Bitcoin Core :: Segregated Witness Benefits

How Blockchain.com harms the cryptocurrency community

How Blockchain.com harms the cryptocurrency community
This post has been written to draw Blockchain.com's attention to the issues of its product.
Blockchain.com (formerly Blockchain.info) was founded in 2011 and with no doubt has helped the Bitcoin community to create a block explorer and has proven itself as a valuable service. Millions of people from all over the world use their wallet. However, time goes on, Bitcoin develops, but one of the main cryptocurrency companies not only slows down the process of its development, but also discredits the usability of cryptocurrencies. Why is that? We have tried to explain that in this post.
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1. Lack of Segwit Address Support

This is the most painful problem for our service. To receive cryptocurrency we use segwit addresses by default. If a customer contacts our support, we can of course change an address in an order to P2SH (the one that begins with number "3"), but it reduces the usability of the service. Why don't we use P2SH by default? It is less beneficial both for us and for our client, as the cost of the consolidation of the transaction is taken into account when calculating the exchange rate. With a high network load and with orders for a small amount, the commission becomes significant. To compare — segwit addresses (or Bech32 that starts with "bc1") are 15% more advantageous than P2SH.
Segwit (Segregated Witness) was activated in 2017. At the end of the same year the CEO of Blockchain.info announced its support starting from (most likely) 2018. We can understand certain fears at the beginning of the way, as the company's security system is for sure not that bad. However more than 2 years have passed since then and that is a lot for the crypto world.

2. Using Legacy (P2PKH) Addresses Only

As of now only a P2PKH address (that starts with number "1") is used in the Blockchain.com wallet to receive cryptocurrency. Why is that bad? It is unfavorable for the users of this wallet. They spend 29% more than those using P2SH addresses.

3. Confusion with PAX and USD Digital

Changing the names of the currencies from one to another only in a Blockchain.com wallet is a rather strange decision. The key problem is that nowhere in the wallet are there any clues that this is an ERC-20 PAX token on the Ethereum blockchain. New wallet users will most likely be confused by this.
We sometimes get questions: "do we have USD Digital to buy or to sell?" and our technical support is forced to explain that it is PAX.

4. Incompetence of mobile application developers

In fact, this post was inspired by this particular problem. We will not focus on performance or shortcomings, we will just tell you about the main issue.
It is worth starting with questions. What problem does a mobile application solve when a person needs to pay for something? What is the best way to fill in the recipient address and the payment amount on the smartphone? Answer: QR code.
Scanning the QR code in this application is done not just badly, but also in such a way that creates maximum number of problems for a user.
The fact is that in the Android application when scanning code with the bitcoin:
?amount=, the value of the amount to be inserted in the corresponding field may differ from the encoded value by 1-100 Satoshi! Our team simply does not understand how this was implemented.
Do not believe? Try it yourself. Amount to insert — 0.00143452 BTC
bitcoin:3LAxDr5CxwBJT4tCejV8rpAXETz7bUH3tG?amount=0.00143452
After receiving information on such a problem from our users, we began to monitor updates to this application. After 2 updates had come out, the problem was not fixed.
And what about iOS? When scanning a QR code with a sum in iOS , the sum value is simply not inserted into the field! No comments. Bravo!
Blockchain.com wallet has different currencies, not just Bitcoin. Let's try Ethereum. You want to scan QR codes for Ethereum payment with the relevant sum? There is no such possibility. The application will respond with an "Invalid address" to all such codes:
  • eth:
    ?amount=
  • ether:
    ?amount=
  • ethereum:
    ?amount=
For BitcoinCash, the task of identifying the amount in the line is also an impossible task. Line with wallet bitcoincash:qpk0689rt3xkzlw8ap4yy72amp2zpws6zujkcgavptconsidered true, but with the amount bitcoincash:qpk0689rt3xkzlw8ap4yy72amp2zpws6zujkcgavpt?amount=0.1 — "Invalid address"
But there are applications that understand all such formats, or at least one of them. The string parsing function is pretty trivial and should not be a problem for the developer.
This article has been written based on the experience of using the application of the members of our team (who have used it for many years) and our users.
We encourage Blockchain.com to fix at least 3 of the 4 problems that we covered in this article. We still hope that the company will work on the bugs and will earn back trust of its users.
In the meantime — use other applications! ;)
The post is published on our blog:https://fixedfloat.com/blog/guides/how-blockchain-com-harms
submitted by FixedFloat to Bitcoin [link] [comments]

Bitcoin (BTC)A Peer-to-Peer Electronic Cash System.

Bitcoin (BTC)A Peer-to-Peer Electronic Cash System.
  • Bitcoin (BTC) is a peer-to-peer cryptocurrency that aims to function as a means of exchange that is independent of any central authority. BTC can be transferred electronically in a secure, verifiable, and immutable way.
  • Launched in 2009, BTC is the first virtual currency to solve the double-spending issue by timestamping transactions before broadcasting them to all of the nodes in the Bitcoin network. The Bitcoin Protocol offered a solution to the Byzantine Generals’ Problem with a blockchain network structure, a notion first created by Stuart Haber and W. Scott Stornetta in 1991.
  • Bitcoin’s whitepaper was published pseudonymously in 2008 by an individual, or a group, with the pseudonym “Satoshi Nakamoto”, whose underlying identity has still not been verified.
  • The Bitcoin protocol uses an SHA-256d-based Proof-of-Work (PoW) algorithm to reach network consensus. Its network has a target block time of 10 minutes and a maximum supply of 21 million tokens, with a decaying token emission rate. To prevent fluctuation of the block time, the network’s block difficulty is re-adjusted through an algorithm based on the past 2016 block times.
  • With a block size limit capped at 1 megabyte, the Bitcoin Protocol has supported both the Lightning Network, a second-layer infrastructure for payment channels, and Segregated Witness, a soft-fork to increase the number of transactions on a block, as solutions to network scalability.

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1. What is Bitcoin (BTC)?

  • Bitcoin is a peer-to-peer cryptocurrency that aims to function as a means of exchange and is independent of any central authority. Bitcoins are transferred electronically in a secure, verifiable, and immutable way.
  • Network validators, whom are often referred to as miners, participate in the SHA-256d-based Proof-of-Work consensus mechanism to determine the next global state of the blockchain.
  • The Bitcoin protocol has a target block time of 10 minutes, and a maximum supply of 21 million tokens. The only way new bitcoins can be produced is when a block producer generates a new valid block.
  • The protocol has a token emission rate that halves every 210,000 blocks, or approximately every 4 years.
  • Unlike public blockchain infrastructures supporting the development of decentralized applications (Ethereum), the Bitcoin protocol is primarily used only for payments, and has only very limited support for smart contract-like functionalities (Bitcoin “Script” is mostly used to create certain conditions before bitcoins are used to be spent).

2. Bitcoin’s core features

For a more beginner’s introduction to Bitcoin, please visit Binance Academy’s guide to Bitcoin.

Unspent Transaction Output (UTXO) model

A UTXO transaction works like cash payment between two parties: Alice gives money to Bob and receives change (i.e., unspent amount). In comparison, blockchains like Ethereum rely on the account model.
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Nakamoto consensus

In the Bitcoin network, anyone can join the network and become a bookkeeping service provider i.e., a validator. All validators are allowed in the race to become the block producer for the next block, yet only the first to complete a computationally heavy task will win. This feature is called Proof of Work (PoW).
The probability of any single validator to finish the task first is equal to the percentage of the total network computation power, or hash power, the validator has. For instance, a validator with 5% of the total network computation power will have a 5% chance of completing the task first, and therefore becoming the next block producer.
Since anyone can join the race, competition is prone to increase. In the early days, Bitcoin mining was mostly done by personal computer CPUs.
As of today, Bitcoin validators, or miners, have opted for dedicated and more powerful devices such as machines based on Application-Specific Integrated Circuit (“ASIC”).
Proof of Work secures the network as block producers must have spent resources external to the network (i.e., money to pay electricity), and can provide proof to other participants that they did so.
With various miners competing for block rewards, it becomes difficult for one single malicious party to gain network majority (defined as more than 51% of the network’s hash power in the Nakamoto consensus mechanism). The ability to rearrange transactions via 51% attacks indicates another feature of the Nakamoto consensus: the finality of transactions is only probabilistic.
Once a block is produced, it is then propagated by the block producer to all other validators to check on the validity of all transactions in that block. The block producer will receive rewards in the network’s native currency (i.e., bitcoin) as all validators approve the block and update their ledgers.

