partial trust — but if they’re linked in really rigorously, they can benefit from the full trust of the base trust layer, and you can get the best of both worlds.

Watch the full interview with Joe Lubin:

So, you get high transaction throughput per second, and you get the security of the base layer. And by that I mean, if you have a game and you brought your own network for your game or your exchange or some other application, if they have assets on your system, everybody using your system can be confident that, if you’re incompetent or if you’re corrupt, it doesn’t matter so much. It’s a pain in the butt, but they can still pull your value tokens back to safety and you’re not vulnerable. So, that’s happening.

So, I think we’re at many tens of thousands of decentralized transactions per second on the Ethereum network right now. And another point that I believe she was making, and that I think Ameen was making, is that we’ve got all this scalability for specific use cases.

So, we’re not reaching any limits soon with the base trust layer at 15 to 27 transactions per second, but the base trust layer within 18 to 24 months is going to multiply its capacity by about a thousand times.

That development is Serenity, or Ethereum 2.0. And Ethereum 2.0 is divided into four phases: three major phases — and in computer science terms, they’re numbered 0, 1 and 2. Phase 0 is getting close, it’s eight different groups that are building their own clients according to a specification that’s really very stable right now, a bunch of different testnets that each uses and there’s one testnet for everybody to come together.

So, within a small number of months, we should have a fully operational testnet and possibly by the end of this year, we’ll have a fully operational real Phase 0 Ethereum 2.0. So, good chance it’ll go live this year.

There’ll be different ways that it gets connected with Ethereum 1.0: ether tokens will move from Ethereum 1.0 to Ethereum 2.0, there may be bidirectional mechanisms, and there may be a way in the not too distant future to use the Beacon Chain, which is basically the Phase 0 proof-of-stake finalized blocks on Ethereum 1.0.

A proof-of-stake future

OC: Okay, so you mentioned proof-of-stake and I wanted to ask about another point from yesterday that was sort of contentious with the panel about proof-of-stake vs. proof-of-work. I know Ryan Selkis from Messari was sort of critiquing proof-of-stake.

JL: So, I don’t know that he was critiquing proof-of-stake. The question that was put to him about having a certain amount of money to invest in either Bitcoin or Ethereum 2.0. He said that he would put 80% or 100% on Bitcoin, because Ethereum 2.0 isn’t released yet. There’re still questions and he has children.

I don’t think he was fully discounting proof-of-stake, I think he just knows that it has been proven that proof-of-work works.

And so, if he was faced with the conservative decision of investing his child’s college fund, he would make the prudent choice. That is kind of the choice we made on the Ethereum project at the start, we intended to go proof-of-stake.

Unlike what was said on that panel, there are proof-of-stake systems that are working — different flavors of proof-of-stake systems. But we were aware of edge cases in all of the systems that were working at the time that could potentially take down a network.

Those systems weren’t incredibly valuable, and we figured that if the Ethereum network is incredibly valuable, then well-resourced actors would potentially exploit these vulnerabilities.

So, we knew we could make proof-of-work work, and the intention was to do that, do the research and get to the point where we were very confident in proof-of-stake — and that is done.

OC: Could you summarize why it’s so important to move to proof-of-stake?

JL: Proof-of-work is a mechanism that keeps all the different nodes of a network in sync. So, it’s a consensus formation mechanism. You get the trust characteristic from blockchain, from having all these nodes kept in sync.

Proof-of-work is one class of consensus algorithms — they all, essentially, find a leader and everybody follows in behind that leader. And this is a brand new one, it’s a decentralized mechanism where you don’t really elect a leader, the leader wins its role and wins the right to propose the next state of the system by showing everybody the next block that’s valid. Then, everybody validates that and crypto economics causes them to all fall into sync.

But proof-of-work, unfortunately, requires very expensive custom hardware, enormous amounts of electricity and wastes huge amounts of computation, and it benefits efficiencies of scale. So, if you’re a well-resourced actor, you can have an unfair advantage over someone running it on their game machine at home.

Proof-of-stake fixes all of that, proof-of-stake trades all that expense for a crypto-economic bond — essentially ether [ETH] — that you put into a smart contract on Ethereum. It burns orders of magnitude, less electricity, so you’ll be able to run it on your pad or phone at some point pretty soon, or some jewelry at some point in the not-too-distant future.

