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The Creator of Proof-of-Stake Thinks He Finally Figured It Out

Known for creating the first proof-of-stake-based cryptocurrency, pseudonymous developer Sunny King is back with an idea that’s sure to surprise – adding hardware. Proof-of-stake, or PoS, has been heralded as a more ecological way to come to consensus on blockchains since it doesn’t rely on expensive hardware using vast amounts …

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BitTorrent Courted EOS, Filecoin Crypto Creators Prior to Tron Sale

A number of well-known crypto startups had their eyes on BitTorrent prior to its acquisition by Tron’s Justin Sun. CoinDesk has learned that in addition to Tron and Neo, blockchain governance-focused project Icon and Protocol Labs, the developers of Filecoin, also entered into talks with BitTorrent to explore a purchase. …

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The $1 Billion Tezos Blockchain Is Officially Launching Monday

The “experimental” phase of the Tezos blockchain is soon to conclude. Announced today, the Tezos Foundation will officially launch the protocol on Monday, at which point the platform, whose token supply is today valued at more than $1 billion, will no longer be in beta, meaning it will be fully …

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Leading Bitcoin Cash Developer Says Future Fork Unlikely

Cryptocurrency forks are likely to slow down considerably in the future, leaders of several major projects, all of which were formed by forks, said at CoinDesk’s Consensus Singapore event today. On a morning panel, Amaury Sechet, the lead developer behind Bitcoin ABC, the most widely used bitcoin cash software implementation, …

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Ethereum’s Vlad Zamfir Claims Milestone In Blockchain Sharding

Ethereum might just be one step closer to sharding its blockchain. At least that’s according to long-time blockchain researcher Vlad Zamfir, who claims to have coded up a successful proof-of-concept of the idea at the ethereum hackathon EthBerlin this week. Built with the help of several other developers, including Tim …

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Ethereum’s Constantinople Hard Fork to Activate on Testnet in October

Ethereum’s upcoming hard fork, Constantinople, will activate in a testing environment next month, core developers agreed on Friday. As detailed by CoinDesk, Constantinople features changes designed to increase the platform’s efficiency, alter its economic policy and delay the so-called “difficulty bomb,” a piece of code meant to encourage the network …

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EVM 2.0: Inside the Race to Replace the Heart of Ethereum

At the heart of ethereum lies a virtual computer. Stored across tens of thousands of nodes that make up the platform, the ethereum virtual machine, or EVM, is responsible for executing the countless tokens, dapps, DAOs and digital kittens of which the blockchain is comprised of. It’s an engine on …

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Ethereum Dapp Bancor Is Expanding to EOS for Fast, Free Transactions

Bancor, one of the most popular and valuable decentralized applications on ethereum, is expanding to the EOS blockchain. According to a company announcement, the “decentralized liquidity network,” which allows users to trade a range of ethereum-based tokens without depositing funds in an exchange or matching trades in an order book, …

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This DEX Is Enabling Merchant Payments in Any Ethereum Token

119,876 – that’s how many ethereum ERC-20 tokens are currently in existence. It’s a number that is growing by the hundreds every day, but the trouble is, according to Loi Luu, the CEO and co-founder of decentralized exchange Kyber Network, the majority of those tokens fall short of a practical …

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‘Turbo Geth’ Seeks to Scale Ethereum – And It’s Already in Beta

There’s software ready to help ethereum scale – right now. Revealed exclusively to CoinDesk, the raw architecture of Turbo Geth has been completed – and is currently available to early adopters for testing. Alexey Akhunov, the independent software developer that built the software, told CoinDesk that unlike many other scaling …

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Momentum Is Building to Block Ethereum ASICs

Several ethereum miners and developers have come forward with the goal of stopping specialized mining hardware from effectively operating on the network. Underway since April, the controversy surrounding application-specific integrated circuits (or ASICs) on ethereum rose after news broke last Thursday of a new line of specialized mining hardware that …

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R3’s Hearn and Brown Say Enterprise Blockchain’s Day of Reckoning Is Here

This space ain't big enough for all of us.

That about sums up the way R3's technical chiefs, CTO Richard Gendal Brown and lead platform engineer Mike Hearn, view the rivalry among enterprise blockchain solutions.

While it may be more genial and less chaotic than the public blockchain world that Hearn left behind when he quit work on bitcoin in 2016, enterprise tech is still a competitive business. And speaking to CoinDesk last week during R3's CordaCon event in London, the two executives described this game as, if not quite zero-sum, something close.