The blockchain

Block production

The Bitcoin protocol utilizes the Merkle tree data structure in order to organize hashes of numerous individual transactions into each block. This concept is named after Ralph Merkle, who patented it in 1979.
With the use of a Merkle tree, though each block might contain thousands of transactions, it will have the ability to combine all of their hashes and condense them into one, allowing efficient and secure verification of this group of transactions. This single hash called is a Merkle root, which is stored in the Block Header of a block. The Block Header also stores other meta information of a block, such as a hash of the previous Block Header, which enables blocks to be associated in a chain-like structure (hence the name “blockchain”).
An illustration of block production in the Bitcoin Protocol is demonstrated below.

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Block time and mining difficulty

Block time is the period required to create the next block in a network. As mentioned above, the node who solves the computationally intensive task will be allowed to produce the next block. Therefore, block time is directly correlated to the amount of time it takes for a node to find a solution to the task. The Bitcoin protocol sets a target block time of 10 minutes, and attempts to achieve this by introducing a variable named mining difficulty.
Mining difficulty refers to how difficult it is for the node to solve the computationally intensive task. If the network sets a high difficulty for the task, while miners have low computational power, which is often referred to as “hashrate”, it would statistically take longer for the nodes to get an answer for the task. If the difficulty is low, but miners have rather strong computational power, statistically, some nodes will be able to solve the task quickly.
Therefore, the 10 minute target block time is achieved by constantly and automatically adjusting the mining difficulty according to how much computational power there is amongst the nodes. The average block time of the network is evaluated after a certain number of blocks, and if it is greater than the expected block time, the difficulty level will decrease; if it is less than the expected block time, the difficulty level will increase.

What are orphan blocks?

In a PoW blockchain network, if the block time is too low, it would increase the likelihood of nodes producingorphan blocks, for which they would receive no reward. Orphan blocks are produced by nodes who solved the task but did not broadcast their results to the whole network the quickest due to network latency.
It takes time for a message to travel through a network, and it is entirely possible for 2 nodes to complete the task and start to broadcast their results to the network at roughly the same time, while one’s messages are received by all other nodes earlier as the node has low latency.
Imagine there is a network latency of 1 minute and a target block time of 2 minutes. A node could solve the task in around 1 minute but his message would take 1 minute to reach the rest of the nodes that are still working on the solution. While his message travels through the network, all the work done by all other nodes during that 1 minute, even if these nodes also complete the task, would go to waste. In this case, 50% of the computational power contributed to the network is wasted.
The percentage of wasted computational power would proportionally decrease if the mining difficulty were higher, as it would statistically take longer for miners to complete the task. In other words, if the mining difficulty, and therefore targeted block time is low, miners with powerful and often centralized mining facilities would get a higher chance of becoming the block producer, while the participation of weaker miners would become in vain. This introduces possible centralization and weakens the overall security of the network.
However, given a limited amount of transactions that can be stored in a block, making the block time too longwould decrease the number of transactions the network can process per second, negatively affecting network scalability.

3. Bitcoin’s additional features

Segregated Witness (SegWit)

Segregated Witness, often abbreviated as SegWit, is a protocol upgrade proposal that went live in August 2017.
SegWit separates witness signatures from transaction-related data. Witness signatures in legacy Bitcoin blocks often take more than 50% of the block size. By removing witness signatures from the transaction block, this protocol upgrade effectively increases the number of transactions that can be stored in a single block, enabling the network to handle more transactions per second. As a result, SegWit increases the scalability of Nakamoto consensus-based blockchain networks like Bitcoin and Litecoin.
SegWit also makes transactions cheaper. Since transaction fees are derived from how much data is being processed by the block producer, the more transactions that can be stored in a 1MB block, the cheaper individual transactions become.
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The legacy Bitcoin block has a block size limit of 1 megabyte, and any change on the block size would require a network hard-fork. On August 1st 2017, the first hard-fork occurred, leading to the creation of Bitcoin Cash (“BCH”), which introduced an 8 megabyte block size limit.
Conversely, Segregated Witness was a soft-fork: it never changed the transaction block size limit of the network. Instead, it added an extended block with an upper limit of 3 megabytes, which contains solely witness signatures, to the 1 megabyte block that contains only transaction data. This new block type can be processed even by nodes that have not completed the SegWit protocol upgrade.
Furthermore, the separation of witness signatures from transaction data solves the malleability issue with the original Bitcoin protocol. Without Segregated Witness, these signatures could be altered before the block is validated by miners. Indeed, alterations can be done in such a way that if the system does a mathematical check, the signature would still be valid. However, since the values in the signature are changed, the two signatures would create vastly different hash values.
For instance, if a witness signature states “6,” it has a mathematical value of 6, and would create a hash value of 12345. However, if the witness signature were changed to “06”, it would maintain a mathematical value of 6 while creating a (faulty) hash value of 67890.
Since the mathematical values are the same, the altered signature remains a valid signature. This would create a bookkeeping issue, as transactions in Nakamoto consensus-based blockchain networks are documented with these hash values, or transaction IDs. Effectively, one can alter a transaction ID to a new one, and the new ID can still be valid.
This can create many issues, as illustrated in the below example:
  1. Alice sends Bob 1 BTC, and Bob sends Merchant Carol this 1 BTC for some goods.
  2. Bob sends Carols this 1 BTC, while the transaction from Alice to Bob is not yet validated. Carol sees this incoming transaction of 1 BTC to him, and immediately ships goods to B.
  3. At the moment, the transaction from Alice to Bob is still not confirmed by the network, and Bob can change the witness signature, therefore changing this transaction ID from 12345 to 67890.
  4. Now Carol will not receive his 1 BTC, as the network looks for transaction 12345 to ensure that Bob’s wallet balance is valid.
  5. As this particular transaction ID changed from 12345 to 67890, the transaction from Bob to Carol will fail, and Bob will get his goods while still holding his BTC.
With the Segregated Witness upgrade, such instances can not happen again. This is because the witness signatures are moved outside of the transaction block into an extended block, and altering the witness signature won’t affect the transaction ID.
Since the transaction malleability issue is fixed, Segregated Witness also enables the proper functioning of second-layer scalability solutions on the Bitcoin protocol, such as the Lightning Network.

Lightning Network

Lightning Network is a second-layer micropayment solution for scalability.
Specifically, Lightning Network aims to enable near-instant and low-cost payments between merchants and customers that wish to use bitcoins.
Lightning Network was conceptualized in a whitepaper by Joseph Poon and Thaddeus Dryja in 2015. Since then, it has been implemented by multiple companies. The most prominent of them include Blockstream, Lightning Labs, and ACINQ.
A list of curated resources relevant to Lightning Network can be found here.
In the Lightning Network, if a customer wishes to transact with a merchant, both of them need to open a payment channel, which operates off the Bitcoin blockchain (i.e., off-chain vs. on-chain). None of the transaction details from this payment channel are recorded on the blockchain, and only when the channel is closed will the end result of both party’s wallet balances be updated to the blockchain. The blockchain only serves as a settlement layer for Lightning transactions.
Since all transactions done via the payment channel are conducted independently of the Nakamoto consensus, both parties involved in transactions do not need to wait for network confirmation on transactions. Instead, transacting parties would pay transaction fees to Bitcoin miners only when they decide to close the channel.
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One limitation to the Lightning Network is that it requires a person to be online to receive transactions attributing towards him. Another limitation in user experience could be that one needs to lock up some funds every time he wishes to open a payment channel, and is only able to use that fund within the channel.
However, this does not mean he needs to create new channels every time he wishes to transact with a different person on the Lightning Network. If Alice wants to send money to Carol, but they do not have a payment channel open, they can ask Bob, who has payment channels open to both Alice and Carol, to help make that transaction. Alice will be able to send funds to Bob, and Bob to Carol. Hence, the number of “payment hubs” (i.e., Bob in the previous example) correlates with both the convenience and the usability of the Lightning Network for real-world applications.

