Researchers in Switzerland say they have discovered a way to solve Bitcoin’s scalability problem—with a protocol that makes crypto “cheap” to run.

Insights into the biggest events shaping the crypto industry.

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Bitcoin is the world's first peer-to-peer cryptocurrency. It was invented by a mysterious inventor Satoshi Nakamoto in 2009 and is regarded as the first digital currency to fix the double spend problem.

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new study

Rakesh Sharma

A new study by a team of research scientists claims to have cracked Bitcoin’s scalability problem. And it does it by eliminating the need for consensus among systems to confirm a transaction, the researchers claim. 

The study is detailed in a paper by researchers at the Federal Polytechnic School of Lausanne in Switzerland. The paper, which recently won the Best Paper award at the International Symposium on Distributed Computing in Budapest, describes a very different approach to validating a transaction in cryptocurrencies such as Bitcoin. 

Up until now, consensus among systems has been considered a necessity to solve Bitcoin’s double-spending problem, a situation in which the possibility of a transaction being duplicated in a ledger is eliminated. Most approaches to tackle this problem involve achieving a quorum or agreement among all systems comprising a blockchain. 

But a quorum has several drawbacks. It is expensive in terms of resources and consumes massive amounts of energy. Quorum can also be time-consuming, if a backlog of transactions piles up in a blockchain or if it relies on consensus among systems spread across multiple geographical regions.

 Bram Cohen at last releases his Chia Network’s “green paper”

The new study, however, suggests that a quorum is not necessary to validate a transaction. Instead, it aims for an agreement about the transaction from a random sampling of systems within a network. 

NOT ANOTHER BITCOIN FORK  

Rachid Guerraoui, lead author of the study, stresses that the algorithm proposed in their paper is not a variant of existing consensus algorithms, such as proof of work or proof of stake. 

“Proof of work is typically used to decide who decides the consensus value,” he told _Decrypt_, adding that their proposed algorithm also does not run nodes to elect leaders. Instead, it uses a gossip protocol, the same one that is used to communicate nonces or headers of different blocks in Bitcoin, to spread information about a transaction. 

A small group initially “confirms” the transaction and communicates the transaction’s details to another, larger group which propagates it further to other groups and so on.

To accomplish this task, the system uses Contagion, a probabilistic algorithm that mimics the spreading of a contagious disease in a population. It consists of three sub-protocols—Murmur, Sieve, and Threshold. The three protocols are responsible for ensuring validity, totality, and consistency of a transaction and for sending the original sampled process to a bunch of randomly picked systems within the network. The size of the randomly sampled systems ensures whether the transaction is valid or not.

Guerraoui said that the size should be logarithmic with respect to the overall system size, meaning it should be large enough to ensure that hackers are not able to penetrate the system. However, it should also be smaller than a quorum, ensuring that it is no more than a representation of the overall network.

Besides reducing the amount of time and resources required to confirm a transaction, the Contagion algorithm also uses minimal energy. “The energy [used to propagate and validate a transaction] is that of sending messages on the Internet,” Guerraoui explained.

The team behind the paper plans to open source the protocol with the help of E.U. funding to disseminate the study’s findings. “People can then use our protocol to build cryptocurrencies that are ‘cheap’ to run,” said Guerraoui. 

That might lead to more coins in an ecosystem already teeming with thousands of cryptocurrencies.


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Research scientists in Switzerland say they have discovered a way to solve Bitcoin’s scalability problem—with a protocol that makes crypto “cheap” to run.

Scientists propose a new way to build a scalable, low-energy Bitcoin

The new tools, protocols and infrastructure shaping crypto today.

Ralph Hamers, chief executive of financial powerhouse ING, says banks may have to sever ties with Facebook if concerns regarding Libra go unaddressed.

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Libra is Facebook's answer to crypto. It's a currency that will integrate with the social network’s 2.6 billion existing users.

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Libra

A wrap up of news covering the announcement of Facebook's cryptocurrency, Libra.

The latest news on Facebook's Libra

Facebook's Libra

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facebook's libra

Nicholas Marinoff

Within the last few weeks, several members of the Libra Association have left Facebook in the dust. Now, it looks like the social-media giant may lose the support of banks as well.

Ralph Hamers—the chief executive of ING—told the _Financial Times_ today that banks might need to part ways with Facebook if the company is unable to address the various regulatory fears associated with its planned digital currency, Libra. Specifically, Hamers pointed to Libra’s potential to facilitate money laundering and other white-collar crimes as particularly problematic

The ING chief further suggested that banks have a responsibility to keep the doors closed to malicious or suspicious parties regardless of their size and scope, and that a company like Facebook would probably incur difficulties trying to make headway in the monetary space if its “activities were opening up [the system] for financial…crime.”

