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Jurisdictions embracing bitcoin and bitcoin-related businesses can dramatically improve their countries’ economies in a multitude of ways. But, what exactly would a favorable bitcoin jurisdiction look like?For starters, it would ideally have no VAT or capital gains tax on bitcoin transactions and would encourage an active two-way exchange market with national currencies.Commercial banking partners would not be subject to costly and overbearing regulatory guidelines that threaten or impede innovation. Furthermore, wallet providers, merchants, and payment processors would be under no restrictions.Isle of ManmannAs the bitcoin protocol expands globally, we are already witnessing some jurisdictions announce their intentions to become welcoming business hubs for bitcoin innovation.Most recently, UK Crown dependency, the Isle of Man, outlined plans to provide an environment that enables companies operating within the bitcoin space to flourish and its government posted an informative Questions & Answers document.Capitalizing on the inability of more bureaucratic jurisdictions to embrace bitcoin, group General Counsel for Counting House Services Paul Davis emphasized:“They cannot come here to launder money, defraud the public, or damage the island’s reputation. But they can pitch their tent here, do their business, build their software and offer their services.”Furthermore, the island’s Financial Supervision Commission, confirmed in March that a bitcoin exchange holding client funds with a licensed overseas payment service provider is not required to obtain a licence in the country for its activities.LuxembourgluxembourgLuxembourg also made headlines earlier in the year when it publicly advertised its intention to start an open dialogue with bitcoin businesses seeking a jurisdictional home.Several teams of bitcoin industry experts have already met with Luxembourg officials. Michael Jackson, partner at Luxembourg-based Mangrove Capital Partners, characterized his conversations with the country’s regulators thus:“[They're saying] we’re very open to people coming here and explaining their businesses. We don’t have any problem with a bitcoin business, as long as it does what it’s supposed to do and behaves properly.”Jackson also expressed optimism that Luxembourg’s decision would carry weight in the broader European community, noting that it is a financial center of Europe.GibraltargibraltarSomewhat reluctantly, Gibraltar has recognised its leadership role in the electronic payments industry for e-gaming and what that means for bitcoin. The British Overseas Territory has hosted two conferences, one in 2011 and one in 2014, that highlighted the strong business benefits for taking a leadership role on bitcoin integration.KPMG’s Archie Watt told New Statesman:“Low cost, low hassle cryptocurrencies such as Bitcoin have the gaming world pricking up their ears.”Two operators in Gibraltar have expressed to me privately that senior members of the Gibraltar government want the jurisdiction to lead rather than follow and that the responsive framework is already in place to make that happen.A question of costsWhen discussing bitcoin’s benefits for an economy, one must distinguish between the economic benefits of a jurisdiction making itself appealing to bitcoin business versus the jurisdiction adopting bitcoin as its territorial unit, which is an entirely different strategy (to be covered in a future analysis).The economic benefits of the former can be seen as setting the stage for bitcoin jurisdictional arbitrage.‘Jurisdictional arbitrage’ is defined as the practice of taking advantage of the discrepancies between competing legal jurisdictions. According to Wikipedia, it takes its name from arbitrage, the financial practice of purchasing a good at a lower price in one market and selling it at a higher price in another.Patri Friedman, grandson of economist Milton Friedman, explains that, just as in financial arbitrage, the attractiveness of jurisdiction arbitrage depends largely on its transaction costs – in this case, the costs of switching legal service providers from one government to another.Reaping the rewardsWith respect to extreme economic benefits, a jurisdictional hub for bitcoin with an independent and functioning court system would immediately experience an influx of new capital and new businesses, thereby contributing to a growing GDP (Gross Domestic Product).“A forward-looking jurisdiction for bitcoin business would demonstrate strength and leadership for the new digital economy.”Due to bitcoin’s inherent lack of a third-party intermediary, the leading financial service industries of today would gradually become dis-intermediated and this newly open jurisdiction would serve as the disruptors’ laboratory.New, disruptive operators geared towards building out the bitcoin mobile payments infrastructure, funds transfer business and asset management industry would flock to the region, spurring vigorous job growth and opportunity.The hub would soon find itself a magnet for related advisory services, venture capital, and other professional support services seeking to capitalize on the bitcoin boom. Retail banks could be rejuvenated as demand increases for true bitcoin services, such as foreign exchange, transaction escrow services, and trusted safekeeping.Most significantly though, a forward-looking jurisdiction for bitcoin business would demonstrate strength and leadership for the new digital economy, catapulting the country and its people to the world stage.Much like Gibraltar became the worldwide hub for e-gaming in 2004 and Zurich became the world’s gold trading hub in 1968 due to the collapse of the London Gold Pool, a jurisdictional bitcoin haven would make history.Follow the author on Twitter.Search, Isle of Mann, Luxembourg and Gibraltar images via ShutterstockGibraltarIsle of Manlawluxembourgregulationtax
Original author: Jon Matonis

The Winklevoss’ bitcoin price index, the ‘WinkDex’, has made its first appearance on Bloomberg. Listed on the platform under WINKBTCO, the move is an important step for the young index, launched earlier this year.winkdexIn a brief blog post the team say they are honoured to be working with Bloomberg to bring a “blended bitcoin price index” to the wider investor community. In addition, the WinkDex is about to get a number of new features over the next few weeks, including an API.WinkDex was launched in February and it is just one bitcoin related initiative headed by Tyler and Cameron Winklevoss. The twins are working towards the launch of their Winklevoss Bitcoin Trust, a bitcoin exchange-traded fund (ETF). The idea was floated last year and the ETF is currently awaiting regulatory approval.