Schnorr Signature upgrade proposal

Elliptic Curve Digital Signature Algorithm (“ECDSA”) signatures are used to sign transactions on the Bitcoin blockchain.
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However, many developers now advocate for replacing ECDSA with Schnorr Signature. Once Schnorr Signatures are implemented, multiple parties can collaborate in producing a signature that is valid for the sum of their public keys.
This would primarily be beneficial for network scalability. When multiple addresses were to conduct transactions to a single address, each transaction would require their own signature. With Schnorr Signature, all these signatures would be combined into one. As a result, the network would be able to store more transactions in a single block.
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The reduced size in signatures implies a reduced cost on transaction fees. The group of senders can split the transaction fees for that one group signature, instead of paying for one personal signature individually.
Schnorr Signature also improves network privacy and token fungibility. A third-party observer will not be able to detect if a user is sending a multi-signature transaction, since the signature will be in the same format as a single-signature transaction.

4. Economics and supply distribution

The Bitcoin protocol utilizes the Nakamoto consensus, and nodes validate blocks via Proof-of-Work mining. The bitcoin token was not pre-mined, and has a maximum supply of 21 million. The initial reward for a block was 50 BTC per block. Block mining rewards halve every 210,000 blocks. Since the average time for block production on the blockchain is 10 minutes, it implies that the block reward halving events will approximately take place every 4 years.
As of May 12th 2020, the block mining rewards are 6.25 BTC per block. Transaction fees also represent a minor revenue stream for miners.
submitted by D-platform to u/D-platform [link] [comments]

Introduction to Cryptocurrency: BCH, Brother of BTC

Introduction to Cryptocurrency: BCH, Brother of BTC
Written by the CoinEx Institution, this series of jocular and easy to understand articles will show you everything you need to know about major cryptocurrencies, making you fully prepared before jumping into crypto!
BCH, which represents Bitcoin Cash, shares some same features as its big brother Bitcoin (BTC). Both are cryptocurrencies based on decentralization, using a peer-to-peer network and consensus initiative, going open source, and with the blockchain as the underlying technology.
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Now that we have BTC, what is BCH for?
To answer this question, we have to trace back to the source of BCH — BTC. Nakamoto created BTC in 2008, and he also limited the block size to 1M at that time. This restriction not only guarantees the participation of weak-performance personal computers, but also prevents the risk of attacks overloading the Bitcoin network; after all, the system was still in its infancy and was very fragile. Under the 1M limit, a block can hold up to about 2000 transactions in 10 minutes, or 7 transactions per second.
As users of BTC transactions were growing in numbers with time passing by, the 1M block size has been unable to carry the ever-increasing transaction volume. As a result, the BTC network appeared congested, transaction fees soared, and transaction packaging became time-consuming…
Such problems gave rise to the call for capacity expansion in the BTC community. Some developers, represented by the core developer Core, hoped to ease the BTC congestion by Segregated Witness + Lightning Network. The following three years has seen users argue over this issue. After all, it involved too many people and too many things, which can’t be solved in a short while.
Then came the time when community conflicts seemed to have reached deadlock, and disputes over the hard fork were getting intense. On August 1, 2017, BTC finally got a hard fork, and its little bro, BCH, was generated!
Due to the version switching, the BTC blockchain was forked into two separate blockchains. Before the fork, everyone who owned BTC was entitled to the same amount of BCH. In this way, the upper limit of the block was upgraded to 8M, and later to 32M, which solved such problems as high fees, slow confirmation, and poor practicability in the old version of the BTC system, and fulfilled BTC’s commitment to being the “peer-to-peer electronic cash”.
Since then, the Bitcoin community has been divided into two and everyone is happy.
It’s fair to say that BTC is the predecessor of BCH, but after the fork, BCH has always been considered as “BTC” in a new direction. Congestion will hardly happen in the BCH community as BCH has larger blocks and can handle more transactions, unlike BTC, which proved ineffective in processing growing transactions due to small blocks. That is also the most obvious difference between the two, making the transaction fee of BCH much lower than that of BTC.
The BCH community is theoretically different from the BTC community under the current Core team. To put it simply, there remains little connection between BCH and BTC, and BCH, separated from its predecessor, has become a brand new cryptocurrency.
BCH also has its advantages, such as decentralization, anonymity, fixed listing and smart contracts.
  1. The BCH network is jointly maintained by all users. Unless the vast majority of BCH users agree to make a certain change (such as rule modifications or version upgrade), no one or organization can change or stop BCH operation.
  2. Like the Internet, the BCH network is working all year round! For 24 hours a day and 365 days a year, you can transfer money to anyone around the world! Regardless of the amount, all transactions require no one’s authorization or approval.
  3. BCH also does a good job in anonymity. Generally there is no way to find who owns the address.
  4. Of course, BCH also has a fixed upper limit. The BCH protocol guarantees that there will never be more than 21 million BCH. Compared to the government that continuously issues currencies, depreciating everyone’s deposits, BCH has a ration of supply, and an extremely stable inventory.
  5. BCH is also a programmable currency, which can also implement smart contracts on the basis of currency. Programmable economy is an obvious solution to the transparency and credibility issues in economic operation, and can also reduce social operation costs.
Today BCH is maintained by several different development teams, and its market value has ranked second in the world. More and more merchants are accepting BCH payments, and there are multiple exchanges that support BCH pricing, such as CoinEx. CoinEx is also the first one to adopt BCH pricing.
Overseas, BCH supporters include former BitcoinCore chief developers Gavin Andresen and Roger Ver (known as Bitcoin Jesus).
In China, many of BCH supporters are veterans in this field, including Wu Jihan, Founder and CEO of Bitmain, Yang Haipo, Founder of ViaBTC / CoinEx, and Jiang Zhuoer, Founder of BTC.TOP Mining Pool.
At present, the circulating market value of BCH has reached 59.1 billion. By April 2020, BCH will perform the first halving at a block height of 630,000, and the reward will be reduced by 50% to 6.25 BCH after the halving.
If you want to enter the cryptocurrency field, come on, learn more and trade on CoinEx! https://www.coinex.com/
submitted by CoinExcom to Bitcoincash [link] [comments]

Which type of curren(t) do you want to see(cy)? A analysis of the intention behind bitcoin(s). [Part 2]

Part 1
It's been a bit of time since the first post during which I believe things have crystallised further as to the intentions of the three primary bitcoin variants. I was going to go on a long winded journey to try to weave together the various bits and pieces to let the reader discern from themselves but there's simply too much material that needs to be covered and the effort that it would require is not something that I can invest right now.
Firstly we must define what bitcoin actually is. Many people think of bitcoin as a unit of a digital currency like a dollar in your bank but without a physical substrate. That's kind of correct as a way to explain its likeness to something many people are familiar with but instead it's a bit more nuanced than that. If we look at a wallet from 2011 that has never moved any coins, we can find that there are now multiple "bitcoins" on multiple different blockchains. This post will discuss the main three variants which are Bitcoin Core, Bitcoin Cash and Bitcoin SV. In this respect many people are still hotly debating which is the REAL bitcoin variant and which bitcoins you want to be "investing" in.
The genius of bitcoin was not in defining a class of non physical objects to send around. Why bitcoin was so revolutionary is that it combined cryptography, economics, law, computer science, networking, mathematics, etc. and created a protocol which was basically a rule set to be followed which creates a game of incentives that provides security to a p2p network to prevent double spends. The game theory is extremely important to understand. When a transaction is made on the bitcoin network your wallet essentially generates a string of characters which includes your public cryptographic key, a signature which is derived from the private key:pub key pair, the hash of the previous block and an address derived from a public key of the person you want to send the coins to. Because each transaction includes the hash of the previous block (a hash is something that will always generate the same 64 character string result from EXACTLY the same data inputs) the blocks are literally chained together. Bitcoin and the blockchain are thus defined in the technical white paper which accompanied the release client as a chain of digital signatures.
The miners validate transactions on the network and compete with one another to detect double spends on the network. If a miner finds the correct solution to the current block (and in doing so is the one who writes all the transactions that have elapsed since the last block was found, in to the next block) says that a transaction is confirmed but then the rest of the network disagree that the transactions occurred in the order that this miner says (for double spends), then the network will reject the version of the blockchain that that miner is working on. In that respect the miners are incentivised to check each other's work and ensure the majority are working on the correct version of the chain. The miners are thus bound by the game theoretical design of NAKAMOTO CONSENSUS and the ENFORCES of the rule set. It is important to note the term ENFORCER rather than RULE CREATOR as this is defined in the white paper which is a document copyrighted by Satoshi Nakamoto in 2009.