 Facebook’s Libra downplays G7 stablecoin warning 

In a statement, a Facebook spokesperson responded by saying that the company is “committed to taking the time to get [Libra] right.” Facebook aims to ensure that “this global financial infrastructure is governed in a way that is reflective of the people it serves,” the spokesperson said.

The trouble is that most regulators around the world don’t seem to be buying it. And the Libra Association has suffered because of it.

Originally, the Libra Association started out with an impressive list of 27 members, many of which were fellow Silicon Valley peers. Six of those companies, however, recently parted ways with Libra, including PayPal, Visa and Mastercard. Some of these companies reportedly received letters from members of the U.S. Congress warning them of the potential risks that could stem from their involvement with Facebook.

Hamers, nevertheless, did have _some_ nice things to say about Libra, calling it a “good initiative to learn with.” He said the ING team will examine Libra’s progress and make an informed decision from there, though other banks appear far less open to the idea. 

Jamie Dimon—the chief executive of JPMorgan Chase—described Libra during a conference in Wasington, D.C. last Friday as a “neat idea that will never happen.”

Harsh words. But, at the same time, Dimon is probably not the person to ask if you’re looking for an impartial view on anything related to cryptocurrency. The JPMorgan exec has long had an aversion towards the industry, particularly Bitcoin. Two years ago, Dimon outright called Bitcoin a “fraud.” Bitcoin is “worse than tulip bulbs. It won’t end well. Someone is going to get killed,” Dimon said at the time.

In that light, any criticism of Facebook’s Libra might seem tame by comparison.




Libra is Facebook's answer to crypto. It's a currency that will integrate with the social network’s 2.6 billion existing users.






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ING chief: Facebook could lose banking services over Libra

The people and companies shaping the crypto industry.

Bitfinex market-share has gone down by over 10 percent, as upgraded fee models and regulatory scrutiny put the embattled exchange out.

investing

Markets

Tether is a cryptocurrency pegged to the price of the US dollar. People use it as a stable store of value instead of more volatile coins like Bitcoin.

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leo token

Ben Munster

Bitfinex, until recently one of the largest cryptocurrency exchanges in the world, has seen a decline in market-share as regulatory woes compound and other exchanges price it out. 

Since early May, the Hong Kong-based exchange’s market share has dropped from 30 percent to under 20 percent, while the market-share of Bitstamp, a competitor, has commensurately risen, according to a new report from crypto analytics firm Coin Metrics. 

Coin Metrics points to two possible reasons for the downtick. The first is the ongoing investigation into Bitfinex by the New York attorney general, which earlier this year accused the exchange—along with its parent company, iFinex—of covering up an $850 million deficit in its fInances, without notifying investors. That money was supposedly held hostage by Crypto Capital Corp, a since indicted, Panama-based payment processor. 

 Bitfinex brings back referral program, offers “unlimited commission”

The second possibility is that Bitfinex has been priced out by Bitstamp, which offers similar services but lower fees. That exchange introduced a new fee model in late August, around the time Bitfinex’s market-share began to decline. Coin Metrics observes that this new fee model might have poached many of Bitfinex’s high-voltage, “whale” customers. 

Trades of over $1 million on Bitstamp, for instance, incur fees of 0.14 percent, while the same amount on Bitfinex incurs fees of 0.20 percent for the “taker,” according to Coin Metrics.

The study also dismisses the notion that Bitfinex lost traction because of the Hong Kong protests. Data shows that Bitifinex’s market-share actually _increased_ as the Hong Kong protests began, only beginning its descent when Bitstamp rolled out its new fee model. The regulatory travails, meanwhile, may have put off U.S. traders from using the platform—though it was already technically illegal, reporting by _The Block _suggested it was trivially easy for New Yorkers to trade. 

Bitfinex’s LEO token has reportedly also seen a decline, with under 2,000 unique addresses holding the cryptocurrency. Bitfinex launched the LEO token sale to recapitalize its business after the New York attorney general made public the exchange’s financial troubles. 


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Bitfinex faces declining market share amid regulatory woes: report

Binance

Blockchain

Electronics

Changpeng Zhao

The Binance exchange's own coin, used to reduce fees when converting and buying currencies.

Binance Coin

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blockchain network

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exchange

klatyn

reported

Major crypto exchange Binance has joined the “governance council” of Klatyn, a blockchain network backed by Asian telecommunications titans Kakao and LG, the company announced today. 

Klatyn—a blockchain network focused on “usable” blockchain services—plans to host layer-two applications and integrate with Kakao’s own existing services. As a member, Binance will have decision-making powers, allowing it to influence the development of the network. 

