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Korea Taps Samsung’s Blockchain Tech to Fight Customs Fraud

South Korea’s customs authority is looking to adopt Samsung’s blockchain tech as the backbone of a decentralized customs clearance system. Samsung SDS, the conglomerate’s IT arm, said on Friday that the Korea Customs Service has inked a memorandum of understanding (MoU) that will see Samsung’s Nexledger blockchain utilized for the …

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Brave Launches Legal Offensive on Google Ads Data Collection Practices

Brave, the startup behind the Brave browser and the Basic Attention Token, has filed regulatory complaints against Google and others over what it considers poor privacy protection for users in the online ads industry. The complaints – filed with the Irish Data Protection Commissioner and the U.K. Information Commissioner on …

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You Can Now Get Paid (a Little) for Using Bitcoin’s Lightning Network

Those running lightning nodes are earning a little extra bitcoin.

Trumpeted as a way to scale bitcoin to handle mainstream adoption, there's a lesser-known perk to spinning up a lightning node to allow users to send cheap, instant payments – you can make money.

To be clear, we're not talking very much.

Today's average fee on the lightning network clocks in at about one satoshi, worth a fraction of a cent, per hop (so every time a node routes the transaction to another node). As such, one of lightning's prominent application developers, Alex Bosworth, reported a monthly income of roughly $2.

Though the profits are pretty meager now, they could be a sign of how the network will develop over time.

The lightning network is what the name implies: a network. In order to send a payment to someone, the payment will typically bounce across several different nodes before it reaches the recipient – similar to the old-style mail carriers passing letters or packages from person to person to get it to its destination.

On the network, each node operator has the option of charging a small fee for carrying the payment a part of the way.

Because this fee market is already emerging, it displays that crypto enthusiasts are more than willing to take some risks (people using the nascent lightning network right now have actually been labeled "reckless" by the protocol's developers).

Speaking to this, Bosworth recently tweeted:

"I think for many people, even OG HODLers, the satoshis earned for providing routing will be among the first bitcoin they ever earn outside of coin trading."

Tweaking the fee

Still, there are some hurdles to earning satoshis with lightning.

For now, participating in the lightning network takes some technical know-how and quite a bit of digital storage capacity. Anyone who wants to route a lightning payment needs to download bitcoin's entire transaction history, nearly 200 GB of data, and then download the lightning software on top of that.

Currently, there are at least 3,000 nodes on the network.

After becoming a node, the user needs to update the default fee feature, which is set at zero. For the LND implementation of lightning, one of the most popular, this ability to change the fee and monitor how much you're earning from the fee is relatively new.

"In LND, it used to be that you couldn't see what kind of fees you were earning, but that feature was added in and that spurred more fee activity," Bosworth told CoinDesk.

Yet, another thing to keep in mind is that users are competing with each other here.

In order to get more people to use their node as a hop in their route, nodes can't charge too much (that's why Bosworth's fees are so low).

But even the lowest of fees are sometimes passed over. For whatever reason, right now, many lightning nodes aren't charging any fees; it's possible many of the nodes are just lightning enthusiasts that aren't worried about making money from their interest.

As such, Bosworth believes some users are probably avoiding his node.

And the users that do route payments through his node, Bosworth guesses, those are probably just users that don't have any other route options for getting their payment where it needs to go.

Reasons for fees

While it's impossible to know how the market will evolve at this point, developers believe there are beneficial reasons for allowing fees.

"You want the system to work not just because people have kind hearts," Ben Woosley, a developer of the lightning wallet app Zap, told CoinDesk, adding:

"As the network grows and a smaller portion are using it for ideological reasons, fees will move toward a more economic outcome."

Even if fees remain tiny, Woosley continued, they can be useful for a number of reasons.

For one, the network needs liquidity. Each lightning node has a certain amount of "liquidity," or how much money can be routed through it based on how much money the operator has locked up in the channel. Channels with more money will be able to support bigger payments or many more payments, and because of that service might be able to charge for those hops, Woosley argued.