Now if we look at the three primary variants of bitcoin understanding these important defining characteristics of what the bitcoin protocol actually is we can make an argument that the variants that changed some of these defining attributes as no longer being bitcoin rather than trying to argue based off market appraisal which is essentially defining bitcoin as a social media consensus rather than a set in stone rule set.
BITCOIN CORE: On first examination Bitcoin Core appears to be the incumbent bitcoin that many are being lead to believe is the "true" bitcoin and the others are knock off scams. The outward stated rationale behind the bitcoin core variant is that computational resources, bandwidth, storage are scarce and that before increasing the size of each block to allow for more transactions we should be increasing the efficiency with which the data being fed in to a block is stored. In order to achieve this one of the first suggested implementations was a process known as SegWit (segregating the witness data). This means that when you construct a bitcoin transaction, in the header of the tx, instead of the inputs being public key and a signature + Hash + address(to), the signature data is moved outside of header as this can save space within the header and allow more transactions to fill the block. More of the history of the proposal can be read about here (bearing in mind that article is published by the bitcoinmagazine which is founded by ethereum devs Vitalik and Mihai and can't necessarily be trusted to give an unbiased record of events). The idea of a segwit like solution was proposed as early as 2012 by the likes of Greg Maxwell and Luke Dash Jnr and Peter Todd in an apparent effort to "FIX" transaction malleability and enable side chains. Those familiar with the motto "problem reaction solution" may understand here that the problem being presented may not always be an authentic problem and it may actually just be necessary preparation for implementing a desired solution.
The real technical arguments as to whether moving signature data outside of the transaction in the header actually invalidates the definition of bitcoin as being a chain of digital signatures is outside my realm of expertise but instead we can examine the character of the individuals and groups involved in endorsing such a solution. Greg Maxwell is a hard to know individual that has been involved with bitcoin since its very early days but in some articles he portrays himself as portrays himself as one of bitcoins harshest earliest critics. Before that he worked with Mozilla and Wikipedia and a few mentions of him can be found on some old linux sites or such. He has no entry on wikipedia other than a non hyperlinked listing as the CTO of Blockstream. Blockstream was a company founded by Greg Maxwell and Adam Back, but in business registration documents only Adam Back is listed as the business contact but registered by James Murdock as the agent. They received funding from a number of VC firms but also Joi Ito and Reid Hoffman and there are suggestions that MIT media labs and the Digital Currency Initiative. For those paying attention Joi Ito and Reid Hoffman have links to Jeffrey Epstein and his offsider Ghislaine Maxwell.

Ghislaine is the daughter of publishing tycoon and fraudster Robert Maxwell (Ján Ludvík Hyman Binyamin Hoch, a yiddish orthodox czech). It is emerging that the Maxwells are implicated with Mossad and involved in many different psyops throughout the last decades. Greg Maxwell is verified as nullc but a few months ago was outed using sock puppets as another reddit user contrarian__ who also admits to being Jewish in one of his comments as the former. Greg has had a colourful history with his roll as a bitcoin core developer successfully ousting two of the developers put there by Satoshi (Gavin Andreson and Mike Hearn) and being referred to by Andreson as a toxic troll with counterpart Samon Mow. At this point rather than crafting the narrative around Greg, I will provide a few links for the reader to assess on their own time:
  1. https://coinspice.io/news/btc-dev-gregory-maxwell-fake-social-media-account-accusations-nonsense/
  2. https://www.trustnodes.com/2017/06/06/making-gregory-maxwell-bitcoin-core-committer-huge-mistake-says-gavin-andresen
  3. https://www.ccn.com/gavin-andresen-samson-mow-and-greg-maxwell-toxic-trolls//
  4. https://www.nytimes.com/2016/01/17/business/dealbook/the-bitcoin-believer-who-gave-up.html
  5. https://www.coindesk.com/mozilla-accepting-bitcoin-donations
  6. https://spectrum.ieee.org/tech-talk/computing/networks/the-bitcoin-for-is-a-coup
  7. https://www.reddit.com/btc/comments/68pusp/gavin_andresen_on_twitter_im_looking_for_beta/dh1cmfl/
  8. https://www.reddit.com/btc/comments/d14qee/can_someone_post_the_details_of_the_relationships/?ref=tokendaily
  9. https://www.coindesk.com/court-docs-detail-sexual-misconduct-allegations-against-bitcoin-consultant-peter-todd
  10. https://coinspice.io/news/billionaire-jeffrey-epstein-btc-maximalist-bitcoin-is-a-store-of-value-not-a-currency/
  11. https://www.dailymail.co.uk/news/article-7579851/More-300-paedophiles-arrested-worldwide-massive-child-abuse-website-taken-down.html
  12. https://news.bitcoin.com/risks-segregated-witness-opening-door-mining-cartels-undermine-bitcoin-network/
  13. https://micky.com.au/craig-wrights-crackpot-bitcoin-theory-covered-by-uks-financial-times/
  14. https://www.reddit.com/btc/comments/74se80/wikipedia_admins_gregory_maxwell_of_blockstream/

Now I could just go on dumping more and more articles but that doesn't really weave it all together. Essentially it is very well possible that the 'FIX' of bitcoin proposed with SegWit was done by those who are moral reprobates who have been rubbing shoulders money launderers and human traffickers. Gregory Maxwell was removed from wikipedia, worked with Mozilla who donated a quarter of a million to MIT media labs and had relationship with Joi Ito, the company he founded received funding from people associated with Epstein who have demonstrated their poor character and dishonesty and attempted to wage toxic wars against those early bitcoin developers who wished to scale bitcoin as per the white paper and without changing consensus rules or signature structures.
The argument that BTC is bitcoin because the exchanges and the market have chosen is not necessarily a logical supposition when the vast majority of the money that has flown in to inflate the price of BTC comes from a cryptographic USD token that was created by Brock Pierce (Might Ducks child stahollywood pedo scandal Digital Entertainment Network) who attended Jeffrey Epstein's Island for conferences. The group Tether who issues the USDT has been getting nailed by the New York Attorney General office with claims of $1.4 trillion in damages from their dodgey practices. Brock Pierce has since distanced himself from Tether but Blockstream still works closely with them and they are now exploring issuing tether on the ethereum network. Tether lost it's US banking partner in early 2017 before the monstrous run up for bitcoin prices. Afterwards they alleged they had full reserves of USD however, they were never audited and were printing hundreds of millions of dollars of tether each week during peak mania which was used to buy bitcoin (which was then used as collateral to issue more tether against the bitcoin they bought at a value they inflated). Around $30m in USDT is crossing between China to Russia daily and when some of the groups also related to USDT/Tether were raided they found them in possession of hundreds of thousands of dollars worth of counterfeit physical US bills.
Because of all this it then becomes important to reassess the arguments that were made for the implementation of pegged sidechains, segregated witnesses and other second layer solutions. If preventing the bitcoin blockchain from bloating was the main argument for second layer solutions, what was the plan for scaling the data related to the records of transactions that occur on the second layer. You will then need to rely on less robust ways of securing the second layer than Proof Of Work but still have the same amount of data to contend with, unless there was plans all along for second layer solutions to enable records to be deleted /pruned to facilitate money laundering and violation of laws put in place to prevent banking secrecy etc.
There's much more to it as well and I encourage anyone interested to go digging on their own in to this murky cesspit. Although I know very well what sort of stuff Epstein has been up to I have been out of the loop and haven't familiarised myself with everyone involved in his network that is coming to light.
Stay tuned for part 3 which will be an analysis of the shit show that is the Bitcoin Cash variant...
submitted by whipnil to C_S_T [link] [comments]

⚡ Lightning Network Megathread ⚡

Last updated 2018-01-29
This post is a collaboration with the Bitcoin community to create a one-stop source for Lightning Network information.
There are still questions in the FAQ that are unanswered, if you know the answer and can provide a source please do so!

