As if running the third-largest bitcoin mining pool wasn't enough, China-based Bitmain announced the launch of its second mining pool yesterday.

Unlike the other large mining pools, though, the new offering (launched through its subsidiary BTC.com) will be open sourced to its community of users. According to Bitmain, the pool is not meant as a replacement for its popular Antpool platform (which has roughly 13% of the network's market share) but rather to enhance the stability of the bitcoin network.

In interview, Nisthant Sharma, international marketing manager at Bitmain, explained that the goal is to use this software to "promote decentralization of the bitcoin mining network".

Sharma told CoinDesk:

"We hope that this open-source mining pool will set new benchmarks in terms of stability, efficiency, and service for all mining pools."

Sharma explained that, by utilizing the global community, the company believes it can set new technical standards for mining.

Profit, profit

A key focus for the software is on reducing "orphan rates", a metric that has a material impact on miner profitability.

In bitcoin mining, it's not uncommon for two separate miners to find the same block almost at the same time. This results in the creation of two blockchains, but only one can become the longest chain that is accepted as official by the network.

The blockchain that is eliminated is called an orphan, and each time one occurs, some member of the mining network misses out on the revenue that would come from official recognition.

According to analytics provider Blockchain, it's not uncommon for there to be three to five orphan blocks in any given week. Though this is only 0.5% of the total blocks produced every seven days, bitcoin mining has become a low margin business.

To combat this, one of the primary features associated with the pool is a "PoolWatcher" function.

As Bitmain explains it, this looks for signals that another pool has found a block. Rather than continuing to mine on a potential orphan, it will instead, immediately switch to that block.

Sharma explained that Bitmain is spinning up clusters of servers around the world to help with latency of new block discovery. If another miner finds a block, these clusters will transmit that data faster, allowing the pool to switch to the next block.

Though the software is open-source, only users of the BTC.com pool will have access to these server clusters, Sharma said.

Centralization possible

While Bitmain is touting this new software as a way of decentralizing bitcoin mining, it certainly does carry with it the risk that the firm will accumulate an even greater market share with two mining pool services.

Yet, in the short-term, the gain might be neutral. Because it already runs Antpool, it's likely that users might migrate from Antpool over to the new pool, especially in the short-term.

Accoridng to Sharma, this is "not something Bitmain is thinking about". However, the pool's payout mechanism, "pay per share (PPS)", could help it to quickly accumulate market share.

PPS simply means that a miner receives a percentage of the mining reward proportional to the hashrate they contributed to that block. For example, if the miner contributes 1% of the power needed to uncover a mining reward, it would receive 1% of the revenue.

However, a situation could present itself in the future where Antpool keeps its hold and users from other pools, or entirely new miners, join BTC.com's pool.

As mining pools share the reward based on pooled resources, the bigger the pool, the more likely that a reward will be paid out. This results in miners joining larger pools because it maximizes the likelihood that they'll earn something for their efforts.

Because of this, and the 0% fee that Bitmain is charging until the end of the year, BTC.com’s pool has the chance to quickly gain market share, a move that could further centralize mining under Bitmain.

Pool image via Shutterstock

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Blockchain payments firm Circle has integrated with Apple's iMessage, a move that allows users to send payments in dollars, euro, pound sterling and bitcoin through the popular texting platform.

Circle executives said the launch marks the end of preparations that began in June, when Apple announced it would open up iMessage to third-party developers.

"We decided to jump on it," Circle CEO Jeremy Allaire said in an interview. "We had been planning to build out a model for app-less payments using Circle that would work in all the places people communicate and interact."

The confirmation came days after social media leaks and Asia-based media reports hinted that Circle would soon make an announcement.

Allaire and fellow Circle co-founder Sean Neville indicated that making payments available on the "most used app in the world" would help it better navigate the larger transition to becoming a payment platform that not only leverages the bitcoin blockchain, but that could compete against more established payment apps.

Allaire told CoinDesk:

"This is going to be a big part of the future, it’s all tied into the how do we make money work, the way the Internet works. We talk about photos and content and the way we do that is through social messaging, that is the core medium of the Internet for a lot of people."

As a result of the integration, Circle users who have installed the application will be able to access Circle from new icons built into iMessage. Users who don't have Circle installed will also have the option to tap to receive money.

According to Neville, the payments are instant on the Circle platform, but consumers could still wait days to receive the money in a bank account.

"If you use the app today, if you hold dollars and you sent me euros, I immediately have euros and I can send those euros elsewhere or to non-Circle customers. If I want to cash out into checking account, I'm still subject to my bank," he continued.

The announcements comes a time when Apple’s stance on blockchain and digital currencies remains opaque, as evidenced by a number of recent app store take-downs.