The WinkDex can be viewed as a component of the Winklevoss’ ETF push. It was announced in one of the ETF regulatory filings and described as a method of establishing an accurate spot price that eliminates price confusion and reflects the true value of bitcoin.
The Winklevoss brothers claimed to hold 1% of all bitcoins when their initial ETF document was submitted last July.Winklevoss Winkdex screenshotBloomberg started experimenting with a bitcoin price ticker last year. The platform has since integrated bitcoin pricing (from exchanges Coinbase and Kraken) alongside news on its Bloomberg Professional service.The service has more than 300,000 subscribers, mainly financial professionals, who pay upwards of $20,000 each year to use it.These users now have the ability to track bitcoin prices along with relevant news and social media posts. However, Bloomberg has reiterated that the decision is not an endorsement of bitcoin, emphasising that investors cannot yet trade the cryptocurrency on its platform.bloombergWinkdexWinklevossWinklevoss Bitcoin Trust
Original author: Nermin Hajdarbegovic

Merlion Singapore
Bitcoin businesses in Singapore now have a new group to promote their cause, with the formation of the Association of Crypto-Currency Enterprises and Start-ups, Singapore (ACCESS) on 30th May.ACCESS, which launched publicly just yesterday, represents various businesses within the Singapore bitcoin and other cryptocurrency ecosystem, including exchanges, merchant transaction services, vending machines and miners.As a condition of membership, members must abide by a Code of Conduct.Mission and objectivesThe Association’s Mission is “To facilitate legitimate use of cryptocurrencies in Singapore”, and its vision is “to promote Singapore businesses using cryptocurrencies and lower the cost of business transactions”.It wants to promote Singapore globally and industry-wide as the world’s premier location for cryptocurrency-related businesses and services. It recognizes the need for regulation, saying the framework must balance the necessity for innovation with the duty to protect both consumer end-users and commercial entities.ACCESS will also promote adoption and development of digital currencies within Singapore itself, through education, public engagement and effective engagement with governmental and non-governmental bodies.It also seeks to ”promote the development, dissemination and adoption of best-practices by Singaporean digital currency businesses and other industry participants, and to counter illegitimate use of the technology.”Chairman Anson Zeall of CoinPip reiterated these main points at the Inaugural General Meeting on 13th June:“ACCESS aims to provide an open and clear dialogue between Singapore cryptocurrency businesses and the wider public, including regulators. With the forming of our association, we will help facilitate an ecosystem where Singapore can be a hub for cryptocurrencies businesses to grow and create jobs related to this new and growing technology.”The seven-member executive team features other notable Singapore bitcoin business representatives, including President Antony Lewis of exchange itBit, and Secretary General Jarrod Luo of local ATM/vending machine producer Tembusu Terminals.RegistrationACCESS is a fully registered society with the Registry of Societies under the Ministry of Home Affairs.Singapore law states that any professional society concerning monetary activity must register with the government. Although bitcoin is still not legally defined as money, since its most common use is as such, ACCESS decided the best option would be to register.Image via PokkO / ShutterstockACCESSAsiaSingapore
Original author: Jon Southurst

Tuur Demeester is an independent investor and newsletter writer. He has a background in Austrian economics, the school that specialises in the study of boom-and-bust cycles in the economy. Here, he compares bitcoin’s disruptive potential in traditional finance to petroleum’s shakeup of the whale oil industry in the 19th century.whale pic 1Today, I want to tell you the story of Charles W Morgan.Mr Morgan lived in the United States during the early 19th century and was a successful entrepreneur and investor. He was active in the energy market. Or, as it was better known in the day: whale hunting.It’s no exaggeration to say that at the time, the whole world was lit by whale oil. It fuelled most of the oil lamps. It was also used to produce the superior spermaceti candles – sturdier candles that burned brighter and with less smell than those from animal fat or beeswax.We can still trace the dominance of the whale oil candles via the candela, widely used base unit for luminous intensity, which was originally based on the brightness of a single spermaceti candle.When Charles Morgan got involved in whaling, it was an