Justice Department hires expert counsel to evaluate company compliance programs

This week, the U.S. Department of Justice (DOJ) announced the hiring of Hui Chen as a “full-time compliance expert”. In this role, Ms. Chen will be tasked with assessing the compliance programs of companies under DOJ investigation. This information will aid prosecutors weighing criminal charges of companies and individuals, including any remedial compliance measures. As you may recall, Ripple agreed to resolve a DOJ criminal investigation in exchange for a settlement agreement which called for a lengthy series of remedial compliance measures.

According to the DOJ, the hiring of Ms. Chen serves to indicate how serious the Justice Department is taking compliance. (As if the bitcoin community needed a reminder.) Officials, however, were quick to emphasize that a compliance program review is but one of several factors prosecutors will consider. This makes sense. FinCEN, which regulates bitcoin MSBs and conducted the parallel civil enforcement investigation of Ripple, considers multiple factors, including the violations themselves (i.e. volume, severity, time period, etc.); any corrective action undertaken by the institution; self-reporting efforts; level of cooperation with regulators; and, any past history of regulatory exams and prior violations.

It’s unlikely any of these individual factors will be cast aside anytime soon. However, the DOJ has signaled its intention to scrutinize how seriously companies take their compliance obligations, and to what degree the circumstances they find themselves are of their own making. Ms. Chen will, in the words of the DOJ, determine whether a company’s compliance program is “thoughtfully designed and sufficiently resourced, or essentially window dressing”. Now might be a good time to ask yourself which description applies to your compliance program.

Joe Ciccolo is the President of BitAML, a bitcoin compliance company helping BTM operators, exchanges and trading platforms comply with FinCEN and state regulations. Joe is a seasoned AML expert having worked for both large and mid-sized financial institutions before defecting from legacy banking. He can be reached anytime at [email protected].


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Earlier this month, FinCEN released the latest edition of its SAR Stats publication, a compilation of quantitative and qualitative data gathered from SAR filings. The (overly and conspicuously) comprehensive 44-page report contained detailed analysis of SAR narratives, emerging trends among SAR filings, and highlights from within each of the financial sectors, including MSBs.

Often overlooked, SAR Stats has historically stood as a reliable indicator of FinCEN sentiment and in some cases may even portend future regulatory actions. This publication, chock-full of valuable insights and behavioral tells, is a great way to get inside the regulator mind. The recent edition of SAR Stats is no exception.

While the bulletin did not contain any explicit references to bitcoin or digital currency, a closer look reveals several invaluable takeaways for the industry.

For starters, FinCEN indicated that SAR filings within the MSB industry generally contained less specificity within the narrative field, and in many cases minimal detail concerning the underlying suspicious or unusual activity. To reinforce this point, FinCEN claimed that “[i]n more than 100,000 instances filers should have furnished more detail relative to the suspicious activity being reported. Greater detail and context better assists in identifying a more accurate and discernable variety of trends.” Ouch!

While it’s true that bitcoin MSBs comprise a statistical minority of all MSBs, this in no way should negate the warning shot fired by FinCEN. The quality of information and attention to detail within your SAR filings is a direct reflection of your AML program and commitment to regulatory compliance. Regulators want to see detailed yet concise narratives. Describe what you found and why it’s suspicious or unusual. As my colleagues in the regulatory and law enforcement community often say, your SAR narrative should “tell me a story.”

Back to the SAR Stats publication. FinCEN analysis also determined that in reference to the type of suspicious or unusual activity, MSBs checked the “Other” box with greater frequency than any other financial sector. This too should be cause for concern. The obvious reaction might be to suggest FinCEN update or add more boxes (please no!) to better reflect the realities of new and emerging financial technologies. While perhaps true to a degree, selecting “Other” on a recurring basis could suggest to regulators the absence of understanding routine money laundering typologies. After all, there’s no shortage of possible options to select when describing the suspicious or unusual activity you’ve identified. The “Other” box is widely viewed in the AML compliance world as a last resort.

Notwithstanding the optics of checking the “Other” box, the SAR filer is obligated to specify the activity within an open text field. Two of the three emerging terms in this field, “Flipping” and “Excessive Activity”, exhibited annual increases of 203% and 304%, respectively, according to FinCEN. It’s likely that these increases were fueled, in part, by the growth of bitcoin MSBs. Flipping, at first glance, might seem more at home in the investment services sector with reference to the frequent buying and selling of assets. However, in the context of MSB SAR filings, it might describe customer-initiated high velocity arbitrage exchanges of BTC. The same could be said for the term “excessive activity”.