⚡What is the Lightning Network? ⚡

Explanations:

Image Explanations:

Specifications / White Papers

Videos

Lightning Network Experts on Reddit

  • starkbot - (Elizabeth Stark - Lightning Labs)
  • roasbeef - (Olaoluwa Osuntokun - Lightning Labs)
  • stile65 - (Alex Akselrod - Lightning Labs)
  • cfromknecht - (Conner Fromknecht - Lightning Labs)
  • RustyReddit - (Rusty Russell - Blockstream)
  • cdecker - (Christian Decker - Blockstream)
  • Dryja - (Tadge Dryja - Digital Currency Initiative)
  • josephpoon - (Joseph Poon)
  • fdrn - (Fabrice Drouin - ACINQ )
  • pmpadiou - (Pierre-Marie Padiou - ACINQ)

Lightning Network Experts on Twitter

  • @starkness - (Elizabeth Stark - Lightning Labs)
  • @roasbeef - (Olaoluwa Osuntokun - Lightning Labs)
  • @stile65 - (Alex Akselrod - Lightning Labs)
  • @bitconner - (Conner Fromknecht - Lightning Labs)
  • @johanth - (Johan Halseth - Lightning Labs)
  • @bvu - (Bryan Vu - Lightning Labs)
  • @rusty_twit - (Rusty Russell - Blockstream)
  • @snyke - (Christian Decker - Blockstream)
  • @JackMallers - (Jack Mallers - Zap)
  • @tdryja - (Tadge Dryja - Digital Currency Initiative)
  • @jcp - (Joseph Poon)
  • @alexbosworth - (Alex Bosworth - yalls.org)

Medium Posts

Learning Resources

Books

Desktop Interfaces

Web Interfaces

Tutorials and resources

Lightning on Testnet

Lightning Wallets

Place a testnet transaction

Altcoin Trading using Lightning

  • ZigZag - Disclaimer You must trust ZigZag to send to Target Address

Lightning on Mainnet

Warning - Testing should be done on Testnet

Atomic Swaps

Developer Documentation and Resources

Lightning implementations

  • LND - Lightning Network Daemon (Golang)
  • eclair - A Scala implementation of the Lightning Network (Scala)
  • c-lightning - A Lightning Network implementation in C
  • lit - Lightning Network node software (Golang)
  • lightning-onion - Onion Routed Micropayments for the Lightning Network (Golang)
  • lightning-integration - Lightning Integration Testing Framework
  • ptarmigan - C++ BOLT-Compliant Lightning Network Implementation [Incomplete]

Libraries

Lightning Network Visualizers/Explorers

Testnet

Mainnet

Payment Processors

  • BTCPay - Next stable version will include Lightning Network

Community

Slack

IRC

Slack Channel

Discord Channel

Miscellaneous

⚡ Lightning FAQs ⚡

If you can answer please PM me and include source if possible. Feel free to help keep these answers up to date and as brief but correct as possible
Is Lightning Bitcoin?
Yes. You pick a peer and after some setup, create a bitcoin transaction to fund the lightning channel; it’ll then take another transaction to close it and release your funds. You and your peer always hold a bitcoin transaction to get your funds whenever you want: just broadcast to the blockchain like normal. In other words, you and your peer create a shared account, and then use Lightning to securely negotiate who gets how much from that shared account, without waiting for the bitcoin blockchain.
Is the Lightning Network open source?
Yes, Lightning is open source. Anyone can review the code (in the same way as the bitcoin code)
Who owns and controls the Lightning Network?
Similar to the bitcoin network, no one will ever own or control the Lightning Network. The code is open source and free for anyone to download and review. Anyone can run a node and be part of the network.
I’ve heard that Lightning transactions are happening “off-chain”…Does that mean that my bitcoin will be removed from the blockchain?
No, your bitcoin will never leave the blockchain. Instead your bitcoin will be held in a multi-signature address as long as your channel stays open. When the channel is closed; the final transaction will be added to the blockchain. “Off-chain” is not a perfect term, but it is used due to the fact that the transfer of ownership is no longer reflected on the blockchain until the channel is closed.
Do I need a constant connection to run a lightning node?
Not necessarily,
Example: A and B have a channel. 1 BTC each. A sends B 0.5 BTC. B sends back 0.25 BTC. Balance should be A = 0.75, B = 1.25. If A gets disconnected, B can publish the first Tx where the balance was A = 0.5 and B = 1.5. If the node B does in fact attempt to cheat by publishing an old state (such as the A=0.5 and B=1.5 state), this cheat can then be detected on-chain and used to steal the cheaters funds, i.e., A can see the closing transaction, notice it's an old one and grab all funds in the channel (A=2, B=0). The time that A has in order to react to the cheating counterparty is given by the CheckLockTimeVerify (CLTV) in the cheating transaction, which is adjustable. So if A foresees that it'll be able to check in about once every 24 hours it'll require that the CLTV is at least that large, if it's once a week then that's fine too. You definitely do not need to be online and watching the chain 24/7, just make sure to check in once in a while before the CLTV expires. Alternatively you can outsource the watch duties, in order to keep the CLTV timeouts low. This can be achieved both with trusted third parties or untrusted ones (watchtowers). In the case of a unilateral close, e.g., you just go offline and never come back, the other endpoint will have to wait for that timeout to expire to get its funds back. So peers might not accept channels with extremely high CLTV timeouts. -- Source
What Are Lightning’s Advantages?
Tiny payments are possible: since fees are proportional to the payment amount, you can pay a fraction of a cent; accounting is even done in thousandths of a satoshi. Payments are settled instantly: the money is sent in the time it takes to cross the network to your destination and back, typically a fraction of a second.
Does Lightning require Segregated Witness?
Yes, but not in theory. You could make a poorer lightning network without it, which has higher risks when establishing channels (you might have to wait a month if things go wrong!), has limited channel lifetime, longer minimum payment expiry times on each hop, is less efficient and has less robust outsourcing. The entire spec as written today assumes segregated witness, as it solves all these problems.
Can I Send Funds From Lightning to a Normal Bitcoin Address?
No, for now. For the first version of the protocol, if you wanted to send a normal bitcoin transaction using your channel, you have to close it, send the funds, then reopen the channel (3 transactions). In future versions, you and your peer would agree to spend out of your lightning channel funds just like a normal bitcoin payment, allowing you to use your lightning wallet like a normal bitcoin wallet.
Can I Make Money Running a Lightning Node?
Not really. Anyone can set up a node, and so it’s a race to the bottom on fees. In practice, we may see the network use a nominal fee and not change very much, which only provides an incremental incentive to route on a node you’re going to use yourself, and not enough to run one merely for fees. Having clients use criteria other than fees (e.g. randomness, diversity) in route selection will also help this.
What is the release date for Lightning on Mainnet?
Lightning is already being tested on the Mainnet Twitter Link but as for a specific date, Jameson Lopp says it best
Would there be any KYC/AML issues with certain nodes?
Nope, because there is no custody ever involved. It's just like forwarding packets. -- Source
What is the delay time for the recipient of a transaction receiving confirmation?
Furthermore, the Lightning Network scales not with the transaction throughput of the underlying blockchain, but with modern data processing and latency limits - payments can be made nearly as quickly as packets can be sent. -- Source
How does the lightning network prevent centralization?
Bitcoin Stack Exchange Answer
What are Channel Factories and how do they work?
Bitcoin Stack Exchange Answer
How does the Lightning network work in simple terms?
Bitcoin Stack Exchange Answer
How are paths found in Lightning Network?
Bitcoin Stack Exchange Answer
How would the lightning network work between exchanges?
Each exchange will get to decide and need to implement the software into their system, but some ideas have been outlined here: Google Doc - Lightning Exchanges
Note that by virtue of the usual benefits of cost-less, instantaneous transactions, lightning will make arbitrage between exchanges much more efficient and thus lead to consistent pricing across exchange that adopt it. -- Source
How do lightning nodes find other lightning nodes?
Stack Exchange Answer
Does every user need to store the state of the complete Lightning Network?
According to Rusty's calculations we should be able to store 1 million nodes in about 100 MB, so that should work even for mobile phones. Beyond that we have some proposals ready to lighten the load on endpoints, but we'll cross that bridge when we get there. -- Source
Would I need to download the complete state every time I open the App and make a payment?
No you'd remember the information from the last time you started the app and only sync the differences. This is not yet implemented, but it shouldn't be too hard to get a preliminary protocol working if that turns out to be a problem. -- Source
What needs to happen for the Lightning Network to be deployed and what can I do as a user to help?
Lightning is based on participants in the network running lightning node software that enables them to interact with other nodes. This does not require being a full bitcoin node, but you will have to run "lnd", "eclair", or one of the other node softwares listed above.
All lightning wallets have node software integrated into them, because that is necessary to create payment channels and conduct payments on the network, but you can also intentionally run lnd or similar for public benefit - e.g. you can hold open payment channels or channels with higher volume, than you need for your own transactions. You would be compensated in modest fees by those who transact across your node with multi-hop payments. -- Source
Is there anyway for someone who isn't a developer to meaningfully contribute?
Sure, you can help write up educational material. You can learn and read more about the tech at http://dev.lightning.community/resources. You can test the various desktop and mobile apps out there (Lightning Desktop, Zap, Eclair apps). -- Source
Do I need to be a miner to be a Lightning Network node?
No -- Source
Do I need to run a full Bitcoin node to run a lightning node?
lit doesn't depend on having your own full node -- it automatically connects to full nodes on the network. -- Source
LND uses a light client mode, so it doesn't require a full node. The name of the light client it uses is called neutrino
How does the lightning network stop "Cheating" (Someone broadcasting an old transaction)?
Upon opening a channel, the two endpoints first agree on a reserve value, below which the channel balance may not drop. This is to make sure that both endpoints always have some skin in the game as rustyreddit puts it :-)
For a cheat to become worth it, the opponent has to be absolutely sure that you cannot retaliate against him during the timeout. So he has to make sure you never ever get network connectivity during that time. Having someone else also watching for channel closures and notifying you, or releasing a canned retaliation, makes this even harder for the attacker. This is because if he misjudged you being truly offline you can retaliate by grabbing all of its funds. Spotty connections, DDoS, and similar will not provide the attacker the necessary guarantees to make cheating worthwhile. Any form of uncertainty about your online status acts as a deterrent to the other endpoint. -- Source
How many times would someone need to open and close their lightning channels?
You typically want to have more than one channel open at any given time for redundancy's sake. And we imagine open and close will probably be automated for the most part. In fact we already have a feature in LND called autopilot that can automatically open channels for a user.
Frequency will depend whether the funds are needed on-chain or more useful on LN. -- Source
Will the lightning network reduce BTC Liquidity due to "locking-up" funds in channels?
Stack Exchange Answer
Can the Lightning Network work on any other cryptocurrency? How?
Stack Exchange Answer
When setting up a Lightning Network Node are fees set for the entire node, or each channel when opened?
You don't really set up a "node" in the sense that anyone with more than one channel can automatically be a node and route payments. Fees on LN can be set by the node, and can change dynamically on the network. -- Source
Can Lightning routing fees be changed dynamically, without closing channels?
Yes but it has to be implemented in the Lightning software being used. -- Source
How can you make sure that there will be routes with large enough balances to handle transactions?
You won't have to do anything. With autopilot enabled, it'll automatically open and close channels based on the availability of the network. -- Source
How does the Lightning Network stop flooding nodes (DDoS) with micro transactions? Is this even an issue?
Stack Exchange Answer

