Srp 25

Segwit Activated: How it Works & What’s Next for Bitcoin

· August 25, 2017 · 4:00 am

Segregated Witness, or Segwit, has finally been activated by a super majority of the current hashpower on the Bitcoin network. Segwit fixes many bugs currently in the protocol, and allows for some scaling using an effective blocksize increase.


Almost two years of debate

In December of 2015, the source code for Segregated Witness (Segwit) was released. It was meant as a fix for the ever-problematic transaction malleability bug, which allowed for someone to change one or two characters of a transaction’s ID before it was cemented into the blockchain. Along with that, it provided a method of scaling Bitcoin. Doing away with the concept of a blocksize, a new metric was made called blockweight.

For years the software was not added to the Bitcoin protocol as it never garnered the necessary 95% of the hashpower needed to activate. It was to be implemented though means of a softfork, which meant it would comply with all currently consensus rules and be backwards compatible with those running old software and did not wish to upgrade.

Whether you believe that Segwit was a direct result of the grassroot approach of BIP148 forced miners to finally activate it after all this time, or the New York Agreement was the reason everyone came together to signal for Segwit, it is finally here.

A second BIP was released weeks ago to lower the activation threshold to 80% of the hashpower, but even with the lowered bar Segwit still achieved around 97% signaling and locked in during the beginning of August.

After the official lock-in period, the network allowed for two weeks to provide grade period of sorts for people to upgrade their software to work with Segwit.

How Segwit Works

There has been a ton of misinformation about Segwit, so this article will hopefully clear some things up of how it actually works. As stated earlier the whole idea of a blocksize has been gotten rid of. Instead, the network will now use blockweight.

There’s two types of data that are contained in a transaction. Firstly, there is actual transaction data, such as the address the coins are being sent to. Then there is the witness data, which is all the information that is only needed when the transaction is confirmed, and then that data is essentially never used again.

Segwit provides a “discount” to the witness data, and once committed to the blockchain it gets pruned. These 1000 1KB transactions would obviously fill the current blocksize of 1MB, but remember blocksize isn’t even a metric any more. It’s been replaced by blockweight, the new limit of which will be set at 4,000,000 “units.”

The way the new unit system works is the number of units in a transaction is simply the number of bytes of transaction data multiplied by four. Witness data is, as said before, discounted. The bytes of the witness data are essentially a direct translation to units at a 1:1 rate.

So, for example, let’s say there’s 1000 transactions in the mempool, all at 1KB of data. Now let’s say in each of the transactions, 400 bytes is witness data and the other 600 bytes is transaction data. The 600 bytes for transaction data is now worth 2,400 units, while the witness data is now worth 400 units giving the whole transaction a weight of 2,800 units. All of these transactions together will only take up 2,800,000 of the 4,000,000 units, leaving room for more transactions.

Once the transaction is confirmed by the network, the not needed witness data will be pruned off the blockchain, to save storage space and decrease bandwidth use.

How Do I Actually Use SegWit?

For those of you expecting an immediate sign that Segwit is helping everything, I’m sorry to let you down. In reality, it could be weeks or even months before Segwit really starts to have widespread adoption.

Segwit transactions can only be sent from Segwit addresses. So, every single address that currently contains coins would have to send them to a Segwit address before we see the full effect of the upgrade. And even then, there could be a decent chunk of users who still don’t trust Segwit and don’t want to use it. Which is perfectly fine, that’s the point of a softfork. It doesn’t force users who don’t agree to it to upgrade to it.

For you to use segwit and send segwit transactions, you’ll need to send your coins to wallet that generates Segwit addresses. Otherwise, it will just be a normal transaction.

Moving forward, Segwit was an important setup to the upgrading and scaling of the Bitcoin network, which has been woefully overloaded in the past several months. Segwit opens the door to better implementation of the lightning network, which can allow for transactions to be sent off chain for pennies.

Coming in November, the second half of the New York Agreement is set to take place calling for a doubling of the blockweight to even further scale the network though means of a hardfork.

Will you be using segwit from here on in? How do you think this will effect the network? Let us know in the comments below!


Images courtesy of Shutterstock, Segwit.co

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Litecoin Activates SegWit Today As Price Nears $40

· May 10, 2017 · 9:48 am

SegWit activation day is here for Litecoin as the fourth-largest cryptocurrency gains another 38% in price.