Plus, fees also "provide a way for nodes to encourage or discourage people to join their channels," Woosley added.

In this way, lightning developers have even instituted a negative fee for the case where a node actually wants to pay users for routing money through them. This might happen if, for example, a channel runs out of money in one direction and needs to be "rebalanced" with more funds.

And, Bosworth notes, specialized lightning payments, such as those trading one cryptocurrency for another, will be more complex and as such, could be spendier.

Predicting fees?

Yet, according to Bosworth, "This is a market, so predicting [costs] will be super tough."

That said, many developers believe fees will remain quite low in the future as well.

For one thing, the costs of spinning up a node and routing payments via the lightning network are not that high. Sure, it takes time – more time than downloading a traditional mobile payment app. But it doesn't have a lot of financial costs.

For that reason, lightning network co-authors Tadge Dryja and Joseph Poon predicted back in 2016 that fees would be "effectively zero." And, so far, their prediction is holding up.

"I think the payment routing system will eventually settle to what is basically just a 'I scratch your back, you scratch mine' level," pseudonymous lightning developer ZmnSCPxj said.

In other words, the developer guesses that routing people's payments for a minuscule fee will be done so that others will route their lightning payments for cheap as well.

And with that, many believe that lightning payments will be far cheaper than current online payment systems – a scenario that will excite long-time bitcoin enthusiasts that were passionate about the technology because of its ability to upend the legacy systems.

"Credit cards charge around 3 percent, so lightning will probably be orders of magnitude cheaper than credit cards," Woosley said, concluding:

"My expectation is [lightning fees] will be negligible, like less than a cent, forever."

Shiny penny 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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The Code for an Anonymous Lightning Network is Now Live

The lightning network is due for a privacy boost.

That's according to Dr. Ayo Akinyele, a computer scientist who has focused his efforts on building a zcash implementation of anonymous off-chain payment architecture called BOLT. And today that work was published on Github.

First conceived by zcash founders Matthew Green and Ian Miers in 2016, the code is inspired by the bitcoin scaling solution, lightning network, and seeks to unlock high levels of transaction throughput while adding payment confidentiality.

"The lightning network has solved the initial issue with scalability, and now that gives us the opportunity to deal with the privacy problem. That is the strength of the BOLT design," Akinyele told CoinDesk.

Using blind signatures and zero-knowledge proofs, BOLT obscures transactions, balances and sender and receiver identities. Plus, because it's built to function along with privacy-oriented cryptocurrency zcash, users can open a channel using shielded transactions, thereby anonymizing the initial connection to the network.

"BOLT is one approach that could lead to very promising results for privacy, and I'm excited to be on the front line of pursuing that," Akinyele said.

Today's release allows for the "bidirectional" use case — or payment channels that can move funds back and forth between two participants.

In order to be activated on the cryptocurrency, new code would need to be added to the zcash repository, in what is called a "soft fork" — or a type of change that doesn't require all versions of the software to update.

Going forward, the team behind BOLT is hoping to follow a similar development plan to the lightning network itself — deploying it as an open testnet to allow users to battletest the software.

"It would be awesome to deploy this, similar to what lightning had done, and allow people to test on the testnet and then gradually get toward the mainnet," Akinyele said.

And while the current release has been optimized for zcash, in the future, Akinyele plans to develop it as a privacy extension for the lightning network itself, telling CoinDesk:

"The next step is to retrofit these properties to bitcoin and litecoin on the lightning network, probably as a shielded transaction option, similar to what zcash offers now."

First steps and beyond

Speaking to CoinDesk, Akinyele said today's release marks a minimal sketch of BOLT's fundamental architecture.

"This initial implementation is based on CL signatures and very standard techniques for blind signatures and zero-knowledge proofs, and so it is a very basic construction that has been well known to cryptographers for a couple of decades now," Akinyele said.