It doesn’t waste a lot of computation. It has very low barriers to entry, so my sister could do it or somebody could set up a warehouse, and my sister wouldn’t be disadvantaged compared to that warehouse — because, essentially, it’s probabilistic in terms of how much you’re called on to participate, depending on how much you’ve invested.

So, it’s a more secure system and a fairer system — more equitable. Because it’s based on probabilistically selecting validators for each new block, you can have a single validator pool for many different sharded blockchains. Right now, we have a single validator pool that keeps Ethereum’s blockchain secure, so all the validation power is focused on that one blockchain.

Split all that validation power into 1,024 different shards that would weaken all the different shards and people would notice that shard number 37 is really weak and these other shards would gang up and it would be madness. But from this one validator pool in Ethereum 2.0, groups are selected and randomly allocated to validate the different shards, so all the shards are secured equally and they’re all secured with the full validation power of the entire network.

Ethereum for enterprise

OC: I also wanted to touch on the debate between public and private blockchains. As we heard on another panel, representatives from EY and ConsenSys were both arguing for using Ethereum’s mainnet, a public blockchain, for large enterprises.

JL: We do a huge amount of work in our solutions group and we’ve built lots of enterprise blockchains, private permissioned blockchains for companies and for consortia, and banks and central banks. And you absolutely need to build the right architecture for each use case. There aren’t a lot of use cases on public blockchains right now that are appropriate for enterprise use cases, enterprise solutions.

One of [ConsenSys’] John Wolpert’s arguments is that Ethereum will be the base trust layer, the base settlement layer that many different sidechains and other technologies will link into. We’ve got a group called Aztec that built a protocol that enables obfuscation of transactions on the public Ethereum.

The Aztec protocol is super cool, and it will be live on public Ethereum pretty soon. That’s very similar to what Ernst & Young [EY] built, so [EY’s] Paul Brody described Nightfall, which also enables the shielding of public transactions on public blockchain.

Essentially, the public Ethereum isn’t fully ready for primetime — for all use cases — because it’s not scalable enough yet and because it doesn’t have sufficient privacy and confidentiality for all use cases yet.

We’re solving privacy and confidentiality by using private networks that can link into the public Ethereum or link into each other. We’re also solving it with those two protocols that I just described, so many different classes of transactions or use cases can now, or soon, be done on the public Ethereum. And we’re solving scalability via layer two and moving to Ethereum 2.0.

OC: Awesome, that’s really great. Thank you so much, really appreciate it.

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Vitalik Buterin: “Bitcoin SV is a Complete Scam”

Vitalik Buterin is not particularly a fan of Bitcoin SV. For the creator of Ethereum, the fork of Bitcoin Cash (BCH) is nothing more than a scam created to enrich its promoters.

In an interview with Grey Jabesi, Buterin responded with no regrets when asked his opinion about Bitcoin SV:

“Yeah, like, obviously BSV is a complete scam”

Vitalik did not comment further on this and preferred to talk about other issues he considered more important, such as the power of exchanges and the future of trading on Dexes.

This was not the only time Buterin downplayed BSV’s importance. In fact, not only has Buterin attacked BSV but Craig Wright directly, saying he does not believe that his claims to be Satoshi Nakamoto are true, calling him a fraud on different occasions:

The tension between Craig Wright and an important number of personalities in the crypto-verse has escalated considerably since Mr. Wright started a series of legal claims against those who voiced doubts about the veracity of his arguments.

In the letters, he demanded that skeptics remove the comments, publish an apology, and testify in court that Wright is Satoshi Nakamoto (even though he had not yet provided reliable proof of his identity, following the demands of the community).

Vitalik Buterin Bets on Decentralized Exchanges

In the same interview, Vitalik Buterin commented that he found more interesting the debate that followed CZ‘s announcement that Bitcoin SV was being delisted from the exchange because of the unethical conduct of Craig Wright and Calvin Ayre.

