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CONTENTS
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Digital Finance 2.0— Realizing Ideas Whose Time
Hot Crypto Trends
Cryptopreneurs Will Succumb to Politics, Not Technology
by MAX WRIGHT
by MANIE EAGAR
by GARY BODDINGTON
Letter from the Editor
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Expert Advisory Board . . . . . . . . . . . . . . . . . . .
Page.2 September.2014 Crypto Biz Magazine
by MAX WRIGHT
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CryptoCoin Social
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You Know You Want to Go: New Zealand’s Cryptocurrency Conference, Bitcoin South . . . . . . . . . . . . by BELINDA TOO
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CoinGecko: An Altcoin Trader’s Best Friend
Op-Ed: Obituary for Hal Finney .
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Hot Crypto Trends of Q4 2014 . . . . . . . . . . . . . . . .
Bitcoin Solutions
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Issue.04 September.2014 Published by CRYPTO BIZ MEDIA, a division of CRYPTO BIZ GROUP Editor-In-Chief SOSHI Chief Operations Advisor TRENT NELLIS trent@cryptobizmagazine.com Chief Financial Advisor BARRY MORGAN Chief Technical & Media Advisor JAY ADDISON Art Director VANESSA KING Technical Editor BELINDA TOO COVER DESIGN Jay Addison CONTRIBUTING WRITERS Oleg Andreev, Sarah Blincoe, G ary Boddington, Carla Caraluzzo (via Cointelegraph.com), Sean Comeau, Sean Donato, Manie Eager, Dominic Steil, Belinda Too, Andrew Wagner, Josiah Wilmoth, Max Wright IN CANADA: VANCOUVER BC Ilya Brotzky Ilya@cryptobizmagazine.com IN THE US: SACRAMENTO CA Brandon Johnson Brandon@cryptobizmagazine.com IN NEW ZEALAND: AUCKLAND Belinda Too Belinda@cryptobizmagazine.com
TEL 1 844 CRYPTO1 (1 844 279 7861) E-MAIL contact@cryptobizmagazine.com www.cryptobizmagazine.com
subscriptions@cryptobizmagazine.com for a FREE subscription to Crypto Biz Magazine Receive our monthly editions delivered to you in the digital format of your choice.
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Access to well-written information, which builds awareness of positive projects that use cryptocurrencies, and provide inspiration and awareness of what can be done with them, is what we need to successfully make widespread social, and economic change about the way we do transactions. The entire coin industry is a breeding ground for entrepreneurs— the opportunities are everywhere, and at this point in time there are so many to choose from that the perfect niche startup can quickly be established to suit the skills of the development team. These companies are all smart—they know that they are developing a product with next-level potential—a new way of doing things. But in order to make that coin exchange successful, or the industry-specific coin be widely accepted, or the investment-trading platform be recognized and used, they understand mainstream education is needed. The coin industry wants this done right, and to be accepted as an official form of currency—because it’s the economy of the future. This education and awareness-building is even being tapped into by entrepreneurs finding a tailor-made niche, converting their current knowledge into something relevant, to teaching about cryptocurrencies. So this has opened up a whole new sub-industry of experts developing policy frameworks, working with financial regulators, organizing conferences, and offering consultations to share and explain the rapidly growing knowledge database with corporates, small businesses and the average person. Suddenly, credibility for cryptocurrencies is earned—it’s a ‘real thing,’ and no longer something unknown, scary, and highly risky that should be avoided. Positive awareness is being built for coins as an industry, through developers and entrepreneurs using education as a marketing tool for their product. Sharing the wealth of information, and introducing the world to cryptocurrencies is the best way to trigger a new future of transactions. That future is here, now. Enjoy! —S
Crypto Biz Magazine
Crypto Biz Magazine assumes no responsibility for unsolicited material. Opinions expressed herein are those of the authors and advertisers and do necessarily reflect those of CRYPTO BIZ GROUP, editors, advisors or staff. Readers are encouraged to thoroughly investigate and consult with a crypto financial advisor before embarking on any investment, speculation or financial opportunities. Crypto Biz Magazine makes no warranties or guarantees and we assume no liability regarding advertisements or editorial content or any claims that may arise from them. The contents of Crypto Biz Magazine are Copyright © 2014, all rights reserved. Crypto Biz Magazine may not be reproduced in whole or in part without the expressed written permission of CRYPTO BIZ GROUP.
It’s exciting to see how the innovation of cryptocurrency entrepreneurism goes hand-in-hand with a rise in education about what cryptocurrencies are, and how they work, and what their scope could be for the future of business.
September.2014 Page.3
CRYPTO BIZ MAGAZINE PH3507 1111 West Pender St Vancouver BC Canada V6E 2B4
I AM SOSHI…
DECENTRALIZED CROWDFUNDING www.swarmcorp.com
CONTENTS
continued from page.2
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Bitcoin Service Directory . . . . . . . . . . . . . . . . . .
Hemp Grows to the Cloud . . . . . . . . . . . . . . . . . . 34 Dominica to Be the First Bitcoin Nation . . . . . . . . . . . . .
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BlueCoin’s Blue Water Project: Building Wells in Africa . . . . . . . .
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Bitcoin Merchant Directory
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Bitcoin Expo 2014
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Crypto Biz Magazine
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The Digital Denominator . . . . . . . . . . . . . . . . . . by DOMINIC STEIL
Github Bitcoin Glossary . . . . . . . . . . . . . . . . . . . 48 BitHalo
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by SEAN COMEAU
EXPERT ADVISORY BOARD KRISTOV ATLAS KRISTOV ATLAS is a network se-
curity and privacy researcher who studies crypto-currencies. He is the author of Anonymous Bitcoin: How to Keep Your Ƀ All to Yourself, a practical guide to maximizing financial privacy with Bitcoin. Kristov is also a correspondent for the World Crypto Network, appearing regularly on the weekly roundtable show The Bitcoin Group, and host of Dark News, a show about un-censorship technologies.
LISA CHENG LISA CHENG is the co-founder of
BRANDEN PETERSEN is the founding Executive Director a n d C h a i r m a n o f t h e B o a rd of yesbitcoin. Along with this work, he serves on the Financial St a n d a rd s Wo r k i n g G ro u p at Th e B i tco i n Foundation. Elected to the Minnesota House of Representatives in 2010 and the Minnesota State Senate in 2012, Petersen currently represents the people of Senate District 35 in Northwest Anoka County. His legislative accomplishments in education policy reform as well as citizen data privacy protections are among the notable items in his body of work as the youngest member of the State Senate. Along with his work in the public sector, Petersen has also been delivering strategic communications solutions for an array of nonprofit and corporate clients as a Senior Counselor at Ainsley Shea Communications in St. Paul, MN.
PIOTR PIASECKI, BSc MSc PIOTR PIASECKI i s a C h i e f
S c i e n t i s t a t P rova b l e I n c , a Vancouver-based software development startup. Since discovering Bitcoin in 2011, he became a reputable member of the Bitcoin community under the nickname “ThePiachu.” Piotr wrote his Master’s thesis on the subject of Bitcoin security in Technical University of Lodz, in Poland. He is also a moderator of Bitcoin.StackExchange. com, /r/Bitcoin subreddit, runs a number of Bitcoin-focused websites, such as Vanity Pool and TestNet Faucet, as well as writes a blog on various cryptocurrencies.
September.2014 Page.7
Distributed.buzz and the CEO of the Vanbex Group. She is the force behind the popular news aggregation site BitcoinRegime. com and a behind the scenes advocate of Bitcoin 2.0 and blockchain technology. She comes from an accomplished background after having worked at Fortune 500 companies and technology startups involved with Big Data, algorithmic trading, and enterprise systems. Lisa’s time is now focused on consulting and planning for new cryptocurrency projects after having worked for the Mastercoin Foundation in leading the Business Development effort. She is located in Vancouver, British Columbia, Canada and you can reach her via Twitter @lisacheng.
BRANDEN PETERSEN
Crypto Biz Magazine
DIGITAL FINANCE 2.0—REALIZING IDEAS WHOSE TIME HAS COME by MANIE EAGAR
CONVERGENCE OR COLLISION? CRYPTOCURRENCY MEETS DIGITAL FINANCE AND MOBILE TRANSACTIONS.
Crypto Biz Magazine
Page.8 September.2014
The power of Bitcoin—creating the platform for enormous market disruption In five short years Bitcoin has grown from a hobby project to a multi-billion dollar global crypto-finance industry. With new competing alternatives and technology advancing beyond simple currency-based payments to all manner of value exchange, financial instruments and smart contracts, everyone is waking up to the fact that Bitcoin was just the beginning. Arriving just in time for the great convergence of mobile payments, digital branchless banking and crypto-value exchange, Bitcoin and Digital Finance 2.0 promises a major disruption of global finance. Originally an outlier technology, the business of Bitcoin, and its broader digital money applications, has now grabbed the attention of nearly all major financial institutions, consumer technologies and regulators all over the world. We will explore the tension between decentralization and the ‘new channels to market’ play of the various incumbents.
Inspiring the next generation financial ecosystem, startups and investors Today digital finance is a new and emerging area of finance that encompasses the areas of financial technology, digital payment systems, digital financial products such as digital deriv-
atives, digital securities, digital carbon credits, and a wide variety of digital forms of traditional financial products.
The Bitcoin proposition In his seminal paper ‘A peer-to-peer electronic cash system’ dated November 2008, Satoshi Nakamoto envisaged ‘A purely peer-to-peer version of electronic cash would allow online payments to be sent directly from one party to another without going through a financial institution.’ From this simple premise the bitcoin phenomenon has grown in scope (1 million users) and size ($8bn market cap) to grab the attention of media headlines worldwide, thanks to the infamous MtGox and Silk Road debacles. Bankers and regulators still quote these two factors as the specific reasons that they don’t ‘trust’ Bitcoin, confusing business malpractice with the legitimate applications of a highly disruptive financial innovation. But what is unstoppable is the convergence of two major financial technology sectors with that of Bitcoin technology—the crossroads at which Digital Banking and Mobile Transactions meet Cryptocurrency Protocols. Will this be a natural convergence or a collision?
The Internet of money: A radical new business model What will drive the adoption of the overlapping technologies, and the efficiencies and disruptive business opportunities? Customers, consumers and users become the new co-creators of value. This requires a value transfer system that rewards each respective contribution incrementally and directly, regardless of the kind of services or goods being offered, anywhere in the world, in real time. The Bitcoin protocol fits the model perfectly, of-
The coming digital finance platform convergence
Digital value exchange—the ‘distributed autonomous zone’ The distributed autonomous zone will become the virtual marketspace where distributed organizations and communities connect to barter, exchange, transact and interact around different modes of digital value exchange.
digital banking —Branchless and internet value exchange
INTERNET OF VALUE EXCHANGE mobile value exchange —Mobile transactions
cryptocurrency protocols —Smart contracts —Machine-to-machine transactions
Digital banking
Internet access (all devices, but especially mobile) with customer centricity, affordability, ease of use
and affordable secure access almost anywhere, especially as Point of Sale becomes the key driver.
Mobile transactions
Mobile is a lead driver for change in payments technology—specifically the remittance and money transfer markets. A third of all online sales are now made using mobile devices —IMRG Capgemini
Crypto Biz Magazine
Branchless banking is the key distribution channel strategy used for delivering financial services without relying on bank branches, or as a separate channel strategy that entirely forgoes bank branches. Overriding even this will be the fact that the majority of customers now prefer online or mobile banking.
August.2014 Page.9
Digital finance 2.0 will be distinguished from the old ways of banking and traditional financial legacy systems through the convergence of digital banking, mobile value exchange and cryptocurrency applications in a variety of forms suited to different jurisdictions, market evolutions and the differentiated needs of the banked versus the underbanked (estimated at 2.5bn) worldwide.
fering elegant new forms of value exchange, especially suited for the ‘internet of things.’
“Business models, technology, and consumer behaviors are changing. Electronic payments, digital commerce, predictive analytics, and mobility are converging, along with contextual marketing, digital advertising, couponing, loyalty, and social media. The opportunities to enable magical new commerce experiences for consumers and more meaningful interactions between brands, merchants, and their customers are endless.” —Paul Galant, VeriFone Dramatic uptake of smartphone devices and mobile phone penetration in emerging markets (not just the ‘unbanked’). 67% o f t h e p e o p l e o n t h e p l a n e t n ow h ave a mobile phone conducting and estimated 300bn transactions valued at $860bn. There are already 1bn mobile banking users. —Mobile Commerce revolution
panies — that rely on skimming transaction fees for their revenue. Despite these barriers, we believe its efficiency and low cost in comparison to legacy payments tools like credit cards, money transfer services, or letters of credit will ultimately prove too tempting for merchants, individuals, and business-to-business billing. This value will hold even when intermediaries are involved. Bitcoin processors charge only 1% to process bitcoin transactions, compared to the 2 to 3% often paid by merchants for credit card processing. (Business Insider, The Five Main Reasons Bitcoin Is Beginning To Flourish As A Payment Technology, June 2. 2014)
Interoperability—the integration challenge (and opportunity)
Crypto Biz Magazine Page.10 September.2014
M-Pesa—lessons for Bitcoin merchant and consumer adoption? A leading example, and great case study for alternative digital transaction adoption, is the emerging market success story in Kenya, namely M-Pesa.
distributed —Network deployment —Points of access
It was originally designed by Safricom (Vodafone) as a system to allow microfinance-loan repayments to be made by phone, reducing the costs associated with handling cash and thus making possible lower interest rates. Once you have signed up, you pay money into the system by handing cash to one of 40,000 agents (typically a street vendor or a corner shop selling airtime). It has since broadened to become a general money-transfer scheme, loans and savings products, bill and salary payments, etc. Having established a base of initial users, M-PESA then benefitted from network effects: the more people who used it, the more it made sense for others to sign up for it. (The Economist, May 27, 2013)
INTEROPERABILITY
The emerging cryptocurrency protocol(s) (e.g. blockchain) Bitcoin’s greatest potential is as a global payments network, to power transactions that are extremely low-cost, virtually frictionless, and easily flow across national borders. In a nutshell, Bitcoin allows for the simple and secure transfer of value online, without intermediaries (although intermediaries are often good to have, see below). Bitcoin’s strengths explain why it potentially pushes out legacy payments players — like credit card networks and card-processing com-
decentralized —Operate autonomously —Open source —Anonymous —Off-network P2P transfers
centralized —Authority —Services —Issuance —CGIs
The challenge is that emerging financial technologies don’t trust or have access to established financial institutions and services whilst they in turn don’t trust or have access to the emerging technologies. Both worlds are already exploring strategic partnerships and relationships and soon we will see a large-scale convergence and meshing of legacy and emergent digital finance offerings and delivery platforms. Imagine centralized meets cloud meets distributed solutions. Here lies the true competitive advantage and innovation for digital finance 2.0 players. The future of money won’t be about cash or the form it takes. The future of money and commerce will be about breaking down barriers and increasing access for more people across both geographies and incomes. Why? Because with the right payment systems and new innovations in place, how you pay for things drives greater equality of opportunity in society. (Ajay Banga, Wall Street Journal, July 7, 2014)
Delivery platforms from every sector of the industry will vie for a stake in this lucrative and necessary business—from the so-called ‘over to under banked’ parts of the world. There is no question that the world financial system needs an overhaul, or at the very least sound and viable alternatives to the current legacy system driven offerings and the latest innovations emerging through branchless banking and mobile transactions/payments. There is a great chance that Bitcoin itself could become dis-intermediated if it does not ‘step up its game’ as alternative technologies, business processes and alternative currencies and protocols emerge or become adopted by existing players in the financial and mobile payment sectors. Future players, from a Bitcoin perspective, need to step up their game to compete with the vast resources of the incumbent players in the financial sector, to win the regulators over (or at least build common understanding) and to provide room for the evolution of this disruptive innovation, and last but not least, convince the consumers that this can work for them (this is the driver for all the business models and ROI’s that we all need to achieve to make ‘enterprise bitcoin’ sustainable).