While that's very technical, simply it uses digital signature technology that's been around for some time and so is proven efficient. Yet, there's still work to expand some of the architecture's capabilities.

"This first implementation is just a concrete implementation of one version of that architecture, though in the future BOLT could look very different," Akinyele said.

Still, it's technically viable to implement and requires minimal changes to zcash in order to get into the testing phase.

And crucially, having specified the initial architecture, it's easier to further iterate the protocol, as well as building support for other cryptocurrencies — the next significant step in the BOLT development roadmap.

As Akinyele told CoinDesk:

"Now we have one approach implemented we can decide what is the next approach that we want to try and which cryptocurrency can it benefit."

Cryptocurrencies that are similar in structure to zcash, such as bitcoin and litecoin, are low hanging fruit for such implementations.

Added privacy

Such additions would be applied to the lightning network itself, as an option for users looking to anonymize their payment channel usage.

"It's a privacy add-on," Akinyele said.

And that's because, while lightning itself deploys some privacy-enhancing features, the robustness of that privacy is a point of contention for academics. For example, if lightning settles in what is termed a "hub-and-spoke" structure, there's a risk that nodes with high processing throughput can have an overview of transactions as they run through the network.

While lightning also employs a technique called onion-routing, in which users can route payments through many different channels to hide the contents of a payment, Akinyele warned that the practice might not catch on.

"They do have some features for encryption, you can route your payment through multiple hops, which is great, but when you talk about bidirectional payments and some of the more basic use-cases that most people will gravitate towards, there is no privacy," he explained.

As such, there's a risk users will opt for convenience – such as users linking their transaction histories by using the same bitcoin address repeatedly – rather than the more complex, yet privacy-preserving options.

"We have seen how this movie plays out in bitcoin," Akinyele said.

Learning from leaks

Still, having identified these potential leaks was useful for the development of the BOLT architecture.

Specifically, Akinyele said the design owes a lot to the popularity of the lightning network payment channels being used today, which are beginning to reveal what the network could look like.

"Having lightning exist and being used has been very helpful in figuring out how to do privacy correctly," he told CoinDesk.

"We're seeing patterns emerge – centralization of some hubs are forming where a lot of people are using the same paths to route payments. All of these patterns are emerging, so it's giving us a real insight into okay, where is the real privacy problem, and what would be the best technique to deal with that," Akinyele continued.

And not only that, but going forward, Akinyele feels that BOLT could provide a private link between zcash, bitcoin and litecoin — a layer-two interoperability that he hopes could dismantle some of the tribalism that occurs in cryptocurrency today.

He concluded:

"It provides an option to figure out how we can get away from 'this currency does this, this currency does that,' and just start thinking more longer term and big picture with how we want to use these currencies in the real world."

Lightning 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’s Taproot Privacy Tech Is Ready – But There’s a Catch

Bitcoin's privacy is pretty abysmal – after all, what else can you say when anyone in the world can look up any transaction using a web explorer?

But while that's the case today, developers have long been trying to find a fix, or at least improve it over time. One of bitcoin's most famous developers, Greg Maxwell, even aroused quite a bit of interest when he proposed something called Taproot back in January.

Far from providing full bitcoin privacy, Taproot's code offers a way to make all transactions on the blockchain look the same to outsiders. Still, chatter about the proposal has arguably faded as other projects caught the community's eye and bitcoin's price tumbled.

Among those who haven't forgotten about the proposal, though, are bitcoin's developers, as plenty of toiling has been going on behind the scenes. Mathematician Andrew Poelstra pulled together a mathematical security proof in April, while Xapo engineer and Bitcoin Core contributor Anthony Towns put forward an idea for potentially decreasing how much data the technique uses in July.

The continued work showcases why many believe Taproot to be a discovery that provides an "enormous privacy win" for bitcoin, as Blockstream co-founder Pieter Wuille put it in a recent talk. Even better, it's actually not a crazy difficult change to make to bitcoin.

