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UPDATE (15th August 17:20 BST): According to reports from the NXT community and BTER, a rollback is no longer being actively considered. BTER announced on Twitter that it would seek to retrieve the stolen funds through other means. The company said: We have decided not to rollback but get the stolen funds back from the hacker since we have got lots of information of him. — Bter.com Exchange (@btercom) August 15, 2014 NXT
BTER is reporting that 50m NXT, or roughly $1.65m at press time, has been stolen from its exchange following an attack on one of its hosting servers. A developer representing the China-based digital currency exchange platform confirmed the news on the community information website NXT Forum, suggesting that the BTER team was considering rolling back the NXT block chain to recover the lost funds. In a post to the community, developer ‘freeworm’ revealed the gravity of the situation for both the exchange and the NXT community, saying: “It’s totally our fault and we are trying our best to cover all the loss. However, 50m nxt is huge for us, we cannot afford it at the moment.” Freeworm continued his post by providing the address containing the stolen 51,670,000 NXT, and detailing how the exchange will try to help the NXT community recover its funds. The BTER representative suggested that the exchange is exploring all options, including contacting the NXT development team in an effort to rollback the block chain, thereby restoring the ledger to its state before the theft occurred. BTER also revealed the news on Twitter: Someone hacked Bter’s NXT central account and stole 50m NXT. We are working with the dev for a plan. We will keep you updated. — Bter.com Exchange (@btercom) August 15, 2014 Latest block chain rollback The block chain rollback proposal, while still only in its early stages, would follow vericoin’s decision to reset its internal ledger in July. That decision occurred after 8m VRC were lost in an attack on digital currency exchange MintPal. While successfully avoiding the theft, the decision also sparked controversy within the altcoin community, with litecoin creator Charlie Lee speaking out against the decision and reassuring his community and its investors that it would not seek a similar solution in the event of large theft. NXT was initially listed on BTER in January amid excitement about the then-new altcoin. The second-generation cryptocurrency uses a version of Proof of Stake (PoS) for its mining, awarding new coins to users for continuing to hold the assets. Notably, vericoin cited its own PoS mining system as a key reason for its rollback. By not restoring the block chain to its previous state, many argued, the thief may have been rewarded for continuing to hold the confiscated funds. Community reaction At press time, many NXT Forum members were supportive of the idea of a rollback, though at least one member suggested that time was of the essence should the community look to pursue the fix. Forum member ‘Come-from-Beyond’ suggested that the decision to revert NXT’s block chain would need to take place before 720 new blocks had been successfully processed by the community. Other NXT exchanges also responded to news of the hack, with Poloniex freezing its NXT/BTC market. CoinDesk will continue to monitor this developing story. Image via NXT crimeNXT
Original author: Pete Rizzo

Runner Mining bitcoins chews up a lot of computing power for no other purpose than to sustain the network. Wouldn’t it be useful to mine cryptocurrency in some other, more productive way? Now a team of Serbian developers has tried to crack the problem with a proof-of-concept altcoin that lets you mine coins simply by exercising. Mangocoinz was launched as a computer science project by three students at Belgrade’s School of Computing, with a simple concept: instead of using computational work to generate coins, miners have to do some actual, physical work. For example, repeatedly moving a smartphone (typically by walking or jogging) will result in ‘proof of work‘, which the client software will turn into a portion of a coin. While the coin is still in its very early days and problems remain to be ironed out, the concept may hold promise as a tool for institutions promoting fitness or as a way to lower health insurance premiums. Useful proof of work Mangocoinz is the latest idea in a long-running quest to make proof-of-work models that do more than simply crank out coins. Some have been frankly bizarre: bumbacoin, for example, bafflingly enables people to ‘mine’ coins by trolling newsgroups with Jamaican expletives. Some attempts have stuck with computation, but have tried to make the computations scientifically useful. Primecoin solves prime numbers while mining coins, for example. Peercoin, by the same developer, uses proof of stake, at least in part, which mines coins based on how many a person already owns, in an attempt to cut computing cycles and experiment with economics. Another alternative, gridcoin, rewards people for useful research. Its users still crank out compute cycles, but they use them for crowdsourced scientific computing projects such as SETI@home. Gridcoins are tokens proving that their computers did that work. All of these projects, even ridiculous ones like bumbacoin, have one thing in common: they involve some kind of effort on the miner’s part. “There are many kinds of proofs-of-work. All have their trade-offs. We discover more new ideas/avenues every day,” said core bitcoin protocol developer Jeff Garzik. “The general idea is that copying digital data is trivial and frictionless. You must discover a method to make that process