industry that had been growing for over five decades. It being very lucrative, the government had gotten involved decades ago and regulated most of the important aspects of whaling; it was a highly regulated industry.Over time, Morgan built a fleet of seven whaling ships. In 1841, at the height of the whaling industry’s success, he launched an eighth, a 351-ton wooden ship named after – who else – himself. whale pic 2The Charles W Morgan is the last remaining wooden whaling ship in the world. It took its last whaling voyage in 1921.However, a couple of years later Morgan started to notice the whaling space getting overcrowded – the competition was staggering. He also discovered that whale populations were in decline, making it more expensive to find and catch the deep-sea mammals.Thus, in 1847 he decided to start selling his whaling ships and diversified into other sectors, such as mining, railroad construction, and banking.Decline of the whaling industryMorgan timed his decisions just right, because in 1849 a Canadian geologist distilled an oily substance out of bituminous tar, which he called kerosene. It didn’t take long before the world market switched from lighting their homes with whale oil lamps, to much cheaper kerosene lamps.And in the 1850s, the invention of paraffin, a distillate from petroleum, dealt a devastating blow to the demand for the spermaceti from whales. (Electric light only was invented in 1880.)After decades of strong growth and dominance, the age of whaling pretty much ended in the span of a couple years.whale chart 1What did the whalers do?This of course did not mean that all whalers went bankrupt outright. A not insubstantial number of them saw opportunity in the upcoming petroleum industry. Actually, there were quite a few parallels between the two sectors:Both industries had booms and bustsWhalers were familiar with the phenomenon of depletionProspecting for oil was arduous and adventurous in whaling as well as in petroleumPetroleum had to be refined with a chemical process, just like whale oilAnd so it’s no surprise that historian Samuel John Mills Eaton made the following comment in 1866:“Many of the old whalemen have thrown aside the tarpaulin and harpoon, and have entered upon the business of selecting [petroleum] sites and locating wells with as much avidity as ever they pursued the monsters of the deep.”Revolution then, revolution nowToday my friends, we are seeing history repeat itself. The old industry of money and banking on the one hand, and brand new monetary technology on the other. Here are some parallels with the 19th century petroleum revolution:1. The fiat banking industry, intertwined with central banking, has been growing quickly for over five decades, is heavily regulated and has been in a worldwide state of crisis since 2008.2. Bankers today are also on a hunt for a rare find: yield. Making a return on investment in an environment of ever-increasing inflation and central bank interventions is a risky endeavour, perhaps akin to Captain Ahab hunting for a white whale named Moby Dick.3. Technologies with vastly higher efficiencies are making waves and are growing at blistering speeds. To illustrate: a couple months ago, a $100m Bitcoin transaction was made, and it:Cleared in a matter of secondsDid not make use of any middlemenHad zero transaction costsRespected the privacy of the participantsHappened on a sundaywhale table 1The transaction of 195,000 BTC took place on November 11, 2013. The issuer remains unknown.Vastly higher efficiency indeed.4. Just like with petroleum in the 19th century, the challenger of the status quo:Is an unlikely contenderHas no support from establishment intellectualsIs associated with scams and fraudIs a volatile sector, with violent price swings and spectacular bankruptcieswhale graph 1In the early days of petroleum, prices were extremely volatile, and would vary from place to place. Over time, infrastructure and market makers made prices more uniform.Features both horrible and super high quality products (‘standard oil’ was named such to indicate a certain standard in quality)In other words, cryptocurrency entrepreneurs are operating in a wild west environment, just like in the early days of petroleum.5. Cryptocurrency companies are beginning to snatch away the brightest minds in banking.Just like the whale oil and petroleum industries had similarities, both the bitcoin and the legacy banking industries are dealing with digital currencies – so there are obvious opportunities for bankers who want to create value in the new economy.Are these intriguing parallels showing us the way forward for the world of money and banking? Are they showing us that Bitcoin is bound to become the new world reserve currency?We cannot know for sure, but what they do tell us loud and clear is this: don’t take