Unanswered Questions

How do on-chain fees work when opening and closing channels? Who pays the fee?
How does the Lightning Network work for mobile users?
What are the best practices for securing a lightning node?
What is a lightning "hub"?
How does lightning handle cross chain (Atomic) swaps?

Special Thanks and Notes

  • Many links found from awesome-lightning-network github
  • Everyone who submitted a question or concern!
  • I'm continuing to format for an easier Mobile experience!
submitted by codedaway to Bitcoin [link] [comments]

On "Segwit is a blocksize increase"

Because I still hear this argument all the time, I'd like to discuss the talking point a bit.
Today, I'm not going to discuss as much the context it's brought up in (which can make the argument border on disingenuous.) Instead I'd rather discuss it in terms of actual effectiveness.
As an initial aside, to anyone making this argument, I'll start by saying this.
Now let's look where Segwit has actually left Bitcoin
Both in blocksize,
and transaction throughput
First, notice that what is often claimed to be a "4MB maximum blocksize increase" has only once averaged above 1.3MB for a 1-day period on Feb 11th of this year and maybe a 17% overall increase in transaction capacity.
The reason blocksizes haven't been substantially higher is that SegWit (which stands for Segregated Witness) takes the signature data of a transaction and offloads it to a different blockspace.
Most transactions only have a couple of inputs and thus only need a couple of signatures so there's not much data to offload. The creators of SegWit, however, realized that there would be fringe cases with dozens or hundreds of inputs to a transaction which would have a higher proportion of data:sigdata.
That means in order to use more than ~1.7MB of space with 100% SegWit usage, you need to write transactions that have far more inputs than outputs. In plain English, you're taking balances from a large number of wallets and putting that balance in to one or two.
The obvious problem with this is in order to fulfill that requirement for any reasonable length of time, you would quickly find yourself consolidating all bitcoin to a single address... where the process couldn't possibly continue.
Because the average number of addresses in the system is going to grow instead of shrink, a 4MB benchmark simply doesn't reflect any sane notion of daily usage.
As a side note, I've even seen one user make the argument that "increasing the Signature block size to 4MB was the compromise" in spite of the fact that anything over 2MB will just be unused space in anything but outlier circumstances... And also in spite of the fact that the 2X in SegWit2x stood for... 2x...
Additionally, Schnorr signatures will effectively reduce signature data to 1-per-transaction so after implementation, the effectiveness of SegWit should fall drastically.
The more important point I'd like to make deals with how Segwit adoption has never exceeded 50%.
Now this can be seen as a half empty / half full scenario.
One person can take a look at that and say "the fact that SegWit isn't being used is proof that it's a dumb idea."
Another person can take a look at that and say "the fact that SegWit isn't being used is proof that more scaling isn't needed because there's still more space."
Personally, I think both of these assertions miss the mark in favor of this:
Bitcoin Transactions have different values to different people and the SegWit protocol best scales only when everybody on the system uses it in a preferred and expected way.
A blocksize increase on the other hand, doubles capacity regardless of how users use it.
By relying only on SegWit to scale, you slowly alienate everybody on the network who absolutely needs the extra space and you undermine the transactional utility of the network.
I don't think SegWit was a bad idea, but relying on fee pressure to force SegWit usage will probably have some longer-term adverse side effects.
TL;DR: SegWit scales best when everyone uses the network in a specific way. A blocksize increase scales no matter what.
submitted by CaptainPatent to btc [link] [comments]

Andreas Antonopoulos' depiction of the day he became aware of the donations that made him a millionaire