slower, more difficult.” If a proof of work is simply about effort, then a physical proof should theoretically be possible. Running entails a measurable effort, which has a positive fitness effect. The ‘washing machine attack’ There are problems with the idea, though. It would seem trivially easy to game this system so that you didn’t have to work at it – and the cost of attack is very low. Putting the phone on a washing machine during the spin cycle might do it. Theoretically, you could make yourself a mangocoinz millionaire and get a nice, fresh-smelling pair of socks at the same time, for a double win. The trio’s answer for that involves a daily mining limit of 10 mangocoinz (MCZ) per day, verified using a centralized, cloud-based service. “Coins only become valid when you sync them,” said the company’s founders, who declined to give their full names. “If you mine three coins a day and click sync, you make three coins valid and [can send them] to anyone you like, and you have seven coins left to mine in the day. Then it resets.” With no rollovers, that places a limit on the profit that anyone could make per day. However, were mangocoinz ever to gain sufficient real-world value to make them interesting, people could still game the system. Attackers could generate multiple accounts, using phones on washing-machines or hacked clients, and continue to mine coins to the limit. That would raise the mining difficulty, and penalize people who were trying to mine the coins legitimately by working out. Mitigating hacks A technical solution to that problem would be difficult. Theoretically, the software could use the GPS to check for a change in geographical position while the coins are being mined, to check that the miner is really walking or running. But that would penalize those using a treadmill or exercise bike at home. A better alternative might be to marry the accelerometer to the kind of heart monitor expected to be incorporated into wearable devices like Motorola’s Moto360 smart watch. Google’s Fit software development kit is already out in preview form, for developers to play with. However, this brings us back to the same problem: all of these signals could be falsified using software hacks. And this in turn boils down to a fundamental design characteristic: mangocoinz mining and transactions are validated by a centrally-managed server. The system does not use a decentralized network to cryptographically verify the proof of work as bitcoin does. “We made the system for honest people,” say the founders. Well, quite, but the Internet is full of scam artists and tricksters who will quickly subvert such a system at the cost of those honest users. A matter of trust To take a nascent project like mangocoinz to the next level, it may be necessary to revamp its trust model. Honesty and trust are difficult to codify, but it is possible, believes Jesse Heaslip, a board member at digital currency innovation and branding lab Humint. A big believer in the use of cryptocurrency for social good, Heaslip muses about reputation systems. If the network could be seeded with trusted nodes – the “honest people” that mangocoinz’ founders describe – then perhaps they could be used to raise the reputation of other nodes that run with them, Heaslip suggested, adding: “You’d have to build a group dynamic into it. So before you were trusted individually, you’d run in a group.” He also suggested getting institutional support to launch a coin with potential health benefits to greater heights. “Who’s going to get the value from performing the exercises? You have to throw it to a government or health insurance provider,” he said. Such an organization might be able to prove that exercise reduces overall healthcare costs by a certain amount. “You can prove that people exercise that certain amount, which reduces your insurance costs. Thereby you should contribute this much to the project to ensure that it goes,” he concludes. These concepts are far beyond where mangocoinz is today, but its founders say they have received inquiries from more than one technology accelerator, indicating that there is some interest. And as any good investor knows, product ideas are malleable: it’s the team that counts. Even if mangocoinz needs further development, it’s an interesting taste of how proof of work may expand in innovative directions in the future. Perhaps we could call it ‘proof of sweat’. Runner image via Shutterstock. mangocoinzproof of work
Original author: Danny Bradbury

Dhaka, Bangladesh
The Bitcoin Foundation has announced its first affiliate group in Asia, with Bitcoin Foundation Bangladesh becoming the latest local advocacy group to join its international network. The addition of Bangladesh means the Bitcoin Foundation has built an international chain of affiliates in just eight months. The newest member joins groups in Canada, Mexico, Australia, Germany, Denmark and Netherlands. The president of Bitcoin Foundation Bangladesh, Sazeeb (no last name given), said: “To be effective in positively improving lives, it’s important we join together, align our goals, become educated and coordinate our efforts to encourage bitcoin’s adoption.” The Bangladesh team An entrepreneur, motivational singer and musician, Sazeeb has been the driving force behind the new foundation chapter, with support from international bitcoin evangelist Roger Ver, who appears on the group’s site as an official advisor. Bitcoin Foundation Bangladesh President, SazeebPresident of Bitcoin Foundation Bangladesh, SazeebAlso on the Bangladesh board are local entrepreneurs Sadia Sultana Mou, Mizanur Rahman, and Jamil (no last name given). “Our mission is to help people utilize the best solutions