In past weeks, digital currency-focused apps by firms including ShapeShift and Jaxx have reported pressure to remove support for certain currencies.

In statements, Allaire and Neville also used the announcement to hint at the benefits of technology standards, in this case, the short message service (SMS), which has long served as the platform for mobile communication.

As a result of iMessage's use of this underlying technology, Allaire and Neville said that Android users will be able to receive payment requests via the integration, even if the process has a different user experience.

"One of the things that’s really cool about using iMessage as the container is it's an SMS app, so it allows you to send the messages to any contact that uses any SMS compatible device," Allaire said.

Allaire and Neville said they see the opening of the iMessage platform as a step by Apple to rival what companies such as Tencent and Alipay have done successfully in China.

Elsewhere, iMessage users can expand the app to full-screen mode, Allaire said, to access and set their preferred funding sources for payments, whether it’s US dollars, bitcoins or pounds, all with low costs.

Allaire emphasized that even on iMessage its policies toward monetizing its platform will remain the same, adding:

"We believe holding and sending data should be free, we don’t charge."

Disclaimer: CoinDesk is a subsidiary of Digital Currency Group, which has an ownership stake in Circle.

iPhone image via Shutterstock; Circle photos via Circle

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The US House of Representatives has passed a non-binding resolution calling for a national technology innovation policy that includes supportive language for digital currencies and blockchain technology.

Introduced in July, the resolution calls on the US government to craft a national policy for technology, with specific mentions for digital currencies and blockchain. The bill was written by Illinois Representative Adam Kinzinger, with Representative Tony Cardenas from California sponsoring.

The resolution passed by a voice vote following statements from backers late this afternoon. Though non-binding, the measure is perhaps the most significant to emerge from Congress to date on the subject of digital currencies and blockchain tech.

The resolution emerged months after the House Committee on Energy and Commerce discussed the technology, and comments from supporters on the debate floor indicated that there was genuine interest in the issue among House members.

Rep. Michael Burgess, a Republican from Texas, said at the hearing:

"There’s no doubt that blockchain innovations are on the cutting edge today."

What remains to be seen is whether the next session of Congress, which will meet after this November's US elections, will take up a more substantive bill focused specifically on bitcoin and blockchain.

However, the bipartisan nature of today's resolution suggests that a bill could be put forward in the next year in either the House or the Senate.

Hat tip to Coin Center

House of Representatives image via Shutterstock

Correction: This article has been updated that Rep. Adam Kinzinger represents Illinois, not Indiana, in the US House of Representatives.

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The code at the heart of the IEX stock exchange that inspired author Michael Lewis's bestseller "Flash Boys" could soon form the foundation of a blockchain-based gold exchange.

As part of a $9m investment by IEX and Sprott Inc in the newly launched Tradewind Market, the codebase will be integrated with an as-yet-undetermined blockchain for the purpose of streamlining gold trading and bringing more transparency to the market.

But a key difference is that while IEX's secret sauce was the so-called "speed bump" that slowed some kinds of high-frequency trading in an attempt to create a more equitable market, Tradewind has set out to use blockchain to make it easier for trades to remain compliant with regulation while accelerating settlement.

In his first ever interview about Tradewind, the startup's president and the former head of product for IEX, Matthew Trudeau, explained how a research effort within the stock exchange gave it the idea to modernize precious metals trading.

Trudeau told CoinDesk:

"We had this view that maybe this blockchain technology could find a place in the new world that was emerging in light of new regulations. We started with a fairly open-ended research project, not to see where we could jam the blockchain in, but to understand what clearing and settlement modalities around the world looked like in different asset classes."

After settling on the gold market, Trudeau said he and his co-founders set about finding a strategic partner with industry-specific knowledge to complete their board. The final piece to the puzzle was Toronto-based Sprott Inc, which also runs the Gold Miners ETF that in July surpassed $250m in assets.

As part of Sprott's investment, the company's CEO, Peter Grosskopf, joined the Tradewind board of directors, a group that includes IEX's CEO Brad Katsuyama; IEX’s CTO Rob Park; Matt Harris from Bain Capital; and Tradewind co-founder Mike Haughton, an analyst from the hedge fund started by Steve Eisman who inspired Steve Carell's character in the film, "The Big Short".

Tradewind's third co-founder is Fraser Buchan, who has served as an interim CEO and president of NewCastle Gold Ltd, and the CEO and president at Angus Mining Inc.

Currently, the firm hasn't yet settled on a specific blockchain implementation or determined if they might build something new from scratch. However, Trudeau said his team has a detailed understanding of what their implementation will require, including that it won't be public like the bitcoin blockchain.