Interestingly enough, in the previous edition of SAR Stats, FinCEN warned of bitcoin speculators simultaneously arbitrating in multiple instruments and strategies. It was their contention that while not illegal, “speculation can share a transaction footprint with other activities that might be suspicious, (such as activity associated with High Yield Investment Programs (HYIP), or outright criminal, such as Ponzi Schemes involving Bitcoin.” If the increased use of these terms does indeed reflect the growth of bitcoin MSBs, there’s clearly a consensus among SAR filers as it pertains to both transactional velocity and high-dollar denominations.

Well, there you have it; the latest edition of SAR Stats. However, the fun doesn’t have to stop here. This publication is just one of a treasure trove of open-source documents FinCEN makes available to the public. Too often, these free (repeat free) resources go largely unnoticed. Take every advantage of resources such as SAR Stats, as well as other transcripts and public documents posted on FinCEN’s website. Better yet, do yourself a favor and signup for their mailing list to receive immediate notification of such announcements. Staying informed and ahead of the curve will enable better decision making and long-term planning, especially in times of continued regulatory malaise. Stay compliant!

Joe Ciccolo is the President of BitAML, a compliance company devoted exclusively to helping bitcoin ATM operators, exchanges and traders comply with FinCEN and state AML regulations. Joe is a seasoned AML expert having worked for both large and midsized financial institutions before defecting from legacy banking. He can be reached anytime at [email protected].

Since its inception, digital currencies like Bitcoin and digital finance have troubled governments and regulators across the globe. Some countries have chosen to classify these digital assets as legally recognized currencies because of their use by consumers, while other nations have chosen treat them as an illicit tool and banned their use outright. The United States is no exception to this legal scrutiny: the Internal Revenue Service has deemed Bitcoin is property, Obama released an executive order earlier this year allowing the government to seize digital currency without prior notice or due process, and most recently, the Commodities and Futures Trading Commision (CFTC) issued a statement that Bitcoin is indeed a commodity. This new decree is causing the legal teams of every major exchange in the space to scramble for regulatory compliance, lest they be forced to close doors like the unfortunate California based exchange Derivabit/Coinflip. One such firm has patiently awaited legal clarity regarding financial compliance and is preparing to go live.

Alt-Options is a Boston-based financial services company that offers a platform to trade Bitcoin derivatives in order to hedge risk and speculate efficiently. Their advance trading platform allows for scalability, as their exchange is not limited to a single derivative product or digital currency; additionally, their website is available in both English and Chinese Mandarin. The company has just released their public beta for paper trading and is filing paperwork to be compliant with the recent change in CFTC regulations.

Mining and Bitcoin storage is a risky venture due to price volatility. A financial option offers alternatives to miners selling their holdings by using the AOEX platform to either mitigate risk or gain extra income from selling contracts. Additionally, one can lock in the price they wish to buy or sell Bitcoin for a small premium. The AOEX platform attempts to mitigate price risk for its users in the safest way possible, by offering a wallet service that will be insured up to $250,000.

ao2

Likewise, the Alt-Options updated platform caters to the needs of seasoned option traders. A new, robust analyzer engine allows traders to back test their option trading strategy and related risk without committing to any positions. The P&L (profit and loss) graph and scenario analysis give user a clear expectation of their potential earning/loss from each potential trade.

Analytics Page Includes:

• Advanced profit and loss graph
• Sensitivity analysis on expiration date & underlying
• Real time portfolio Greeks & risk analysis
• Strategy analyzer (multi-leg positions)

Source: Alt-Options

Alt-Options is working with several partners in the Bitcoin space to hold a paper (mock) trading competition to test their platform. A number of organizations such as the College Cryptocurrency Network and notable universities (Boston University, Yale, Carnegie Mellon) have already signed up for this event to compete alongside professional traders. Participation is completely free and top winners will receive cash and other prizes. The competition will be held during the first week of October more info can be found here.

Sign up for Alt-Options Bitcoin Trading today.