Litecoin Passes $35, Lee Remains Cool

With just several hours to go before its “locked-in” status changes to “activated”, investors are celebrating as Litecoin’s price per token exceeds $35.

The surge marks a turnaround in the altcoin’s fortunes, prices having suffered earlier this week as assets across the board hemorrhaged value.

Poloniex, a major altcoin exchange, experienced slowness and loading problems, which some pointed to as a major cause of panic selling resulting in a broad comedown.

On Twitter Wednesday, Litecoin creator Charlie Lee appeared naturally upbeat, noting nonetheless that this was just the start for his cryptocurrency.

SegWit Still King For Investor Confidence

The rags-to-riches story has been marked by overwhelming investor appetite for SegWit. The confidence that accompanied Litecoin locking in the technology appeared to engulf any misgivings or even alleged attempts to derail the process.

This in turn led to a rapid U-turn for two other altcoins, namely SysCoin and Vertcoin, which both successfully activated SegWit and benefitted from giant price rises.

As in the case of Litecoin, criticism that SegWit activation was simply a tool for developers to make money did not stop trading interest.

Now, Litecoin will no doubt be eyeing the next step in the chain – introduction of Lightning Network transactions.

Lightning Network Brewing

“The activation of segwit on Litecoin allows us to deploy Lightning on an active production blockchain,” Lightning’s Olaoluwa Osuntokun wrote in a blog post last week.

“With our ultimate launch, we’ll be able to examine monetary incentives within the network, observe the emergent properties of the networks’ channel graph, and see the rise of production services and applications built on top of the network.”

A survey conducted by Lee meanwhile suggested Litecoin users were keener on harboring their funds long term than testing Lightning.

Lee himself stated that he intended to both “hodl” and test the technology.

Across the altcoin board meanwhile, only a modest recovery is noticeable, while Bitcoin is also down from its near $1800 highs. The figures will likely be music to the ears of experts such as Vinny Lingham, who repeated warnings about “bubbles” in recent public comments.

What do you think about Litecoin after SegWit activation? Let us know in the comments below!


Images courtesy of

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Srp 13

Blockstream Welcomes New Members to Their Team, Hires On Christian Decker

Source: bitcoin

Blockstream Welcomes New Members to Their Team, Hires On Christian Decker

Prominent Bitcoin enthusiast and proposer of ‘duplex micropayment channels,’ Christian Decker, announced on Twitter today that he will be joining the Blockstream team to work on L2 protocols.

Decker Joins Blockstream to Work on Lightning Network

According to Blockstream’s official blog, Decker was hired on to bring his expertise and talent to the company’s current research on lightning networks. While pursuing this line of work he will be joined by Blockstream developer, Rusty Russell, who has made theoretical contributions to the advancement of lightning networks in the past.

Decker is an early adopter of Bitcoin, as he began engaging in the cryptocurrency while it was still in its infancy in 2009. He has also created a number of protocols including PeerConsensus and Duplex Micropayment Channel. Furthermore, Decker brings with him the unique distinction of having authored the world’s first PhD dissertation about Bitcoin at ETH  Zurich while working with the Distributed Computing Group.

Along with Decker, Blockstream also took the chance to formally welcome other new employees that they have brought on since early this year. A noteworthy hiring has been that of Kat Walsh — joined in February as legal counsel — having served on the board of the Wikimedia Foundation for seven years, including a term as its chair. Additionally, Blockstream also hired on Eric Martindale as “Developer Evangelist.” Eric has a long history with Bitcoin, having worked a similar role for Bitpay.

Ever since the acquisition of the European-based Bitcoin wallet software provider, GreenAddress, it seems Blockstream has been trying to expand its operations. The new batch of hirings, especially that of Christian Decker, only works to further this belief as the company itself looks to continue its efforts in Bitcoin development with projects like the lightning network.

What do you think of Blockstream’s hiring on Christian Decker? Let us know in the comments below!


 

Images courtesy of Blockstream, Christian Decker

 

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Blockstream Welcomes New Members to Their Team, Hires On Christian Decker

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Kvě 16

Everyone’s Favorite Crypto Just Might Scale After All

Source: bitcoin

scale

The popular Bitcoin explorer and wallet company Blockchain.info has revealed a new protocol to the cryptocurrency ecosystem called the Thunder Network. The project is in its alpha release and the code is open source. Thunder allows users to make off-chain payments instantaneously with lower fees.