An enterprise blockchain "shakeout" is well underway, said Brown, who before joining R3 spent 15 years as a banking expert at IBM (now arguably a chief adversary of his present employer) and was also an advisor to a young and then-inexperienced Hyperledger.

In order to gain the network effects of blockchains, many firms will have to move at once, Brown told CoinDesk, and they are simply not going to tolerate multiple different platforms all in the same organization.

He added:

"So that naturally means there has to be a shakeout and a consolidation down to a small number of platforms."

This boils down to a Big Three, Brown argued: a choice among R3's Corda; Hyperledger, which he acknowledged is "well governed"; and possibly one of the enterprise ethereum variants, given the conviction behind it, although "right now we are not seeing it."

Indeed, there has arguably been a shaking out at the sector level; as previously reported by CoinDesk, the insurance industry, for example, seems to have settled on R3's Corda platform after some deliberation.

But Hearn told CoinDesk this period of reckoning will be wider than just the enterprise space, voicing serious doubts about ethereum in general.

"I don't think ethereum is going to go anywhere, to be frank," said Hearn, adding, with perhaps a touch of hyperbole, "They have announced they are going to rewrite everything from scratch; that's why I say that."

Hearn said he found "ethereum 2.0" initiatives (like moving to proof of stake and rewriting the virtual machine) "really surprising."

"They have a market position now; what you don't want to do is start a new blockchain with new technology and announce that all of your existing technology is rubbish – which is kind of what they are doing."

In Hearn's view, this will result in minimal traction in the enterprise space as well as the loss of a lot of momentum in the public blockchain space.

"So instead of improving what they've got, they are now going to spend a long time rewriting what they've got," he said.

Hearn went as far as saying all the time wasted on indecision and infighting in the public space (his exasperation over which famously drove him away from bitcoin) means the really exciting and interesting technological work is happening in enterprise blockchain.

"I think the really cutting-edge work has actually now moved to companies like us, which are better funded and more focused and not spending time with internal disputes," he said.

Tooth and nail

Further underscoring that enterprise blockchain is no hugbox, R3 has been involved in some dust-ups recently.

Last week the startup agreed to a settlement in a dispute with Ripple over a large swath of XRP, the cryptocurrency closely associated with Ripple. While the terms of the settlement are confidential, if the payment to R3 is sizable it could conceivably address the startup's rumored cash flow issues.

And a couple of months back, R3 launched an aggressive bid to provide technology to the Utility Settlement Coin project, which was rebuffed by its consortium of banks.

This type of hustle has earned R3 a reputation as a "scrappy contender," in the words of one industry member.

"If someone called me that, I'd see it as a compliment," responded Brown, adding that firms can choose whatever platform they see fit and Corda does not have an inherent right to be chosen.

He went on:

"We have to convince them that Corda is the right choice, show them that we understand their problems. So yeah, we fight for every piece of business. Absolutely. We take nothing for granted."

Brown pointed out that he and Hearn made some architectural decisions early on in the genesis of Corda that were viewed at the time as unusual or controversial and possibly unfashionable.

"But we have not had to revisit any of them," said Brown, "and apps on earlier versions of Corda continue to work. We don't see any u-turns or major changes on the horizon in the way maybe we see with some of the other platforms."

But some changes afoot in other areas of the enterprise blockchain space could be interesting to watch play out. Among the possibilities, there could be closer alliances between ethereum and Hyperledger, both in terms of the Sawtooth ethereum implementation (Seth) and work underway involving Fabric and the ethereum virtual machine (EVM).

Asked about this, Brown pointed out that Corda's licensing is identical to Hyperledger's Apache 2.0 – and that from a governance and a licensing process Corda is directly aligned with Hyperledger. (Software licensing is a salient issue for enterprises when choosing which open-source platform to build on, and it has been a complex area for ethereum, although the EVM was successfully brought within Hyperledger and Apache licensing with the Burrow implementation courtesy of Monax).

Yet Hearn was circumspect about any possible alliances between ethereum and Hyperledger.

"It's not going to change anything fundamentally about the products. So any sort of alliance would be something of a marketing event rather than a major change to way the platforms work," he said.

Token gesture

Despite R3's reputation as the quintessential "I'm interested in the technology, not the currency" organization, tokenized ownership of assets on Corda is becoming a big deal, especially as the open source community grows.

R3 co-founder Todd McDonald will now focus on tokenizing activity of all stripes, from decentralized governance tokens on Cordite to collateral lending via HQLAx.

Brown said tracking and transferring ownership of real-world assets in a regulation-compliant manner is a sweet spot for Corda right now.

"You need strong identity and settlement finality to free up these assets, make them liquid," he said.