"We haven't generically defined blockchain here," he said. "We have a fairly detailed view of what our system needs to do and how it needs to look. We’ve tried to decompose it and demystify it a bit."

Not settling for gold

The world's largest gold exchange, the London Gold Market, transacted 4.62 billion ounces of gold worth about $5tn in 2015, according to the most recent report by CPM Group, a commodity researcher.

But according to Trudeau, the mostly over-the-counter market is "fairly opaque" and its post-trade clearing and settlement process is "not as technologically driven as other markets", making it ripe for disruption.

Yet, Tradewind is not alone in seeing this potential weakness as an opportunity. Other firms seeking to improve gold markets technology include The London Bullion Market Association and the World Gold Council, which is working in partnership with the London Metal Exchange.

The prize to whoever successfully modernizes this market could be more than just gold.

"If we can get a live production version of a distributed settlements system in place, I think the industry would find that interesting," he said, adding:

"If we can build other products on top of that we'll assess other opportunities at the time."

IEX heritage

Though Tradewind was conceived within IEX, Trudeau said the company was always meant to become a subsidiary. The IEX connections however, run much deeper.

In addition to learning how to run a "market that operates based on integrity and transparency", Trudeau said his time at IEX taught him the importance of getting all the representatives of a sector one wants to disrupt under a single roof.

"We had this mix of people that weren't typically inside a single organization and that was fairly unique," he said. "The cross pollination of ideas, that mix, created a lot of opportunities and innovations that IEX came up with."

Based in the Nolita neighborhood of Manhattan, the firm now employs eight people with plans to scale to 25 by the middle of next year, including several engineers to adapt the IEX codebase from trading stock to trading gold.

As for whether that influence goes both ways and IEX itself might have plans to follow the Australian Securities Exchange by building blockchain into its own infrastructure Trudeau said: "I can’t say that I’m aware of any."

He concluded:

"I think that we’ll probably see how this pans out and they’ll assess from there."

Image of golden microchip via Shutterstock

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Apple appears to be getting more aggressive in its policing of digital currency apps.

The Cupertino company has moved to restrict at least two separate apps on its online store in recent weeks, a development that has generated speculation in absence of official statements. The issues reportedly stem from a list of cryptocurrencies "approved" by Apple, a policy that dates back to a 2014 update that saw it disclose how it would approve apps that utilize the technology.

Originally seen as a progressive move by the technology firm, the stance has since drawn criticism given recent problems experienced by blockchain startups. These include Jaxx, a digital currency wallet, and ShapeShift, a digital currency exchange, both of which have had to pull iOS apps at the request of Apple.

Last month, Apple was said to have asked Jaxx to remove a specific cryptocurrency, dash (formerly known as darkcoin), because it was not part of a list of so-called "approved currencies" that reportedly includes bitcoin, litecoin and ether.

Jaxx is now set to remove support for dash later this month, and recently disclosed that Apple had rejected its bid to add support the digital currency ethereum classic. Likewise, news broke this weekend that the iOS app for ShapeShift was pulled from Apple's app store, a removal it later confirmed on social media.

ShapeShift told CoinDesk that it, too, had run afoul of the list of approved currencies because it offers exchange services for other, non-approved blockchain-based tokens. ShapeShift CEO Erik Voorhees said that his company is seeking to re-list the app with support for six digital currencies.

According to the two firms, Apple is allowing services that use bitcoin, litecoin, dogecoin, ripple and ethereum, as well as tokens tied to the now-defunct DAO project.

However, the company has yet to officially publish this position or comment on the app issues. Other digital currencies are rumored to be allowed by Apple, but as of press time, the company hadn't confirmed which have been approved.

Apple did not respond to multiple requests for comment.

Lack of clarity

As can be expected, both Jaxx and ShapeShift have been critical of the developments and the lack of transparency by Apple.

Jaxx CEO Anthony Di Iorio said in an interview that he has pushed for more clarity from the company in conversations with representatives.

"It would be easier for them down the road if they could just clarify things," he told CoinDesk. "It just ends up leading to a lot of speculation."

While Di Iorio said that he believes Apple may have legitimate reasons for wanting to restrict particular digital currencies, Voorhees said that he thinks the company is choosing which ones to allow "on a whim".

Voorhees said:

"I would strongly recommend to Apple that they not pick and choose digital assets for their users. It would be like telling users which music they could download, or which websites they could visit on their iPhone."

The statements echo lines of divisions in the larger blockchain space, which has increasingly shown signs of embracing a vision that would result in the creation of many different digital assets.

At the same time, concerns remain about the maturity of such projects, as well as the prevalence of scams and lack of innovation evidenced in many of the hundreds of available digital currency offerings available today.