*Content Provided and Co Authored By Carole Anne Vetter

Ethereum Labs announces the launch of much anticipated “EtherX” platform and the release of brand new multi-currency wallet with integrated exchange featuring ‘EthereumCard” and many other various white label derivatives…

Ethereum Labs

Ethereum Labs is a research and development organization, incubating disruptive ideas, leveraging the Ethereum Blockchain Stack, developing decentralized applications, organizations and smart contracts. Ethereum Labs’ mission at it’s core is to deliver real life value through applications that can make a meaningful difference to legacy processes

EtherX

EtherX is a distributed decentralized application that will serve as a secure multi-currency wallet with an integrated exchange. Features of the new EtherX wallet are as follows:

  • Multi-Signature – Allows funds within specific wallets to be controlled by multiple parties based on a specific set of rules or individual roles. This feature will be important as many blockchain based applications will require this type of functionality (Family Trusts, Joint Accounts etc.)
  • Multi-Currency – Offers the ability to store and transact in many different types of blockchain based currencies, tokens and derivatives. This feature will become more and more in demand as the ecosystem expands and the masses start to implement these technologies into everyday life and everyday business and will eventually transition into an accepted requirement across many applications and platforms.
  • Integrated Marketplace – Users will also have the ability or option to view several different vertical marketplaces where they can find, track and pay for goods and services directly from the wallet.
  • Integrated Exchange – The EtherX integrated exchange is fully compliant and regulated and can facilitate the exchange of fiat as well as various cryptocurrencies, smart contracts and cryptoassets (tokens and/or derivatives). Retail outlets and small business with appropriate AML & KYC licensing working through the core EtherX exchange API can now utilize any EtherX wallet as a potential exchange agent. While EtherX exchange is fully decentralized and distributed it does require regulation and compliance at gateways communicating with banking infrastructures.
  • ScalabilityIt is immensely scalable; a key requirement pertaining to the long term affordability of a busy blockchain. Because it is not focused on fulfilling financial transactions, the Ethereum blockchain purpose is different to that of Bitcoin. Technically, Ethereum doesn’t have a limit on the block size, and intrinsic to its core design, it will adjust dynamically as a whole, as part of its core design. In addition, Ethereum is continuing to work on improving the scalability aspects, and that will have the direct benefit of lowering the overall transaction costs.

Loyalty 2.0

One of the key focus areas of Ethereum Labs and EtherX developers is the evolution of loyalty apps on the blockchain. We are all familiar with loyalty apps and or reward point programs that have become hugely popular with names like “Frequent Flyer Miles” etc.

The evolution of loyalty apps and programs now being implemented onto the blockchain will be epic as white label derivatives are now being developed using Ethereum and Ðapps.

As explained by William Mougayar in his article The Business Imperative Behind the Ethereum Vision, A ÐApp is the combined set of smart contracts and client-side code that enables them. Smart contracts are like cryptographic “boxes” that contain a value and only unlock it if certain conditions are met. They typically encapsulate some logic, rules, a process, or an agreement between parties. When they are launched on Ethereum, the network enforces their ramifications.

A ÐApp can be viewed architecturally as being very similar to a traditional web application, with one difference: in a traditional web application, you have client side Javascript code that is run by users inside their browsers and server-side code that is run by a host or company; but in a ÐApp, you instead have smart logic running on the blockchain, and client side code running in Mist, the special browser.

Furthermore, a ÐApp can interact or connect with other web apps or other decentralized technologies. For e.g., a ÐApp may use a decentralized messaging service such as Whisper in the Ethereum context, or a decentralized file distribution like IPFS. On the web apps side, a company such as Google might want to get data from a decentralized reputation service, or a Bloomberg data feed may want to interface with a financial ÐApp.

The decentralization of loyalty or reward points will take this industry to new heights the likes of which we have never seen before. The introduction of Loyalty 2.0 represents a new peer-to-peer lifestyle filled with opportunity, connections and possibilities. Some of the features of Loyalty 2.0 applications and programs will include:

  • Blockchain loyalty tokens or reward points are generated by an algorithm and issued in the form of digital tokens on the blockchain…
  • By making use of underlying blockchain technology, blockchain based tokens and or retail reward points are decentralized and exempt from regulation…
  • Can create tokens for individual users and loyal patrons however the countervailing liability resides on the blockchain itself…
  • No liability on merchant balance sheets…
  • Tokens or Reward points distributed in real time due to the speed of transactions or confirmation times on the blockchain…
  • Instant consumer evaluation based on market not by expensive 3rd party consultants…
  • Instant Liquidity or conversion of loyalty tokens or reward points…
  • A more open, blockchain-mediated marketplace unlocks value, increases trust of users by making transactions public and also makes it simple for customers to trade or convert tokens and rewards points using an exchange…
  • Fraud and counterfeit proof security with multi-signature capabilities…
  • Seamless in social media, video games or any of digital media and can integrate with other apps on your smartphone…

EthereumCard (In Development)

EthereumCard is a universal platform that will be applied to numerous branded applications in the same way as the EtherX wallet. “EthereumCard” will serve as the perfect complement to mobile wallet apps for those who still prefer plastic and will offer many more features and benefits than traditional payment cards like Visa, Mastercard or American Express.