Also read: Japanese Company Raising Funds Abuses Tech Bureau Corp. Credentials

Can The Thunder Network Help Scale Bitcoin? 

Blockchain.info’s Thunder claims it will be able to process transactions at a rate faster than most credit card processors such as Visa and Mastercard. Currently, many developers and community members are afraid the Bitcoin protocol will not scale to the masses. Proponents of raising the block size or those who wish to use off chain solutions do not believe the network could handle 100 transactions per second. However with the Thunder Network the team claims it will be able to process 100,000 transactions per second. Blockchain.info’s blog states:

“Thunder has the potential to facilitate secure, trustless, and instant payments. It has the ability to unleash the power of microtransactions, to allow the bitcoin network to handle heavy loads, and to increase user privacy.”

There have been a few solutions brought to the table with scaling Bitcoin over time. Some of the ideas include a hard fork to raise the block size to 2mb or above. Then on the other hand off chain solutions such as the Lightning Network, Segregated Witness (SegWit) and Duplex Micropayment Channels (DMC) have been introduced in theory with some testing. Blockchain.info thought it would be best to release the code and alpha now saying, “We believe it is critical to get something in the hands of users as soon as possible to gain feedback that will enable us to be ready when the network is. So review it, test it out, open an issue on GitHub.”

With the popular wallet’s impressive user base the testing may get a lot of traction. Blockchain.info has already done some inside testing of Thunder already and you can view the experiment via the company blog. The platform had sent transactions to the two people in a “trustless manner based on the Lightning Network.” Blockchain.info states in their blog until now ideas like the Lightning Network are “purely conceptual, research-based, and only in test nets and labs – until now.” The two people who tested the Thunder Network were CEO of Blockchain.info Peter Smith and the team’s recently hired engineer Mats Jerratsch.

Blockchain.info wants people to know the project is currently experimental and not quite ready. Thunder is only suitable for testing at the moment and should only be used with trusted parties. The company says, “Try this amongst your dev team or amongst your trusted internet friends, but don’t use it for real payments. Remember: this is alpha testing software.”

The world of Bitcoin-land is getting exciting with new opportunities like these projects. It’s good to see developers taking initiative and coming up with things like Lightning, Thunder, Segwit, and DMC. With quality testing and implementation (and less arguing), everyone’s favorite cryptocurrency just might scale after all!

What do you think about the Thunder Network? Let us know in the comments below.


Images via Pixabay and the BC.info blog 

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Everyone’s Favorite Crypto Just Might Scale After All

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Kvě 10

OpenBazaar’s ‘Ambitious Destination’

Source: bitcoin

OpenBazaar

The OpenBazaar team has released its roadmap to the public via a Medium blog post and a picture of the company Trello board. The decentralized marketplace had “received a better than expected response,” and has gained visitors from all across the globe. With this, the company thought it would let the community know the upcoming development plans for the future.

Also read: BitcoinAverage: Craig Wright Can’t Keep Bitcoin Down For Long

“Today we’re releasing our high-level roadmap for OpenBazaar, — Our mission is to make trade free for everyone, everywhere. Our vision is for OpenBazaar to become Commerce 2.0: a permissionless and censorship-resistant protocol for global trade using Bitcoin.”

OpenBazaar’s 1-2 Year Roadmap

The developers of OpenBazaar say the roadmap goals are an “ambitious destination” that will likely take 1-2 years. The team tells the community the project is fully open source and users are invited to join the Slack group to help contribute. Additionally, they write the roadmap is called “high level” and some expansions include “important platforms such as mobile.” The outline detailed in the OpenBazaar blog says there constant ongoing commitments of which some are short term, medium, and long-term goals.  