Echoes of 2014

In some ways, the developments of the past month are a throwback to two years ago, when Apple fell at odds with bitcoin users.

Back in early 2014, Apple made headlines by removing a bitcoin wallet app developed by Blockchain from its online store, an incident that came months after Apple yanked Coinbase from its app store.

At the time, Blockchain blasted the removal as an anti-competitive measure driven by the company's efforts to support its payments app, Apple Pay. (The situation would arguably come to a head in public displays of anger against the company, with viral videos showing bitcoin fans joyfully destroying Apple products).

Ultimately, Apple would re-open its doors to bitcoin wallet applications after updating its app development guidelines. A month later, Blockchain's wallet app returned to the store, and since then a number of wallet services have been listed.

Even after that policy change, however, apps working with bitcoin have continued to hit obstacles.

In March 2015, for example, a messaging service called Wiper was pulled from China's iOS store because of a bitcoin integration.

Search for clues

As Apple has yet to comment on its digital currency policies since the 2014 update, observers can only speculate as to what is driving the recent moves.

Jim Harper, a senior fellow for the Cato Institute and a former board member of the Bitcoin Foundation, suggested that Apple may be responding to regulatory pressure – either that or it's still fumbling its way forward in regards to digital currency policy.

"Apple may have consumer protection or regulatory concerns, or the company may just be acting at random," he told CoinDesk. "The App Store is essentially a bureaucracy even though it's within a private, profit-making company."

To some, the move is a reminder that in the end, Apple has the final say on which apps are or aren't sold via its platform, regardless of whichever reasons the tech company is relying on to restrict certain digital currencies.

"As a consumer or a developer, when you use a closed and permissioned ecosystem like Apple's, you accept the fact that there will be a gatekeeper who polices for quality and value at their discretion," Coin Center executive director Jerry Brito remarked.

That said, according to Brito, there are always other options for distributing wallet apps.

He told CoinDesk:

"Apple tends to be pretty conservative in its content curation practices. Luckily, there's always the open and permissionless web, which even Apple will find it hard to censor."

Disclosure: CoinDesk is a subsidiary of Digital Currency Group, which has an ownership stake in ShapeShift.

Image Credit:  Andrey Bayda / Shutterstock.com

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New research has found that unless the price of bitcoin goes up, there will be little room for new miners to compete.

In "Minting Money With Megawatts", released this September, Sveinn Valfells of Flux, Ltd and Jón Helgi Egilsson of the University of Iceland conduct a broad analysis of the health of transaction processing on the open public blockchain, ultimately finding that the network could be headed toward further consolidation and centralization.

Once a hobby for tech-enthusiasts, the aim of the study was to determine the profitability of bitcoin mining following July's halving, a scheduled network change at which the rewards given to bitcoin miners dropped from 25 BTC to 12.5 BTC.

Notably, the researchers found that it is now only possible for new miners to profit when the price of bitcoin is above $600, a figure that was nearly double what it was before the halving.

To determine this figure, the researchers analyzed whether a new mining operation could remain small while still generating profit.

Profitability gap

Because the addition of new hashrate to the network alters how hard it is to generate the reward, the researchers also analyzed how much hashrate could sustainably be added to the network.

In this case, new miners can only add about 16% before difficulty increases would make them unprofitable. This worries the researchers, as this narrow gap for profitability doesn't impact incumbents nearly as much as new miners.

The writers explain that legacy miners have already made a capital investment to build out their mining operation. Therefore, a reduction in revenue only becomes a concern if their operational costs are greater than the amount of money they're bringing in.

They write:

"Existing miners have no reason to turn off their equipment even after the block reward has halved to 12.5 BTC … incumbents enjoy a clear advantage over new entrants."

While a new miner has to worry about the cost of both the new hardware they’ve purchased as well as their operational costs, legacy miners only need to worry about the latter.

This gives legacy miners the ability to operate in a low-margin environment that might not support a new miner.

Spectre of centralization

In sum, the researchers view this development as problematic because it could ultimately lead to further consolidation by incumbents, which the authors believe could open the network to consolidation and attack.

If new miners can't participate in the network, the larger operations become an increasingly larger part of the total network, creating the opportunity for mining operations to do harm to the network.

Fortunately, the researchers believe that Moore’s Law may be able to prevent this problem.

Because electricity is one of the biggest costs for any bitcoin miner, if hardware power efficiency can double every three years, the researchers predict the minimum required price for new entrant profitability could drop to $530.

This increase in power efficiency would also make it possible for the network to support an additional 25% of hashrate before difficulty made new miners unprofitable, rather than the 16% it currently can handle.

Should Moore’s Law continue beyond just the next doubling of power efficiency, it appears that there might be a market for new entrants for some time.

Miniature miners via Shutterstock

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