MANIE EAGAR, CEO of Idaeon; Director of the Bitcoin Alliance of Canada; and co-founder and Chairman of the Digital Finance Institute
Based in Vancouver BC, the Digital Finance Institute is chaired by co-founder Manie Eagar. Christine Duhaime from Duhaime Law, is a co-founder and Executive Director.
Targets startups and policy developments that support bridging the gaps in realizing the monetization of the Internet of Things as businesses and consumers move to financial transactions that are not only digital but machine-to-machine;
There is currently healthy and justifiable consumer skepticism based on the media highlighting the calamities of Silk Road and MtGox—justifiable concerns on the one hand—but, at the opposite end also just part of a much bigger picture of a range of positive applications and benefits. But, they will only believe this when they experience it first hand and there is broader adoption. Until the regulator has finally spoken none of the financial institutions will be ‘first movers’ in this space. The audit, governance and risk implications are too great for anyone to risk their brand or license at this early stage of the game. We need to keep demonstrating positive opportunities, innovation, adoption and user friendly, merchant adoption at POS, secure, beneficial applications as an alternative to the plethora of other options available to the consumer from mobile payments, to online banking to credit/debit cards (Canada has one of the highest level of penetration in the world) for anyone to jump in. —S
Supports financial innovation and incubates and accelerates startups in financial technology that focus on digital finance to ensure Canada remains a leader in this area; Partners with international digital finance and fintech groups to share knowledge, research and regulatory developments; Raises funds for financial technology R&D that could lead to future financial products and in that vein, is creating the world’s first digital finance boutique venture capital fund for digital financial innovation startups; As part of its fundamental mandate, undertakes initiatives to ensure the inclusion of women in financial technology, which draws upon the greater outreach need to have women remain engaged and in leadership roles in financial technology startups; and Provides innovative solutions based on new financial technology for financial inclusion (which is the practice of traditional banking systems not providing banking services to disadvantaged sectors of the population), starting in Canada where studies suggest there are close to one million persons of First Nations ancestry who are unbanked (financially excluded).
Crypto Biz Magazine
Digital Finance Institute Specifically, the Institute promotes the research, policy issues and regulation of the advent of emerging digital financial products, such as digital payments, digital platforms, digital transactions and generally, financial technology initiatives;
Key criteria for adoption: Consumer confidence; Ease of use and security; Regulatory tolerance.
August.2014 Page.11
Manie Eagar is a global investment and mergers and acquisitions advisor, and marketing and business development executive with over 30 years of driving new wealth creation, business growth and strategic innovation. The past two years he has focused on deal shaping and making in the new world of digital value inter-exchange, mobile media delivery platforms and digital finance 2.0 futures, inspired by the Bitcoin protocol phenomenon
Challenges to bitcoin adoption in Canada?
HOT CRYPTO TRENDS OF Q4 2014 by MAX WRIGHT
In August 2014, in front of a small crowd at a regional Bitcoin event in Raleigh, North Carolina, a panel of six of, arguably, the brightest minds in the crypto community, were asked, “What is the most pressing issue facing Bitcoin today?”
Crypto Biz Magazine Page.12 September.2014
The unanimous answer: A more efficient consensus algorithm. Bitcoin is secured by a consensus of “who owns what,” through what is called a Proof of Work consensus algorithm. Satoshi understood that decentralization is the key to a disruptive technology in the field of payments and currency. By creating a system that used many individuals, but relied on none, the system would be sufficiently decentralized so that it could never be thwarted. Much like BitTorrent. It was genius. Without going into the technical details, every single day 3600 Bitcoins (approx two million dollars’ worth) are created and given to the many individuals (called miners) who secure and run the Bitcoin network. Said another way… The people who own Bitcoins are paying a security force (miners) via the mechanism of inflation, two million dollars per day for that service.
In return, Bitcoiners can participate in a trustworthy, frictionless, pseudonymous, instant payment system, without the interference of third parties. Obviously, those who participate find this a to be a great deal. Myself included. Let’s take a deeper look though, to make that two million dollars in inflation a little more tangible. Because most of the individuals who are providing that security service have electricity, hardware and time costs, they must sell most of the Bitcoins they receive to cover their cost. We could assume that say, 25% of that $2 million is kept in Bitcoin by the miners as profits and 75% is sold to pay for the hardware and electricity costs. That means that every single day, at least one point five million dollars’ worth of new money must enter the Bitcoin eco-system to keep prices stable. Said another way, if there was a more efficient way to provide security and consensus for Bitcoin, then instead of simply keeping prices stable, the first one point five million per day— or half a billion dollars per year—would drive Bitcoin prices up significantly. It’s easy to see why the Bitcoin brain trust in North Carolina said the most pressing issue is to find a more efficient consensus algorithm.
So, has an algorithm superior to Satoshi’s original Proof of Stake been invented yet? Well, only time will tell, but I suspect the answer is ‘yes.’
But the Billion dollar question is: Will a security weakness be discovered? Since then, Dan and his coding team worked around the clock, until the first altcoin based on DPOS, BitsharesX, was released in late June.
Will BitSharesX stand the test of time? And if so, what will the Bitcoin community do—and when? If Bitcoin were to adopt a DPOS consensus algorithm too soon, and a security flaw was discovered, it would be devastating. However, if DPOS is superior, and the Bitcoin community adopts it too late, then they may miss the boat and be displaced as the number one Crypto out there. It is very early days. I don’t think anyone would suggest DPOS has earned its stripes just yet. It will however, will be very interesting to watch this Crypto story play out… especially if BitSharesX keeps climbing in value like it has. —S Wright’s critique of the security concerns of DPOS can be found at www.SuccessCouncil.com Disclaimer: Max Wright owns both Bitcoin and BitSharesX.
Crypto Biz Magazine
Dan Larimar published a whitepaper on a concept he called Delegated Proof of Stake (DPOS) in April, 2014. Among the Bitcoin intellectual elite, opinions were divided. Some loved it; some hated it. But there is no question, it is vastly more efficient, easier to use, and can safely confirm transactions in ten seconds—compared to Bitcoin’s one hour.
Within 30 days, BitSharesX had gone from nothing, to the third biggest altcoin—with a market cap of over $100 million, and rising fast. Really fast. August.2014 Page.13
The challenge for any algorithm is to create efficiencies without sacrificing security. This is why I think the altcoin space is so important. With over 700 altcoins, it’s like a huge lab experiment to test out different consensus algorithms—survival of the fittest, if you will. Whichever altcoin and underlying consensus algorithm proves worthy, can be “stolen” by Bitcoin.
Crypto Biz Magazine Page.14 September.2014
SPECIAL ADVERTISING FEATURE
BITCOIN SOLUTIONS www.btcsolutions.ca
Bitcoin is becoming more widely and internationally adopted each day. Companies are accepting it as currency, governments are exploring its potential, and employees are opting to receive Bitcoin as payment, rather than currency. As Bitcoin becomes more mainstream, it’s becoming increasingly important to have information readily available for new adopters, as well as innovative platforms for early and existing adopters. Bitcoin Solutions is now offering both. Since day one, Bitcoin has made it their goal to make Bitcoin accessible and understandable. As of September 1, 2014 they launched a new venture; a way to invest in Bitcoin through margin trading. Online Bitcoin trading is now publicly available and known as Bitcoin Solutions Trading division. This is exciting news for both traditional financial enthusiasts and for Bitcoin enthusiasts. Bitcoin’s
volatility can now work to the trader’s advantage, rather than his or her dismay. The Bitcoin Solutions Trading boosters are based on Callable Bull Bear Contracts (CBBCs), among the most popular retail investment products globally. To read about these, more information can be found here. The HSBC CBBC handbook explaining how these work is here. This is common practice in the investment industry but can be very confusing for those without financial training. Bitcoin Solutions makes it simple, thus ensuring that anyone has access to maximized profits! Until now, there have been three major ways to profit with Bitcoin:
Buying and holding Mining
Day/arbitrage trading
BUYING AND HOLDING: This has proven to be very
profitable. However, since Bitcoin Solutions does the work to enable users to maximize profits, their platform enables users looking to buy and hold to profit eight times more! All while minimizing the risk of traditional buying and holding with a number of platform features (look for “stop/loss”). MINING: This is a great way to get started with Bitcoin for those tech-savvy consumers. However, on top of the expensive hardware, high power consumption and complicated computer software, mining “rigs” are becoming obsolete quickly as the Bitcoin algorithm’s difficulty increases. DAY/ARBITRAGE TRADING: This requires a keen
eye for the market and constant attention… and a lot of luck! In order to successfully day or arbitrage trade, users must keep large volumes of funds in multiple exchanges and constantly watch all exchanges. This can prove to be very frustrating, have high costs associated with it, and have the potential to suffer serious losses should the methods not go according to plan.
The short booster really proves its value with the December 2013 example shown in the link above. The three-day 48% drop saw a lot of losses in the traditional market. The short booster, however, allowed its users to profit up to 350%, with maximum leverage.
Investment amount (how much upfront funds to invest)
Long or Short booster (price to move up or down)
The platform does the rest, and trading with Bitcoin Solutions is a simple process! On top of the easy trading platform, trading with Bitcoin Solutions is jam-packed with features. Specifically the stop/loss. This feature prevents the need for margin calls. Margin calls are made by other trading platforms when the position moves opposite of the user’s choice (choice c; long or short). The stop/loss automatically closes the user’s position should the price move more than 7% the wrong way. The remaining funds are then deposited into the user’s wallet, ready to be immediately reinvested or converted to Bitcoin and withdrawn. The stop/loss ensures the user’s losses are limited without capping profits! On top of the stop/loss, Bitcoin Solutions trading offers enhanced security with 2-factor authentication and a proprietary system solely for managing and maintaining Bitcoin in different storage systems (more on that here). With security taken care of, the trader has the option to move funds between USD and BTC at any time. This is beneficial should the user assume the price will fall, but not want to enter a short booster; or rise, but not want to enter a long booster. They sell their Bitcoin, hold USD until they choose to buy back the BTC at a reduced rate, or hold their Bitcoin and sell for USD at a higher rate. To cap it all off, users can always track their open positions in real time on the open positions page. They can see their net profit (after the 0.3% fee) in both dollar and percent value, among other information. The 0.3% fee is taken out of profits, meaning you never have to pay anything extra! The profits shown are net profits after the fee has been deducted from the position. It’s also possible to implement strategies that more effectively control your risk while maximizing your profit. If a user were looking to invest into $10,000 of Bitcoin, they would be risking the full amount should the price of Bitcoin suddenly fall. Using 8x leverage on the booster, they can use just $1,250 to build a Bitcoin position equivalent to $10,000, without the possibility of losing more than their original investment of
Crypto Biz Magazine
On top of amazing products, Bitcoin Solutions offers a user interface that is very simple and easy to use. Users only need an email address and a password to gain full access to the platform. Once logged in they have a Bitcoin address to send funds to, and can trade immediately after those funds are deposited. The trading page (see photo, Page.19) gets the user trading with only three choices to make:
want to increase your invested amount without laying any more capital, known as exposure)
August.2014 Page.15
The clear advantage of using the Bitcoin Solutions trading platform is the ease of use, while maximizing profits through a staggering eight-times leverage on both long and short positions. This allows users to profit in both rising and falling markets. Traditionally, when the Bitcoin price rises the value of Bitcoins held also rises. Bitcoin Solutions now gives you the option to multiply those profits by up to eight times! Even more incredibly, the short booster allows for profit in falling markets; something a traditional market can’t! (A long booster example and short booster example.)
Leverage amount (by how many times you
$1,250. They give themselves the option to profit equally as much, while seriously reducing their risk. This makes trading with Bitcoin Solutions ideal for every type of investor. A full list of features about the new platform can be found at www.btcsolutions.ca/online-trading. Bitcoin Solutions is hard at work to provide customers with far more than margin trading. On top of allowing users to profit up to 8x more on their original investment, Bitcoin Solutions also owns and operates ATMs across Western Canada, as well as offering in-house and online consultations. Bitcoin Solutions aims to make Bitcoin accessible. Their ATMs allow instant access in three simple steps. Users walk up to the ATM and tap the screen. This initiates the process. Once prompted, the user scans their wallet address at the ATM, which tells the machine where to send the requested Bitcoin. Once the Bitcoin address has been scanned, the user deposits as much cash
as they like and presses send! Their Bitcoin wallet is instantly funded and they are free to spend, or to hold on to their Bitcoin as they please. A list of the company’s ATMs can be found at www.btcsolutions.ca/atm. If your business (in Canada) could benefit from a Bitcoin ATM by Bitcoin Solutions, please contact them by visiting www.btcsolutions.ca/contact or by e-mailing the President of the company, Adam O’Brien adam@btcsolutions.ca. The second half of making Bitcoin accessible is making it understood. Bitcoin Solutions offers inhouse (in their office in Vancouver, BC) as well as online (via Skype and Google Hangouts) consultations. These come with a price tag of $50 per hour (payable in Bitcoin) as the company’s promotional period has ended. A customer’s consultation can be booked at any time and be used for anything from a wallet setup to an hour long Q&A. For some more information on Bitcoin, please visit www.btcsolutions.ca/learn and fill out the form to schedule your consultation! —S
BITCOIN SOLUTIONS TRADING DASHBOARD— WWW.BTCSOLUTIONS.CA:
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ABOUT COINFEST… CoinFest is the world’s FIRST decentralized currency convention! Not the first convention about decentralized currency, but rather the first currency convention to itself be decentralized in concept, organization and form. We book venues all across the globe for a simultaneous extravaganza of cryptocurrency, hosted in a non-profit fashion by various partners. CoinFest is not owned by any person or company, and all domain names and other assets will eventually be turned over to a decentralized autonomous organization. Anybody can start a CoinFest of their own, so long as they uphold the spirit of CoinFest. One may not charge admission for a CoinFest event, as it is intended for public outreach. CoinFest is also intended to incentivize cryptocurrency adoption, and thus one may not host a CoinFest at a venue or business that does not support alternative currency, barring extreme circumstances. All currencies are allowed, but use of state-backed currency (within the state backing said currency) is discouraged, except for the purpose of purchasing alternative currency.