"Taproot is simple enough it could probably go in straight away," Towns told CoinDesk.

The problem, and it's a big one, is it's dependent on tech that doesn't exist yet.

Towns explained:

"Without Schnorr, Taproot doesn't get you all the way to where you want to go."

The missing piece

The reason is that Taproot would keep it a secret that any advanced payment is occurring on bitcoin.

More commonly known as smart contracts, there are a variety of complex transactions used in bitcoin, like the kind that enables the off-blockchain protocol lightning for more scalable bitcoin payments and other complex types that are still in development.

But because bitcoin's ledger is public, it's obvious when someone uses one of these transactions.

Taproot puts an end to that by making these transactions look the same as every other "boring payment," as Maxwell put it in the technology's announcement post.

Yet, it can't do this without Schnorr, an upgrade to bitcoin's signature scheme that's been on developer's coding agenda for years. The signature scheme is supposed to be better than bitcoin's current signature scheme "in basically every way." And it enables Taproot because it allows signature data to be mashed together into one.

"Schnorr is necessary for that because without it, we cannot encode multiple keys into a single key," Wuille continued in his presentation.

Schnorr's just finally getting off the ground. In fact, it looks like it's going to be bitcoin's next crucial change, with Wuille recently publishing a (very) technical proposal detailing how it might one day be added to bitcoin.

But since Schnorr's been taking years, developers have long been dreaming about what they can build on top once the technology is actually live.

As Towns put it, Schnorr is a "more exciting" change, but Taproot is "the cherry on the top."

Developers have long been thinking about other enhancements, including those enabled by Schnorr, though it's worth noting that Taproot isn't the only important change being considered. Towns thinks the privacy enhancement might be rolled in with other upgrades.

"As far as I'm concerned, Taproot, Schnorr, Graftroot is a bundle that all goes together," he said, referring to yet another technology Maxwell pioneered.

And it doesn't stop there. Towns guesses that still even other long-anticipated changes will go in at the same time, including MAST, a proposal to boost bitcoin smart contracts, and SIGHASH_NOINPUT, a change that could usher in a more reliable lightning network - the tech bitcoiners hope will help bring bitcoin to the masses.

Even though these technologies have different names and have been proposed at different times, Towns is starting to think of them as one thing.

Deciding what's next

There are so many proposed changes, in fact, developers have been grappling with which should be made first.

Wuille explained in his talk why it's not such an easy decision. There's a small pressure for deploying all these features together at once. Each time they deploy a new "consensus change," it requires a new addressing format.

Since the addresses are different than the old one, this makes it very obvious who's using the new feature - especially since not everyone is going to suddenly adopt the feature the day it launches. It's going to take time, just like past changes have taken time.

That's a small hit to privacy. And doing this more than once would be even worse.

On the other hand, deploying all these changes together would be a mess.

Speaking of other changes, there's also so-called "signature aggregation," the most-hyped application of Schnorr, which could help to scale bitcoin even further. But since it's so complex and needs further review, this is one change that developers think should be added to bitcoin later on.

But Schnorr might not ultimately prove to be a roadblock for Taproot.

In fact, Wuille's been focusing on a proposal to deploy Schnorr and Taproot together, partly because he thinks the privacy addition from Taproot is so exciting, calling it an "enormous win" for smart contracts in bitcoin.

On the Schnorr front, Towns mentioned that developers are still working out some kinks, such as a hardware attack vector that Maxwell discovered. Developers are cagey to give code timelines, since upgrades often take longer than expected. And Schnorr is no different.

Earlier on, Poelstra was hopeful it could be deployed by the end of the year, giving bitcoin users a chance to decide whether to adopt it or not. But it all depends on how quickly developers can settle on a path for the change, code it up, and get it reviewed.

As Towns put it:

"You can't come up with a proposal until you know what to stick in it. The only real delay is finalizing what's going into it. "

Tree root 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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Coinbase Wins Patent for Secure Bitcoin Payments System

A newly published Coinbase patent seeks to protect a way of making bitcoin purchases more secure for customers.