the status quo for granted.Challenges and opportunities going forwardLet me close with a couple of thoughts on what the challenge and opportunity is here.Basically what we see is that the upcoming cryptographic technologies have taken the game of money and banking to a new level. The old rules apply to an ever smaller extent.Here is what customers will increasingly demand going forward:Control & flexibility: just like Steve Jobs set a new standard with his ’1000 songs in my pocket’ iPod, customers will not be satisfied with less than ‘a bank in my pocket’Deposit banking with high transparency: now that verifiable reserve audits are a possibility, they will grow out to become the new standardLending and borrowing brokerage as a separate service. In the absence of a central bank to bail out deposit banks, there is no benefit to increasing the risk of fraud and insolvency by blending these two traditionally independent industries. This is what we already see in bitcoin today100% predictable monetary policy: men with beards uttering greenspeak don’t cut it anymore, people will want financial systems where they don’t have to trust a secretive, centralised institutionFinally people will demand antifragility: they won’t accept a central point of failure. Sure, maybe today they do still, but after the next big banking crisis many of them will change their mindsThis is the new reality we live in.And what an opportunity it represents. For the first time in history, we are able to build a robust and low cost financial system from which the entire world can benefit.And what an opportunity for the Netherlands. Bitcoin adoption is among the highest in the world right here, and there’s a wealth of entrepreneurial knowledge and creativity ready to take things to the next level.All the knowledge is present to make this place into the Silicon Valley of money 2.0, into the Hong Kong of 21st century banking.Just like the Bank of Amsterdam was central for the Dutch golden century, cryptocurrency could be key for a new era of prosperity here in the low lands. So let us not be afraid of this revolution, but instead embrace it.Vintage car image via ShutterstockEnvironmentHistoryinvestment
Original author: Tuur Demeester

bitgo
Bitcoin-focused security-as-a-service provider BitGo has secured $12m in new funding, courtesy of several venture capitalists, seasoned bitcoin investors and a famed Hollywood A-lister.The funding round was led by VC firm Redpoint Ventures and it attracted Barry Silbert’s Bitcoin Opportunity Corporation, Radar Partners, Liberty City Ventures, Crypto Currency Partners and Ashton Kutcher’s A-Grade Investments.Speaking CoinDesk, BitGo CEO Will O’Brien framed the successful funding round as being about “more than capital”, telling CoinDesk:“The folks that we’ve brought on [are] people like Stratton Sclavos, former CEO of VeriSign, Redpoint and industry influencers like Barry Silbert. [...] We’re putting together a company that Fortune 500 [companies] and the largest hedge funds can trust as their bitcoin security platform.”O’Brien added: ”This capital is about team, building a trusted brand and scaling globally”.The news follows BitGo’s recent addition of former Facebook employee Ben Davenport, who joined the company as head of product and co-founder in May.Fortune 500 qualityBitGo CEO Will O’Brien told CoinDesk that the funding would help improve BitGo’s position and bring enterprise bitcoin security to a whole new level, saying:“Bitcoin is obviously still in its early innings, and we feel fundamentally that security is a threat to bitcoin adoption, and as an industry we need to solve this problem.”O’Brien added that the company has been focused on security “from day one”, when his team came to market with the first multisig wallet in August 2013. The company has since focused efforts around building a robust platform that can enable businesses and financial institutions to securely store and transact in bitcoin.The CEO likened the progress of his business to early Internet trailblazers who helped pave the way for e-commerce as we know it today, stating:“If you go back to the early days of the internet, it wasn’t safe for you to put your credit card on a website, and companies like VeriSign came to market and enabled the growth of the internet today. There’s a lot of DIY and experimentation and we need to quickly move toward standards and robust security platforms.”Security and celebrity talentBitGo used the opportunity to announce that it has new board members, including former VeriSign CEO Stratton Sclavos and Jeff Brody of Redpoint Ventures.VeriSign is a hugely successful e-commerce platform that has become a de-facto Internet standard. Further, Brody was one of Redpoint’s founding members and he was ranked 19th on the Forbes Midas List of tech’s top investors.