EthereumCard can be configured to a specific use case and can represent one or more of the following features:

  • White Label VISA/Mastercard Co-Branding – Fiat currency exchange capability, subject to requirements…
  • Near Field Communication (NFC) – “Tap and Pay” functionality on smartphone mobile apps that support NFC…
  • Multi-Currency Capability – Uses smart gateway if card not supported by wallet…

In conclusion, Ethereum Labs looks to take decentralized applications, organizations and smart contracts to the next level using EtherX and Ethereum Block Stack technology forever changing the app’s landscape and how we develop and use them.

Originally Launched in March of 2014 Canada eCoin [CDN] is a scrypt algorithm digital currency with merge mine-able support that over the course of the last year has seen it’s share of challenges within the cryptocurrency ecosystem.

The original developers seem to have all but given up on the project over the course of the last few months but just recently their has been a resurgence of this coin as it looks as if community members have taken over the development moving forward…

Community members have released the following statement with regards to Canada eCoin [CDN]:

“Please keep in mind, we are not the creators of the Canada eCoin [CDN] nor are we affiliated. We are just interested parties who wish we would have seen more from this coin from the start. So, we are going to do what we think should have been done in the first place. We are not aware of what happened to the original creators of this coin and we hope we are not stepping on any ones toes as
the community will take over development path of Canada eCoin [CDN] from this point on. Thanks for all the support from community members around the world, it is obvious we are all now on the right path.”

“DISCLAIMER: We are not affiliated in any way with the owners/creators of the Canada eCoin project or with any government or government agency. We are all Canadians, this is a team thing.

TO THE NAYSAYER: We don’t believe our coin or any other are intentionally created to be used for bad things. We think that the abilities wrapped up within a blockchain are exciting and interesting. We also believe that when governments around the world learn how to use one properly they will be joining in on all the fun.”

New developers of Canada eCoin [CDN] are currently working on bringing applications together to serve as consensus gathering and distribution tools, a general forum and will also be updating the core of Canada eCoin [CDN] to include all bug fixes from it’s mother-coin Litecoin.

Developers are planning to create the Canada eCoin Foundation for tracking of projects, people and funding and will be asking the users of the Canada eCoin to vote forward the features and structure of the organization. The Canada eCoin team encourages all users to join the Canada eCoin Foundation when launched as it will serve as a body for a unified voice.

Details of specific applications and time-lines are unpublished currently due to re-organization and schedule changes which depend on funding and manpower. As the foundation gets established all of these details will become public knowledge and consensus driven.

Developers further state:

“Patience is appreciated as we are all family oriented employees who donate their time to do this work out of the goodness of our hearts. We are working for free now so our children can be free later.“

A published ‘birds eye view’ of a work-path for expanding blockchain technology into service delivery using Canada eCoin and Ethereum as public ledgers with the intention of creating GigaGeek DAO, a peer-to-peer service delivery platform which will be publicly owned using a third blockchain (Asset, GigaGeek Peer Share) http://todo.ourcoin.ca

Addition of Canada eCoin CDN into Coinomi (Universal Bitcoin Wallet & the launch of two Mercury Servers (more Electrum) has been successful giving Canada eCoin CDN an extra boost in it’s goal of also being added to ShapeShift.io in the near future.

Developers are also working on a community social network using BitVote and Ethereum for consensus gathering, a rewards program for contributors (and on/off-line verification) as well as a new Twitter-Bot to engage users and give away Canada eCoins (@CanadaeCoin)

They also have outlined a road map here for more information: https://github.com/CanadaeCoin/announcements/blob/master/ann-cdn e08-25-2015.md

The new regime of developers stem from GigaGeek headed by Jason (koad) Zvaniga (owner & operator of GigaGeek Industries, a digital living concierge and consultancy company)

About The Developers:
“We are a team of Bitcoin enthusiasts that came together to pick up where the creators of the Canada eCoin project left off. We have been working on this project like it’s our full time job because we are excited about the blockchain and the possibilities it affords our evolution in and out of the financial sector”

Canada eCoin runs 20x faster than Bitcoin. This results in lightening fast confirmations so Canada eCoin can be used in face-to-face retail with ease. Canada eCoin’s 30 second block target means you can have 10 confirmations within 5 minutes.