I'm not sure if this already has been posted here, but I just came across this post from A. Antonopoulos' Patreon page (it's a public entry posted on 16th of December. The readability and formatting is better there btw):
Edit: direct link to the post: https://www.patreon.com/posts/emotional-15912702
On December 6th, my life changed trajectory... again. I went to sleep on a wave of positive messages and support from the bitcoin community, in response to a letter I had posted on Patreon titled “In defense of optimism” that had leaked to Reddit. I had spent the day reading messages of support pouring in on Twitter, Patreon, and email, literally thousands of them. It was a life-affirming experience. Like everyone else on social media, the messages I receive are not always kind and supportive. Often the critical messages and trolls are far louder than the supporters. Our brains don't evaluate praise and criticism in equal measure - it's easy to believe the criticism and see the praise as undeserved. That’s why each little message of support makes a difference, each one helps me ignore the critics and see the impact of my work. In addition to all of the written messages, people were signing up to support me on Patreon and some were even sending bitcoin to my donation address. By the time I went to sleep, I was filled with gratitude, humbled by the overwhelmingly positive, viral response of the community.
Here’s what happened next...
I wake up on December 7th, the notifications list on my phone was too long to scroll. Hundreds more messages of support had come in while I was asleep.
Then my phone rings and I recognize the number of a dear friend. "Strange," I think. I’m not expecting a call. "Don't open your laptop yet," she says. "You got some big bitcoin donations overnight. Are you sitting down?" I sit down. I open my laptop, I look at the balance in my 1andreas bitcoin donation address.
Surprise, gratitude, fear, shock, joy, elation, anxiety. My emotions achieved a level of volatility that mirrored that of the bitcoin exchange rate. Good thing I was sitting down.
You're probably thinking that between the supportive messages and the large donations, I’d have been celebrating without a care in the world. But I'm a security professional who works in bitcoin. Could I come up with a doomsday scenario to taint this experience? Hold my beer.
I'm in a taxi on the way to the airport. I’m cycling through emotions again, a bit faster now.
Joy, Terror, Tears, Gratitude, Fear, Elation, Dread, Cold Sweat. It's a good thing I'm sitting down. I can't feel my fingers.
Anxiety
Wouldn't it be ironic if I get hacked and this massive donation is stolen the same day it was given? Shudder. That was a real possibility. Funds were sent to a vanity address, posted on my website, which was mainly used to support my habit of giving small amounts of bitcoin to strangers at meetups and conferences. Before December 6th, the address typically received small gifts each month and I emptied it every now and then in a spree of small donations.
Gratitude
I still can’t believe how many people have responded. I had no idea how many people could identify with the feelings expressed “In defense of optimism” and would want to show their support. I’m grateful to be a part of this community.
Fear
This vanity address is secured with a single private key which was stored on my phone in a “hot” wallet, so that I can give away bitcoin at meetups. The address has maximum public visibility and no Segwit (segregated witness) support. My security model just tipped over and I'm freaking out.
Happiness
I’m so happy! This is incredible, unimaginable. My fingers are numb, in a good way. Is this really happening?!?
Cold Sweats
I have to move the funds out. Now. Right now. But I only have this key on a wallet that doesn't handle RBF (replace-by-fee), CPFP (child-pays-for-parent), and it's not a Segwit address. I'm traveling; I’m about to get on two long flights and the mempool is slammed with transactions. Of all the days!
Joy
I’m crying. Tears of joy. This is something most people never get to experience in the most meaningful of careers, a loud acknowledgement from an entire community and financial security. I’m thinking about my family members and close friends who are struggling and overjoyed at the opportunity I now have to help them.
Terror
Then it dawns on me: a perfect nightmare scenario. What if this is considered "income" in the US and I have to pay taxes at a 39.6% rate? Those taxes would be evaluated on the USD value of the donation at the time it was made, at an all-time-high price of bitcoin. If bitcoin's bubble bursts by 50% today, I will owe more taxes than the donation is worth. I will be bankrupt but will owe the IRS and those debts can't be discharged in bankruptcy. I'm going to be in debt for a decade!
Elation
I can HODL! I don’t have to keep selling to pay bills. Patreon has grown too, so I should be able to cover my expenses and build the business with their support. I can really HODL!
[Alarm buzzes on my phone]
“Boarding on Gate D15”. Pack everything back up, run to the gate. Find my seat. Unpack all my electronics. Re-establish connections. No Wifi yet. 3G if I hold my phone just so against the window. We're taking off. No Wifi at all on this flight. 4 hours, offline, me and my thoughts. What is the opposite of a state of mindfulness? Head spinning.
Fear
What if the price crashes. Should I sell some?
Silliness
I'm buying a lambo (I laugh out loud at the thought of that. No, I'd never waste money on something so silly).
Dread
What if the donations had zero fees and will never confirm? What if this was all a cruel joke?
Joy
My dad will be so proud!
[Landed]
Turn on smartphone. Too many notifications. Turn on VPN, Tor. Sync wallet. Too slow. Too slow.
Run to the lounge. Get on Wifi. Fire up VPN, Tor. Start electrum. Import keys. Child-pays-for-parent the stuck transactions, Replace-by-fee new transactions. Careful coin selection. Send to cold storage (so glad I keep an unused cold storage address handy). Overpay fees more than ever before. 2000 satoshi per byte? Fuck yeah. This is the highest priority transaction of my life. 8 agonizing minutes. 1st block. Confirmations ripple down my screen. Exhaling... I hadn't noticed I was holding my breath.
“Boarding gate C51”. Pack everything, run to the gate. Board the plane. Unpack everything. This flight has Wifi. Bet it doesn't work. Yup, it doesn't work. 6.5 hour flight. I'll just read a book. I've read the same paragraph 8 times and don't know what it says. I'll sleep. Nope. Ok fine, I'll fret - seems I'm good at that and nothing else right now.
[Landed]
That was the longest flight ever. Boot up, 4G, VPN, Tor. Sync.... slow, too slow.
ANOTHER GIANT DONATION. WTF! Is this really happening? Is my wallet counting the balance incorrectly? This isn't possible. WTF IS GOING ON?
Joy, Terror, Tears, Gratitude, Fear, Elation, Dread. I’m cycling faster now.
I just emptied my wallet into cold storage and now it's carrying a ridiculous amount again. Boot up, VPN, Tor, Electrum, CPFP, RBF, cold sweat, 1 confirmation. Phew.
I realize that I just conducted the 4 biggest transactions of my life. I'm shaking. Hope I didn't screw anything up.
Finally I get to my hotel. “Long day” doesn’t even begin to describe it. I am grateful, giddy, jetlagged and exhausted, so sleep should come easy, right? Not happening. Two hours of tossing and turning while my mind is racing. In the end I just pass out from exhaustion. I wake up in a state of anxiety.
I open my inbox. I have a dozen interview requests from newspapers, TV, radio. They don’t want to talk about bitcoin. They want to talk about “my story.” It’s never been about “my story” and I’m not about to change that. Denied, denied, denied. That’s it. I’m going offline for a few days. I need time to process everything that has happened over the past couple of days and strategize about what to do next.
There are no words to adequately convey my appreciation, my gratitude.
These are life-changing gifts, but I don’t intend to change my life. I’m highly suspicious and careful about “lifestyle inflation”: I resist any urges to increase my spending as my income increases because as a self-employed entrepreneur I know my income can decrease significantly at any moment.
First, the practical side: For legal and tax reasons the gifts should remain mostly untouched for at least three years. This is a new situation and no one knows for sure how the authorities will characterize it. I wanted to HODL anyway, so that’s fine with me.
Second, and the much more important side, I love what I do. I’m obviously not going to “retire” or slow down. Receiving your messages and support has energized me and I’m excited to do more, much more.
The number of people supporting me on Patreon has grown significantly and with that support I’ll actually be able to do a lot more. And there are many things I want to do: a new website with more materials, in as many formats and languages as possible; more books; an epic tour; and that’s just the beginning! I also plan to grow my team, which serves two goals: I can get help for the things that need to be done, but I can also bring more people success and security with a steady paycheck.
While I’m excited about all of these new projects, I want you to know that the ultimate goal remains the same: to educate as many people as possible about this transformational technology and remain an independent voice, working directly for the community.
A week has passed. The one feeling that keeps returning, among the barrage of feelings, is gratitude. After taking time to process and calm down, the fear and stress is gone and all that is left is gratitude. I am so thankful for all the messages of support. I am so touched to hear stories of how my work has affected others in a positive way. I am thankful for all the donors who rallied behind me to help me in my advocacy and education.

THANKYOUBITCOINCOMMUNITY

Thank you for being so generous, so kind, so supportive; I’ll never forget this experience. Now, back to work!
submitted by TheGreatMuffin to Bitcoin [link] [comments]

Forward Blocks - A proposal to increase on-chain settlement capacity by 3584x with a soft-fork

Mark Friedenbach, a bitcoin core developer, proposes a new idea he is calling Forward Blocks, for Bitcoin. It enables all sorts of amazing capabilities via soft-fork. You can read the whole paper here ( http://freico.in/forward-blocks-scalingbitcoin-paper.pdf ) and I believe he will be presenting it this weekend at Scaling Bitcoin.

Here's a snippet from the paper that does a great job summarizing a lot of the potential improvements:
We demonstrated that the idea of forward blocks provides a unifying mechanism that:
• Provides on-chain settlement scaling of up to 3584x current limits as a soft-fork;
• Provides for an (optional) proof-of-work upgrade as a soft fork;
• Limits growth of validation costs with a flexible weight limit;
• Decreases centralization risks through the adoption of sharding; and
• Provides a framework for ledger accounting in future protocol extensions including but not limited to:
– A rebatable fee market with consensus-determined transaction clearing fee rates;
– Confidential transactions for obscuring transaction amounts;
– Mimblewimble, ring signatures, or anonymous spends for obscuring the spend graph; and
– Sidechain value-transfer mechanisms.
While there are many moving parts to this proposal, it is not beyond the level of complexity of prior extensions adopted by bitcoin (e.g. segregated witness), and achieves a variety of benefits comparable in magnitude.

submitted by johncantrell97 to Bitcoin [link] [comments]

I quit btc.