As for Hollywood talent, Ashton Kutcher is also on board.Kutcher is no stranger to the world of bitcoin. He was an early investor in bitcoin payments processor BitPay.Banking on multisig securityBitGo describes itself as a leading bitcoin security platform that offers multisig security-as-a-service, and claims to provide the industry’s most secure online bitcoin wallet and enterprise solutions for corporate users.The company says its investors include elite Silicon Valley angels and venture capitalists who have backed successful companies in the past, including the likes of PayPal, Tesla, Twitter and Yammer.Emphasizing enterprise-grade security, BitGo aims to offer institutional investors the opportunity to store bitcoin in online wallets and access their holdings on short notice. bitcoin walletImage via ForbesAs the above diagram shows, the BitGo platform uses three keys to bolster security. One is held by the user, encrypted in their browser. The second is generated by BitGo and stored on its servers. Finally, the third key (or the cold key) is generated offline, and it is only used for disaster recovery in case one of the other two keys is lost or compromised.In a transaction, BitGo acts as a co-signer. The user can also set up additional layers of security, such as spending limits and different corporate treasury policies.Image via BitGoBarry SilbertBitGoinvestment
Original author: Nermin Hajdarbegovic

voting
In the digital age, it seems strange that people all around the world still use paper to vote. Of course, given bitcoin’s promise to remove paper from the financial system, many in the industry are beginning to ask if the same block chain technology can be applied to help modernize the democratic process.There’s good reason, as the traditional paper voting system has its flaws. In 2012, when the last US election occurred, one in every eight voter registrations was invalid or inaccurate, and 2.7 million voters were registered in multiple states. That’s a terrible statistic in a system used to decide the future of any nation, let alone one as powerful as the US.Some might argue that the paper voting system could use a little digital efficiency. Internet voting might not only be more accurate, but it could also be more frequent. Organising a paper-based vote on monthly issues would be impractical, but voting from your tablet or mobile phone on, say, whether to allow your local MP or senator to continue in their role might encourage a little more accountability in the seat of power.Forget it, says Barbara Simons. “At this point we cannot do Internet voting securely,” warns the former IBM computer scientist who has conducted extensive research into Internet voting. Readers will point out that Internet voting is already happening, but she’s saying that we cannot guarantee its integrity.Simons, a former president of the Association for Computing Machinery, participated in a National Workshop on Internet Voting commissioned by former US President Bill Clinton, and authored a book, ‘Broken Ballots‘. She is a long-standing critic of online voting, and her research caused the US Department of Defense to nix an Internet voting system it was considering.“A lot of people think ‘I can bank online, so why can’t I vote online?’,” says Simons. “But, millions disappear from online bank accounts each year.”There are several challenges facing Internet voting systems. One of the biggest is auditability. How can you prove that a vote was cast the proper way?Sending your vote from a kiosk, mobile phone or home computer to a server – or even selecting options using an automated phone-based voting system – doesn’t guarantee that it gets registered properly at the other end, or even registered at all. The voter doesn’t have access to that server, or to the network along which their vote travels. And when it comes to a recount, there is no paper trail.“The beauty of paper ballots is that you can do recounts,” says Simons.Some are mulling block chain-based systems to help solve the tangled problem of Internet voting. Block chains are already used to encode information from – and about – a particular source, made at a particular point of time.Blocks in a block chain are ‘sealed’ with a cryptographic hash, which can be used to verify the contents of that block at a later date. If anyone tries to alter the historical record of transactions in a network, or to introduce new ones, then they’d have to go back and alter that block in the block chain. That would create a new hash that wouldn’t match the existing hash on record for that block.The fraudster could simply replace that hash with a new one, but it takes a lot of computing power to calculate a hash on the bitcoin network. And the hash for a bitcoin block is used to help compute the hash of the next block in the block chain. That means that the further back in time you try to alter a transaction, the more hashes you’d have to recalculate, and the more computing power it would take.Voting on the block chainThat is how bitcoin is able to guarantee its validity as a public ledger for all transactions in its history. But, if you can do that for financial transactions, the argument goes, then why can’t you do it for votes? After all, votes are another kind of transaction that has to be recorded. The Liberal Alliance party in Denmark is said to be in favour of a block chain-based vote.BitCongress is using the Ethereum platform to build a scrypt-based altcoin called votecoin, that will use its network to hash and verify votes. It will use an application, Axiomity, both to organise and decide the parameters for votes, and to handle the voting process, explains founder Morgan Rockwell, who is also behind Bitcoin Kinetics.Rockwell told CoinDesk:“The numbers that detail the cryptocurrency component, the voting methods, the GUI for Axiomity all are being set up to allow custom implementation of votecoin for multiple case uses.”He added that votes will be hashed into a block chain.Compromised machinesA block chain-based system might provide a useful way to prove that a particular vote was cast by someone with a specific private key, and thereby guarantee the integrity of the votes once they were cast. But, what about guaranteeing the integrity of the voting process itself?The big problem with Internet-based voting software, experts say, is that it’s difficult to prove that the voting machines themselves have not been compromised.