The Canada eCoin and Sidechain Development Team, est 2015 is User Experience Centric. This means that the main focus in the development of this bleeding edge technology will always be based around the comfort and trust of the user.

Along with the standard Bitcoin style apps that are well known and easy to use, Canada eCoin has many projects evolving to help make it superior to those who are new to the cryptocoin world while making it super effective and efficient for the expert.

Canada eCoin is an open-source cryptography project featuring a public blockchain, merged-mining support and an all Canadian advanced multi-agenda research and development team.

Specifications:
Operating Metrics:
– 30 second block/confirmation target
– 100 million coins total
– Mining Algorithm: Scrypt – Merged minable as per Unified Scrypt Coin (USC)      codebase (DEC-2013)
– 120 block maturity
– block halving interval: every 500,000 blocks (or about every 173.6 days)
– difficulty adjustment target: once daily

Network Ports:
– Mainnet – RPC:34331 – P2P:34330
– Testnet – RPC:41331 – P2P:41330

Canada eCoin can currently be traded on Bleutrade exchange and is in the process of being voted onto Cryptsy and Cryptfolio and now has a live pool at http://pool.canadaecoin.ca

Canada eCoin [CDN] also has plans to collaborate with a number of projects within the ecosystem moving forward into the future though nothing is in concrete just yet… developers have been reviewing collaboration with start-ups Bountyshares, CoinRaQ and others that can show a solid, consensus based, use case driven nature to projects.

In conclusion Canada eCoin has always performed well technically in retrospect but has faced some challenges along the way as many coins including Bitcoin have over the last couple of years.

However, Canada eCoin has weathered those challenges and through it’s dedicated community and development team it looks as if Canada eCoin has a very bright future and should be considered a solid cryptocurrency that has stood the test of time unlike many coins “THAT HAVE COME AND GONE”
ceasing to exist within a 30 day time span…

Canada eCoin has shown to have staying power and the trust of a hard working community who has managed to keep Canada eCoin “ALIVE and KICKING”.

Twenty one cities in Pennsylvania, including Pittsburgh, have faced the threat of bankruptcy for several years. A subcommittee report in late 2013 suggested several means of mitigating this problem’s causes, including acceptance of digital currency to make payment of taxes and fines more convenient. City officials declined to comply with this suggestion, however, alleging that digital currencies like Bitcoin remained too volatile for such purposes. The city’s finance director, Paul Leger, said on their behalf that “We would need to see a longer term proof of stability for digital currency to be good stewards of the public’s funds.”

Leger appears not to have heard of BitPay, a Bitcoin payment processor that offers free and unlimited payment processing. Bitpay immediately converts Bitcoin payments into USD, and deposits them into the recipient’s bank account. Contrary to Leger’s claim, such a payment method would avoid any of the risks associated with digital currencies’ volatility.

A city spokesperson further said that “Currently residents cannot even regularly use credit or debit cards for all payments,” presumably because such payment methods’ implementation would demand too much skill from the city employees. BitPay offers a solution not only of similar simplicity and convenience as using a credit or debit card, but also liberates all parties involved from the processing fees typically imposed by these conventional methods.

Assuming that Pittsburgh experiences a typical rate of funding loss to fraud, this factor alone drains about $200 million annually from its economy. Since the blockchain can practically immunize its users against fraud, fully implementing it (beyond merely accepting Bitcoin) could completely remedy Pittsburgh’s threat of bankruptcy. The blockchain’s efficient assurance of uploaded documents’ integrity and minimal transaction fees would further reduce legal expenses, in ways that no credit or debit card processor could otherwise possibly manage.

In light of these facts, Pittsburgh’s residents ought to question the true reason for their officials’ decision. As evident by Pittsburgh’s ongoing financial failure, incompetence might offer the most likely explanation. Further justifying suspicion of this cause, Pittsburgh’s previous mayor fired Leger from his position as finance director in 2006. Assuming that ulterior motives didn’t influence the officials’ decision, the city might want to consider electing officials who can keep pace with contemporary technology.