He noted that Binance should not be judged by a single decision given the important role it has played in promoting and growing the ecosystem:

“The delisting from Binance, that was interesting. There are arguments in favor of it but then there’s also arguments like this is an exchange that’s yielding a lot of centralized power, but realistically, Binance is as an exchange that has a lot of power and is buidling it in a lot of ways … So it gets we were to kind of criticize like that one decision without looking at all their others”.

Buterin has also strongly criticized centralized exchanges, even commenting at a time that he wished they all “burned in hell.” He expects decentralized exchanges to acquire a greater presence in the ecosystem, becoming the platforms of preference among traders around the world.

Full interview available here:

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Cryptocurrency Mixers and Why Governments May Want to Shut Them Down

Can a possible government shutdown of cryptocurrency mixers lead to the development of more censorship-resistant avenues?

On May 22, 2019, cryptocurrency mixers (also called tumblers) were front and center on the news cycle, following reports of European authorities shutting down one such service. Law enforcement officials involved said the action was necessitated by reports on Bestmixer.io — i.e., the platform in question that was being used to funnel dirty money via cryptocurrencies.

Stakeholders in the crypto industry decried the action, calling it a gross overreach by government agents. They also declared that it set a dangerous precedent, one that could be inimical to cryptography as a whole.

In the wake of the shutdown, Vitalik Buterin, the co-founder of Ethereum, suggested the creation of an on-chain mixing service. With the eyes of law enforcement seemingly fixed on anonymous cryptocurrency operations, a pivot toward on-chain anonymization might be the solution for those preferring to keep their cryptocurrency transactions anonymous.

Is cryptocurrency transactional anonymity a myth?

While it is common to hear phrases like “anonymous transactions” with respect to cryptocurrencies, the truth is that activities on many blockchains are more pseudonymous than anonymous. Cryptocurrency transactions proceed without the need for a third-party intermediary, and oftentimes, this feature gets conflated with actual anonymity.

In mainstream finance, if person A wishes to send funds to person B, then A has to use a service — e.g., a bank to facilitate the transaction. The identity of both participants will be known to the third-party authenticator, and it could be provided to law enforcement, tax bodies or other government agencies.

For cryptocurrency transactions, the absence of an intermediary means A and B can transact between themselves without revealing their identities. While this may seem like anonymity, it really isn’t, as their transaction is still visible to other participants with access to the blockchain.

Now, let’s imagine a spy or some other “bad actor” — who really has it in for either A or B — using careful blockchain forensics: They can follow these transactions to uncover the real-life identities of the participants. These days, public addresses belonging to cryptocurrency exchanges and other major stakeholders are known to many in the community.

This knowledge is one of the reasons why monitors can become aware of a hack even before platforms become aware of what is happening. A large transaction from a known wallet to an unknown wallet usually raises eyebrows.

There have been numerous instances when the alphanumeric cryptocurrency addresses have been linked to their owners. Back in November 2018, Cointelegraph reported on the United States Treasury Department sanctioning a couple of Iranian nationals implicated in the SamSam bitcoin ransomware scheme.

At the time, the Office of Foreign Assets Control (OFAC) of the U.S. Treasury Department remarked that it was the first time that BTC addresses had been publicly attributed to individuals on its sanctions list.

Cryptocurrency mixers and how they work

There are, of course, cryptocurrencies that offer near-total anonymity by obscuring almost every detail of a transaction — addresses, amounts involved, etc. Monero (XMR) and zcash (ZEC) are popular examples of these so-called “privacy coins.”

These cryptocurrencies mostly utilize transaction mixers or high-anonymity consensus protocols, such as zero-knowledge proofs (zk-SNARKs), to create almost total obfuscation of transaction details. Zero-knowledge proofs enable transaction verification without needing to authenticate the validity of transactional information.

Not everyone who values anonymity would necessarily want to use these privacy coins, and that is where cryptocurrency mixers come into play. These services obscure the source and destination of virtual currency transactions.

As the name implies, mixers take the target transaction and include it in a basket of other transactions of the same value. The idea is that the “mixing” of these transactions would throw off any spy trying to “follow the money.”

Tumblers aren’t only used for sending cryptocurrencies to other users, though. They can also be employed when trying to remain anonymous when receiving cryptocurrencies from platforms that utilize Know Your Customer (KYC) protocols, like trading services.