“If we’re doing remote internet voting on the voters own machines, then we need some assurance that those machines aren’t owned,” says Christopher Camp, founder of Restart Democracy, a nonprofit organization focused on driving innovations in technology to help promote democracy.Camp explained:“There is no simple solution. The rate of tech geeks who are having bitcoin lifted off them is a sign that this is a deep problem. And bitcoin owners are people who likely have decent security hygiene and high-entropy passwords.”How might a client-side compromise work? Let’s say that Bob is about to vote on the next president. Bob is using a PC-based system, with open-source code that anyone can inspect and the machine is under his control. Bob uses biometric authentication to prove to the voting program that he is who he says he is.Bob then enters his private key – securely stored on a piece of paper in a locked safe – to access his votecoin and cast his vote. Using the public key, he votes for Jane to be president.So far, so good. But, a rookit installed by Jane’s opponent Mike via a drive-by download has altered the software’s functionality. The software uses Bob’s carefully-validated ID to alter the vote. That vote, fully authenticated, is then hashed into the block chain for posterity – as a vote for Mike.This is not far fetched. Similar things happen in banking all the time, says Simons:“Malware is put on the victims’ machines, and malware steals money from the victim’s bank accounts without their knowledge. There’s a famous virus called Zeus that has stolen millions of dollars from online bank accounts.”Zeus does that by waiting for the victim to authenticate themselves to the bank, and then carrying out its own actions using that authentication.But, surely the same software used to vote could scan the block chain and double-check that Mike’s vote was cast correctly? Perhaps. But then, if the software is running on a compromised machine and has been altered to tamper with a vote, then it isn’t to be trusted. Banking trojans also rewrite bank statements to fool users, after all.Rockwell doesn’t have an easy answer for this.“The reality is that problem cannot be easily solved by any electronic method,” he says. “BitCongress is not being created to replace all forms of voting; it is merely for a simple block chain-based option to give a public ledger of votes to the public eye.”Steps toward solutionsSome have tried to solve these problems using end-to-end auditable voting systems, which at least try to facilitate electronic voting, if not Internet voting.Typically, votes are made via a kiosk, which produces some kind of paper record of the ballot, but they allow votes to be processed electronically rather than hand-counted, for efficiency and expediency. An E2E verificable system will typically cryptographically encode the physical ballots somehow, so that a later audit can be conducted if necessary to match the paper ballot with the registered vote.Scantegrity, a system used to cryptographically verify optical voting records, tries to solve the problem of verifying physical ballot validity by including a cryptographic code printed on the voting ballot. Auditors can use the cryptographic code later on to check that the vote registered on the system corresponded with the vote on the ballot.But, Scantegrity relies heavily on data registered before an election (such as unique codes that can be used by voters, for example). What if an election official added more codes to the list of allowable voting codes, and then ‘stuffed the ballot’ to make new, fake votes?Jeremy Clark of Carleton University and Aleks Essex at the University of Waterloo hope to use block chains to solve that problem. They published a paper describing commitcoin. This is an implementation of a system that uses cryptographic proof of work systems to prove that they committed a message before a certain date.The pair have suggested that this system could be used not to manage an entire voting system, but rather to prove the integrity of election data (such as a list of valid voting codes) before an event. That way, if someone tried to add more voting codes, it could be compared with the original, verifiable list.A hybrid approachClark has also worked on a remote voting system known as Remotegrity. This allows voters to use the Internet, though it relies on the postal system as a side channel. Voters can’t rely entirely on the voting system, but must instead receive lists of candidates via the mail.The candidates are represented by numbers, randomised across different mailings and they use these numbers when voting on the Internet. That prevents a compromised computer from changing their vote.Clark explained:“I think the long term solution is to marry a modified version of Remotegrity with the block chain, so that you end up with a Distributed Autonomous version of Remotegrity.”The block chain may be a useful means of guaranteeing vote integrity at the back end, but as these experts point out, guaranteeing vote integrity from end to end is a sticky problem – especially if you’re trying to make push-button democracy a reality.On the other hand, in an electoral system where a quarter of eligible US voters aren’t even registered, rootkits are one problem in a constellation of democracy-threatening issues.Digital voting image via Shutterstockblock chainvoting