CONFIRMED LOCATIONS FOR COINFEST 2015
Vancouver, Canada, the birthplace of CoinFest. It will once again be organized by CoinFest founder Andrew Wagner Winnipeg, Canada, brought to us by returning organizer Josh Nekrep. Check out his website Montreal, Canada, home of Canada’s Bitcoin Embassy. Now joining us thanks to Francis Pouliot, chief executive of the Canadian chapter of the Bitcoin Foundation
Renaca Beach in Vina Del Mar, Chile. Major thanks to our anarchist friend Gabriel Scheare from Galt’s Gulch
Mexico City, Mexico, spearheaded by Bitso co-founder and Bitcoin Co-Op member Pablo Gonzalez
Donate to CoinFest CoinFest is entirely funded by donations and sponsorships, and charges no fees to event venues or guests. If you like what we’re doing to spread currency innovation and freedom, you can support the movement by donating to one of the following addresses, or by using CoinOS!
BITCOIN ADDRESS:
LITECOIN ADDRESS:
FEATHERCOIN ADDRESS:
13SH6sEaETA5Ca7Gb5kb1Yv5SjqxauvKdm LNUh9955nADhfT43WL8YsuwwJ6uR9nEjto 6sifxgAmyoBhXQCrRYpZko1tz4J3hRVSE5
Donate with CoinOS! February 20 – 22—CoinFest is now an annual event. Save the date! www.coinfest.org Contact
DOGECOIN ADDRESS:
DNAeVUATMqjFrNKom719QxdfisKsKTrqnf
Crypto Biz Magazine Page.20 September.2014
CRYPTOCOIN SOCIAL
@ProjectCoin
@DrCoinMD
CRYPTOCOIN SOCIAL
@BitcoinAgile
September.2014 Page.21
@BitcoinStarter
Crypto Biz Magazine
Crypto Biz Magazine Page.22 September.2014
CRYPTOCOIN SOCIAL
@BuyGHS
@GigaBitcoin
CRYPTOCOIN SOCIAL
@alt_bit_coins
September.2014 Page.23
@BruceFenton
Crypto Biz Magazine
COINGECKO: AN ALTCOIN TRADER’S BEST FRIEND by JOSIAH WILMOTH
Altcoin trading is an inexact science at best, and numerous traders have found themselves on the wrong end of a pump and dump due to poor investment decisions. CoinGecko hopes to take the guesswork out of altcoin investing with their platform for traders that includes coin metric rankings, dedicated coin pages, and personalized coin chart dashboards.
Crypto Biz Magazine Page.24 September.2014
COINGECKO COIN METRIC RANKINGS
Amateur traders have relied on anecdotal information such as community passion, exchange liquidity, and developer attentiveness to determine whether or not a coin is a sound investment. Unfortunately, anecdotes are not always correct. Thankfully for traders, CoinGecko has developed a metric algorithm that analyzes whether or not the anecdotes have merit. The algorithm calculates overall coin health by examining three major components of a strong coin: developer interaction, community involvement, and exchange liquidity. While a wide variety of factors influence a coin’s price, CoinGecko believes tracking these three factors helps users make an informed opinion about the state of a coin and its community. CoinGecko says developer interaction is important because the cryptocurrency landscape is evolving at such a rapid pace. Some coins are no longer maintained by their developers, therefor those coins would appear very unlikely to progress over time. By looking at how much interest and effort goes around the development community, there is a chance that the coin will continue to innovate according to how the cryptocurrency market sees fit.
Likewise, coins need a strong community to weather the difficult times all cryptocurrencies face. A strong community contributes to new ideas and new features to be incorporated into the coin, increases trading volume, and it signifies growth towards a bigger market. Finally, altcoins need to demonstrate a high trading volume to grow their market cap. Liquidity of altcoins can be used to measure its market share, market maturity, and market acceptance. The coin needs to be widely traded on exchanges to be considered a potential growing coin. A strong coin exhibits high scores in all three areas. For instance, Bitcoin currently leads CoinGecko’s rankings with a 98% rating in both liquidity and developer source code repository activity and 95% in community interaction on social media, giving it an overall metric score of 97%. The next highest coin is Dogecoin, which has a 73% overall rating. Dogecoin has a relatively high developer and community activity score, but it suffers from a 44% exchange liquidity score. Litecoin, in contrast, possesses a higher liquidity score but lower developer and community interaction scores. At present, only 8 altcoins possess a complete metric score higher than 50%, demonstrating how volatile altcoin markets are compared to Bitcoin. Novice traders should consult CoinGecko’s metric scores before acting on community hype that revolves around nearly every altcoin. After compiling individual coin metric scores, CoinGecko ranks the coins according
to their metric score, rather than by market cap like most coin lists do. By glancing at the list, traders can quickly compare how similar altcoins match up in these critical areas. CoinGecko ranks coins by their complete metric score rather than by market cap, though the complete market cap and chart information for each of the coins is featured on the site. CoinGecko cofounder Bobby Ong believes the metric rankings will help novice traders weed through the mountains of misinformation propagated by price manipulators, as well as the untested anecdotes the community usually relies on. “We created CoinGecko to help traders better understand the cryptocurrency market. There are too many altcoins where the developers claim that their coin has superior features and that their coin is the best. It is very hard to make a holistic judgment based solely on qualitative reasons alone. We found that if any numbers are quoted, it is usually only the market capitalization figure. There are many aspects in determining the value of a cryptocurrency and we want to provide a 360degree overview so that traders can make a better informed decision before purchasing any cryptocurrency,” he explains. However, Ong believes experienced traders will find the metric rankings incredibly helpful as well.
COIN PAGES
COIN DASHBOARD
CoinGecko also offers a personalized dashboard that enables users to track the coins they are interested in with ease, and all relevant chart
COINGECKO’S FUTURE PLANS
CoinGecko offers traders a host of useful tools to make wise investment decisions, but the service is still in beta, and the developers have planned a number of improvements to the platform. The first step is to increase the number of altcoins featured on the site. At present, CoinGecko supports about 80 coins, with more constantly being added. CoinGecko also plans to bolster their coinranking metric algorithm by adding dozens more components to the metric score. The increased number of components examined by the algorithm will render the ranking scale more precise. Finally, CoinGecko hopes to use the data they accumulate from their metric algorithm to perform in-depth price analyses. To accomplish this, CoinGecko recently partnered with Professor David Lee and the PhD students of Singapore Management University’s Lee Kong Chian School of Business to perform statistical analysis on the cryptocurrency data they have already acquired. CoinGecko believes this analysis will give traders insight into how the coin metric scores affect the long term performance of each coin. CoinGecko’s altcoin analysis tools should appeal to traders of all experience levels. Altcoin trading may never become a stable investment source, but in an industry characterized by widespread price manipulation, CoinGecko gives traders the tools they need to make informed decisions. —S
JOSH WILMOTH is a full-time history
teacher, with a particular interest in economic and political history. In his spare time, he covers alternative cryptocurrencies for CryptoCoinsNews and serves as Content Manager for CoinProz.
Bitcoin tip address: 1MYFb3nzhUUdqnhtPxD5qw5v6qHezGTZ2q
Crypto Biz Magazine
To further equip traders to make good investing decisions, CoinGecko establishes a coin page for every cryptocurrency featured on the website. A coin page gives background information about the coin, provides links to price charts that support a wide variety of both fiat and cryptocurrency pairs, and provides the data used to calculate the coin’s metric ranking.
Sample CoinGecko dashboard. The coin charts can be rearranged into any order users wish.
August.2014 Page.25
“CoinGecko is a treasure trove of data on cryptocurrencies. Since launching, we have accumulated several gigabytes of data on altcoins and this figure is rising exponentially. We see experienced traders using CoinGecko as a quick way of obtaining data from a single website instead of going to several different websites to obtain the same information. We will be rolling out our historical data for each metric that we track soon and this can be used in the future to find out the “momentum” of a coin growth.”
data conveniently on a single page. Users can add any coin featured on the website to their dashboard so they can track the price charts and market caps of any coins they are watching or already invested in. CoinGecko executes the dashboard perfectly, making it a must-use for traders whose investments are spread across multiple currencies.
OP-ED: OBITUARY FOR HAL FINNEY by CARLO CARALUZZO, COINTELEGRAPH.COM [REPRINTED WITH PERMISSION] When we hear about the early development of Bitcoin we usually think of Satoshi Nakamoto. But the truth is that no one really knows who Nakamoto is but we do know who Hal Finney is and how much he meant to the development of Bitcoin. Hal Finney, Bitcoin icon, passed away at 9am on Thursday morning. Mr. Finney is known as one of the original coders for Bitcoin and it was his debugging skills that allowed Nakamoto to complete the first transactions with his algorithm.
Crypto Biz Magazine Page.26 September.2014
Finney was devoted to exploring the boundaries of our world through technology and that seems to hold true even after his death. Both Finney and his wife Fran committed themselves more than two decades ago to have their bodies frozen after death with plans to reanimate them in the future. Finney died of complications from ALS (Lou Gehrig’s disease) and his hopes are pinned on both a cure for ALS and a successful reanimation. After his passing, as per his instructions, his body was immediately sent to the Alcor Life Extension Foundation in Scottsdale, Arizona. Upon arrival technicians prepared his corpse for cryogenic storage by draining his exchanging his bodily floods for a substance called M-22. This solution is primarily composed of three chemicals: Dimethyl Sulfoxide or DMSO (24.765%), formaldehyde (17.836%) and Ethylene glycol (17.401%), while only 2% is composed of x-100 and c-100 “ice blockers,” which is supposedly the function of the chemical to prevent crystallization of the cell walls. The use of formaldehyde is interesting because this chemical is used in embalming because it irreversibly fixes tissue and/or cells that connect the primary amine groups in protein or DNA molecules. This might make reanimation challenging to say the least. While DMSO is sometimes used as an oxidant its more common uses are as a solvent or skin penetrant. No one has ever been reanimated using this process or any similar process but this has not deterred the Finneys or their beliefs. Hal Finney never allowed naysayers to deter him from his dreams. Finney was one of the original Cypher Punks from the 1990’s and wrote the first successful “remailer” that allowed users to send anonymous emails without fear of being traced and this
code led to the development of things like Tor and the Deep Web. In 2008 he read Satoshi’s white paper and immediately became interested in the potential of cryptocurrencies. After exchanging emails for some time, Satoshi gifted some bitcoins to Finney in 2009 making him one of the first people to use and even possess the cryptocurrency. Max More, Alcor’s Director and a personal friend of the Finney family said that his body be slowly lowered in temperature over a several day period until it reached 320 degrees Fahrenheit. At this point it would be placed in an aluminum pod inside a 10-foot tall tank filled with 450 liters of liquid nitrogen and would remain there until reanimation was possible. More seemed confident that he would see his friend again someday and the technology that is literally keeping Finney “on ice.” Fran Finney also seems confident that the world has not seen the last of her husband. She said that she understands that people believe different things and that they respect that. But she also has such faith in her husband that she does not feel the need to convince anyone else. “Hal respects other people’s beliefs, and he doesn’t like to argue. But it doesn’t matter to him what other people believe. He has enough confidence in how he figures things out for himself. He’s always believed he could find the truth, and he doesn’t need to convince anyone.” Finney was an active member of the Extropians, a philosophy built on the works of Dr. Max More in his “Principles of Extrophy.” The group teaches that mankind can reach its full potential, eventually leading to greatly expanded lifespan, by using science and technology as the tools and transhumanism as the protocol. Hal Finney’s innovative talents will be sorely missed by the Bitcoin community but more than that so will Hal Finney’s unquenchable belief in the individual freedoms that science and technology can bring us. It has been leaders such as Hal Finney that made Bitcoin and cryptocurrencies a possibility in the first place. People like Hal Finney believed when the rest of us had not even caught up enough to understand. —S
YOU KNOW YOU WANT TO GO:
NEW ZEALAND’S CRYPTOCURRENCY CONFERENCE, BITCOIN SOUTH, NOV 2014 by BELINDA TOO It’s time to add the most exciting Bitcoin networking event and conference destination to your calendar: Bitcoin South in Queenstown, New Zealand. The weekend of November 29 – 30 2014, go on an unforgettable adventure and enjoy the latest the global Bitcoin community has to share.
scenery, and majestic mountain views, which make up the Southern Hemisphere’s premier, four-lake and alpine resort area. It’s also the home of adrenaline sports, but if that’s too adventurous for you, there are wine tours, golf, and relaxing spas to enjoy. Make your stay worthwhile, and spend some time after the conference exploring the area with new conference friends.
Queenstown is an incredibly luxurious location for a Bitcoin Meetup—guests will be able to experience the amazing Lord of the Rings territory, dramatic lakeside
The conference is at the Millenium Hotel, and there are plenty of accommodation options available. Awardwinning airline, Air New Zealand will fly you there in style, maybe even on one of their famous Hobbit planes. International flights arrive in Auckland, and then connect to Queenstown. Make sure you have your camera handy as you fly over the picturesque and breathtaking Southern Alps! Only 500 tickets are available for this conference, don’t regret missing out on this amazing opportunity. Put a New Zealand stamp in your passport and register now at bitcoinsouth.co. —S
Crypto Biz Magazine
With a full schedule of local and international speakers, there will be something for every level of Bitcoin enthusiast. These specialists include a variety of entrepreneurs: those who have made businesses out of Bitcoin functionality; who want to share their story of how integrating Bitcoin into their business has been successful; legal and accounting experts who can advise on the changing economic landscape that Bitcoin provides; and Bitcoin currency traders who want to share their expertise. You can read more about the speakers on the conference website.
August.2014 Page.27
The conference, organized by Fran Strajnar, founder of bravenewcoin.com, is taking shape as a ‘journey around the blockchain’ to give a full 360-degree view of cryptocurrencies. This is designed to encourage anyone—from corporate executives to entrepreneurs and developers—to attend, so they can learn about how Blockchain Technology can be integrated into their businesses. Educating mainstream industries will go a long way towards making Bitcoin a regular part of economic enterprise, and this conference is an opportunity for businesses to learn, be inspired, and go away feeling more confident about what Bitcoin can offer them.