TL&DR Basically rant why I don’t want to face bitcoin core supporters constant lies and I don’t want to have anything to do with bitcoin core (btc) anymore.
Bitcoin was always about sending safely digital money to anybody, anywhere and without need of central authority. It was very clearly stated in first discussions and first promoting materials, that whole idea is for it to work instantly with no fees, or very little fees and it is for everybody equally and anonymously.
Nobody was ever suggesting that bitcoin is finished product. Probably it is fair to say everybody were expecting some kind of problems and different and unforeseen circumstances that could potentially kill the project any minute and instantly. Many of users could also see potential new use cases and phenomenal possibilities for the future. Bitcoin got quickly recognised as very risky but very promising technology that could change the world. Things like that don’t happened every day.
Evolution of bitcoin was inevitable. Every aspect of bitcoin needed protection and improvement to face problems.
Oh boy, but how I’m surprised what way it all went.
Maximum blocksize was introduce by bitcoin creator as a temporary measure to mitigate problems bitcoin was vulnerable at the time. It was always suppose to be increased when needed and Bitcoin creator (Satoshi Nakamoto) even said how to do it effortlessly. That max block size was trivial temporary fix that not many at the time realised how big obstacle for bitcoin it will become. Unfortunately for all of us, Satoshi left the project, before sorting it out.
Instant transactions were removed when “replace by fee” feature and increasing transaction waiting time in mempool from, I think 3 days to 14 days, were introduced. It was done to allegedly make it easier to estimate correct fee needed to pay to get to next block. In effect though, it enabled race to the top of the fees where in order to keep up with increasing volume, it was better to increase fee above everybody else or face staying in limbo of unconfirmed transaction for two weeks or more in case some party chooses to rebroadcast transaction. What is more terrifying, transactions couldn’t be safely used as instant anymore, as a sender could potentially double spend transaction with sending funds to different than original address with higher fee and more chance to not get rejected. Instant transaction was basically killed. Now we all had to wait for confirmations, preferably 6 of them. Originally, that was only advised as extra safety measure for bigger purchases, but now thanks to rbf, it is a must. Plus fees were encouraged to go up.
Foundations for high fees were set by rbf and 1mb block size. When volume came with increasing adoption and interest from new users, fees skyrocketed to above 1000sat/byte. You could send with lower fees and get lucky, but basically fees were extremely high. Also, not every transaction is simple. This 1000sat/byte could easily result in fee on 100gbp for transaction if you were using many unspent outputs.
That killed adoption. Period. You can’t use bitcoin to send money if you have to pay transaction bigger than often value of transaction itself. Low fee or no fee aspect was killed and even vanished for a while from bitcoin.org site.
Important part is, that all of that above could have been justified. As I mentioned before, bitcoin is not finished and it is vulnerable so any changes should be tested, not rushed. I can understand that. What is more, I can not demand from bitcoin developers changes. I can propose changes myself and even show how to do it though.
But here is the tricky part. Bitcoin core developers killed all progress by censoring every discussion that was not in line with central party rhetoric. You want to talk about big blocks? Ban. You want to ask about why not? Ban. But, but… Ban. So changes can not be proposed anymore and discussed. It was possible to get ban even when taking part in discussion elsewhere or agree to something core didn’t approve and “obviously” being not in line.
Well done guys, you just created central authority that stand against everything that bitcoin was for.
How big fees were justified?
By pushing blame on users. It must be stupid to use bitcoin they said. When you using it you are taking precious resources. You are bad for bitcoin. Bitcoin is not money, it is store of value!!!
Just buy and hold. Sorry. Just buy and “hodl”. Be stupid meme reader. Than tell others to buy and hold. Create perfect ponzi. This is what bitcoin core is now being used mostly for.
Solutions proposed and introduced.
Segwit or Segregated Witness. (didn’t help)
Reorganisation of transaction record that changes the way transaction size is being counted and also fixes malleability issue. At the time of introduction it was being compared to approximately equal to increase to 1.7 mb block size. Now opinions and calculations are vary. Some give it more, but most are very confusing anyway. As misinformation is very common in bitcoin world, I leave it for everybody to check it themselves.
Segwit was mostly needed to introduce Lightning Network that required transaction malleability to be fixed. In normal bitcoin use, it wasn’t really big problem, but lightning apparently had to have it sorted this way.
Lightning network
Fascinating concept really I must admit. It is different layer working on top of bitcoin block chain. Instead of sending every transaction on chain, users were encouraged to use this so called settlement layer, where only final balancing is written on chain. In theory, when network will be big enough and everybody will connect, closing final balances will never be required or for very long time plus when something goes wrong. Lightning network is in even bigger beta than I thought and I don’t think I can say more about its technical side, but already I think it might be very interesting someday. It should not stop on chain scaling though.
My problem with Lightning network is more on idealogical level. It to much looks like trying to replicate existing banking system (I might be totally wrong on this) and there was LIE spread before introducing LN that everybody needs to run full node. It is a lie. Obvious lie.
First of all, the definition of full node has been changed. Originally full node was node that was doing all functions of node and that includes mining. Mining is now highly centralised and it has very big entry price, so normal user rather can’t run full node efficiently.
Definition has changed to call non mining nodes a full node. That implies they are important to bitcoin network. They are not. They are important for Lightning network though, as user has to be connected to it all the time via they're own node.
Not only Lightning Network is build on bitcoin chain but also on the lie and misinformation. That is very bad. Any discussion to put things straight as they are result in ban in every communication channel controlled by central authority of core devs.
Every day I come to reddit or any other social media, I see plenty of lies, usually from people that do not lie, and I am sick of it. Bitcoin is evil, bitcoin is broken, bitcoin is taken over by malicious group, that luckily forked away in August last year and is marked as btc.
Bch chain restored the original value of Bitcoin. Central authority is gone. If it happens again, we will fork away again. It is low fee or no fee system for everybody.
It is fascinating again. There is new development. Look on memo and blockpress. If you can’t see implications of this, I don’t know what to say.
Now is the time people have to choose though. Bitcoin cash has low volume. It is possible people don’t want uncensored money, social network, or network in general. Maybe they need Lambo dream and ponzi scheme? Maybe. I don’t know. But I’m off from btc and I am not coming back.
submitted by MarchewkaCzerwona to btc [link] [comments]

Blockstream investor emails leaked - shows Blockstream motivation to steal transaction fees from miners and pay to Liquid sidechain customers

A little birdie leaked multiple Blockstream investor emails to me. I will not be revealing my source so do not ask. As we are all well aware many Blockstream investors are upset with the way Blockstream has been squandering away their venture capital.
I am taking snippets from the leaked emails and publishing them here. Any Blockstreamer that wants to confirm or deny the leaked email snippets is more than welcome to but I highly doubt they will and will more than likely deny these exist. It's easy to tell who wrote the emails from their obvious writing style. Also just think who is the main public facing exec at Blockstream and you know will know who. It's very easy to tell :D

Here is the first leaked email to investors which covers Q1 2017. Some interesting snippets with bolded areas by me to show important statements and claims being made by Blockstream.

Dear Blockstream Investor!
A lot of exciting things have happened since our last update and we are preparing several public announcements over the coming weeks. Below is an update on our progress:
Community Update
As background on the Bitcoin ecosystem, although none of Blockstream’s business plans are conditional on activation of Segregated Witness (“SegWit”), the “SegWit versus Bitcoin Unlimited” story remains a major conversation topic in the Bitcoin community. We agree with the overwhelming majority of technical leaders in the ecosystem who state that SegWit is not only the safer way to increase transaction capacity in the short-term, but it also includes other protocol improvements that will enable a significant amount of future innovation. There are some suggestions that the miners’ delays in activation of SegWit are economically motivated rather than technical in nature -- delays allow miners to collect artificially high fees from the strong demand for Bitcoin transactions in the short-term, and the assumption is that fees would decrease with the activation of SegWit and layer2 retail and micropayment applications, such as Lightning, which compete for fees. (Lightning fees are paid to peer-to-peer liquidity providers, and not miners).
Market Update
On March 10th, the bitcoin-based ETF proposed by Cameron and Tyler Winklevoss was rejected by the SEC. The decision was based on several factors, including concerns about the fact that bitcoin exchanges are largely unregulated, affecting the quality of the price data used to support the ETF. Reaction to the decision was mixed; however our view is that this is only a temporary blip in bitcoin’s progress. (More in this article, which includes Adam’s thoughts on the ruling.) There are other bitcoin ETF’s awaiting an SEC decision, and it is likely that new applications will be filed in the future. Many of the SEC concerns are addressed by Blockstream products and technologies, so future approval of a bitcoin ETF may be more realistic than the specific reasoning provided in the SEC decision would suggest.
In late February, the Enterprise Ethereum Alliance was announced, with large partners including Microsoft, Accenture, JP Morgan Chase, as well as other large companies and Blockchain startups. The alliance, which resembles organizations like R3 and Hyperledger, will attempt to address some of the problems encountered by businesses that want to use Ethereum for a number of different use cases. We do not view these groups as ma