Original author: Danny Bradbury

ghash.io
CEX.IO, the operating exchange for the largest bitcoin mining pool Ghash.io, has issued a new statement to address community concerns regarding the growing amount of the pool’s bitcoin network hashing power.The post marks the first time since Ghash.io began rapidly approaching 50% of the network’s hashing power that CEX.IO has issued a statement on the mining pool’s growing size and influence over bitcoin’s core infrastructure.Should Ghash.io reach and maintain 51% of the bitcoin network, the mining pool would theoretically be able to perform certain actions uncontested, such as double spending individual bitcoins, preventing transaction confirmations and obstructing other miners and mining pools from profiting from valid blocks.Issued via CEX.IO’s website, the pool operator reaffirmed its commitment to the bitcoin ecosystem, stating:“Our investment, participation and highly motivated staff confirm it is our intention to help protect and grow the broad acceptance of bitcoin and categorically in no way harm or damage it. We never have and never will participate in any 51% attack or double spend against bitcoin.”Notably, however, CEX.IO also indicated that it is against “temporary solutions” to reducing the threat of a 51% attack, suggesting that should it embrace this type of solution, the underlying problem in the bitcoin network would not be removed.CEX.IO added: ”It also does not address the core issue only pushing the problem a few weeks or months down the road when another pool or perhaps GHash.IO again grows towards 51%”.To guard against this threat, CEX.IO is proposing a summit of leading mining pools and the Bitcoin Foundation that will aim to collectively address the issue of 51% attacks.At press time, Ghash.io accounted for 31% of bitcoin’s total hash rate, according to Blockchain.Mining pool summitThough details were scant, CEX.IO indicated it is in the process of contacting other leading mining pools and the Bitcoin Foundation, the industry’s leading trade group, to hold a meeting on the issue of 51% attacks.CEX.IO described the event as a “‘round table’ meeting of the key players, with the aim of discussing and negotiating collectively ways to address the decentralisation of mining as an industry”.The meeting could happen as soon as 10th-11th July, at the CoinSummit Conference in London, which will unite bitcoin industry leaders such as angel investor Roger Ver, BitGo CEO Will O’Brien and MaidSafe head David Irvine with payments experts such as Stripe’s Greg Brockman.Limiting competitionCEX.IO took aim at its detractors who have suggested that the bitcoin ecosystem could benefit from it taking more immediate steps to discourage miners from joining the pool.Framing this argument as one that is against the values of fair competition and innovation, the company said:“In any market, competition and innovation drives growth and that is particularly true in an emerging and disruptive environment such as bitcoin. Successful and innovative companies cannot be expected to limit their growth or competitiveness as a direct result of their success.”Still, some in the industry have attempted to address the issue in time with recent community concerns.For example, the news follows the 13th June announcement by industrial mining facility operator BitFury that it would pull more than 1PH/s of mining power from the pool over such concerns.Community reactionReaction to the proposed plan was immediately vibrant on reddit, with detractors and proponents both sounding off on the latest development in what has become a highly publicized issue for bitcoin.The news of bitcoin’s latest perceived vulnerability was quickly seized by a litany of major news publications including The Guardian, TechCrunch and Ars Technica, among others.Still, there remains a debate in the bitcoin community regarding the viability of such an attack, with experts aligning on both sides of the issue. The problem may be best summed up by Princeton professor and industry observer Ed Fenton who acknowledged the theoretical dangers of a 51% attack as well as its more practical considerations, stating:“Concentration of mining power might not be a short-term disaster, but it is unhealthy for bitcoin, and the community needs to address it.”Image via Ghash.io51% attackCEX.ioGhash.iomining
Original author: Pete Rizzo

bitcoin