A full 24 members already sit on the council, among them LG Electronics, Union Bank of the Philippines, Celltrion, AhnLab and Yeahmobi. 

The Malta-based exchange has reported an uptick in profit in recent weeks, and said that a recent quarterly “burn” of its tokenized equity—done as a proportion of revenues—was higher than any that came before. Asian exchanges in general, meanwhile, have reported a similar upturn. 

It’s unclear how Binance stands to benefit from the Klatyn involvement. The exchange already has its own blockchain platform, run by “validators” close to Binance, and recently announced its own cryptocurrency, Venus, which bears some resemblance to the proposed Facebook-led digital currency, Libra. Binance did not immediately respond to _Decrypt’_s request for clarification.

In a statement, Binance CFO Wei Zhou said the goal was to advance the two companies’ “mutual vision with Binance in fostering and stimulating sustainable growth in the industry and to bring meaningful use cases.”


Binance joins blockchain council backed by Kakao, LG Electronics - Decrypt

Binance joins LG and Kakao-backed blockchain Klatyn, affording it influence over the protocol’s development.

Binance joins blockchain council backed by major Asian institutions

A form of offline payments is being developed for Bitcoin’s Lightning Network

lightning network

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scaling

intermediate node

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lightning rod

mobile nodes

network nodes

new functionality

nodes

Nawaz Sulemanji

Lightning Rod, a new offline-style payments protocol for the Bitcoin Lightning Network, will enable users to make Lightning payments to a payee without their mobile nodes being online at the same time. 

Developed by Bitcoin payments startup Breez, Lightning Rod delivers a “Venmo-like user experience” for the Lightning Network, according to Breez CEO Roy Sheinfeld. “There won’t be a need for two mobile nodes (payer and payee) to be online at the same time in order to send or receive Lightning payments,” he told _Decrypt_. The firm has released the protocol open-source, and is planning to integrate the new functionality into its iOS and Android payment apps by the end of this year.

The new functionality is being developed specifically for payments made on the Lightning Network—a decentralized system for instant and high-volume Bitcoin micropayments. The network allows payments as low as 1 satoshi (worth $0.00008) to be sent across payment channels that distributed across the network today. Over the last few months, the network has surged back into growth with the number of network nodes recently hitting 10,000. 

Currently, to make a bitcoin payment across the Lightning network, both the payer and payee need to be online and have their network nodes connected to each other. The new protocol works by routing a Lightning network payment through an intermediate node. This intermediate node is always online and can securely forward a payment without needing that the payer and the payee maintain an active connection to the network. 

Sheinfeld said he would not describe the functionality as “offline Lightning payments” but as the “ability to pay someone and go offline right after you’ve sent the payment”—so the payee is offline during the payment. “It’s the difference between a phone call and text messaging,” he said. “One requires both parties to be online at the same time, the other doesn’t.

Although it’s normally not an issue whether both nodes are online in a transaction, if payments can be sent across a protocol where at least the payee is offline, it could open up the door for a much-improved UX for payments made across Bitcoin’s layer-two scaling solution.


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New Lightning Rod protocol enables Bitcoin payments to be sent between two Lightning Network nodes that are not online.

bitcoin price

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price of bitcoin

Tim Copeland

The price of Bitcoin has fallen below $11,000, and is currently hovering $10,980–signifying a 3.5 percent drop for the day. It remained relatively stable just below $11,400 for the majority of the day before falling 1.7 percent in a single hour.

The top three coins have followed suit, with Ethereum heading back towards the $200 mark and XRP staying below $0.30.

Most of the coins in the top 100 are in the red with VestChain and Maximine Coin (a coin pumped beyond degree) posting the greatest losses. Both are down by more than ten percent. In contrast, ABBC coin is up 18 percent after its coin spiked 64 percent in one hour yesterday before slowly coming back down to Earth.

When the price of Bitcoin dropped, traders going long (betting the price would go up) were thereby liquidated. Datamish shows that more than $30 million in longs were liquidated on BitMEX alone.

This doesn't pose well for anyone betting on Goldman Sachs' advice. The investment company sent a note to its institutional clients speculating that Bitcoin may retrace to $11,094 before pumping towards $13,000. Might it recover in time?


Things are not looking good for Goldman Sachs' trading call on Bitcoin's price.

Bitcoin slides below $11,000, taking the market with it

Latest news about markets and price movements.

The price of Bitcoin has fallen below $11,000, currently worth $10,980. It is down 3.5 percent for the day. This doesn't pose well for Goldman Sachs' call.

Bitcoin slides below $11,000, taking the market with it

Things are not looking good for Goldman Sachs' trading call on Bitcoin's price.

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