 

As the recent indictment of Michael Oppenheim clearly shows, the traditional financial system is rife with abuse. On the rare occasions that I unexpectedly find someone in my area that has already heard of Bitcoin, however, they invariably associate it with the black market, and lack familiarity with applications outside its use for maintaining anonymity. This impedes Bitcoin’s mainstream acceptance, and warrants an explanation of its potential to combat crimes, like financial fraud.

Readers might better conceptualize Bitcoin’s technology as a form of pseudonymity, rather than anonymity, since its addresses serve as users’ pseudonyms. Depending on the method of implementation, users can consequently employ it either for obscuring their identities, or for providing a means of proving their role(s) in transaction records. By voluntarily associating themselves with particular addresses, organizations’ members can use the blockchain for combatting fraud, with far greater efficiency and effectiveness than bureaucracy would permit.

Provided that the program runs on a sufficiently vast network to prevent a single user from commandeering over half of its mining power, the blockchain provides unassailable protection against unauthorized alteration of its records. This absolves the system not only of the unnecessary overhead incurred by operating such brick-and-mortar establishments as banks, but also frees it from the inevitable risks that come with relying on humans for performing financial functions.

Oppenheim, a former investment adviser at JPMorgan Chase & Co, recently embodied these risks by embezzling $22 million of his clients’ funds, a crime to which his defense lawyer has claimed that he plans on pleading guilty. Such criminals rely on conventional currency’s secretive transaction records for evading detection. In contrast, the blockchain automatically makes its records publicly available. Rather than forcing voters, journalists, or potential prosecutors to waste time on the bureaucratic protocols that impede investigations into these matters, cryptocurrencies can render the transaction records immediately and completely transparent to anyone who has to trust them with their money. (e.g. taxpayers, investors, etc.)

According to a Forbes article in 2011, the United States alone loses approximately $190 billion per year to fraud, more than the annual interest on our national debt in 2010. Requiring authorities to use Bitcoin would effectively negate this waste, saving each taxpayer roughly $1,000 per year. Beyond explicitly illegal fraud, such a system would also help voters identify political candidates’ financial affiliations. This transparency would allow the public to make more informed decisions during elections, and encourage integrity among the authority figures in whom we invest political power.

More advanced blockchain technology enables users to remedy many other forms of corruption. Issuing and recording votes on the blockchain, for example, would prevent electoral fraud. Though its potential uses might extend even beyond the imaginations of contemporary users, the ability to prevent crimes like Oppenheim’s has been an intrinsic feature of Bitcoin from its inception.

 

Bitcoin core developer Jeff Garzik has recently proposed a consensus based solution to the bitcoin block size debate and the proposal is drawing attention from some heavy hitters in the bitcoin ecosystem.

The block size debate began back in October 2014 when Gavin Andresen announced a proposal through the Bitcoin Foundation blog entitled “A Scalability Roadmap”. Since then ex-google developer Mike Hearn partnered up with Gavin and both have pushed for a significant increase in block size from 1mb to 20mb and failure to do so would be catastrophic if this increase was not implemented immediately and that this change would take place with or without the consensus of the bitcoin community, this approach was seen by the community as an act of totalitarianism which turned the debate into more of a civil war of sorts with both sides of the issue slinging mud…

Bitcoin XT has offered to reduce the initial increase from 20mb to 8mb with an annual gradual increase however it seems the community is not buying into the protocol with accusations that the XT version contains back doors to allow for 3rd party interference an on and on…

Enter Jeff Garzik and the BIP100 solution who argues that an increase is definitely needed but should be increased through a framework where the network increases block size by consensus which would be a lower risk technically and politically than a hard fork. Block sizes exceeding 1mb may be selected without flag day network upgrade. Small size increments limit the potential for unexpected harm to bitcoin network security and allow the network time for testing, preparing and adjusting to overall behavior. More complex solutions such as extension blocks are rejected in favor of a one time simple change that will greatly reduce the need  for future hard forks in this area.

Protocol changes proposed:

  • Hard fork, to
  • Remove static 1MB block size limit.
  • Simultaneously, add a new floating block size limit, set to 1MB.
  • The historical 32MB limit remains.
  • Schedule the hard fork on testnet for September 1, 2015.
  • Schedule the hard fork on bitcoin main chain for January 11, 2016.
  • Changing the 1MB limit is accomplished in a manner similar to BIP 34, a one­way lock­in upgrade with a 12,000 block (3 month) threshold by 90% of the blocks.
  • Limit increase or decrease may not exceed 2x in any one step.
  • Miners vote by encoding ‘BV’+BlockSizeRequestValue into coinbase scriptSig, e.g. “/BV8000000/” to vote for 8M. Votes are evaluated by dropping bottom 20% and top 20%, and then the most common floor (minimum) is chosen.