Some of the long-term achievements the team wants to tackle are improving the moderation system, reputation enhancement, listing flexibility, discovery search, and more privacy. The OpenBazaar developers intend to enable Tor and other privacy-centric features after additional development is added. OpenBazaar states, “Going forward, we will be upgrading the network backend to IPFS, which is discussed in greater detail below. This upgrade will be a significant step forward to eventually integrating Tor.” Short term deployments for the decentralized marketplace include:

  • Email notifications
  • Webhooks
  • Backups
  • Order management
  • Inventory management
  • Order process UI
  • Sales control center improvements
  • Advanced digital goods
  • Blockchain ID on-boarding

Some medium-term goals include “big ticket” items such as an Interplanetary File System (IPFS). The protocol is a hypermedia for building distributed file systems, and would be an extension to the OpenBazaar network architecture. This feature would act like BitTorrent says OpenBazaar and the developers say, “when you visit another user’s store, your node will download and begin seeding that store data to other users.” The new framework will benefit users a great deal with enhanced censorship resistance, persistent content, multi-transport, local connections, and improved DHT implementation.

Additionally, OpenBazaar developers want to add advanced messaging that are encrypted and sent in real-time. The team also wants to add a full featured Bitcoin wallet integrated into the platform. OpenBazaar says the goal is to help new Bitcoin users manage the cryptocurrency on the site. The decentralized marketplace blog states:

“OpenBazaar uses a basic BIP32 wallet to manage multisignature escrow transactions in a user-friendly way. Ultimately, we want to include a full featured wallet in the application. The goal here is to make it easier for users to manage their Bitcoin (especially those that are new to Bitcoin) and incur fewer bitcoin transaction fees when transferring funds out of the app.”

Lastly OpenBazaar says it will be fully compatible with off chain proposals such as the Lightning Network and Segregated Witness. The team also details it will be working on a mobile app noting that, “mobile is eating eCommerce like software is eating the world.” They plan to launch a client-only mobile application and hope that it “empowers users” to manage their node.

The decentralized marketplace has a lot of work to accomplish and many community members are supporting its future stake in the new economy. The company got a lot of honourable mentions at the recent CoinDesk Consensus 2016 event and completing a roadmap like this one will bring the team quite a few more.

What do you think about OpenBazaar’s roadmap? Let us know in the comments below.   


Images via OpenBazaar Websites, and its associated blog

 

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Dub 28

Andreas Antonopoulos Makes Bold Prediction on Bitcoin Consensus

Source: bitcoin

Antonopoulos

Andreas Antonopoulos surprised a crowd at a Berlin Bitcoin conference last week by claiming that, by the end of this year, Bitcoin’s consensus algorithm will be totally changed.

Also read: BitcoinAverage Report: Bitcoin Price Hits 2016 High

Antonopoulos: Bitcoin Will Become a ‘Hybrid’

The prediction comes after a much-publicized block size debate in which developers have disagreed on how to update the Bitcoin system in order for it to keep pace with growth in transaction demand.

Antonopoulos.com

“By probably the end of 2016 Bitcoin will have a hybrid of Proof-of-Work proof of stake system,” Antonopoulos told conference attendees in a video available on YouTube. “Because Lightning Network is a Proof-of-Stake system, and people haven’t yet realized that Lightning Network is a proof-of-stake system.”

The repeat Joe Rogan guest continued: “In order to set up a functioning channel on Lightning Network, you have to commit money to a multi-sig address, and the more money you have committed to a multi-sig, the [higher] transaction rate it can handle and the more fees it can generate locally. Only it’s a completely trustless proof-of-stake system based on Bitcoin transactions running on top and guaranteed by Bitcoin’s proof-of-work.” Antonopoulos notes he only realized this six months ago.

“I had to go to one of the developers who is writing it, just to make sure I am getting this right. He said, ‘yeah you could call it [a Proof-of-Stake].’”

According to Antonopoulos, Proof-of-Stake could play a large role in Bitcoin’s consensus algorithms in the future. He claims it could allow the Bitcoin network to scale with increasing transaction rates better than does the current Proof-of-Work model.

Proof-of-Stake is an alternative to Proof-of-Work consensus algorithms. They are both similar in that they attempt to provide consensus and prevent double-spending.

Proof-of-Work involves some type of work in order for a block to be produced. Proof-of-Stake requires users to put up some amount of coins which correlates with how much digital currency they can mine.

Bitcoin’s Proof-of-Work currently cannot scale due to the block size limit. Certain Bitcoiners say this might be solved with a Proof-of-Stake system.