to help make their life easier,” the group’s website states. While there are plenty of great opportunities in the marketplace, it continues, the right approach is needed to deliver the bitcoin message to that part of society who need its answers most. Bitcoin has the potential to dominate the entire payments industry, it adds. Sazeeb is currently in the process of setting up websites to educate locals about bitcoin and the benefits it can bring. He has already formed an affiliate marketing program, Coinpiler, which pays its rewards in bitcoin. Why affiliate? The international Bitcoin Foundation has been hosting a series of informational webinars for other groups interested in becoming affiliates. Affiliate Director Mark Woods espoused the benefits of formal links with the Foundation for new bitcoin organizations, as opposed to spending the energy and resources required to build those structures from the ground up. He said: “As the leading and first member driven nonprofit digital trade organization in the world, our affiliates take on an active and important leadership role as part of a global conversation and movement. We are more effective working together, sharing information, resources and ideas as a united and coordinated front.” Affiliating with the Foundation provided the membership platform, educational collateral, sub-domain, email accounts and even hosted websites, he added, to make it easy to get started so new groups can focus on what’s really important – outreach and education. There were also Bangladesh’s specific needs that the Bitcoin Foundation had identified and cooperated in preparing an agenda. “The Bangladesh leadership team plans to put a major emphasis on education to encourage bitcoin’s adoption. We will be providing bitcoin education and resources in Bengali, the official language as well as support a local outreach campaigns.” Bitcoin in Bangladesh Bangladesh is the eighth most populated country in the world, with over 150 million people. Although still considered a ‘developing country’, it has an open and market-based economy driven mainly by agriculture and large-scale manufacturing industries. As is the case with neighboring India and the Philippines, Bangladesh counts on remittances from foreign-based workers and even local employees sending money from large cities to small towns as a significant contributor to its GDP. Estimates put income from remittances in 2012-2013 at $14.5bn. This would be an obvious use case for digital currency, though the usual hurdles of technology adoption, infrastructure costs and general awareness would need to be addressed, plus the need for affordable and reliable fiat currency to bitcoin gateways that exists in all countries. Dhaka, Bangladesh Image via Shutterstock AsiaBangladesh
Original author: Jon Southurst

shutterstock_43010719
KnCMiner has announced that production of its Titan scrypt line of miners has moved into a new phase. The cryptocurrency mining hardware maker broke the news on its official blog, indicating that the Titan ASIC chips are now in the wafer encapsulation phase. During this process, a protective layer is applied to electronic components to safeguard the parts from damage caused by temperature and humidity changes. The update comes nearly two months after KnCMiner said that the tape-out for the Titan had begun. At the time, the company noted that it expected to complete production on the hardware in time for shipment in the third quarter of this year. The company wrote: “Our new Titan Scrypt Miner is finishing it’s first run in fabrication this weekend with wafers being sent to the next step: encapsulation. As so, we’re awaiting completion and the arrival of the finished chips in Stockholm, Sweden, where they’ll move into our testing and assembly phase, for delivery.” KnCMiner added that after encapsulation is complete, the chips will begin testing and the final stages of production will begin. The announcement is the latest news related to the Titan, which has been in active development since early this year. Pre-orders for the Titan began in March, with buyers paying $10,000 per unit. Originally designed to provide roughly 100 MH/s in scrypt mining power, the units were later estimated to produce 250 MH/s instead. Work on the Titan has continued despite persistent problems for KnCMiner itself. Througout the Titan’s production period, KnCMiner has been dogged by accusations of deceptive business practices and negligence resulting in problematic deliveries to customers. The wafer encapsulation update follows a recent statement saying that the Titan will sport a modular design, with each chip contained within what KnCMiner called “cubes”. At the time, the hardware maker declared that the approach made sense from a cooling and operational perspective, saying: “Each module having it’s own case also enhances efficiency in cooling and we can make each cube very quiet.” The post also suggests that the PCB board utilized for the Titan will be the same kind used in its Neptune mining product. Finally, the company said that finalized specifications for the Titan would be released once testing has been completed. Chip image via Shutterstock kncminerTitan
Original author: Stan Higgins

deal, business