CRYPTOPRENEURS WILL SUCCUMB TO POLITICS, NOT TECHNOLOGY
Crypto Biz Magazine Page.28 September.2014
by GARY BODDINGTON
I don’t know about you, but I’m not sure what to make of the crypto currency industry right now. The long awaited, and much anticipated, policy framework from New York City—currently open for public comment— leaves me with a sense of ambivalence as to who wins, or if any real progress was made. The current regulatory landscape (or lack thereof) in the crypto space begs for a solution where everyone wins, and where technological innovation is balanced with public protection. Still, I increasingly get the sense that the respective stakeholders are going to struggle to come to terms with the flip side of the coin. At a radically extreme end of the opinion spectrum that crypto currency regulation represents, perhaps a loose analogy could be drawn using the concept of Mutually Assured Destruction—the principle that underlies nuclear deterrence. This principle identifies the mutual recognition that the use of nuclear weapons between any two nuclear powers (or nuclear-allied powers) will result in mutual destruction. It’s possible in the crypto game for regulators exercising political influence to crush the industry—and in turn, the industry can respond with whatever crypto tools are at their disposal to exercise the power of a decentralized digital world. This situation is not unlike nuclear fallout—everybody loses. That’s an extreme apocalyptic view, but I think it’s fair to say the proposed legislations have fallen on deaf ears, or at very best, ears exercising selective listening—certainly in the case of the industry stakeholders, anyway. There appears to be a perceived failure by the
regulators to address issues at a fundamental level, or at least acknowledge that the industry expects radical political and policy shifts that cut to the core of the centralization issues, which so stubbornly stick in the collective throat of libertarians at large. It seems no more than a case of “the more things change, the more they stay the same” and is clearly not an acceptable outcome to the industry. This notion is eloquently described in a recent article by Jerin Mathew in the Crypto Coin Post, where Jesse Powell, the CEO of Kraken, a San Francisco-based Bitcoin exchange, says “New York’s attempt to treat digital currencies such as bitcoin in the same manner as other financial instruments by fitting them into an existing legal framework would harm innovation and consumers’ independence.” Let’s face it, no one would have expected the liberal-minded thought leaders driving the fledgling crypto industry to agree with much of the proposed regulations, even if the first draft was wildly revolutionary in nature. I doubt these industry pioneers are lying awake at night, thinking “we’re screwed.” In fact, judging by the lack of mass public discussion and commentary— and certainly in my own experience at a more local level, the absence of any agenda items invoking any public discourse on “regulation” appearing at local meetups in Vancouver—I can’t help but get the sense that the proposal has been ignored to date. It’s also obvious that the legislators are happy to claim continued on Page.30
THE EVOLUTION OF TRANSACTION SOLUTIONS
Bitcoin offers merchants transaction fees that are much lower than other payment solutions With the excitement of all the various cryptocurrencies currently in the space, what in in thethe future of what sometimes sometimesisisunder-discussed under-discussedisistheir theirrole role future transactions. As merchants learnlearn aboutabout the benefits of accepting cryptoof transactions. As merchants the benefits of accepting currencies like Bitcoin, skepticism will be will met be by met the numerous advancryptocurrencies like Bitcoin, skepticism by the numerous tages of using type protocol for payment. advantages of this using thisoftype of protocol for payment. At BitPay we currently have 30,000 merchants, including higher profile clients like Gyft, TigerDirect and the NBA’s Sacramento Kings. While these forward thinking companies immediately saw the benefit of Bitcoin and were quick to jump aboard, the mainstream acceptance of Bitcoin also requires our smaller merchants that sell specialized items or services. Once skepticism and misinformation is quelled, the facts of Bitcoin as a payment method become crystal clear to many merchants. Through or or less of their transaction amount (deThrough BitPay BitPaymerchants merchantspay pay1%1% less of their transaction amount pending on volume) as aasprocessing fee which is significantly less than (depending on volume) a processing fee which is significantly less payment processing options. It’sP2P the nature P2P nature the Bitcoin other payment processing options. It’s the of theofBitcoin netthan other network enables extremely payment processing option. It’s work thatthat enables this this extremely low low payment processing option. It’s also also important to realize Bitcoin is still infancyand andother otherpayment payment important to realize thatthat Bitcoin is still in initsitsinfancy options have had 50 plus years to build their network and infrastructure. Bitcoin has hasbeen beenaround aroundsince since2009 2009and and those years Bitcoin in in those fivefive years thethe useruser exexperience merchants customers become drastically easier. perience forfor merchants andand customers has has become drastically easier. This Thiscontinue will continue to improve asopen the open source platform develops. will to improve as the source platform develops. What’s important is for other Bitcoin companies in the space to contribute development time to ensure the protocol can grow properly. At BitPay, Bitcoin Core Coredeveloper developerJeff JeffGarzik Garzik a member of our andconwe Bitcoin is aismember of our teamteam and we continue to contribute to platform the platform through projects as Bitcore. tinue to contribute to the through projects suchsuch as Bitcore. One startups grow able One our biggest hopes as other of ourofbiggest hopes is asisother startups grow thatthat theythey willwill be be able to to expand their development teams to contribute to Bitcoin. expand their development teams to contribute to Bitcoin. Bitcoinusers userscurrently currently have various reasons useprotocol; the protocol; Bitcoin have various reasons to usetothe includincluding technological, political, financial and economic. As merchant ing technological, political, financial and economic. As merchant acacceptance grows education subject grows, ceptance grows andand education on on thethe subject grows, the the useruser basebase will will diversify platform become easier to use. aren’t close diversify andand the the platform will will become easier to use. WeWe aren’t close to to widespread acceptability in same the same vein as a credit card, it is widespread acceptability in the vein as a credit card, but it isbut somesomething thatBitcoin the Bitcoin community is currently developing. thing that the community is currently developing.
SPECIAL ADVERTISING FEATURE
An analogy I quite often make is to the music industry in the early 2000s. Napster forced record labels to change their business model to one that is more in line with what the consumers wanted. Some advantages that Bitcoin has hasover overwhat whathappened happenedwith with Napster include existence Bitcoin Napster include the the existence of a of a global marketplace, investments and continued global marketplace, ventureventure capital capital investments and continued developdevelopment of the protocol. The switch to digital was something thatconwas ment of the protocol. The switch to digital was something that was confusing for many fansthe andimmediate the immediate resistance fusing and and scaryscary for many musicmusic fans and resistance slowly slowlyaway fadedand away and business opportunities as iTunes and Google faded business opportunities such assuch iTunes and Google Music Music to came to buying make buying music and easier the preferred came make digital digital music easier theand preferred way to way purto purchase song. Bitcoin is controversial now because it’s challenging chase a song.a Bitcoin is controversial now because it’s challenging somesomething thatbeen has been the same a very time. more important thing that has the same for afor very longlong time. It’s It’s more important to to realize that, other technology, it becomes mature and realize that, likelike anyany other technology, it becomes moremore mature and easeasier to use time. ier to use overover time. Some of the smartest and most successful entrepreneurs in the world are embracing Bitcoin. These individuals see the long long term term potential potential ininhow howititcould coulddrastically drasticalreduce payment ly reduce paymentcosts costsasaswell wellasasthe theglobal globalreach reachitit has. has. BitPay BitPay has continued to support andand development of the continued tobring bringcredibility, credibility,excellent excellent support development of platform to the community andand thatthat hashas resulted in being thethe market the platform to the community resulted in being marleader for Bitcoin Payment Processing. We alsoWe hope to continue grow ket leader for Bitcoin Payment Processing. also hope to to continue to grow globally with new offices in San Francisco, New York City, and Amsterdam as well asas a new our continuously growing Argentina and Amsterdam well location as a newfor location for our continuously growing Atlanta office.
ACCEPT BITCOIN www.bitpay.com
continued from Page.28
pioneer status in the industry by releasing the first draft globally. However, in so doing, as some cynics have postulated, they could be looking to score some political points for personal gain in a competitive race up the political leadership ladder. Discounting party politics though, one has to assume that the regulators will not claim “game over,” and the responding silence will be deafening. Regardless, as is so often the case in countless industries and addressing innumerable issues, the future of many is in the hands of an elected few. This time, the progress is under the public scrutiny of an international audience, chomping at the bit to get on with investing in a regulated, balanced environment, where risk undertaken is rewarded by globally-accepted principles of return on investment—free of the threat of undue, unfair, or unnecessary political interference.
Crypto Biz Magazine Page.30 September.2014
So it seems that this first real regulatory attempt could possibly be categorized as a very advanced copy and paste exercise, using existing regulation from long-standing financial service policy frameworks, and will serve to do nothing other than prove sufficiently invasive on cryptopreneurs, to the extent that it almost feels like we may have reached a regulatory standoff— an impasse the industry can ill afford to face as it seeks to develop and evolve. The most damaging outcome is that the average consumer remains as innocently oblivious to the industry issues as it has at any stage of the evolution of the industry to date. Therein lies a further political complexity which serves to impinge on crypto currency acceptance. While the industry grapples with the seemingly inevitable regulatory influence from government, a separate political battle for protocol supremacy rages on. Stellar is the latest entrant to further muddy an already confusing, impossibly intertwined and incestuous development landscape. Ironically, this all seems to continue in the void of a technical bubble that has zero consideration for external political considerations. What’s more, the inherent pseudonomity of the industry does not lend itself to mass marketing—traditional, digital, or otherwise—let alone mass adoption. We probably have more chance of seeing Elvis Presley Live at Candlestick Park in our lifetime than getting a chance to hear where Satoshi Nakomoto stands on his/her/its vision. No Netflix “Game Changer” documentaries with the godfather (or godmother or godgroup) of the crypto currency industry. No sharing of early development breakthroughs that cut to the core of why crypto currency threatens to be so disruptive in our history. Richard Branson flies hot air balloons, flaunting his brand for the world to absorb, through his publicity machinery; Elon Musk challenges existing automotive giants; Mark Cuban seeks to disrupt sports franchising; and Mark Zuckerberg connects the world. Satoshi Nakomoto is a myth (I think) and leaves a void in the industry, which would typically be spearheaded by a bold, vocal, and charismatic leadership.
To now, Bitcoin has been the obvious poster child for the industry, but has not showered it in glory… not just yet, anyway. Nor has it succeeded, by any stretch of the imagination, in educating the merchants and public on the pros and cons of participation. So, as the industry grows and matures through its early fledging stage, there are lingering, murky misperceptions that have to be cleared up before the average person will trust the crypto industry. In the absence of any clear vision; of fearless and recognizable leadership, indicating which protocol to adopt for the long haul, who will establish or represent the trust necessary to take crypto to Main Street? Who will be the voice that challenges the regulators to accept what the crypto currency industry aspires to become? Don’t get me wrong, I’m not confused about the fact that disruptive technology, as the crypto technology is destined to be, is ever adopted overnight. It takes years to “cross the chasm,” as Geoffrey Moore instructed technology companies to do, from early adoption to Main Street. In the crypto space however, it seems the challenge is actually more political than technological. There is no shortage of super-smart developers who have hopped into the industry and can write no end of iterations of intelligent code. Even with high profile industry early adopters, and investors like Venture Capitalist Ben Horowitz—who said “I compare it to the Internet, the Internet was a new way to transmit data. Bitcoin’s a new way to transmit money”—traction on Main Street will remain elusive. Bitcoin will have to survive the political minefield that threatens to create incalculable distractions and wranglings, in a bureaucratic cesspool brought on by federal, or local regulators, as well the growing and fracturing protocol and application factions in the industry itself. I guess I can’t help but feel a little deflated. Where is the groundbreaking regulation that will jump this industry forward? What is the advance that will have the same impact on crypto as the iPhone had on telephony, photography and social communication? What will strike awareness into the industry that consumers just don’t get it yet? It should be pointed out that consumer education actually needs some proper attention from the industry itself. How do we get past all the federal and regional government, and industry challenges? How do we get the public to feel like the industry is being built on sound and educated decision making, and not on the outcome of a coin-flipping lottery? I’m hoping I’m just being premature in my initial interpretation—frankly, I’m not sure what I was expecting—and I still don’t know what to expect from the evolving new crypto world. I am hopeful though, that cryptopreneurs will rise to the challenge and will not succumb to politics. —S GARY BODDINGTON Silver Lining Ventures Inc, Vancouver, BC, Canada. E-mail: gary.boddington@outlook.com. LinkedIn • Twitter
CoinMap Spend Your Bitcoins
www.coinmap.org Find Businesses Accepting Bitcoins and LiteCoins
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BITCOIN SERVICE DIRECTORY WALLETS BLOCKCHAIN
blockchain.info
COINKITE
coinkite.com
MULTIBIT
multibit.org
COINBASE
coinbase.com
HIVEWALLET hivewallet.com
XAPO
xapo.com
EXCHANGES BTC-E
btc-e.com
CRYPTSY
cryptsy.com
MINTPAL mintpal.com
QUADRIGA CX
quadrigacx.com
SWISSCEX
VAULT OF SATOSHI
swisscex.com
vaultofsatoshi.com
INDEXES BITCOIN AVERAGE
BITCOIN CHARTS
bitcoincharts.com
BITSTAMP
BRAVENEWCOIN
bravenewcoin.com
COINDESK
COINMARKETCAP
coinmarketcap.com
bitcoinaverage.com
bitstamp.com
coindesk.com
CoinMarketCAP
This is a list of merchants, and their websites, that accept bitcoins for their services. If you know companies that are now accepting bitcoins and who you’d like to see added to this list, please contact us at directories@cryptobizmagazine.com. Additionally, let us know if you find that any of these companies has stopped accepting bitcoins, or if you have any difficulty using bitcoins with them.
HEMP GROWS TO THE CLOUD
SPECIAL ADVERTISING FEATURE
Hempcoin, the coin especially designed for the hemp industry, has innovated past Bitcoin into cloud storage in their quest to become the main form of currency for their industry. The cloud has proven to be a useful tool for the Hempcoin, and the standard cloud features of anywhere, anytime, any computer, is just the beginning. Hempcoin with cloud storage has answered cryptocoin’s most serious negative critique—data usage, because the user no longer requires any blockchain data to operate. The cloud handles all of the P2P data transfer. The cloud wallet user is always up-to-date no matter when they joined or how long it has been since their last visit.
Crypto Biz Magazine Page.34 September.2014
The cloud solves another confusing problem for some users, “What is a wallet file?” Using the cloud, the user simply logs into their account to access their Hempcoins. The new HTML5 Hempcoin cloud wallet works exactly like any other popular website, such as Facebook, Twitter, or YouTube.
enable change in unprecedented ways. Its use of sensors to communicate between devices and humans improves understandability for everyone involved. The “hemp” niche attached to the Hempcoin further builds on this industrial internet, as it is an industry-specific coin with a purpose. Farmers, suppliers, retailers and consumers are all connected to the same system with real-time information and updates. Analytical intelligence self-diagnoses and self-corrects to deliver the right information to the right people at the right time.
Gamification and viral techniques are implemented from within the app to promote wider user adoption of Hempcoins among the public. Users can connect Facebook to their account so they can connect with their friends, and share interesting content and competitions, and generate interest through creating a viral social engagement effect.
With this in mind, cyber-security is an important issue. In preparation for immediate growth and expansion, the Hempcoin cloud wallet has been built on Amazon’s secure cloud networking system. This is the same system that Twitter uses to secure their massive network. Not only is this the most secure cloud networking system in the world, it also provides Hempcoin users with excellent data transfer times. Users will enjoy immediate on-demand access.
HTML5 was used to make this a truly cross-platform app that reaches users throughout the world, with no software installation required. Rather than porting code needlessly to support various devices, the wallet can focus its efforts on developing the right features, and perfecting the user experience.
The Hempcoin uses dual-mining security layers, compared to Bitcoin’s single-mining security layer. The Hempcoin uses the POW (Proof-of-Work) technology like Bitcoin, as well as POS (Proof-of-Stake). POS + POW mining prevents the fatal 51% attack associated with Bitcoin, since it includes mining by stake.
There is definitely accessibility for future expansion, as the cloud wallet base is solid, and is like a content management system, with plugins. Over time, plugins can be created to extend the Hempcoin wallet with new features, created to improve on the industrialization of the internet.
Stakeholders who hold coins for 45 days are entered into a lottery; winning this lottery selects that stakeholder to secure the network and then earn 5% interest for their security help. Coins are then reset to 0 days and must be held for 45 days to stake again. This POS technology is newer than POW so it is trailing behind in technology for mobile apps. The cloud wallet allows for POS ability by removing all technical requirements from the user, and coins are staked by the cloud wallet.