For example, person C has made a total of 1 bitcoin (BTC) this past week: 0.5 BTC from trading, 0.3 BTC from her online store, and 0.2 BTC from working as a freelance writer. If C withdraws all 1 BTC to her bitcoin address, she could lose her anonymity because these transactions would be originating from platforms with robust KYC provisions.

Person C could use a cryptocurrency tumbler to mix up these transactions by adding inputs from other users. At the end of the process, C receives her 1 BTC, but the information recorded on the blockchain would be sufficiently scattered to throw off any potential spy.

Cryptocurrency mixing services employ numerous features to ensure privacy and anonymity. Users usually have to create “burner cryptocurrency addresses” (i.e., temporary wallets). These platforms do not store user information for more than 24 hours. The mixing process can last between 30 minutes and six hours. Longer time frames tend to produce more secure transactions.

While there are several cryptocurrency mixing platforms, they usually employ the same process. Users specify their target addresses for receiving the “mixed coins,” then select a convenient time frame and agree to the fee, which typically ranges from 2-5%.

In April 2019, Cointelegraph reported that mixed BTC transactions (“CoinJoins”) constituted about 4.09% of all bitcoin payments. Data from Long Hash — a blockchain analytics firm — showed that bitcoin payments via CoinJoins were up by more than 300% since August 2018.

The war against cryptographic anonymity

Privacy and anonymity aren’t usually concepts that go down well with governing bodies. Thus, it is no surprise that various jurisdictions have taken steps to curtail efforts for ensuring anonymity for cryptocurrency payments.

Countries such as France and Japan have called for privacy coins like monero and dash (DASH) to be banned. In China, blockchain companies are forbidden from designing anonymity-enhancing features, with Beijing saying such regulation is healthy for the industry in the long run.

Government officials usually put forward the same argument to justify their actions: Privacy coins enable criminals to launder money, evade taxes or sponsor terrorist organizations.

As previously reported by Cointelegraph, various governments are stepping up their efforts to monitor blockchain transactions. Some of these jurisdictions are even turning to blockchain analysis specialists like Chainalysis to identify cryptocurrency hackers and tax evaders.

Now, it appears that law enforcement agencies are turning their attention toward cryptocurrency tumblers. Recently, Europol, in conjunction with Dutch and Luxembourgian authorities, shut down Bestmixer.io — one of the largest cryptocurrency mixers in the industry, with a turnover of more than $200 million since its inception back in May 2018.

Source: bestmixer.io

According to the Europol report, the platform was involved in money laundering and several forms of illegal financing. The investigation reportedly began back in June 2018, with Europol planning to share the information gathered from the bust with several other law enforcement agencies in different jurisdictions.

Once the news became public, several notable figures spoke out, including internet security guru and cryptocurrency bull John McAfee, who responded to the news via Twitter, saying:

“Bitcoin mixers are now being targeted. Anonymity itself is slowly being considered a crime. The word ‘Privacy’ will soon mean ‘Criminal Intent.’”

McAfee’s comment echoes those of many in the industry who accuse the government of conflating privacy with criminality. These critics argue that there are many noncriminal reasons why someone would wish to protect their privacy and anonymity while transacting in cryptocurrencies.

Sjors Provoost, a bitcoin developer, quipped:

Cryptocurrency-related robberies aren’t restricted to online hacks. There have been physical assaults on cryptocurrency owner, with some even leading to the death of the victim. From Dubai to Singapore, and even the United Kingdom, cryptocurrency owners have fallen victim to armed bandits looking to steal their valuable virtual coins.

Many government agencies around the world argue that the use of cryptocurrency-anonymizing services akin to being involved in illegal activities. In many ways, it seems to be an extension of anti-cryptocurrency rhetoric by state officials in different jurisdictions.

Cointelegraph reached out to Emin Gün Sirer associate professor of computer science at Cornell University and the co-director of the initiative for cryptocurrencies and smart contracts (IC3), to speak about the merits of such government action vis-à-vis the pervasiveness of money laundering via virtual currencies. According to the professor:

“Money laundering is a problem for all bearer assets, starting with government-issued cash. Every society on earth has decided that the benefits of cash on hand outweigh the downsides of a small percentage of money laundering transactions. And they have enacted effective means for controlling these unwanted use cases at the edges of the financial system, where the banking system meets consumers.”