Ripple Labs has reached an agreement that will prevent original co-founder Jed McCaleb from selling 9 billion XRP, the portion of the protocol’s native currency he was awarded for starting the company, this year. The open-source payment network provider issued the announcement in a blog post penned by Director of Communications Monica Long. The post said that McCaleb, who recently launched his new project Stellar, had agreed to a distribution timeline that will block him from selling more than a specific allotted amount of XRP each year over the next seven years. Under the terms of the plan, McCaleb cannot sell more than $10,000 worth of XRP per week for the first year of the agreement. Long indicated that the plan will allow McCaleb the freedom to liquidate some of his holdings, while preventing his decision from having a significantly negative impact on the larger XRP market. Long wrote: “For context, $10,000 per week currently comprises less than 1% of volume, so it’d have a minimal impact to the price of XRP. For the next four weeks, he retains an option to sell up to $2.5m of XRP off market to a single counterparty vetted by Ripple Labs.” Notably, the price of Ripple fell by 40% on 22nd May, the day McCaleb took to the company’s XRP Talk forum to announce he would move to sell all his XRP holdings over a two-week span. Terms and conditions The deal sets firm limitations on the amount of XRP McCaleb can sell over a seven-year period, with the timeline allowing McCaleb more freedom to sell his XRP holdings over time. The remainder of the schedule prevents McCaleb from selling more than: $20,000 per week during the second, third and fourth years 750 million XRP per year for the fifth and sixth years 1 billion XRP per year for the seventh year 2 billion XRP per year after the seventh year. Following McCaleb’s announcement that he would liquidate his holdings, CEO Chris Larsen agreed to gift 7 billion XRP to the Ripple Foundation for Financial Innovation, which was established to help underbanked consumers around the world. Putting the past to rest Ripple Labs’ original founders retained 20 billion XRP as compensation for the risks associated with starting the company in what has long proved to be one of the company’s more controversial decisions. 80 billion XRP was then given to Ripple Labs to facilitate its operations. The post indicated that Ripple co-founder and chief strategist Arthur Britto had previously signed a similar agreement limiting the rate at which he could liquidate his XRP holdings. Long ended the post by acknowledging past disagreements between Larsen and McCaleb. Further, she remarked that the deal illustrates how the co-founders have been able to put aside serious differences to ensure Ripple will be able to complete its stated goal of revolutionizing finance. Long concluded: “Our team at Ripple Labs, our partners, investors and I’m sure you, our community, are pleased to have reached a final, constructive outcome as we continue on with the important work we care about and believe in so deeply.” Document signing image via Shutterstock Jed McCalebRipple LabsXRP
Original author: Pete Rizzo

Baskets vector illustration
Payments firm Braintree, a subsidiary of eBay and PayPal, is “in talks” with several processing companies including Coinbase on the possibility of accepting bitcoin, according to a Wall Street Journal report. Braintree provides payments software for a number of popular mobile applications including Uber, Airbnb, and GitHub. The company, which was acquired by PayPal for $800m in December last year, was processing up to $12bn in payments annually – $4bn of that via mobile apps. No matter which bitcoin processor Braintree may choose, accepting digital currency would represent another significant step in bitcoin’s lifecycle. “People familiar with the matter” stressed that any deal would not include either eBay or PayPal accepting bitcoin for now, though senior executives including eBay CEO John Donahoe have at times expressed an interest in ways to accept digital currencies, even describing it as “inevitable”. Anyone who doubted the seriousness of those comments in the media may be swayed if a partner business as close as Braintree began accepting bitcoin, demonstrating its utility on a slightly smaller scale than the two online giants. It could also represent a foot in the door for future acceptance. Both Uber and Airbnb have much in common with bitcoin. The startups have been lauded by supporters in the technology world for their disruption of the taxi and hotel industry, though they have also encountered stiff opposition from established participants in those segments. Thanks to its formal partnership with PayPal, also an eBay subsiduary, Braintree now serves 40 countries and 130 different currencies. Founded in 2007 by entrepreneur Bryan Johnson, Braintree raised $34m in Series A investment from Accel Partners in 2011, and a further $35m led by NEA in 2012, before its eventual acquisition. It provides a solution for mobile based and other online businesses to accept credit card payments directly from their apps and sites, supplying both the payment processor and merchant account in one package. BraintreeeBayPayPal
Original author: Stan Higgins

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The Geniuses at Work Corporation, the parent company of bitcoin mining hardware specialist GAW Miners, has acquired a controlling stake in cloud mining provider ZenMiner for $8m. GAW Miners had originally announced a partnership deal with ZenMiner earlier this month. At the time, ZenMiner agreed to provide cloud hashing services as part of a broader strategic partnership. In the latest deal, GAW Corp. acquired a controlling stake in the cloud hosting company. GAW CEO Josh Garza told CoinDesk, the stake purchase follows a period of close collaboration between the two companies, and that the development also reflects the growing role of hardware hosting in bitcoin mining company business models. As Garza explained, the deal will allow GAW customers to either receive their miners through the mail or immediately begin hashing through