If you noticed that there is a lack of Bitcoin support for iOS devices, it’s because Apple had, until recently, restricted access to any app using blockchain technology. In contrast, HTML5 promotes an open web. A device manufacturer can’t take a negative stance against an HTML5 app and prevent its access. Therefore, the Hempcoin HTML5 cloud wallet works on iOS, Android, BlackBerry, Windows, Macs and other operating systems. The Hempcoin cloud wallet envisages an exciting future and is taking steps towards being part of an industrial internet, where people and machines are connected to
The Hempcoin is not Bitcoin, but it is innovating to become the next Bitcoin. The multi-billion dollar hemp industry is growing fast and will benefit from the Hempcoin as its main currency. This wallet is leading the way with its incorporation of the cloud. Hemp coins are currently available by trading bitcoins through exchanges. Two of the most popular exchanges are Bittrex and C-Cex. —S
DOMINICA TO BE THE FIRST BITCOIN NATION “THE BIT DROP” TO DISTRIBUTE BITCOIN TO ALL ISLANDERS Press Release—Dominica is set to be the first nation to adopt Bitcoin following a successful collaboration between island officials, Coinapult, Aspen Assurance, Bitcoin Beauties and the College Cryptocurrency Network, who have partnered to deliver the project, officially titled The Bit Drop. The Bit Drop project will to send Bitcoin to every resident on Dominica, a Caribbean commonwealth island, via SMS texting. With a population of over 70,000, this project will create the world’s largest and highest density Bitcoin community. The Bit Drop is scheduled to take place on 14th March 2015 at 09:26 to coincide with Pi Day. To mark this unprecedented event The Bit Drop will be throwing an island-wide party with celebrities, musicians and supporters of Bitcoin, fire dancers, sponsored tropical island spirits, free giveaways, and bitcoin education booths during the event. This will be the first time a government has embraced the potential of Bitcoin for the population of a whole nation.
MORE INFORMATION CAN BE FOUND AT WWW.LETTHEBITDROP.COM.
ABOUT LET THE BIT DROP PARTNERS: Coinapult is a bitcoin wallet, and merchant services provider.
Aspen Assurance accepts bitcoin for corporate, licensing, and bond services
Aspen Assurance Company Ltd
Bitcoin Beauties is a global organization of women who evangelize and use Bitcoin to monetize their passions.
College Cryptocurrency Network’s MIT chapter is responsible for the distribution of bitcoin to every undergraduate later this year.
CONTACT FOR FURTHER INFORMATION: Sarah Blincoe, Project Manager, Sarah@Letthebitdrop.com
Ira Miller, CEO Coinapult, ira@coinapult.com
Francis Ford, Senior Advisor Aspen Assurance
Hon. Dr Kenneth Darroux, Minister of the Environment & Physical Planning
Jeremy Gardner, Director College Cryptocurrency Network
WWW.LETTHEBITDROP.COM —S
Crypto Biz Magazine
CEO of Coinapult Ira Miller shaking hands with the Honorable Dr Kenneth Darroux
August.2014 Page.37
Crypto Biz Magazine Page.38 September.2014
BLUECOIN’S BLUE WATER PROJECT: BUILDING WELLS IN AFRICA PRESS RELEASE—Details are finally starting to emerge about BlueCoin, the exuberant new cryptocurrency backed by renowned entrepreneur Charlie Shrem. It started as a bit of a joke, with “to the sea” instead of “to the moon” as their rallying call, and the hashtag #becauseblue. The coin gained new energy, however, following the official BlueCoin Afterparty (held at the North American Bitcoin Conference in Chicago), where models dressed in blue and posed with notable guests.
Unit—the wheeled “robot” he sent to Chicago so he could attend the North American Bitcoin Conference remotely (in light of his house arrest). It’s valued at another $2,500 + $500 for the iPad attachment, and is a popular attraction at conventions.
Now that it has completed its transition to a proof-of-stake hybrid, the community has unveiled the Blue Wells Project, a charitable initiative in keeping with their aqua theme. The Blue Wells Project hopes to provide clean drinking water to communities in need. The initial plan is to build wells and distribute water-filtration straws across developing Africa. This will be the start of more ambitious projects to come.
and a new block is generated every minute for faster transaction times. The block reward is currently 100 BLU, and the proof-of-stake rewards 5% interest annually. The best places to get some BlueCoin are currently Cryptsy and Bittrex, where BLU is already traded. A few others like Poloniex, Cryptokopen and Bleutrade also exchange the cryptocurrency, with more expected to follow. Like Bitcoin, BlueCoin is completely open source, and its decentralized peer-to-peer network operates without relying on a central authority.
So far, Blue Wells has raised over $2,500 with the help of the BlueCoin community, who have been increasingly generous due to BLU’s steady rise in value, especially since the proof-of-stake release with block 50,000. The first funding goal is $20,000. To help speed fundraising along, Charlie Shrem is auctioning off a Double Robotics Telepresence
BlueCoin is still working on getting its own Foundation off the ground, with many project bounties having been issued and several filled. For proof-of-work, the currency itself is mined with the x11 scrypt algorithm used by DarkCoin,
BlueCoin will be making another appearance at the Coins in the Kingdom conference at Disney World in Florida. Many BlueCoin projects and details are still emerging, but Charlie Shrem and others are available for interview. —S
Not a
actual robot
BITCOIN EXPO 2014
BITCOIN EXPO 2014 IT’S COMING TO SHANGHAI AND PROMISES TO BE THE BEST PLACE FOR YOUR BUSINESS FOR IMMEDIATE RELEASE! After a very successful Central European Bitcoin Expo in Vienna, a new opportunity to build, expand your business partnerships, meet new people and enjoy an exciting and informal atmosphere is coming. The same organizers are preparing a remarkable event in Shanghai: Bitcoin Expo 2014. The Expo is going to take place September 19 – 21, 2014. The Expo already has many confirmed speakers, such as Jean-Marie Mognetti, Aaron Koenig, Leon Li, Vitalik Buterin, Martin Westhead, Brett Stapper and many other influential people from the world of Bitcoin and Digital Currencies.
One of the new big players is BUMarket, whose aim is to “help network business people all around the world to get to the future,” as written on the official website. BUMarket is enriching the family of Bitcoin Expo and will be also a strategic partner for the event. Attendees can look forward to other partners such as BTC ROBOT, SatoshiLabs, Shanghai Daily, Seoul Bitcoin and PRYPTO.
Crypto Biz Magazine
The early bird tickets are sold out; however, there are still a few tickets left. If you want to be a part of this unique event, do not hesitate to buy tickets as soon as possible. Please come join us and have a great time with business partners, investors, entrepreneurs, exhibitors, enthusiast and the expo organizers. See you in Shanghai! —S
August.2014 Page.41
One of the main aims of Bitcoin Expo 2014 is to break new ground for Western companies in China by connecting them to local key players, and securing their exposure within the local market. This conference and expo acts as a center for prominent local companies to establish valuable relationships with important partners from overseas. Bitcoin Expo is focused on knowledge and the Bitcoin community.
BITCOIN MERCHANT DIRECTORY ADORMO
COINRX
EXPEDIA
adormo.com
coinrx.com
BITFARE
DISH NETWORK
bitfare.org
dish.com
expedia.com
NEW MEXICO TEA CO. nmteaco.com
JRT PROPERTY
jrt.com
JRT Property International Real Estate NEW EGG
OVERSTOCK.COM
SIMPLY TRAVEL s implytravelonline.com
newegg.com
overstock.com
This is a list of merchants, and their websites, that accept bitcoins for their products. Please contact us at directories@cryptobizmagazine.com if you know merchants who are now accepting bitcoins and who you’d like to see added to this list. Additionally, please let us know if you find that any of these merchants has stopped accepting bitcoins, or if you have any difficulty using bitcoins with them.
THE DIGITAL DENOMINATOR Crypto Biz Magazine Page.44 September.2014
by DOMINIC STEIL The ability to transfer and hold value is intrinsic to human nature. The classic ‘gold standard’ established a common denominator for countries to participate in international trade, investment, and finance. After World War II, the Bretton Woods monetary system reformed the gold standard, and made the United States dollar the centerpiece of the global monetary order. This established a standard where the value of other currencies would float compared to the dollar, which was pegged at 35 dollars per ounce of gold. In 1973, in an effort to give itself more monetary freedom, the United States government chose to abandon the gold standard under the Bretton Woods system. Today there are regional monetary systems that vary in stability, based upon geographical location, but ultimately there is an absence of a global monetary system.
The global flow of information via the internet has created exponential growth and development for companies due to the cost-effectiveness of software, and different types of digital technologies. Despite these advancements, there is global economic turmoil as seen in financial crisis in Europe, the bail-in in Cyprus, inflation of currencies in Latin America, and the Great Recession in the United States. A functioning global monetary system over the internet that serves as a common denominator has not been established, and is needed for the recovery of the global economy. The Bitcoin protocol, the first namespace for deregulated international transfer of ownership, will serve as a common denominator for international trade, and be the single greatest technological achievement, thus far, in the 21st century.
The globalization of our economy, and the outsourcing of manufacturing, has shattered the Ford Model which encouraged paying high wages to workers so they could go out and buy products made domestically. American corporations now outsource production to geographical markets where there is more cost effective labor and resources. These businesses leverage the interconnectedness of the global economy to augment economic production and surplus value. Despite these capital gains at the enterprise level, wages for middle class domestic workers have remained stagnant, and the United States economy is 70% based on consumer spending. Globalization and the Internet changed the demand for domestic employment, and furthermore, increased the demand for imports of goods and services.
The technology to implement such a global monetary system has emerged through a combinational creativity of cryptography, mathematical proofs, global internet infrastructure, and failure in the security and transparency of current international monetary regimes. This new system, the Internet of Money, is a digital, time-stamped, public ledger, operated by a network of computers around the world. These computers verify peer-2-peer transactions without the need for a third party institution. Why is it that any transfer of ownership has to go through a third-party or fiat institution? What if there was a way to store and transfer any scarce asset, of any amount, on your own mobile device, regardless of geographical location? How could such an empow-
ering technology become adopted and used by consumers and merchants to optimize trade efficiency, specialization between international markets, and ultimately, increase the effectiveness of secure, transparent international finance? The core technology of this global financial platform is analogous to the HTTP protocol, which is what the internet and every social network is built upon. The intrinsic value of this new system, like many new network effect protocols, is in its user base. The network effect of this global financial revolution will augment the abilities of international small and medium enterprises to operate in a free global market. Many industries have been turned upside-down by the digitization of content over the internet. Blockbuster Video was replaced by Netflix, Barnes & Nobles lost considerable market share to Amazon, and this new exchange technology has even more disruptive potential in almost every industry. By the year 2020, 5 billion people will be connected to the internet. These people will be able to share their thoughts and moments, projected across a globally connected world. With existing international financial regimes, the unbanked in developing countries will be unable to reap the benefits of an interconnected global economy. Bitcoin will empower developing countries to leap into a new global economy. It will also enable developed countries to find new market channels in e-commerce, and furthermore, increase the revenue per user in international ventures. To understand why a global, deregulated, public ledger will be effective for international trade, we have to
look at the blockchain, the core technology of Bitcoin. The blockchain is as intrinsic to Bitcoin as the HTTP protocol is intrinsic to the internet. The blockchain is a timestamp server that prevents the double-spending of Bitcoin by giving computational proof that the network of servers verified the original transfer of ownership. The first application that utilizes the blockchain transfer of ownership is the in form of a digital currency. The name for this application is Bitcoin, which is a non-fiat digital crypto currency and payment network, operated by computers around the world, that verify peer-2-peer transactions on a public ledger. Bitcoin is analogous to the light bulb in relation to the electrical grid. There are much more intricate and coupled applications that are built on the electrical grid, such as water systems, defense protocols, and communication networks. However, the incandescent light bulb was the on-loading mechanism, in what would ultimately substitute candles, and transform into a digitally connected globe. The development of other technologies happened over the course of a century, but ultimately, electricity was implemented and served as self-evident. The ability to move value electronically without counter parties, and without IOUs and promises, is very useful. Bitcoin is the first digital, verifiable, proof of ownership, without the need for a third-party institution. The current transfer system that is in place depends on a third party bank or fiat institution to know the identities of the parties involved, and keep transactions hidden.
Identities
Transactions
Trusted Third Party
Counterparty
Public
New Privacy Model Identities
Transactions
These computers are known as Bitcoin “miners.” The owners of these miners are compensated in Bitcoin for devoting their electricity and computing power to sustain the network that verifies the transactions. When bitcoins are “mined,” it is the process of comput-
ers combining their computational ability to solve the mathematical algorithm that verifies and timestamps a digital chain of chronological transactions over the global Bitcoin network. Only 21 million bitcoins will ever be mined, to keep currency to a finite amount and prevent inflation. As more bitcoins are released into the market, over time, the difficulty of the mathematical algorithm increases, and more computing capacity is demanded.
Crypto Biz Magazine
This new distributed system is built on the blockchain that detaches the identity of the parties involved, but publishes every transaction to verify by the network of computers.
Public
August.2014 Page.45
Traditional Privacy Model
The difficulty of the mathematical algorithm is determined by the computing power that the miners output. It is a proportional mathematical algorithm that allows only 25 bitcoins to be mined every 10 minutes. The
number of bitcoins released when a block is mined, or a block of transactions are verified, will retain a half-life so that as it gets closer to 21 million less coins are re-
Crypto Biz Magazine Page.46 September.2014
So why is this the most revolutionary technology known thus far in human history? The reason is the transfer of ownership. It’s a programmable way to transfer scarce resources of any kind. The true value in blockchain public ledgers is that other applications that enable the exchange of scarce digital assets can be built on this protocol. These blockchains could enable real-time digital auctions for analog assets such as a parking spot, or a share economy physical asset. Any type of transaction where party A can transfer ownership to party B without the need for party C. People connected to the internet in Africa, Asia, India, and South America will be able to participate in a global free market with a common digital denominator. The current international transactions for remittances via Western Union or other third-party processors is not only inefficient, with regard to time, but it also costs the parties involved higher percentage per transaction. With Bitcoin, families will be able to send and receive remittances instantly, across borders, without having to go to a bank or payment processor. International travelers will also be able to benefit from Bitcoin by avoiding exchange rates and fees for acquiring local currency. There is no central authority or fiat distributor. As a result, there is a finite number of Bitcoin, therefore it will eventually become scarce and mathematically there is no way of insolvency. The intrinsic value is in the technology that enables the protocol and facilitates the distribution of any scarce asset; digital or physical. Bitcoin removes friction and barriers for the transfer of ownership. Stocks, bonds, real-estate, escrow, microloans, gambling, crowd funding and P2P contracts all will be executed on decentralized networks. The multiple blockchain applications that will be developed over time have been referred to as colored coins, or designated digital “smart contracts” by a new
leased into the market. Miners are incentivized to sustain the network by being rewarded with the newly created bitcoins released into the market in exchange for their devotion of electrical and computing capacity.
protocol named Ethereum. Ethereum is a platform, a scripting language, and ultimately a new decentralized system, for developers around the world to build with. This can be any sort of deal, contract, or exchange, that can be mathematically expressed in code. It enables the parties to set the terms in a publicly verifiable and protected transaction. There is an even greater application that will emerge from these types of systems. This is the DAO, or Decentralized Autonomous Organization. Imagine a corporation 20 years from now that is completely automated, checked and balanced in its management by computer code, providing a service that is globally accessible. This is the DAO. An organization that relies on the network, and the programmers pivoting with hacks, that maximize the user experience and delegate operations more efficiently to the computer system. Developers around the world can instill Artificial Intelligence into a publicly traded corporation, a voting system, or even a manufacturing facility. The open source system will enable people to effectively build an organization with code, set it in motion, and delegate operations to machines and data servers around the world. The value in a decentralized distributed system such as Ethereum is that anyone with an apparatus verifying contracts is now an additional node on the network. Marc Andreesen of Andreesen Horowitz predicted that chip manufacturers will soon start building chips that can support an OS and mine. An ever-growing network of nodes, in every electronic device, verifying contracts between two people or within autonomous organizations. There will be an unlimited number of applications and organizations that are built on the blockchain in the future. Bitcoin is not about price speculation. It’s about the promise of the underlying technology, and the effect it
will have on the global economy, for those who wish to embrace and develop it. Bitcoin is the forefront of disruptive technology in the digital world. It’s the first application of many, to the distributed consensus asset ledger. The protocol is a frictionless digital API for trading, and storing scarce resources of virtually any magnitude.