Hearn pointed out that Corda's intellectual origins are basically in bitcoin, more so than ethereum.

Harking back to his early work in the bitcoin space, and a practical vision for cryptocurrency, he said, "The first app ever written was a cash token app. That's what it's all about: payments, coins."

Going further with this concept means an exploration beyond technology. For instance, in a recent brainstorming session, Hearn said he was looking at a "sort of Satoshi-style, free-floating token" on Corda with no issuer at all.

"We were just mucking about basically, but it ends up again in the social and political side of how do you issue it fairly?"

Stepping back, it's a similar issue when it comes to convincing central banks to "allow people to have hard money and make it easy to use," Hearn said, referring to proposals for central bank digital currencies (CBDCs).

Or, having to go through the commercial banks who then need to be convinced to hold the money and turn it into tokens.

"The thing with tokens, the technology is not the hard part. It's really business, regulatory and political issues rather than technical issues."

Chessboard image via Shutterstock.

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

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Bitcoin Core Developers Move to Fix Denial-of-Service Software Bug

An abnormally severe bug was discovered in bitcoin's software, prompting developers to put together and release a fix on Tuesday.

Fixed and revealed to the wider public by way of Bitcoin Core software version 0.16.3, the vulnerability is a denial-of-service bug. If exploited, it can be used to take out nodes and at worst, temporarily crash a significant segment of the network.

However, not everyone has the power to take advantage of the bug. Only miners – those that run hardware and spend energy ordering transactions on the network – can exploit the vulnerability by double spending a transaction and placing it in a block.

But, it's not exactly painless for them to execute, either. If they try the attack, they would lose their block reward, which is worth more than $75,000 at today's prices.

The vulnerability was introduced in Bitcoin Core version 0.14.0, which was first released in March 2017. But the issue wasn't found until just two days ago, prompting contributors to the codebase to take action and ultimately release a tested fix within 24 hours.

And luckily, most bitcoin users don't have to do anything to be protected from the vulnerability now.

Developers stressed that "stored" bitcoins are not at risk. Yet, it could impact those using the Lightning network, an in-development transaction layer that seeks to allow faster and cheaper transactions.

Still, because the bug is potentially dangerous for the network, developers strongly advise users who are running so-called "full nodes" that store bitcoin's complete transaction history to upgrade their software. Moderator Theymos also pinned a notice to the top of the bitcoin subreddit.

The Bitcoin Core notes describing the software patch state:

"We urge all network participants to upgrade to [the new software] as soon as possible."

Impacting Lightning

As it turns out, a popular quote in tech circles aptly applies to this kind of bug.

"A distributed system is one in which the failure of a computer you didn't even know existed can render your own computer unusable," said famous computer scientist Leslie Lamport.

In this particular circumstance, a miner making a faulty transaction can impact nodes running across the network. As noted in the Bitcoin OpTech newsletter, a miner would need to try to double spend some bitcoin in order to crash bitcoin nodes.

Bitcoin's code is set up to largely to guard against this kind of problem, but this bug shows how a way around such measures managed to seep through.

Perhaps the biggest impact is on bitcoin-tied technology that isn't ready for primetime. If this attack were to be executed, bitcoin users running Lightning on the mainnet could be impacted.

"If you're reckless enough to be running lightning, you should really update ASAP, or close your channels. Updating is easy enough luckily," Blockstream engineer Gregory Sanders urged on reddit.

Since Lightning is in such an early stage, it requires users to watch their "channels," which hold their bitcoins in the experimental layer. That way they can stop a party they've established a channel with if that party attempts to cheat. Of particular concern here though: if a user's node is crashed by a miner exploiting this bug, a malicious actor could use the opportunity to cheat other Lightning users.

Even so, some developers argue that successfully doing all of this would be pretty hard to accomplish.

"I find it highly unlikely it has much of an impact," developer Justin Camarena told CoinDesk.

That's why some argue that regular users don't need to worry about it, although there's been a general sense of urgency in light of the overall risk.

"Unless you're running a business or lightning network node you really have no funds at risk," Sanders added later.

Buggy conclusions

Yet how significant this bug is in the context of bitcoin's history remains difficult to figure out.

Blockchain.info data engineer Antoine Le Calvez tallied up a list of similar exploits made over the years, showing that they were more common in bitcoin's earlier years.

But Bitcoin Core contributor Luke Dashjr responded by arguing that exploits might not be decreasing over time as the data suggests.

"Sadly, I think recent years suffer from lack of disclosure rather than having fewer exploits," he said.

He went on to admit he doesn't know why this is the case, but he nonetheless argued that some bugs in the bitcoin software are found and patched up, yet are never publicly disclosed.