Despite the continued assertion by state agents that cryptocurrencies find extensive use in criminal activities, the actual hard data available in the public domain shows the exact opposite. Earlier in the year, Japan’s National Police Agency (NPA) released its 2018 money laundering report, which showed virtual currency-related money laundering at less than 2% of all recorded cases.

However, the Financial Services Agency (FSA) of Japan recently declared that it would increase its oversight of cryptocurrency exchanges to stamp out money laundering. With the Financial Action Task Force (FATF) visiting the country in the fall of 2019, Japan hopes to gain a favorable rating from the intergovernmental body.

Perhaps the FSA could focus on the other avenues on which close to 99% of all money laundering in the country happen. Cryptocurrencies certainly didn’t contribute to the country receiving the FATF’s lowest rating in terms of Anti-Money Laundering (AML) and KYC compliance back in 2008.

Perhaps a pivot toward on-chain anonymization?

If governments continue to clamp down on avenues that ensure transactional anonymity, then it stands to reason that developers will create more robust platforms that will be more difficult to police. Professor Sirer made similar remarks in his correspondence with Cointelegraph, writing:

“The problem with shutting down a mixer/tumbler is that it will force the community to develop more effective tumblers and mixers that cannot be shut down or traced as easily.”

One such example could be the pivot toward on-chain anonymization. Shortly after the Bestmixer.io shutdown, Ethereum’s Buterin proposed the creation of an on-chain ether (ETH) mixer as a way of improving user privacy on the blockchain.

Buterin’s proposed ETH mixer goes beyond spreading transactions among multiple users, instead suggesting to completely obfuscate all transaction details by ensuring that they don’t appear on the blockchain. Buterin did, however, mention that such a system might only be able to handle small amounts of ETH.

When asked about the viability of on-chain mixers, Sirer opined:

“I doubt that either Bitcoin or Ethereum will add on-chain anonymity measures any time soon. Bitcoin is capacity limited and change-averse, while Ethereum is focused on building a world computer. But other coins will emerge with stronger guarantees, and there’s plenty of research into bolt-on alternatives. By clamping down on a service that is easy to trace, law enforcement is setting the stage for another generation of services that they will not be able to control or corral.”

Section 10 of the bitcoin white paper, as written by its creator Satoshi Nakamoto, focuses on privacy — i.e., the limiting of personal information of transacting parties. Privacy and anonymity are arguably fundamental tenets of cryptocurrency held by many enthusiasts. It doesn’t appear to be beyond the realms of comprehension to envision that developers will create censorship-resistant platforms that allow anonymous cryptocurrency transactions — if pushed to do so.

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Ethereum Co-Founder Vitalik Buterin Proposes Creating On-Chain Ether Mixer

Ethereum co-founder Vitalik Buterin proposed creating an on-chain smart contract-based ether mixer.

Ethereum (ETH) co-founder Vitalik Buterin has proposed creating an on-chain smart contract-based ether mixer in a note on collaborative development platform HackMD on May 24.

In his note, Buterin argues that the Ethereum ecosystem needs more privacy, and points out that the default behavior is to do everything through a single account, allowing for all of the user’s activities to be linked to each other. Furthermore, he notes that simply spreading the ether across multiple addresses is not a solution, since the transactions sending ETH to those wallets connect them.

Buterin also linked to a Twitter thread where it has been brought to his attention that to apply for the HumanityDAO initiative, users are asked to simply tweet their Ethereum address. Twitter user Mooncritic noted: “You can now look up many people’s Ethereum balance by their Twitter handle.”

For this reason, Buterin proposes “a simple mixer for sending fixed quantities of ETH from one account to another without the link being visible on-chain.” According to him, even if the mixer would be able to manage only small amounts of ETH, it would still enable privacy-preserving usage in many applications which involve small quantities of funds.

On the technical side, the proposed system would be composed of two smart contracts: the mixer and the relayer registry. While the mixer would “mix” the coins, ensuring privacy by employing ZK-SNARKs, the relayer registry would allow anyone to publish their IP address for a small fee.