DOM STEIL is an entrepreneur from
the Silicon Valley. He is well-versed in a variety of technological fields and has experience as a business analyst at the international enterprise level. For more information, visit his blog at www.dominicsteil.wordpress.com. Dom also accepts Bitcoin tips to:
1FiYresjQP7GV9EUxr9fudWm3Xz7WC2VMC
Crypto Biz Magazine
Ultimately this new technology establishes a global monetary system to replace unstable regional monetary arrangements. Since 1973, international monetary relations have been based on floating exchange rates among the major currencies. This system is outdated and needs to leverage the internet. This protocol is the answer to a new global level international monetary regime. The software engineers and venture capitalists which developed the internet into the revolutionary technology it is today, are seeing parallels and are captivated by the potential for the applications that Bitcoin and blockchain technologies will enable. It will take a couple years to develop; technology by software engineers, venture capital investments in Bitcoin startups and entrepreneurs, and by merchants and users for mass adoption. There has been a substantial amount of investment in Bitcoin in 2013 and 2014. The same ven-
It is an exciting time for our global population in a limitless digital age that continues to exponentially grow. The blockchain protocol will enhance domestic trade and global flows of trade between developed and developing countries. Bitcoin is just the first application of many for new mechanisms of transfer of ownership. It can be a common denominator for global finance by leveraging the internet and its user base. This is the internet’s 2.0 version. The first stage put all of the world’s information in your pocket on a mobile apparatus. This emerging stage puts an international programmable bank in your pocket. This is the true definition of mobile, location will be irrelevant when someone wants to buy, sell, or trade any kind of asset to any other person on the globe. The network effect will ultimately be the catalyst for the price value and market capitalization, and overall growth over the next few years. This technology will revolutionize international trade and provide a new, more stable and secure global economy. —S
August.2014 Page.47
Is the internet like mail, telephones, or broadcast TV? Is Bitcoin commodity, currency, property, protocol? The answer to both questions is all of the above. Many other applications of asset transfer and proof of ownership can and will be implemented with the digital signature, time stamped, public ledger(s). This is Gold 2.0, the first programmable currency that lets a computer program set a transaction or series of transaction in motion. This is the first application of many that facilitate a digital exchange system that is not limited by geography.
ture capital interest that was surrounding the internet in 1995 is being seen around the Bitcoin ecosystem. The run rate for VC investment in Bitcoin companies is projected to double, compared to 2013.
GITHUB BITCOIN GLOSSARY Some unusual terms are used in Bitcoin documentation and discussions about tx or coinbase, or words like scriptPubKey fly around, without reference or context. Help is here! This glossary will help you understand the exact meaning of all Bitcoin-related terminology—both words and phrases.
0-CONFIRMATION (ZEROCONFIRMATION)
See Unconfirmed Transaction and Confirmation Number.
51% ATTACK
Crypto Biz Magazine Page.48 July.2014 Magazine Page.48 September.2014
Also known as >50% attack or a double spend attack. An attacker can make a payment, wait till the merchant accepts some number of confirmations and provides the service, then starts mining a parallel chain of blocks starting with a block before the transaction. This parallel blockchain then includes another transaction that spends the same outputs on some other address. When the parallel chain becomes more difficult, it is considered a main chain by all nodes and the original transaction becomes invalid. Having more than a half of total hashrate guarantees possibility to overtake chain of any length, hence the name of an attack (strictly speaking, it is “more than 50%,” not 51%). Also, even 40% of hashrate allows making a double spend, but the chances are less than 100% and diminish exponentially with the number of confirmations that the merchant requires.
This attack is considered theoretical as owning more than 50% of hashrate might be much more expensive than any gain from a double spend. Another variant of an attack is to disrupt the network by mining empty blocks, censoring all transactions. An attack can be mitigated by blacklisting blocks that most “honest” miners consider abnormal. Under normal conditions, miners and mining pools do not censor blocks and transactions as it may diminish trust in Bitcoin and thus their own investments. 51% attack is also mitigated by using checkpoints that prevent reorganization past the certain block.
ADDRESS
Bitcoin address is a Base58Check representation of a Hash160 of a public key with a version byte 0x00 which maps to a prefix “1.” Typically represented as text (ex. 1CBtcGivXmHQ8ZqdPgeMfcpQNJrqTrSAcG) or as a QR code. A more recent variant of an address is a P2SH address: a hash of a spending script with a version byte 0x05 which maps to a prefix “3” (ex. 3NukJ6fYZJ5Kk8bPjycAnruZkE5Q7UW7i8). Another variant of an address is not a hash, but a raw private key representation (e.g.5KQntKuhYWSRXNqp2yhdXzjekYAR7US3MT1715Mbv5CyUKV6hVe). It is rarely used, only for importing/exporting private keys or printing them on paper wallets.
ALTCOIN
A clone of the protocol with some modifications. Altcoins usually have rules incompatible with Bitcoin and have their own genesis blocks. Most notable altcoins are Litecoin (uses faster block confirmation time and scrypt as a proof-of-work) and Namecoin (has a special key-value storage). In theory, an
altcoin can be started from an existing Bitcoin blockchain if someone wants to support a different set of rules (although, there was no such example to date). See also Fork.
ASIC
Stands for “application-specific integrated circuit.” In other words, a chip designed to perform a narrow set of tasks (compared to CPU or GPU that perform a wide range of functions). ASIC typically refers to specialized mining chips or the whole machines built on these chips. Some ASIC manufacturers: Avalon, ASICMiner, Butterfly Labs (BFL) and Cointerra.
ASICMINER
A Chinese manufacturer that makes custom mining hardware, sells shares for bitcoins, pays dividends from on-site mining and also ships actual hardware to customers.
BASE58
A compact human-readable encoding for binary data invented by Satoshi Nakamoto to make more user-friendly addresses. It consists of alphanumeric characters, but does not allow “0,” “O,” “I,” “l” characters that look the same in some fonts and could be used to create visually identical looking addresses. Lowercase “o” and “1” are allowed.
BASE58CHECK
A variant of Base58 encoding that appends first 4 bytes of Hash256 of the encoded data to that data before converting to Base58. It is used in addresses to detect typing errors.
BIP
Bitcoin Improvement Proposals. RFC-like documents modeled after PEPs (Python Enhancement Proposals) discussing different aspects of the protocol and software. Most interesting BIPs describe hard fork changes in the core protocol that require a super-majority of Bitcoin users (or, in some cases, only miners) to agree on the change and accept it in an organized manner.
BITCOIN
Refers to a protocol, network or a unit of currency. As a protocol, Bitcoin is a set of rules that every client must follow to accept transactions and have its own transactions accepted by other clients. Also includes a message protocol that allows nodes to connect to each other and exchange transactions and blocks. As a network, Bitcoin is all the computers that follow the same rules and exchange transactions and blocks between each other. As a unit, one Bitcoin (BTC, XBT) is defined as 100 million satoshis, the smallest units available in the current transaction format. Bitcoin is not capitalized when speaking about the amount: “I received 0.4 bitcoins.”
GITHUB BITCOIN GLOSSARY BITCOIN CORE
New name of BitcoinQT since release of version 0.9 on March 19, 2014. Not to confuse with CoreBitcoin, an Objective-C implementation published in August 2013. See also Bitcore, a JavaScript implementation for Node.js by Bitpay.
BITCOINJ
A Java implementation of a full Bitcoin node by Mike Hearn. Also includes SPV implementation among other features.
BITCOINJS
A JavaScript toolkit. Allows signing transactions and performing several elliptic curve operations. Used on brainwallet.org.
BITCOINQT
Bitcoin implementation based on original code by Satoshi Nakamoto. Includes a graphical interface for Windows, OS X and Linux (using QT) and a command-line executable bitcoind that is typically used on servers. It is considered a reference implementation as it’s the most used full node implementation, especially among miners. Other implementations must be bug-for-bug compatible with it to avoid being forked. BitcoinQT uses OpenSSL for its ECDSA operations which has its own quirks that became a part of the standard (e.g. non-canonically encoded public keys are accepted by OpenSSL without an error, so other implementations must do the same).
BITCOIND
Original implementation of Bitcoin with a command line interface. Currently a part of BitcoinQT project. “D” stands for “daemon” per UNIX tradition to name processes running in background. See also BitcoinQT.
A Bitcoin utilities library in Ruby by Julian Langschaedel. Used in production on Coinbase.com.
BLOCKCHAIN
A public ledger of all confirmed transactions in a form of a tree of all valid blocks (including orphans). Most of the time, “blockchain” means the main chain, a single most difficult chain of blocks. Blockchain is updated by mining blocks with new transactions. Unconfirmed transactions are not part of the blockchain. If some clients disagree on which chain is main or which blocks are valid, a fork happens.
BLOCKCHAIN.INFO
A web service running a Bitcoin node and displaying statistics and raw data of all the transactions and blocks. It also provides a web wallet functionality with lightweight clients for Android, iOS and OS X.
BRAIN WALLET
Brain wallet is the concept of storing private keys as a memorable phrase without any digital or paper trace. Either a single key is used for a single address, or a deterministic wallet derived from a single key. If done properly, a brain wallet greatly reduces the risk of theft because it is completely deniable: no one could say which or how much bitcoins you own as there are no actual wallet files to be found anywhere. However, it is the most error-prone method as one can simply forget the secret phrase, or make it so simple that someone is able to brute force and steal all the funds. Additional risks are added by a complex wallet software. E.g. BitcoinQT always sends change amount to a new address. If a private key is imported temporarily to spend 1% of the funds and then the wallet is deleted, the remaining 99% is lost forever as they are moved as a change to a completely new address. This has already happened to a number of people.
BRAINWALLET.ORG
U t i l i t y b a s e d o n b i tco i n j s to c ra f t t ra n s a c t i o n s by hand, convert private keys to addresses and work with a brain wallet.
BITCORE
BTC
A Bitcoin toolkit by BitPay written in JavaScript. More complete than Bitcoinjs.
The most popular informal currency code for 1 Bitcoin (defined as 100,000,000 Satoshis). See also XBT.
BLOCK
CASASCIUS COINS
A data structure that consists of a block header and a merkle tree of transactions. Each block (except for genesis block) references one previous block thus forming a tree called the blockchain. Block can be thought of as a group of transactions with a timestamp and a proof-of-work attached.
BLOCK HEADER
BLOCK HEIGHT
A sequence number of a block in the blockchain. Height 0 refers to the genesis block. Several blocks may share the same height (see Orphan), but only one of them belongs to the main chain. Block height is used in Lock time.
CHANGE
Informal name for a portion of a transaction output that is returned to a sender as a “change” after spending that output. Since transaction outputs cannot be partially spent, one can spend 1 BTC out of 3 BTC output only by creating two new outputs: a “payment” output with 1 BTC sent to a payee address, and a “change” output with remaining 2 BTC (minus transaction fees) sent to the payer’s addresses. BitcoinQT always uses a new address from a key pool for better privacy. Blockchain.info sends to a default address in the wallet.
Crypto Biz Magazine
A data structure containing a previous block hash, a hash of a merkle tree of transactions, a timestamp, a difficulty and a nonce.
Physical collectible coins produced by Mike Caldwell. Each coin contains a private key under a tamper-evident hologram. The name “Casascius” is formed from a phrase “call a spade a spade,” as a response to the name of Bitcoin itself.
September.2014 Page.49 July.2014 Page.49
BITCOIN-RUBY
CONTINUED
GITHUB BITCOIN GLOSSARY A common mistake when working with a paper wallet or a brain wallet is to make a change transaction to a different address and then accidentally delete it. E.g. when importing a private key in a temporary BitcoinQT wallet, making a transaction and then deleting the temporary wallet.
CHECKPOINT
A hash of a block before which the BitcoinQT client downloads blocks without verifying digital signatures for performance reasons. A checkpoint usually refers to a very deep block (at least several days old) when it’s clear to everyone that the block is accepted by the overwhelming majority of users and reorganization will not happen past that point. It also helps to protect most of the history from a 51% attack. Since checkpoints affect how the main chain is determined, they are part of the protocol and must be recognized by alternative clients (although, the risk of reorganization past the checkpoint would be incredibly low).
CLIENT See Node.
COIN
An informal term that means either 1 bitcoin, or an unspent transaction output that can be spent.
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COINBASE
An input script of a transaction that generates new bitcoins, or the name of that transaction itself (“coinbase transaction”). Coinbase transaction doesn’t spend any existing transactions, but contains exactly one input which may contain any data in its script. Genesis block transactions contain a reference to The Times article from January 3rd, 2009 to prove that more blocks were not created before that date. Some mining pools put their names in the coinbase transactions (so everyone can estimate how much hashrate each pool produces). Coinbase is also used to vote on a protocol change (e.g. P2SH). Miners vote by putting some agreed-upon marker in the coinbase to see how many support the change. If a majority of miners support it and expect non-mining users to accept it, then they simply start enforcing the new rule. The minority should either continue with a forked blockchain (thus producing an altcoin) or accept the new rule.
COINBASE.COM
US-based Bitcoin/USD exchange and web wallet service.
COLORED COIN
A concept of adding a special meaning to certain transaction outputs. This could be used to create a tradable commodity on top of Bitcoin protocol. For instance, a company may create 1 million shares and declare a single transaction output containing 10 BTC (1B satoshis) as a source of these shares. Then some or all of these bitcoins can be moved to other addresses, sold, or exchanged. During a voting process or a dividend distribution, share owners can prove ownership by simply signing a particular message by the private keys associated with addresses holding bitcoins derived from the initial source.
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COLD STORAGE
A collective term for various security measures to reduce the risk of remote access to the private keys. It could be a normal computer disconnected from the Internet, or a dedicated hardware wallet, or a USB stick with a wallet file, or a paper wallet.
COMPACTSIZE
Original name of a variable-length integer format used in transaction and block serialization. Also known as “Satoshi’s encoding.” It uses 1, 3, 5 or 9 bytes to represent any 64bit unsigned integer. Values lower than 253 are represented with 1 byte. Bytes 253, 254 and 255 indicate 16-, 32- or 64-bit integers that follow. Smaller numbers can be presented differently. In bitcoin-ruby it is called “var_int,” in Bitcoinj it is VarInt. BitcoinQT also has even more compact representation called VarInt, which are not compatible with CompactSize and used in block storage.
CONFIRMED TRANSACTION
Transaction that has been included in the blockchain. Probability of transaction being rejected is measured in a number of confirmations. See Confirmation Number.