You can trade bitcoin to make money, but earning income by simply saving the digital currency in a risk-free account hasn’t been an option so far, since interest-bearing cryptocurrency savings accounts are rarer than hens’ teeth.Now, though, BTCDelta – a new web-based service from Hong Kong and Vancouver-based firm Delta Financial – looks set to change that.There have been some attempts at providing no-risk growth for cryptocurrencies in the past. Some cryptocurrencies are based on ‘proof of stake‘, for example, which causes coins to produce more coins, and therefore reward users for holding the digital currency, by generating more for them.Others sell bitcoin mining power as a kind of derivative, enabling people to earn more bitcoins based on the quantity of gigahashes that they buy.Delta Financial is the first organisation we’ve seen that offers traditional interest-bearing accounts for people simply depositing bitcoins, though.How it worksCustomers can store bitcoins and US dollars in separate accounts, each of which can earn interest, says Delta Financial’s co-founder, Euwyn Poon. There are separate interest rates for each currency, he explained, adding:“Interest rates are dynamically adjusted based on supply and demand. They’re adjusted nightly to account for the amount of bitcoins and US dollars in the account.”In addition, the firm guarantees a 5% minimum effective interest rate.How can it do that? Without proof of stake, the bitcoin protocol can’t inherently generate interest on its own.In traditional banking, accounts generate interest because banks loan your money to other people at a slightly higher interest rate than they pay you, enabling them to profit from your deposit while guaranteeing you a safe return.Delta Financial does something similar, lending money from interest-bearing accounts to other customers. Those other customers use the loan for trading bitcoins against US dollars on the company’s own margin trading platform.“So deposit accounts reward savers, and on the flip side, active margin traders can take out loans with up to five times leverage,” explained Poon.Leveraging and its risksLeverage is a common concept in foreign currency trading. Currency traders deposit a certain amount (a ‘margin deposit’) in an account that they’ll use for trading currencies. The currency trading platform then lends them multiple times that amount, so that they can make more money by trading.That loan is called ‘leverage’, and it is necessary for currency trading, because currency movements generally aren’t that volatile. That means people need to make bigger bets on currency movements to earn significant amounts.Bitcoin is a more volatile asset than most currencies, although the exchange rate for the cryptocurrency has settled down in recent months.In margin trading, the currency trading platform watches closely to ensure that the trader isn’t losing too much money, which would endanger the loan.If the market moves against them too much and they lose too much of the leverage, the platform will execute a ‘margin call’, taking the trader’s margin deposit. In Delta Financial’s case, that happens automatically.Poon stressed:“We do try to build in safety buffers into our margin trading platforms to ensure that risk is minimised as much as possible.”There are a few dangers here. The most common one is that the market moves quickly against a trader, and that the trading platform isn’t able to close out its position automatically by selling the coins or dollars it needs to recover its funds. After all, bitcoin is becoming a more liquid market, but it isn’t as liquid as many more established markets.To cover this eventuality, the firm will cover deposited funds with its own reserves in the event that the market moves so quickly that a margin deposit is lost.Guaranteeing depositsThis raises another question: how can the company be sure that it has enough reserves to cover all of its margin deposits and bitcoin savings accounts?“During our introductory release, we are only accepting deposits to the extent that we have the USD and BTC funds to match our reserves,” says the company. That’s one reason the company is restricting its service to start with, by running an invitation-only offering.“We are working on other ways to insure funds in our interest accounts, which we’ll announce prior to opening our platform more.”Company historyDelta Financial, which is incorporated in Hong Kong with a software development office in Vancouver Canada, isn’t the founding team’s first rodeo.Poon founded Opzi, a developer of social games for Android and iOS platforms funded by San Francisco-based startup incubator Y Combinator. He was also a corporate attorney in New York, specialising in mergers and acquisitions, and securities groups. He’s a clear high achiever, with degrees in both computer science and law from Cornell.His co-founder, Wilkins Chung, also founded a Vancouver-based games startup, A Thinking Ape – another Y Combinator-funded mobile games startup. Furthermore, A Thinking Ape software engineer Mike Douglas is also on board.Regulatory issuesOne obvious danger is that interest-bearing accounts may bring the firm under regulatory scrutiny. For the time being it is only taking deposits in bitcoins rather than fiat currency (customers would have to move their bitcoins back out of USD accounts to withdraw them).Hong Kong regulators currently don’t have a rule on the use of bitcoin as money, meaning that for now, the organization would appear relatively safe. However, it also means that the interest-bearing deposits made by its customers will not be insured by a third-party organisation.“We are currently not insured by any governmental organization,” admitted Poon, explaining:“We are working with legal counsel to determine the proper regulations that may apply to our product, and are committed to ensuring that our products are compliant with all applicable regulations as we move beyond our introductory period.”BTCDelta launches for invitation-only accounts today, Monday, 16th June.Bitcoin image via ShutterstockBTCDeltaDelta Financialinvestmentsavingstrading
Original author: Danny Bradbury
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