In the filing, published August 14, the U.S.-based cryptocurrency exchange outlined how it could develop a payment portal which would allow users to pay using bitcoin directly from their digital wallet.

"It may be a security concern for users that the private keys of their bitcoin addresses may be stolen from their wallets," the patent stated. "Existing systems do not provide a solution for maintaining security over private keys while still allowing the users to checkout on a merchant page and making payments using their wallets."

The system as described sets up a "key ceremony" that creates key shares that are combined into an operational master key – encrypted with the users' passphrases – that can be made publicly available and deleted after use.

The operational master key is used for private key encryption during checkout, as well as for transaction signing when a payment is made.

What the filing calls "freeze logic" is also employed in the process, a security measure that automatically halts transactions if an administrator chooses to suspend the system.

The patent explains:

"At any point in time after the master key is loaded, the system can be frozen. The system can be unfrozen after it has been frozen using keys from the key ceremony. The checkout process can be carried out when the system is frozen and when the system is unfrozen. The payment process can only be carried out when the system is unfrozen."

The patent goes on to note that the system also includes an API key, meaning different websites would be able to launch their own version of the portal.

The API key would have two parts: one would be specific to the host server, while the other would be stored on the system developed by Coinbase. The two keys would have to match for a transaction to go through, adding another layer of security for customers.

Internet shopping 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’s Lightning Network Is Getting Its Own Hacker Camp

You're scrolling through an online electronic store, when a new drone catches your eye.

Eager to fly it for real, you enter a string of numbers to submit your payment. You're not thinking at all about how, behind the scenes, it's bitcoin that makes the impulse purchase possible.

Far-fetched today? Maybe, but that's the sort of easy user experience the bitcoin developers at Chaincode Labs think is missing from the world of cryptocurrency, even now that a much-anticipated technology layer known as the Lightning Network is in beta. While it's perhaps bitcoin's best shot at reaching mainstream adoption, it's not exactly easy to use today, or as easy as developers envision it could be.

That's why the group, led by veterans Alex Morcos and Matt Corallo, has held similar coding programs focused exclusively on bitcoin. Developers from around the world travel to New York to learn about the intricate details of the protocol and its most essential code.

However, announced Monday, Chaincode is launching a new "residency" in New York from October 22 to 26, one that will focus on helping developers build their own Lightning Network apps.

The goal, according to Chaincode engineer and bitcoin software maintainer Marco Falke, is for the program to create tech "for normal people on the street, not just weird developers." In short, they're looking for some fresh blood. Any and all experienced web developers are welcome to apply – no bitcoin expertise required.

Falke told continued:

"There aren't many apps and you can't go into a shop and pay with bitcoin. There's all this missing infrastructure. We thought it would be great to get some app developers involved that have experience building websites, but don't have to have any background in bitcoin or lightning."

Though, it's worth noting a few lightning apps have already sprung up showing how bitcoin and lightning can be paired to improve online payments. Even so, the developers at Chaincode hope the one-week bootcamp will spur even more apps.

Teachers will include some of the more well-known lightning developers in the space, including Blockstream engineer Christian Decker and engineer Elaine Ou.

What the residency's about

But while Chaincode calls the program a "residency," its program sounds similar to a coding bootcamp, an increasingly common way of teaching coding skills in a short period of time.

This bootcamp is traditional in some ways, of course, as the team will take applications until they "reach capacity" of roughly 12 students. However, from there, the class will focus on lightning specifically.

The six instructors will each give a presentation on the protocol. But they'll also be around for the full residency, helping out students as they have questions. That's because for most of the residency, participants will have time to work on an app of their choosing.

The app can be anything they want – a fun game like Satoshis.place, where users fight over pixel drawings, or something more serious, like an app allowing users to pay for monthly bills.

At the end of the week, participants will demo what they've made to the rest of the group.