BIP100 accomplishes several goals:

  • Demonstrates that change is possible and that the Bitcoin protocol can be upgraded
  • Eliminates 1MB limit as impediment to adoption
  • Removes hard fork risks
  • A “Keep It Simple Stupid” solution in terms of code changes
  • An upgraded path yet restrained until problems and solutions are better understood

This approach introduces friction into the block size increase process making it scalable but giving participants in the system sufficient time to observe system behavior and change course moving to a system where the market decides block size optimization.

Some of the more notable names that have taken a stand for BIP100 include F2Pool, AntPool, BitFury, BTCChina, BW Pool, Eligius, KnCMiner, Slush, 21Inc, Telco 214 and GHash.io to name a few.

This debate has now been out of control for the past 6+ months and has seen it’s share of in-fighting between core developers but it is way too ridiculous at this point and something has to click in order for bitcoin to survive… The bitcoin community has been divided and is primed to be conquered if a solution is not found, a solution for the good of all not just the few! BIP100 seems to be the solution that may achieve this goal.

For more information and to educate yourself on BIP100 visit: http://gtf.org/garzik/bitcoin/BIP100-blocksizechangeproposal.pdf

 

Founded August 10, 2014 , Burstcoin [BURST] uses a unique algorithm called Proof of Capacity or (PoC), which utilizes unused hard disk drive space instead of a processor or graphics card while mining for BURST. Miners can pre-generate chunks of data known as ‘plots’ which are then saved to the hard disk. The number of plots stored is effectively the mining speed. Every block a miner skims through saved plots and calculates an amount of time until it is able to mine a block if another block hasn’t yet been found. Plots only need be generated once with a computer processor unit (CPU) or graphic card (GPU) making BURST hardware and energy friendly.

BURST is for everyone, ASICS will never be more efficient than spare hard disk space running mining operations in the background while a PC is powered on.

The way BURST works is like this, miners generate and cache chunks of data known as ‘plots’, which are divided into 4096 portions known as ‘scoops’.

Plots are generated by taking a public address and a nonce, then hashing it, pre-appending the resulting hash, repeating the hash-pre-append cycle many times, and then hashing the whole thing and xor’ing the last hash with the whole thing.

Lots are staggered together so chunks of the same scoop number are together, then written to disk.

Each block has a generation signature which is derived only from the previous block’s generation signature and miner, so it is difficult to manipulate.

When mining, the scoop number to be used for a block is derived from the generation signature and the block height, so the miner reads all relevant scoops (each plot will have 1 relevant scoop, and staggering allows for larger sequential read with less seeking). Only 0.024% of the stored data will need to be read each block.

The generation signature is hashed with each scoop. Eight bytes are taken from the hash, then divided by a scaling factor (inverse difficulty). The resulting number is a number of seconds. If that many seconds passes since the last block without a new one, the address/nonce combination used to generate that plot/scoop is eligible to announce a new block.

Then the miner’s hardware can just sit idle until a new block is announced. The address/nonce is included in the block as proof of eligibility, and the block is signed by that address.

Technically, this mining process can be mined PoW-style, however mining it as intended will yield thousands of times the hashrate, and your hardware will sit idle most of the time.

Continuously hashing until a block is found is unnecessary, as waiting long enough will cause any nonce to eventually become valid.

BURST is not only the first Proof of Capacity (PoC) currency additionally there are no clones are in existence as of yet,  but since the launch in mid-August 2014 the main developer has put immense effort on improving BURST. Often the coin is referred to as simply BURST, as that is the handle on the exchanges.

Recently, with the announcement of BURST being the first and only HDD-mining coin, they have also announced that it has now also become the first cryptocurrency to implement Smart Contracts within a live environment.

You have probably heard of Smart Contracts as Ethereum and Counterparty have been in the limelight with regards to implementing Smart Contracts which both are still in development. However, you can now start writing Smart Contracts with BURST today.

Users today are discovering that Bitcoin is not anonymous but pseudonymous, able to be tracked and traced by third parties with the right resources.