CONFIRMATION NUMBER
Confirmation number is a measure of probability that transaction could be rejected from the main chain. “Zero confirmations” means that transaction is unconfirmed (not in any block yet). One confirmation means that the transaction is included in the latest block in the main chain. Two confirmations means the transaction is included in the block right before the latest one. And so on. Probability of transaction being reversed (“double spent”) diminishes exponentially with more blocks added “on top” of it.
DIFFICULTY
Difficulty is a measure of how difficult it is to find a new block compared to the easiest it can ever be. By definition, it is a maximum target divided by the current target. Difficulty is used in two Bitcoin rules: 1) every block must meet difficulty target to ensure 10 minute interval between blocks and 2) transactions are considered confirmed only when belonging to a main chain, which is the one with the biggest cumulative difficulty of all blocks. As of September 5, 2013, the difficulty is 86,933,018 and grows by 20 – 30% every two weeks. See also Target.
DENIAL OF SERVICE
A form of attack on the network. Bitcoin nodes punish certain behavior of other nodes by banning their IP addresses for 24 hours to avoid DoS. Also, some theoretical attacks like 51% attack may be used for network-wide DoS.
DEPTH
Depth refers to a place in the blockchain. A transaction with 6 confirmations can also be called “6 blocks deep.”
DETERMINISTIC WALLET
A collective term for different ways to generate a sequence of private keys and/or public keys. Deterministic wallet does not need a Key Pool. The simplest form of a deterministic wallet is
GITHUB BITCOIN GLOSSARY based on hashing a secret string concatenated with a key number. For each number the resulting hash is used as a private key (public key is derived from it). More complex schemes uses elliptic curve arithmetic to derive sequences of public and private keys separately, which allows the generation of new addresses for every payment request without storing private keys on a web server. More information on Bitcoin Wiki. See also Wallet.
DOS
See Denial of Service.
DOUBLE SPEND
A fraudulent attempt to spend the same transaction output twice. There are two major ways to perform a double spend: reverting an unconfirmed transaction by making another one which has a higher chance of being included in a block (only works with merchants accepting zero-confirmation transactions) or by mining a parallel blockchain with a second transaction, to overtake the chain where the first transaction was included. The Bitcoin proof-of-work scheme makes it incredibly difficult to double spend transactions included in the blockchain. The deeper transaction is recorded in the blockchain, the more expensive it is to “reverse” it. See also 51% attack.
DUST
A transaction output that is smaller than the typical fee required to spend it. This is not a strict part of the protocol, as any amount more than zero is valid. BitcoinQT refuses to mine or relay “dust” transactions to avoid uselessly increasing the size of unspent transaction outputs (UTXO) index. See also UTXO.
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FEE
See Transaction Fee.
FORK
Refers either to a fork of a source code (see Altcoin) or, more often, to a split of the blockchain when two different parts of the network see different main chains. In a sense, fork occurs every time two blocks of the same height are created at the same time. Both blocks always have the different hashes (and therefore different difficulty), so when a node sees both of them, it will always choose the most difficult one. However, before both blocks arrive at a majority of nodes, two parts of the network will see different blocks as tips of the main chain. Fork or hard fork also refer to a change of the protocol that may lead to a split of the network (by design or because of a bug). On March 11, 2013, a smaller half of the network running version 0.7 of bitcoind, could not include a large (>900 Kb) block at height 225430, created by a miner running version 0.8 or newer. The block could not be included because of the bug in v0.7 which was fixed in v0.8. Since the majority of computing power did not have a problem, it continued to build a chain on top of a problematic block. When the issue was noticed, majority of 0.8 miners agreed to abandon 24 blocks incompatible with 0.7 miners and mine on top of 0.7 chain. Except for one double spend experiment against OKPay, all transactions during the fork were properly included in both sides of the blockchain.
FULL NODE
ELLIPTIC CURVE ARITHMETIC
GENESIS BLOCK
ECDSA
EXTRA NONCE
A number placed in coinbase script and incremented by a miner each time the nonce 32-bit integer overflows. It is not necessary to continue mining when nonce overflows, one can also change the merkle tree of transactions or change a public key used for collecting a block reward. See also nonce.
The very first block in the blockchain with hard-coded contents and an all-zero reference to a previous block. Genesis block was released on 3rd of January, 2009 with a newspaper quote in its coinbase: “The Times 03/Jan/2009 Chancellor on brink of second bailout for banks” as a proof that there are no secretly pre-mined blocks to overtake the blockchain in the future. The message ironically refers to a reason for Bitcoin existence: a constant inflation of money supply by governments and banks.
HALVING
Refers to reducing reward every 210,000 blocks (approximately every 4 years). Since the genesis block to a block 209,999 in December 2012 the reward was 50 BTC. By 2016 it will be 25 BTC, then 12.5 BTC and so on, until it’s only 1 satoshi around 2140, after which point no more bitcoins will ever be created. Due to reward halving, the total supply of bitcoins is limited: only about 2100 trillion satoshis will ever be created.
HARD FORK
Some people use the term hard fork to stress that changing Bitcoin protocol requires overwhelming majority to agree
Crypto Biz Magazine
A set of mathematical operations defined as a group of points on a 2D elliptic curve. Bitcoin protocol uses predefined curve secp256k1. Here’s the simplest possible explanation of the operations: you can add and subtract points and multiply them by an integer. Dividing by an integer is computationally infeasible (otherwise cryptographic signatures won’t work). The private key is a 256-bit integer and the public key is a product of a predefined point G (“generator”) by that integer: A = G * a. Associativity law allows implementing interesting cryptographic schemes like Diffie-Hellman key exchange (ECDH): two parties with private keys a and b may exchange their public keys A and B to compute a shared secret point C: C = A * b = B * a because (G * a) * b == (G * b) * a. Then this point C can be used as an AES encryption key to protect their communication channel.
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Stands for Elliptic Curve Digital Signature Algorithm. Used to verify transaction ownership when making a transfer of bitcoins. See Signature.
A node which implements all of Bitcoin protocol and does not require trusting any external service to validate transactions. It is able to download and validate the entire blockchain. All full nodes implement the same peer-to-peer messaging protocol to exchange transactions and blocks, but that is not a requirement. A full node may receive and validate data using any protocol and from any source. However, the highest security is achieved by being able to communicate as fast as possible with as many nodes as possible.
GITHUB BITCOIN GLOSSARY with it, or some noticeable part of the economy will continue with original blockchain following the old rules. See Fork and Soft Fork.
INPUT
See Transaction Input.
HASH FUNCTION
KEY
Bitcoin protocol mostly uses two cryptographic hash functions: SHA-256 and RIPEMD-160. First one is almost exclusively used in the two round hashing (Hash256), while the latter one is only used in computing an address (see also Hash160). In addition to Hash256 and Hash160, scripts may also use SHA1, SHA-256 and RIPEMD-160.
Could mean an ECDSA public or private key, or AES symmetric encryption key. AES is not used in the protocol itself (only to encrypt the ECDSA keys and other sensitive data), so usually the word key means an ECDSA key. When talking about keys, people usually mean private keys as public key can always be derived from a private one. See also Private Key and Public Key.
HASH, HASH256
KEY POOL
When not speaking about arbitrary hash functions, Hash refers to two rounds of SHA-256. That is, you would compute an SHA-256 hash of your data and then an SHA-256 hash of that hash. It is used in block header hashing, transaction hashing, making a merkle tree of transactions, or computing a checksum of an address. Known as BTCHash256() in CoreBitcoin, Hash() in BitcoinQT. It is also available in scripts as OP_HASH256.
HASH160
SHA-256 hashed with RIPEMD-160. It is used to produce an address because it makes a smaller hash (20 bytes vs 32 bytes) than SHA-256, but still uses SHA-256 internally for security. BTCHash160() in CoreBitcoin, Hash160() in BitcoinQT. It is also available in scripts as OP_HASH160.
TO HASH
To compute a hash function of some data. If hash function is not mentioned explicitly, it is the one defined by the context. For instance, “to hash a transaction� means to compute Hash256 of binary representation of a transaction.
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HASHRATE
A measure of mining hardware performance expressed in hashes per second. As of September 5, the hash rate of all Bitcoin mining nodes combined is around 647,000 Gh/s. For comparison, AMD Radeon graphics cards produce from 200 to 800 Mh/s depending on model.
HASH TYPE (HASHTYPE)
A single byte, appended to a transaction signature in the transaction input, which describes how the transaction should be hashed in order to verify that signature. There are three types affecting outputs: ALL (default), SINGLE, NONE and one optional modifier ANYONECANPAY affecting the inputs (can be combined with either of the first three). ALL requires all outputs to be hashed (thus, all outputs are signed). SINGLE clears all output scripts but the one with the same index as the input in question. NONE clears all outputs thus allowing changing them at will. ANYONECANPAY removes all inputs except the current one (allows anyone to contribute independently). The actual behavior is more subtle than this overview, you should check the actual source code for more comments.
HEIGHT
See Block Height.
Some wallet applications that create new private keys randomly keep a pool of unused pre-generated keys (BitcoinQT keeps 100 keys by default). When a new key is needed for change address or a new payment request, the application provides the oldest key from the pool and replaces it with a fresh one. The purpose of the pool is to ensure that recently used keys are always backed up on external storage. Without a key pool you could create a new key, receive a payment on its address and then have your hard disk die before backing up this key. A key pool guarantees that this key was already backed up several days before being used. Deterministic wallets do not use a key pool because they only need to back up a single secret key.
LIGHTWEIGHT CLIENT
Comparing to a full node, lightweight node does not store the whole blockchain and thus cannot fully verify any transaction. There are two kinds of lightweight nodes: those fully trusting an external service to determine wallet balance and validity of transactions (e.g. blockchain.info) and the apps implementing Simplified Payment Verification (SPV). SPV clients do not need to trust any particular service, but are more vulnerable to a 51% attack than full nodes. See Simplified Payment Verification.
LOCK TIME (LOCKTIME)
A 32-bit field in a transaction that means either a block height at which the transaction becomes valid, or a UNIX timestamp. Zero means transaction is valid in any block. A number less than 500,000,000 is interpreted as a block number (the limit will be hit after year 11,000), otherwise a timestamp.
MAINNET
Main Bitcoin network and its blockchain. The term is mostly used in comparison to testnet.
MAIN CHAIN
A part of the blockchain which a node considers the most difficult (see difficulty). All nodes store all valid blocks, including orphans, and recompute the total difficulty when receiving another block. If the newly arrived block or blocks do not extend existing main chain, but create another one from some previous block, it is called reorganization.
MERKLE TREE
Merkle tree is an abstract data structure that organizes a list of data items in a tree of their hashes (like in Git, Mercurial or ZFS). In Bitcoin, the merkle tree is used only to organize
GITHUB BITCOIN GLOSSARY transactions within a block (the block header contains only one hash of a tree) so that full nodes may prune fully spent transactions to save disk space. SPV clients store only block headers and validate transactions if they are provided with a list of all intermediate hashes.
MEMPOOL
A technical term for a collection of unconfirmed transactions stored by a node until they either expire or get included in the main chain. When reorganization happens, transactions from orphaned blocks either become invalid (if already included in the main chain) or moved to a pool of unconfirmed transactions. By default, bitcoind nodes throw away unconfirmed transactions after 24 hours.
MINING
A process of finding valid hashes of a block header by iterating millions of variants of block headers (using nonce and extra nonce) in order to find a hash lower than the target (see also difficulty). The process needs to determine a single global history of all transactions (grouped in blocks). Mining consumes time and electricity and nowadays the difficulty is so big, that energy-wise it’s not even profitable to mine using video graphics cards. Mining is paid for by transaction fees and by block rewards (newly generated coins, hence the term “mining”).
MINING POOL
MINER
A person, a software or a hardware that performs mining.
MIXING
A process of exchanging coins with other persons in order to increase privacy of one’s history. Sometimes it is associated with money laundering, but strictly speaking it is orthogonal to laundering. In traditional banking, a bank protects customer’s privacy by hiding transactions from all third parties. In Bitcoin any merchant may do a statistical analysis of one’s entire payment history and determine, for instance, how many bitcoins one owns. While it’s still possible to implement KYC (Know Your Customer) rules on a level of every merchant, mixing allows you to separate information about one’s history between the merchants.
M-OF-N MULTI-SIGNATURE TRANSACTION
A transaction that can be spent using M signatures when N public keys are required (M is less or equal to N). Multi-signature transactions that only contain one OP_CHECKMULTISIG opcode and N is 3, 2 or 1 are considered standard.
NODE
Node, or client, is a computer on the network that speaks Bitcoin message protocol (exchanging transactions and blocks). There are full nodes that are capable of validating the entire blockchain and lightweight nodes, with reduced functionality. Wallet applications that speak to a server are not considered nodes.
NONCE
Stands for “number used once.” A 32-bit number in a block header which is iterated during a search for proof-of-work. Each time the nonce is changed, the hash of the block header is recalculated. If nonce overflows before valid proof-of-work is found, an extra nonce is incremented and placed in the coinbase script. Alternatively, one may change a merkle tree of transactions or a timestamp.
NON-STANDARD TRANSACTION
Any valid transaction that is not standard. Non-standard transactions are not relayed or mined by default BitcoinQT nodes, but are relayed and mined on testnet. However, if anyone puts such transaction in a block, it will be accepted by all nodes. In practice it means that unusual transactions will take more time to get included in the blockchain. If some kind of non-standard transaction becomes useful and popular, it may get named standard and adopted by users (like it). See also Standard Transaction.
OPCODE
8-bit code of a script operation. Codes from 0x01 to 0x4B (decimal 75) are interpreted as a length of data to be pushed on the stack of the interpreter (data bytes follow the opcode). Other codes either do something interesting, are disabled and cause transaction verification to fail, or do nothing (reserved for future use). See also Script.
ORPHAN, ORPHANED BLOCK
A valid block that is no longer a part of a main chain. Usually happens when two or more blocks of the same height are produced at the same time. When one of them becomes a part of the main chain, others are considered “orphaned.” Orphans also may happen when the blockchain is forked due to an attack (see 51% attack) or a bug. Then a chain of several blocks may become abandoned. Usually a transaction is included in all blocks of the same height, so its confirmation is not delayed and there is no double spend. See also Fork.
OUTPUT
See Transaction Output.
Crypto Biz Magazine
Most important reasons for mixing are: 1) receiving a salary as a single big monthly payment and then spending it in small transactions (“café sees thousands of dollars when you pay just $4”); and 2) making a single payment and revealing connection of many small private spendings (“car dealer sees how much you are addicted to coffee”). In both cases your employer, a café and a car dealer may comply with KYC/AML laws and report your identity and transferred
amounts, but neither of them need to know about each other. Mixing bitcoins after receiving a salary and mixing them before making a big payment solves this privacy problem.
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A service that allows separate owners of mining hardware to split the reward proportionally to submitted work. Since probability of finding a valid block hash is proportional to miner’s hashrate, small individual miners may work for months before finding a big per-block reward. Mining pools allow more steady stream of smaller income. Pool owner determines the block contents and distributes ranges of nonce values between its workers. Normally, mining pools are centralized. P2Pool is a fully decentralized pool.
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GITHUB BITCOIN GLOSSARY P2SH
contain public keys or addresses in the output scripts and signatures in the input scripts.