Soon after the residency the Chaincode team will release recordings of all the presentations, for those who can't make it out to New York City for the bootcamp.

App focus

Though a small program, for the industry, it perhaps sends a stronger signal, as Lightning developers have been mostly focused on getting the underlying lightning protocol off the ground to date.

But Chaincode's developers believe that maybe the ecosystem could use more application developers now that there's an increasing emphasis on the code's usability.

"Personally, I think every day we wait for lightning applications will delay lightning and bitcoin. It's really important to do this app development thing as soon as possible," Falke continued.

Chaincode engineer James O'Beirne went so far as to argue that the applications could be key to shifting public perception of bitcoin, which has largely been on its speculative value of late.

"A lot of people outside of bitcoin don't understand it's capabilities, including lightning. By facilitating app development we're spreading awareness of what bitcoin is actually capable of," O'Beirne said. "People have turned to other smart contract platforms because they don't understand how powerful bitcoin can be."

Falke nodded in agreement: "Some people don't think lightning is a real thing."

That's why they're inviting all sorts of developers to participate, especially those who aren't "bitcoin experts."

Falke concluded:

"They should have interest. But that's pretty much it,"

Lightning 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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Analyst Questions Bitmain’s Revenue as Crypto Miner Seeks IPO

Crypto mining giant Bitmain may be losing its advantage in developing miners amid other potential cash-flow issues, according to a new report.

Analysts with research firm Alliance Bernstein said the company's "cash flow appears to be questionable and the company may be gradually losing technological edge" in a report published Wednesday. The researchers note that Bitmain's revenue in 2017 fell below estimates after the company stored a large number of its miners' components, rather than selling to customers, although its revenue still remained "remarkably high" for that year.

Further, even though Bitmain dominated the mining device market with "77 percent unit share in bitcoin and ~85 percent in all cryptocurrencies last year," declining cryptocurrency prices reduced some of that revenue stream.

The bear market also impacted Bitmain's holdings. The company holds roughly 5.7 percent of the total supply of bitcoin cash, which Bernstein says was "likely" acquired using its operating cash and bitcoin holdings.

"These BCH holdings, valued at U.S. $890 million as of [Q1 2018], poses another major risk as BCH is illiquid and has depreciated nearly 20 percent since [Q1 2018]," the report notes.

The company's problems also extend to its own crypto mining projects. The report states that, last year, Bitmain's advantage in mining rigs ensured it could fund projects with customer deposits, and saw roughly $1.3 billion in cash flow. However, as the price dropped early this year, customer deposits also slumped, and Bitmain was "forced to draw from its operating cash flow" in Q1 2018.

The report argues:

Going forward, the competitiveness of Bitmain's chips is in question, as Bitmain failed in a 10nm chip [and] possibly other projects too. Rivals now may have caught up in technologies and Bitmain's inventory (U.S. $1.2B as of [Q1 2018]) may face major a write-down risk."

The publication comes after two of the firm's reported pre-IPO round investors – though the claim did not come from Bitmain itself – told CoinDesk that they were not actually involved in the funding effort. Both Tencent Holdings and SoftBank group said they were not investing in the company, with SoftBank adding that it had not invested in the company previously, either.

Bitmain is seeking potentially as much as $18 billion in its IPO later this year. If successful, the company could see a market capitalization as high as $50 billion after the IPO concludes.

Read the full report below:

AB on Bitmain by CoinDesk on Scribd

Computer chip 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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Above $7K: Bitcoin Price Pushes Higher In Break Past Resistance

Bitcoin's (BTC) price surpassed $7,000 early on Tuesday after 20 days stuck in a narrow range below $6,800.

The worlds largest cryptocurrency by market capitalization first moved past the $7,000 mark soon after 10:00 UTC today after trading sideways for nearly three weeks. As traders of bitcoin have come to realize, periods of low volatility often come to a boisterous end.