The system would allow users to send a transaction to deposit, wait to get more anonymity, generate a ZK-SNARK proof and relay it to the addresses contained in the registry. The software allowing for the use of the mixer would be web-based, requiring users only to visit a web page in their browsers to use it.

As Cointelegraph reported earlier this week, Dutch, Luxembourg authorities and Europol have shut down one of the three largest cryptocurrency mixers.

In September 2017, a group of analysts evaluated how much and where Ethereum transactions were being processed, allegedly finding that a mixer was responsible for 65% of the transaction volume.

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Vitalik Buterin Proposes Privacy Solution for Ethereum (ETH) Transactions

Vitalik Buterin, co-founder of Ethereum, has proposed a new implementation for Ethereum that would provide a degree of anonymity to ‘one-off’ ETH transactions.

With cryptocurrency adoption gaining steam throughout the first half of 2019, some of the industry focus is beginning to shift on towards privacy and protecting the anonymity of cryptocurrency users–all while maintaining the integrity of public blockchains.

It may seem contradictory that an open-ledger, open-source technology like cryptocurrency would attempt to disguise itself with anonymous transactions. However, as Buterin writes in a post published on Wednesday,

“We need a first step toward more privacy.”

In the post Buterin outlines a proposal that would allow Ethereum users to obscure their activity on the blockchain when sending fixed quantities of ETH. Buterin calls his design a “minimal mixer” protocol, focused on ‘one-off’ privacy transactions as opposed gearing the entire network to anonymity in the vein of Monero or ZCash.

Buterin points out the obvious in users attempting to obscure their behavior on a blockchain. While they may operate out of multiple addresses, the original transactions sending ETH to those wallets are still traceable on the public leger, “reveal[ing] the link between them.”

Instead of attempting to subvert the system, Buterin’s idea involves the creation of two smart contracts–a mixer and relayer registry–which allows users the option of private transactions through what he calls an ‘anonymity set.’

In a follow-up email with CoinDesk, Buterin explained,

“Anonymity set is cryptography speak for ‘set of users that this thing could have come from.’ For example if I sent you 1 ETH and you can’t tell who exactly it was from but you can tell that it came from (myself, Alice, Bob or Charlie), then the anonymity set has size 4. The bigger the anonymity set the more privacy you have.”

The proposal retains the advantage of a public ledger while obscuring the exact sender via the anonymity set. Buterin claims that integrating anonymity sets would not require a change to the Ethereum protocol, and that a basic form of the proposal could be implemented today.

In addition to the email, Buterin updated the Ethereum community with a tweet published on May 22, further elaborating how he imagines anonymous transactions being used,

“The main use case I’m thinking of is a one-off send from one account to another account so you can use applications without linking that account to the one that has all your tokens in it. So even though it is a 2m gas cost, it only needs to be paid once per account, not too bad.”

While the majority of the Ethereum development community is focused on rolling out the 2.0 update over the coming year, Buterin continues to posit ways to grow Ethereum’s network in the meantime. On Tuesday, Buterin claimed that the Ethereum Foundation had all of the “research breakthroughs” needed for proper 2.0 integration a year ago. Despite the skeptics, the co-founder and Ethereum team remain committed to their timetable in implementing the largest transition yet for an established cryptocurrency.

The post Vitalik Buterin Proposes Privacy Solution for Ethereum (ETH) Transactions appeared first on Ethereum World News.

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Ethereum Foundation Announces Details on $30 Network Development

The Ethereum Foundation has announced a three-section approach to allocating the $30 million it earmarked for yearlong development costs.

The Ethereum Foundation has announced a three-pronged approach to allocating the $30 million it has designated for developing the Ethereum network over the next year, in an official blog post on May 21.

The breakdown for the three categories is future projects at $19 million, current projects at $8 million, and developer supports at $3 million. Much of the funding will go to Ethereum 2.0 projects including client teams, research, documentation and communication, and layer two projects like Plasma.

Plasma, which was first proposed by Vitalik Buterin and Joseph Poon in 2017, is scaling solution for the network employing autonomous smart contracts. Plasma will purportedly enable “ the blockchain to be able to represent a significant amount of decentralized financial applications worldwide,“ according to the white paper.