BURST has now also addressed this problem with a solution known as atomic cross chain transactions which is considered to be decentralized trading between different currency platforms. Users can trade BURST with a coin that provides a mixing service for the purposes of privacy, then sends it right back to a new BURST account with no third party interference. Recently this has been successfully achieved by both BURST and QORA another second generation cryptocurrency.

As BURST enters it’s second year it looks as if developers have big plans and are celebrating the 1 year anniversary of BURST by unveiling these new developments to start the new year off in the right direction.

As a community let’s all wish BURST a Happy 1st Birthday and give the new HDD wallets a spin and start cutting back on those high electric bills!!

Bitcoin doublers, gambling, betting, trading bots, investments and other methods of so called “bitcoin opportunities” abound on the internet today. All claim to be safe and secure ways of increasing your bitcoin stash.

After evaluating different so called opportunities, There is one particularly more reliable than most, though loss is still possible.

BTCjam has the mission statement that they “make credit affordable and accessible everywhere.”

BTCjam has provided more than $13 million dollars in over 15,000 loans, and due to the very nature of bitcoin, individuals that may not have the opportunity or access to loans can in many instances, apply for a loan and receive the funds in a matter of a few days.

BTCjam works in two separate areas: borrowing and investing, each has slightly different requirements and risk and rewards vary.

As a borrower, you first set up an account and then, through a verification process start to establish a credit rating.

The process involves verifying through social media platforms including Facebook, LinkedIn, BTC Talk and various others; services like Coinbase, PayPal and Ebay, your address, personal identification, income, banking and credit card information and other details.

As each becomes verified your credit rating increases. This author completed all but two verifications and received a C+ credit score. As an investor, these options are available and recommended, but not required.

Once one has reached minimum verification requirements, including address, a loan application can be completed and submitted.

The major negative for borrowers in the interest rate for those with low credit scores and can be greater than 50% if there is no borrowing or investing history and a minimum D- credit score.

This, of course, is a means to encourage investors and offset a greater likelihood of default. It must be stated, that the more information that is verified, the easier and more economical the interest rates.

As an example let’s say an individual applies for a business investment loan of 0.75 BTC, in order to secure new hosting for development of 5 new free coin faucets as well as a reserve for scaling up to faster and more reliable hosting. It would take an estimated 30 hours to reach 100% of the loan goal, and after accepting an interest rate of say 17.85%, an individual would receive funds deposited into a bank account in less than 4 days after completing the loan application.

The service has shown to be simple, and fairly painless, and after setting up an account simply requires the deposit of some bitcoin.

Once you have some working capital, visit the ‘Browse Listings’ and review loan application. You will see the amount, purpose, interest rate, repayment schedule, yield and the credit rating.

Those with an A credit rating and solid history can receive loans with the low interest rate of 2.85% annually; whereas the highest risk loans can be 50% or greater.

Deciding who to invest in may be a science or an art, depending on who you ask and many investors make it clear they have their own personal strategies.

Loans fund, or become available to the borrower once they are 70% funded, and can remain open for 14 days. The borrower can choose to activate or accept the loan once the minimum investment percentage is met, though they can wait until it is 100% funded or the application deadline has been reached.

The dashboard for both borrowers and investors is pretty simple to use with two exceptions. The first allows you to give or receive references to other users, and it is difficult to figure out how to request a reference from someone that is not showing on your suggestions page. The second is determining if a loan has been accepted by the borrower.

Viewing your loan, payments to be made, investments and other important information is simple and clear. When reviewing ones loans, the dashboard provides easy click payment options, a calendar for payment dates and amounts paid for principle and interest.

For the investor, similar data is available and one really nice feature is the Payments/Status section which tells you graphically how many payments are due in total and how many have been received already. In a few seconds it is clear how each investment is doing.

BTCjam offers an auto investing feature, which currently is yielding better than 19% and is very simple to set up and use. This is a data driven method that helps to reduce overall risk through diversification while increasing investment profit.

In addition to the auto investing, there is a ‘Notes’ market that allows you to sell and purchase investment ‘notes’ in a simple commodity styled format.

The future looks strong for bitcoin and those businesses that follow and innovate in the Satoshi Nakamoto mentality.

BTCjam provides a simple yet effective service, and because of this simplicity, it has been successful in spreading the decentralized economic theme around the world.

According to the BTCjam website, borrowers have received loans in more than 200 countries. Based in the Silicon Valley, the founders and staff are dedicated and highly respected and are clearly motivated to continually move forward in this bold new era.