A Proof-of-Stake system theoretically results in lower transaction fees as less computing power is needed to produce blocks. Bitcoin’s Proof-of-Work entails producing data, a time-consuming endeavor. Difficulty in Proof-of-Work systems can vary. Oft a random process, this trial-and-error method of computational problem solving can be designed  for a low probability for a block to be produced, as is the case with Bitcoin. Bitcoin’s Proof-of-Work  is based on the SHA-256 cryptographic hash function.

Lightning Network strives to use smart contract functionality in the blockchain for instant payments across its network of participants. The Lightning Network is designed as an added layer to the blockchain. It combines Bitcoin’s blockchain transactions with its native smart-contract scripting language. According to the Lightning Network, this means a “secure network of participants which are able to transact at high volume and high speed.”

Lightning wants to conduct transactions off-blockchain, removing the limits of using the blockchain: By making the transactions and scripts parsable, the smart-contract can be enforced on-blockchain. Only in the event of non-cooperation is the court involved – but with the blockchain, the result is deterministic.”

In February, Antonopolous tweeted: “I don’t get all the animosity and conspiracy around Lightning Network. I think it’s really [an] amazing innovation & great solution to scaling.”

Developers on Bitcoin.StackExchange are not as convinced as Antonopolous is about designating Lightning Network a pure Proof-of-Stake system. Staking usually entails updating a network’s status. One earns fees by helping to validate and secure the network. Lightning Network also offers a smart contract platform. Participants can earn fees by providing liquidity. Nodes on Lighting Network forward payments. Lightning Network does not verify nor secure transactions. Consensus, rather, is created by Bitcoin’s Proof-of-Work.

Bitcoinist.Net reached out to Lightning Network but did not hear back before publication.

What do you think about Antonopoulos’ comments? Let us know in the comments below!


Images courtesy of LondonReal, Andreas Antonopoulos. 

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Bitcoin Core 0.12.1 Released, Focus on Block Size Scalability

Source: bitcoin

Bitcoin Core

Bitcoin Core has announced the release of a new update, Bitcoin Core 0.12.1. Focusing on scalability, this follows the “Capacity Increases Roadmap” they detailed December 23rd of last year, with Aprils focus to “deploy segregated witness (including Blocksize increase)” according to the table taken from the Bitcoin Core website below.  The release comes during a contentious time for Bitcoin as there are multiple side of an ongoing debate to increase the block size from 1 mb to 2 mb or larger.

Also Read:  Bitcoin Taxes 2016: Accurately Reporting Bitcoin Usage

Bitcoin Core 0.12.1 Changes

Multiple changes have been detailed that laid groundwork for the Lightning Network, a scalable network of instant Bitcoin and blockchain transactions powered by blockchain smart contracts. Bitcoin Core 0.12.1 also has the ability for up to 29 “parallel soft fork deployments at the same time,” thanks to BIP 9 “version bits.” Not only will it allow more changes to occur at the same time, but these changes will also happen in a faster and more decentralized manner.

The new update also looks to activate BIP 68 sequence locks, BIP 112 OP_CHECKSEQUENCEVERIFY and BIP113 Median time past, or collectively known as “CSV” deployment. However, miners cannot begin voicing support for or against these new changes until May 1st, 2016. BIP 112 is especially important for the Lightning Network, as it will allow Bitcoin to be used in numerous bi-directional payment channel situations.

While we have made some progress into scaling through the introduction of segregated witness, lipsecp256k1 verification, and now the various BIPs included with Bitcoin Core 0.12.1, we still have a long way to go before Bitcoin can rival the transaction capacities of payment networks like VISA or AMEX. The block size debate is also a problem that needs to be solved as well before Bitcoin can truly be a currency used by the majority of the people around the world.

How to Upgrade/Downgrade

To upgrade from an older version, make sure any instances on Bitcoin Core are shut down. Once this happens, run the installer of the new Bitcoin Core, and you’ll now be running the version. If you want to downgrade, note that 0.12.0 and later are not compatible with pre-0.12 versions, so you’d have to reindex when you start the earlier version of Bitcoin Core to make sure everything is functioning correctly.

Bitcoin Core update shows promise. It will be interesting to see what the next step is towards segregated witness and a larger block size.

What are your thoughts on the latest release from Bitcoin Core? Let us know in the comments below!

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Bitcoin Core 0.12.1 Released, Focus on Block Size Scalability

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