Meanwhile, others are drawing other conclusions from the bug – namely that bitcoin programmers are mere mortals. OpenBazaar lead developer Chris Pacia went as far as to argue that while many users argue that bitcoin developers are among the best in the world, this proves they're actually normal developers who run into obstacles.

"Bugs happen. This is a fact of life," he remarked on Twitter. "I'm not criticizing them for having a bug. I'm criticizing the idiot minimalists who insist Core developers are God-like individuals."

Still, Camarena thinks that because of the bug's nuances and how difficult the attack is to execute, people are making too big of a deal out of the bug.

He told CoinDesk:

"It's a serious bug, but not as bad as some are making it to believe."

TV without signal image via Shutterstock

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

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One of Investors’ Favorite Governance Blockchains Is Handing Over $20 Million

Governance is one of the hottest topics in crypto right now – and Decred developers' take is that the community should decide.

And, by way of the release of a communication tool called Politeia, they will soon be giving that community $20 million in DCR tokens to manage.

Stepping back, Decred was built by a startup called Company 0, which has among its ranks developers that go back to bitcoin's early days. For instance, Decred's CEO Jake Yocom-Piatt built btcsuite, a software for interacting with bitcoin using Google's programming language, Go, with several other developers that are now part of the Decred team.

In 2015, after spending several years building the suite, Yocom-Piatt penned a blog post where he recounts realizing that bitcoin's lack of robust governance would eventually hold it back.

Calling the group of developers that maintain Bitcoin Core, the most popular implementation of bitcoin, "just another central planning committee," Yocom-Piatt told CoinDesk: "If you weren't part of Bitcoin Core, and you didn't kowtow to them and do what they said, then basically anything they disagreed with wasn't gonna happen. And that model really didn't seem like it was viable to me."

So he and his colleagues set about building an alternative.

They funded it to launch themselves. No token sale. No venture funding.

And since then, they've attracted interest from crypto-focused investors like Placeholder VC and Blue Yard Capital. Retail investors seem to be buying in too. The hash rate has increased dramatically this year as more miners put more powerful hardware to work on the network and token holders have staked some 46 percent of the total tokens minted, which locks those tokens up for on average 28 days (but up to nearly five months).

Something else has been happening behind the scenes as well.

Every block mined generates 20.13 DCR as a block reward – about $725 – 60 percent of which goes to miners, 30 percent of which goes to staked participants and 10 percent which goes to an account called the treasury.

That treasury account, which now has $20 million in it and is growing every five minutes or so as blocks are mined, is currently under the control of Decred developers, but very soon they'll release Politeia and the funds will be in the hands of the community.

While Marco Peereboom, the chief technology officer of Company 0, wouldn't commit to a specific release date, he said, the Decred developers are checking and rechecking the code to release the first live version of it any day now.

According Peereboom:

"We have been extremely frugal spending from the treasury, and we don't consider it our funds. It is for the stakeholders to determine what it will be used for."

Governance in vogue

The developers though have made and spent some money, though.

They paid themselves for the development of the protocol with a so-called premine – where developers of a cryptocurrency protocol generate a batch of tokens in advance of mainnet launch.

The premine accounted for 8 percent of the total token supply of 21 million tokens (just like bitcoin) – valued at around $820,000 at the time. But only 4 percent was used to pay the developers and the other 4 percent was airdropped to people to ignite interest in the protocol.

There's definitely interest in the protocol now, in part because blockchain governance has been an important topic this year.

It's the fundamental idea that bitcoin's, and even ethereum's, conflicts over the future of the protocol could be handled better should those technologies have more sophisticated governance methods.

This drove the whole development of the Tezos protocol. And ethereum competitor, EOS, had a similar idea, although its failure to launch with a fully developed decisionmaking structure has driven much of the discussion around that project.

Sure enough, EOS itself has a very similar pool of funds that developers are supposed to be handing over to the community, although without a clear method for deciding how to do that, the funds currently sit idle.

Announced last October, Politeia gives users a way to carry out conversations and community-wide decisions, vote them through and maintain a permanent record of such decisions. It allows the community to extend governance beyond verifying blocks into more complex issues, like grantmaking from the treasury or protocol upgrades.

According to Chris Burniske of Placeholder, a venture capital firm that has been very supportive of Decred:

"Politeia lays the foundation for other organizations – be they crypto networks or organizations in the broader universe of the world – to use Politeia as a governance mechanism."

How it works

To explain how Politeia will work on the network, it helps to explain how the protocol operates now.