The Ethereum Foundation first announced its $30 million budget at the ConsenSys’ Ethereal Summit on May 10. Executive director Aya Miyaguchi then said that the foundation intends to bring academic involvement to Ethereum, which would purportedly attract top-tier researchers and developers and grants to academic teams and organizations.

As previously reported by Cointelegraph, the Ethereum Foundation announced the “rerelease” of its community website at the end of April, which purports to be a repository filled with community-created Ethereum content, such as documentation and tutorials for using Ethereum tools.

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US Regulator Joins Canada in Fining Blockchain Firm CEO for Securities Act Violation

Alex Tapscott and NextBlock Global have been ordered to cease and desist from committing further violations of the Securities Act.

Blockchain entrepreneur Alex Tapscott has been fined $25,000 by the United States Securities and Exchange Commission (SEC,) according to a filing on May 14.

Tapscott is the CEO of NextBlock Global, and in the filing, the SEC said neither the Canadian company nor its securities had ever been registered with the commission.

The 33-year-old and his company have also been ordered to cease and desist from committing further violations of the Securities Act.

According to the SEC, NextBlock was founded by Tapscott and three others in June 2017 for the purpose of investing in blockchain companies and related digital assets.

During an offering that raised $16 million, the entrepreneur and his company made false representations that four prominent blockchain professionals were serving as advisors. The SEC document adds:

“These misrepresentations were part of the selling point of NextBlock’s fundraising effort: that NextBlock and Tapscott had access to, and unparalleled relationships with, opinion-makers, the best entrepreneurs, and the highest profile figures in the blockchain community. NextBlock and Tapscott knew or should have known that the statements to investors regarding these advisors were inaccurate.”

The SEC said this conduct amounted to a violation of the Securities Act.

Earlier this week, Tapscott was fined $148,000 by the Ontario Securities Commission, and he agreed to lead ethics seminars at Canadian business schools as part of the settlement. NextBlock itself has paid a $520,000 penalty.

These previous fines were taken into account when the SEC made its ruling.

The furor involving NextBlock emerged in 2017 when Forbes reached out to the four high-profile individuals listed as advisors — including Ethereum founder Vitalik Buterin. All of them denied having any involvement, prompting the company to return funds to investors.

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Vitalik Buterin, Joseph Lubin Each Donate 1,000 Ether to Moloch DAO

Joseph Lubin, Vitalik Buterin, ConsenSys, and the Ethereum Foundation donate 1,000 ETH apiece to new Ethereum infrastructure development fund.

Ethereum founders Joseph Lubin and Vitalik Buterin and their respective organizations ConsenSys and the Ethereum Foundation are each donating 1,000 ether (ETH) to the Moloch decentralized autonomous organization (DAO).

This donation brings the organization’s total funds up to $1 million,  a Cointelegraph correspondent learned at the Ethereal Summit on May 10.

The stated objective of Moloch DAO, created by Ameen Soleimani — the CEO of the Ethereum-based adult token platform Spankchain — aims to crowdsource funding for shared, open-source Ethereum infrastructure. Moloch DAO states:

“Our objective is to accelerate the development of public Ethereum infrastructure that many teams need but don’t want to pay for on their own. By pooling our ETH, teams building on Ethereum can collectively fund open-source work we decide is in our common interest.”

Ethereum co-founder Vitalik Buterin previously acted as an advisor to a different Ethereum crowdfunding project, the Ethereum Community Fund (ECF), which was initially endowed with $100 million to go toward infrastructure developments. The ECF named their first five grant recipients at the beginning of 2018, and announced the second cohort of recipients in August 2018.

One example of these infrastructure development grants is second cohort recipient and crypto researcher Patrick McCorry’s work on improving the speed and security of Ethereum state/payment channels.

As previously reported by Cointelegraph, Lubin has high hopes for the future of Ethereum, believing that Ethereum will form the backbone for the next generation of the Internet:

“My feeling is this is just the next Internet. This is World Wide Web version three. We are going to be delivering applications that look like Web pages or Web applications or that look like mobile applications. They will just have this different kind of database in the backend that is a much more trustworthy database that enables easy interoperation amongst lots of other things.”