Bitcoin passing the psychological hurdle did not come without warning. As mentioned yesterday, bearish bitcoin futures bets had hit a record low – signaling investor sentiment was beginning to shift into bullish mode.

What's more, the market was not phased by the SEC's decision to reject several ETF proposals last week. While negative, the news failed to wreak havoc on prices, as has happened previously, and was a sign that bearish market pressure was reaching exhaustion.

At press time, bitcoin is trading at an average price of $7,064 across exchanges, according to the CoinDesk Bitcoin Price Index, having peaked at just above $7,070 today so far.

4-hour chart

After closing a 4-hour session above the elusive resistance zone of $6,700–$6,850, the bulls continued to ultimately pass the peak of the prior rally ($6,899) seen on Aug. 22. The next level of resistance currently resides at $7,165.

What's more, the price was able to close above the 200-period exponential moving average (EMA) – a feat not accomplished since Aug 4. Finding acceptance above all of the short-term EMAs signals the path of least resistance is to the upside, at least in the short-term.

A short-term pullback to prior resistance ($6,899) would be considered healthy, as price often falls back to prior resistance in order to prove it can hold as support.

Daily chart

The daily chart depicts a couple of bullish indications that suggest a move to around $7,600 is more than possible.

For one, bitcoin is defending its first higher low on the daily timeframe since April – a strong bullish indication since the bulls were able to defend avoid setting a new low for the year.

What's more, the 50- and 100-day EMAs are forming a bull cross, signaling that momentum is indeed shifting away from the bears. The strongest resistance on the daily timeframe lies near $7,800 – the location of the 200-day EMA and descending trendline resistance.

View

  • The short-term trend is becoming bullish, setting the stage for a move to the prior resistance zone of $7,400
  • Longer term, bitcoin setting a higher low is a bullish sign that could fuel a move towards the 200 day EMA at $7,800.
  • Finding acceptance below prior resistance at $6,550 would negate the short-term bullish view.

Disclosure: The author holds BTC, AST, REQ, OMG, FUEL, 1st and AMP at the time of writing.

Bitcoin 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’s Next Big Software Upgrade to Feature New Language for Crypto Keys

Bitcoin may be hard to use even with consumer-friendly tools, while running its core infrastructure is even harder. However, this isn't stopping efforts to change that.

The global, volunteer developer group behind the most popular implementation of the software, Bitcoin Core, is soon to debut its 17th major software release, one which puts to code a number of highly-anticipated changes. Of particular emphasis is improving the software's default wallet, where user's bitcoin private keys are stored.

Perhaps the most interesting update is the debut of a new "language," initially proposed by prominent bitcoin contributor Pieter Wuille, known for designing some of the most radical changes to bitcoin in recent years (including Segregated Witness, which helped chip away at bitcoin's scalability problem last year).

The idea behind the new language is to add important extra information to keys. Or, as Bitcoin Core contributor Andrew Chow put it, it provides a "sane" alternative to the problematic "account" system that was recently ripped out of the software. Simply put, it allows users to name their different accounts. Like labeling one "donations" and another "savings."

One other significant use case of the language is to make it easier to move keys from one wallet to another. As it stands, if a user tries to move a key from one wallet to another, they might lose some of the information about how the coins can be unlocked and sent to someone else.

That's not a big problem for many transactions. After all, most transactions have pretty simple instructions: the owner must sign the transaction with a secret key, proving the coins are really theirs. But that's not true for every transaction. For example, multi-signature transactions require more than one person to approve any spending.

Lightning transactions, a faster and more scalable type of payment that's still in its infancy, are perhaps the most exciting example of this.

With this type of transaction becoming more common (lightning is thought to be the best way for the platform to scale to millions of users), the new language aims to ensure crucial information isn't lost more regularly.

With this in mind, Wuille's new language aims to tags each key in bitcoin (both public and private) with a "label" that describes what can unlock it, "changing the way we think about wallets," Chaincode engineer John Newbery said in a talk describing the upcoming release.