the hosting service. By bridging the connection between hardware seller and hosting service, miners can generate revenue more quickly, he said. Garza explained that the deal’s main benefit is that it puts more power in the hands of hardware-buying customers, saying: “I just want to help miners make some money, help get them some return on investment (ROI). I’m just so tired of manufactures milking miners for all the money they can.” The GAW CEO added that the ZenMiner deal is part of Project Prime, a broader effort to bring resources and information to the mining community and industry. The project notably includes the purchase of the BTC.com domain name last month for a record $1m. As Garza explained, the ZenMiner deal reflects a potential solution to a growing problem for bitcoin miners: the rapid depreciation of their hardware. Currently, Garza argued, the developmental arc of mining hardware puts buyers who expect speedy deliveries at a advantage, especially if they have to wait months before their package arrives. With the ZenMiner hardware hosting solution, miners can choose whether they want to begin hashing immediately or wait to receive their equipment. According to Garza, control of the hardware ultimately rests with the customer. Garza said: “You still own it, it’s your equipment. At any given time, you can give us a call, click a button and we’ll send it to you.” The partnership between GAW Miners and ZenMiner has been mutually beneficial, Garza suggested, making the decision to acquire a controlling stake at the holding company level a no-brainer. He concluded: Ultimately, the deal “allows us to work more closely together”. Handshake image via Shutterstock GAWGAW MinersZenMining
Original author: Stan Higgins

The price of bitcoin on the CoinDesk USD Bitcoin Price Index (BPI) dropped below $500 today. At 2.30pm UTC, the price had fallen nearly 9% to $496.27, its lowest level since 21st May, when concerns about restrictive regulation in China were widespread. Notably, the decline below $500 was short lived, with the BPI quickly rebounding over the $500 mark to reach $512.26 at press time. Graph No clear cause Though no one news event could clearly be linked to the price decline, speculation was rampant on Reddit and other bitcoin community mainstays as to what factors were contributing to the market decline. In its most recent BitBeat report, the Wall Street Journal suggested that the recent US Consumer Financial Protection Bureau warning and Bitstamp’s announcement that it had changed banking partners were both potential factors. Dear Bitstamp customers-please make sure you use our updated banking details when sending your transfer to Bitstamp. — Bitstamp (@Bitstamp) August 13, 2014 However, WSJ acknowledged that uncertainty over US regulation may have also been a contributing cause. Vytautas Karalevičius, Spectro Coin co-founder and CEO, told CoinDesk he believes all three events to be contributing factors, though he said Bitstamp might have been the most important of the three, adding: “Bitstamp changing its bank provider from Unicredit to Raiffeisen might have two effects. Firstly, some deposits to old Unicredit account are bouncing back, so people who were willing to buy bitcoin these days do not support the demand for it. Also, it shows a potential problem [even the] most liquid exchanges face.” Though the proposal was first introduced last month, a growing number of bitcoin’s business leaders have started moving to formally contest the proposed framework. Boston-based bitcoin startup Circle even declared yesterday it would not serve New York customers should the laws be enacted. Speaking to CoinDesk, Shawn Sloves, CEO of global bitcoin exchange network Atlas ATS offered a different take. He suggested that overall saturating in the bitcoin exchange market remains a contributing factor. New York regulation, regardless of the form in which it passes, will be a boon for the industry, he added. Sloves explained: “From what I have seen, there’s a saturation point of exchanges popping up every week in different countries, and they’re creating fragmentation and turning bitcoins and digital currencies, and because of the lack of liquidity, it adds to the volatility.” China’s markets mirror US At press time, China’s markets had seen a similar reaction, with the price of bitcoin on the CoinDesk CNY BPI falling nearly 8% to hit ¥3,075.27. This figure was down from an opening price of ¥3,339.58, which was also the market’s daily high. coindesk-bpi-chart (9) The CoinDesk CNY BPI tracks the price of bitcoin at major China-based bitcoin exchanges such as BTC China, Huobi and OKCoin. Optimism remains Despite the recent price decline, bitcoin industry leaders expressed optimism in conversations with CoinDesk that the development would be little more than a speedbump on bitcoin’s road to mainstream adoption. Payza business development consultant Charlie Shrem, for example, noted that the current price drop represents an opportunity for certain segments of the bitcoin market, saying: “Being a ‘long term bull’, it’s a good opportunity to pick up cheap coins. For day traders, like they always say, ‘Buy low sell high.’” Expresscoin CMO and co-founder Joseph Hsieh further emphasized the long-term value of bitcoin to CoinDesk, adding: “If you’re a technologist, then the price is the least interesting aspect compared to bitcon’s utility and underlying potential. The dotcom crash killed the total market valuation of internet companies, but it never killed the underlying value of the internet.” Images via CoinDesk Atlas ATSCharlie Shremprices
Original author: Pete Rizzo
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