Currently, Decred uses a hybrid proof-of-work/proof-of-stake system that, according to Peereboom, "makes miners a commodity and hands ultimate decision making power to the stakeholders."

Proof-of-work is a consensus algorithm where a distributed group of miners all compete to verify blocks of transactions by using hardware that solves mathematical puzzles. Proof-of-stake is an algorithm that puts (or elects) a certain group in charge of validating transactions.

On Decred, proof-of-stake participants double check proof-of-work miners' blocks in an experience that is somewhat like a lottery, in that they have to stake tokens to get what Decred calls "tickets."

Tickets are digital, like tokens. They sit in a user's wallet and give that wallet a chance to vote on verifying blocks. The system aims to have 40,960 tickets staked at any one time.

Every block, five tickets get called at random to vote on each block. When that happens, the voting ticket holders get a small reward (as of this writing, about $44 in DCR), plus they get their stake back. It currently requires about $3,500 worth of DCR to stake for a ticket.

So block verification is like a roving committee for double-checking miners.

No one knows when one of their tickets will get chosen to vote. As such, many people keep DCR tokens staked to possibly get picked to vote and in turn, get some extra tokens.

Politeia operates on the assumption that people holding these stakes in the hopes of being chosen to verify blocks are long DCR, sophisticated about how it operates and interested in its progress.

Censorship tokens

So Politeia leans on ticket holders, too, but there's no lottery on Politeia decisions. Every ticket gets to vote on the big decisions for the platform, such as updates and community events.

Anyone can push a proposal through Politeia, but only those with tickets can vote on them.

But the Decred developers also see a need for vetting proposals – because the internet can be a nasty place.

Peereboom told CoinDesk:

"We all know what happens on sites like Reddit and 4chan. They are cesspools of -isms that may result in legal liabilities when displayed. So we needed some much dreaded censorship capabilities."

The architects then created what's called a censorship token. Everyone who posts a proposal will receive a token that proves a proposal was posted. Admins will review all proposals before the rest of the community can see them, and abusive posts won't go up.

Proposals get timestamped, with hashes logged on the blockchain using dcrtime, Decred software that builds on previous open source tools. Interested parties can read the proposals and discuss them online, and all the discussion gets logged as well.

But if a proposal is censored, the user can prove it with the token, and if it wasn't abusive or offensive and instead was a legitimate proposal, it gives "the voice back to the submitter to prove that there is a bad actor in the admin ranks," Peereboom wrote.

Once a proposal is approved, the voting period opens and those called to vote on a block will be able to make decisions about whether the proposals should get funded.

The most obvious and immediate use for Politeia will be to spend the funds in that ever-growing treasury.

As Yocom-Piatt said: "So if you have a great idea it can get funded, and – the way that this is sort of a website on steroids – is it takes all of the data on this proposal system, including the votes, and it anchors it into the Decred blockchain. "

A broader experiment

A preview of the user interface is up already.

While later on, viewers will probably need to prove that they hold DCR to go in and post, Yocom-Piatt said, for now anyone can have a look.

Unlike authenticating blocks, voting on Politeia proposals doesn't come with direct rewards to participants (just like voting in a nation-state election). But if it works well, it may reward everyone as the esteem and value of the whole network increases, which would likely push up the tokens price as well.

"Part of the Decred project certainly is a social experiment to see how far can we take decentralized sovereignty," Peereboom wrote, adding:

"There are going to be good, bad and awful proposals and we will have to learn how to differentiate between them."

Once the Decred team gets everything tweaked to work, the plan is to share the system with the world.

Although it's not the focus right now, Decred's developers believe that Politeia can manage decision making for more than just one blockchain. In an October 2017 blog post, Yocom-Piatt wrote, "The larger goal with Politeia is to create a resilient public record that mimics the function of typical nation state websites for their governance bodies, e.g. senate.gov or house.gov."

But for now, once the governance system launched, users will have a way to agree on how to fix any vulnerabilities or change the protocol to align with the community's vision for it.

Speaking to this, Peereboom said, "There is no way that all assumptions we have made will prove correct and we don't claim – and we are in fact sure – that we got some things wrong. By having a change mechanism and process we can correct those assumptions."

And Burniske, for one, is very much looking forward to the experiment.

"Politeia is the single biggest feature upgrade that Decred has had thus far in its life," he told CoinDesk. "It's really the materialization of what the Decred core team set out to build in the first place."

Additional reporting by David Floyd.

UPDATE (20 September 14:25 ​UTC​​): A previous version of this story misstated the number of Decred users who vote on Politeia proposals.

Statue of Liberty miniatures image via Shutterstock

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

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