To be clear, though, this release is just a small step, the first code change to put this into practice, Newbery said. But developers anticipate the language will weave its way through the codebase in future software releases.

Mobile bitcoin core?

Other changes in the latest release are iterative, first steps that developers hope will lead to something more.

Partially Signed Bitcoin Transactions (PSBT) are another highly-anticipated change that fits the bill, coded up by Chow. (PSBT is a new format for transactions that are not fully signed yet that can be passed around until finally broadcast.)

This all sounds rather technical, but the thinking here is actually rather forward-looking, and could have an impact on a wide range of users.

Already, there are all sorts of hardware wallets on the market, small mechanical devices that are considered one of the safest ways of storing bitcoin, since it moves the keys that unlock them offline so they can't be stolen by way of an internet connection.

But each hardware wallet – including Trezor, Ledger, and so forth – is kind of off in its own little world when it comes to how it engages with the software. In short, they aren't compatible with all software wallets at once.

One of the easiest ways to use a hardware wallet is to leave it offline, but then connect it to a software wallet on a mobile device that makes it easy to actually make transactions.

It's cool that this is possible – to get the security of hardware wallet but the convenience of a software wallet at the same time. The problem is that usually each hardware wallet only includes support for one or two software wallets. Trezor only supports the software wallet Electrum, for instance. They can't connect the Trezor to Bitcoin Core or whatever other software they want to connect to.

And users have long been complaining about how annoying this is. BIP 174 offers away around that. It's a standard that every wallet can use.

Though, of course, it depends on whether wallets actually indeed choose to use it. The prospects are looking optimistic so far. Even though the code isn't officially out yet, it's attracted much enthusiasm, with one hardware wallet, coldcardwallet implementing the transaction signing method already.

As wallets pick up this standard, it will make Bitcoin Core in particular a bit easier to use because hardware wallets will easily be able to connect to the software.

"PSBT will enable Bitcoin Core to more easily support hardware wallets and have better offline, airgapped wallet setups. I'm actually working on hardware wallet support for Bitcoin Core by using PSBT," Chow told CoinDesk, going as far as to argue that Bitcoin Core is a much safer way to use bitcoin than other software wallets.

"[SPV wallets] carry privacy and potentially security risks as they are trusting a third party to do the blockchain verification. Once Bitcoin Core supports hardware wallets, users can use Bitcoin Core instead, and because it is a full node, the user does not need to trust a third party that the everything has been verified correctly," he said.

But the code change opens up a lot of options, even potentially boosting bitcoin smart contracts and privacy features. "PSBT also makes things like multisigs and CoinJoins easier to do," Chow continued.

To this end, one user tweeted: "Excited to see all the interesting ways BIP174 will be used."

And more

These are a couple of the changes developers are most excited about, but there are dozens of other upgrades rolled into the release. One is a "dynamic wallet creation" feature.

"A few releases ago, we introduced the ability to use multiple wallets in Bitcoin Core. However that required starting Bitcoin Core configured for multiple wallets. Now, we can load, unload, and create wallets when the software is already running," Chow said.

Meanwhile, you might have heard of Coin Selection, an improved way of plucking up the coins go into a transaction. It's so much better than the old algorithm that it greatly improves bitcoin's scalability as a whole, even cutting fees.

Though the main code for the new feature was already added about six months ago, the algorithm is getting a small privacy boost in the 17th release.

That still doesn't cover everything. The rest of the changes are to be described in more detail in the final release notes, which will be released at the same time as the final, tested code.

These might seem like small changes. Especially since few people use bitcoin and even fewer use Bitcoin Core. And there's no question why. Bitcoin's software takes up nearly 200 GB, about the size of a laptop. Downloading it and using it is a far cry from downloading and setting up the Venmo app on a smartphone in matter of minutes.

But the goal with these major code changes is to eventually get the code to the point where it's not such a pain to set up, so maybe one day anyone who wants to utilize the full advantages of bitcoin can do so.

Locks 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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