PAY-TO-SCRIPT HASH
REFERENCE IMPLEMENTATION
See Pay-to-Script Hash.
A type of script and address that allows sending bitcoins to arbitrary complex scripts using a compact hash of that script. This allows payer to pay much smaller transaction fees and not wait long for a non-standard transaction to get included in the blockchain. Then the actual script matching the hash must be provided by the payee when redeeming the funds. P2SH addresses are encoded in Base58Check just like regular public keys and start with number “3.”
BitcoinQT (or bitcoind) is the most used full node implementation, so it is considered a reference for other implementations. If an alternative implementation is not compatible with BitcoinQT it may be forked, that is, it will not see the same main chain as the rest of the network running BitcoinQT.
RELAYING TRANSACTIONS
A form of cold storage where a private key for Bitcoin address is printed on a piece of paper (with or without encryption) and then all traces of the key are removed from the computer where it was generated. To redeem bitcoins, a key must be imported in the wallet application so it can sign a transaction. See also Casascius Coins.
Connected Bitcoin nodes relay new transactions between each other on best-effort basis in order to send them to the mining nodes. Some transactions may not be relayed by all nodes. E.g. non-standard transactions, or transactions without a minimum fee. Bitcoin message protocol is not the only way to send the transaction. One may also send it directly to a miner, or mine it yourself, or send it directly to the payee and make them relay it or mine it.
PROOF-OF-WORK (POW)
REORG, REORGANIZATION
PAPER WALLET
A number that is provably hard to compute. That is, it takes measurable amount of time and/or computational power (energy) to produce. In Bitcoin it is a hash of a block header. A block is considered valid only if its hash is lower than the current target (roughly, starts with a certain amount of zero bits). Each block refers to a previous block thus accumulating previous proof-of-work and forming a blockchain.
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Proof-of-work is not the only requirement, but it’s an important one to make sure that it is economically infeasible to produce an alternative history of transactions with the same accumulated work. Each client can independently consider the most difficult chain of valid blocks as the “true” history of transactions, without need to trust any source that provides the blocks. Note that owning a very large amount of computational power does not override other rules enforced by every client. Illformed blocks or blocks containing invalid transactions are rejected no matter how difficult they were to produce.
PRIVATE KEY (PRIVKEY)
A 256-bit number used in ECDSA algorithm to create transaction signatures in order to prove ownership of a certain quantity of bitcoins. Can also be used in arbitrary elliptic curve arithmetic operations. Private keys are stored within wallet applications and are usually encrypted with a pass phrase. Private keys may be completely random (see Key Pool) or generated from a single secret number (“seed”). See also Deterministic Wallet.
PUBLIC KEY (PUBKEY)
A 2D point on an elliptic curve secp256k1 that is produced by multiplying a predefined “generator” point by a private key. Usually it is represented by a pair of 256-bit numbers (“uncompressed public key”), but can also be compressed to just one 256-bit number (at the slight expense of CPU time to decode an uncompressed number). A special hash of a public key is called address. Typical Bitcoin transactions
An event in the node when one or more blocks in the main chain become orphaned. Usually, newly received blocks extend the existing main chain. Sometimes (4 – 6 times a week) a couple of blocks of the same height are produced almost simultaneously, and for a short period of time, some nodes may see one block as a tip of the main chain which will be eventually replaced by a more difficult block(s). Each transaction in the orphaned blocks either become invalid (if already included in the main chain block) or become unconfirmed and moved to the mempool. In case of a major bug or a 51% attack, reorganization may involve reorganizing more than one block.
REWARD
Amount of newly generated bitcoins that a miner may claim in a new block. The first transaction in the block allows miner to claim currently allowed reward as well as all transaction fees from all transactions in the block. Reward is halved every 210,000 blocks, approximately every 4 years. As of September 5, 2013, the reward is 25 BTC (the first halving occurred in December 2012). For security reasons, rewards cannot be spent before 100 blocks are built on top of the current block.
SATOSHI
The first name of Bitcoin’s creator Satoshi Nakamoto and also the name of the smallest unit used in transactions. 1 bitcoin (BTC) is equal to 100 million satoshis.
SATOSHI NAKAMOTO
The pseudonym of the author of the initial Bitcoin imple mentation. There are many speculations on who and how many people worked on Bitcoin, of which nationality or age, but no one has any evidence to say anything definitive on the matter.
SCRIPT
A compact turing-incomplete programming language used in transaction inputs and outputs. Scripts are interpreted by a Forth-like stack machine: each operation manipulates data on the stack. Most scripts follow the standard pattern
GITHUB BITCOIN GLOSSARY and verify the digital signature provided in the transaction input against a public key provided in the previous transaction’s output. Both signatures and public keys are provided using scripts. Scripts may contain complex conditions, but can never change the amount being transferred. Amount is stored in a separate field in a transaction output.
SCRIPTSIG
Original name in bitcoind for a transaction input script. Typically, input scripts contain signatures to prove ownership of bitcoins sent by a previous transaction.
SCRIPTPUBKEY
Original name in bitcoind for a transaction output script. Typically, output scripts contain public keys (or their hashes; see Address) that allow only owner of a corresponding private key to redeem the bitcoins in the output.
SEQUENCE
A 32-bit unsigned integer in a transaction input used to replace older version of a transaction by a newer one. Only used when locktime is not zero. Transaction is not considered valid until the sequence number is 0xFFFFFFFF. By default, the sequence is 0xFFFFFFFF.
SIGNATURE
A sequence of bytes that proves that a piece of data is acknowledged by a person holding a certain public key. Bitcoin uses ECDSA for signing transactions. Amounts of bitcoins are sent through a chain of transactions: from one to another. Every transaction must provide a signature matching a public key defined in the previous transaction. This way, only the proper owner of a secret private key, associated with a given public key, can spend bitcoins further.
A scheme to validate transactions without storing the whole blockchain (only block headers) and without trusting any external service. Every transaction must be present with all its parent and sibling hashes in a merkle tree up to the root. SPV client trusts the most difficult chain of block headers and can validate if the transaction indeed belongs to a certain block header. Since SPV does not validate all transactions, a 51% attack may not only cause a double spend (like with full nodes), but also make a completely invalid payment with bitcoins created from nowhere. However, this kind of attack is very costly and probably more expensive than a product in question. Bitcoinj library implements SPV functionality.
SECRET KEY
SOFT FORK
Sometimes the soft fork refers to an important change of software behavior that is not a hard fork (e.g. changing mining fee policy). See also Hard Fork and Fork.
Incorrect peer-to-peer messages (like sending invalid transactions) may be considered a denial of service attack (see DoS). Valid transactions sending very tiny amounts and/or having low mining fees are called Dust by some people. The protocol itself does not define which transactions are not worth relaying or mining, it’s a decision of every individual node. Any valid transaction in the blockchain must be accepted by the node if it wishes to accept the remaining blocks, so transaction censorship only means increased confirmation delays. Individual payees may also blacklist certain addresses (refuse to accept payments from some addresses), but that’s too easy to work around using mixing.
SPENT OUTPUT
A transaction output can be spent only once: when another valid transaction makes a reference to this output from its own input. When another transaction attempts to spend the same output, it will be rejected by the nodes already seeing the first transaction. Blockchain as a proof-of-work scheme allows every node to agree on which transaction was indeed the first one. The whole transaction is considered spent when all its outputs are spent.
SPLIT
A split of a blockchain. See Fork.
SPV
See Simplified Payment Verification.
STANDARD TRANSACTION
Some transactions are considered standard, meaning they are relayed and mined by most nodes. More complex transactions could be buggy or cause DoS attacks on the network, so they are considered non-standard and not relayed or mined by most nodes. Both standard and non-standard transactions are valid and once included in the blockchain, will be recognized by all nodes. Standard transactions are: 1) sending to a public key; 2) sending to an address; 3) sending to a P2SH address; 4) sending to M-of-N multi-signature transaction where N is 3 or less.
TARGET
A 256-bit number that puts an upper limit for a block header hash to be valid. The lower the target is, the higher the difficulty to find a valid hash. The maximum (easiest) target is 0x00000000FFFF0000000000000000000000000000000000000000000000000000. The difficulty and the target are adjusted every 2016 blocks (approx. 2 weeks) to keep interval between the blocks close to 10 minutes.
TESTNET
A set of parameters used for testing a Bitcoin network. Testnet is like mainnet, but has a different genesis block (it was reset several times, the latest testnet is testnet3). Testnet uses a slightly different address format to avoid confusion with main Bitcoin addresses and all nodes relaying and mining non-standard transactions.
TESTNET3
The latest version of testnet with another genesis block.
Crypto Biz Magazine
Either the Private Key or an encryption key used in encrypted wallets. Bitcoin protocol does not use encryption anywhere, so secret key typically means a private key used for signing transactions.
SPAM
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SIMPLIFIED PAYMENT VERIFICATION (SPV)
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GITHUB BITCOIN GLOSSARY TIMESTAMP
UNIX timestamp is a standard representation of time as a number of seconds since January 1st, 1970, GMT. Usually stored in a 32-bit signed integer.
TRANSACTION
A chunk of binary data that describes how bitcoins are moved from one owner to another. Transactions are stored in the blockchain. Every transaction (except for coinbase transactions) has a reference to one or more previous transactions (inputs) and one or more rules on how to spend these bitcoins further (outputs). See Transaction Input and Transaction Output.
TRANSACTION FEE
Also known as “miners’ fee,” an amount that an author of transaction pays to a miner who will include the transaction in a block. The fee is expressed as the difference between the sum of all input amounts and a sum of all output amounts. Unlike traditional payment systems, miners do not explicitly require fees and most miners allow free transactions. All miners are competing between each other for the fees and all transactions are competing for a place in a block. There are soft rules encoded in most clients that define minimum fees per kilobyte to relay or mine a transaction (mostly to prevent DoS and spam). Typically, the fee affects the priority of a transaction. As of September 5, 2013 average fees are below 1 BTC per block. See also Reward.
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TRANSACTION INPUT
A part of a transaction that contains a reference to a previous transaction’s output and a script that can prove ownership of that output. The script usually contains a signature and is called scriptSig. Inputs spend previous outputs completely. So if one needs to pay only a portion of some previous output, the transaction should include extra change output that sends the remaining portion back to its owner (on the same or different address). Coinbase transactions contain only one input with a zeroed reference to a previous transaction and arbitrary data in place of script.
TRANSACTION OUTPUT
An output contains an amount to be sent and a script that allows further spending. The script typically contains a public key (or an address, a hash of a public key) and a signature verification opcode. Only an owner of a corresponding private key is able to create another transaction that sends that amount on to someone else. In every transaction, the sum of output amounts must be equal or less than the sum of all input amounts. See also Change.
TX
See Transaction.
TXIN
away, find it in the blockchain, or include it in the blockchain itself (if it’s a miner). See also Confirmation Number.
UTXO SET
A collection of Unspent Transaction Outputs. Typically used in discussions on optimizing an ever-growing index of transaction outputs that are not yet spent. The index is important to efficiently validate newly created transactions. Even if the rate of the new transactions remains constant, the time required to locate and verify unspent outputs grows. Possible technical solutions include more efficient indexing algorithms and more performant hardware. BitcoinQT, for example, keeps only an index of outputs matching user’s keys and scans the entire blockchain when validating other transactions. A developer of one web wallet service mentioned that they maintain the entire index of UTXO and its size was around 100GB when the blockchain itself was only 8GB. Some people seek social methods to solve the problem. For instance, by refusing to relay or mine transactions that are considered dust (containing outputs smaller than a transaction fee required to mine/relay them).
VARINT
This term may cause confusion as it means different things in different Bitcoin implementations. See CompactSize.
WALLET
An application or a service that keeps private keys for signing transactions. Wallet does not keep bitcoins themselves (they are recorded in blockchain). “Storing bitcoins” usually means storing the keys.
WEB WALLET
A web service providing wallet functionality: ability to store, send and receive bitcoins. User has to trust counter-party to keep their bitcoins securely and ready to redeem at any time. It is very easy to build your own web wallet, so most of them were prone to hacks or outright fraud. The most secure and respected web wallet is Blockchain.info. Online exchanges also provide wallet functionality, so they can also be considered web wallets. It is not recommended to store large amounts of bitcoins in a web wallet.
XBT
Informal currency code for 1 Bitcoin (defined as 100,000,000 Satoshis). Some people proposed using it for 0.01 Bitcoin to avoid confusion with BTC. There were rumors that Bloomberg tests XBT as a ticker for 1 Bitcoin, but currently there is only ticker XBTFUND for SecondMarket’s Bitcoin Investment Trust. See also BTC. —S
See Transaction Input.
TXOUT
See Transaction Output.
UNCONFIRMED TRANSACTION
Transaction that is not included in any block. Also known as “0-confirmation” transaction. Unconfirmed transactions are relayed by the nodes and stay in their mempools. An unconfirmed transaction stays in the pool until the node decides to throw it
CONTINUED
GITHUB bitcoin Glossary by OLEG ANDREEV (oleganza@gmail.com). Twitter: @oleganza. Send your Bitcoin tips to:
1CBtcGivXmHQ8ZqdPgeMfcpQNJrqTrSAcG.
by SEAN DONATO
BITHALO In latest smart contract news, Davtonia, Inc. and DBA BitHalo, supported by BlackCoin, have just released a revolutionary new software, never seen in crypto or tech before. It’s a two-party escrow/smart contract technology called BitHalo.
Users take for granted their trust in these exchanges, to trade Bitcoin on their behalf, and there is no guarantee against human error or theft. Therefore it came as a shock when Mt. Gox claimed they didn’t know the Bitcoin was missing. Those funds have never been returned, and analysts predict that this is probably not the last time something like this will happen.
BitHalo was originally designed for Bitcoin, but BlackCoin was proving a little safer and faster, so the BlackCoin-compatible client was released first. The Bitcoin version is expected to be released very soon, with the possibility of extending to other alt currencies in the future. David Zimbeck from BlackCoin claimed the most important thing to him is that “crypto stays united and pure.” He sums up why there is a need for a product like BitHalo by saying “what keeps me up at night is the David vs. Goliath dilemma smaller voices often face. We live in a world where a small percentage of people, hold an undue influence—and sometimes quasi-monopoly—on a majority of markets, and also free expression.” BitHalo’s future is to become the normal way to trade, barter, and make transactions. Employers can use it when subcontracting; it can be used in mergers; and organizations can use it to sell or contract with poor-credit-rated, or new companies. Businesses such as Craigslist and eBay could offer this as a transaction option, removing the need to meet up in person. BitHalo makes it possible to trust a stranger. If you are interested in trying the BitHalo software in Beta, it’s available for BlackCoin on Windows at bithalo.org. —S
Crypto Biz Magazine
BitHalo has been designed to answer the question of how trade disputes can be self-solved by the “network,” and not by an arbitrating third party. Until now, there hasn’t been a solution, and everyone has been resigned to the use of a third party as an arbiter, but that always leaves the possibility for error. By utilizing collateral deposits with BitHalo, risk/reward becomes the sole motivator with the involved parties. This is double-deposit escrow.
BitHalo removes middlemen and reduces recurring extraction costs of doing business across all industries. Being the first contracting client worldwide and available for download, the BitHalo technology has the capacity to revolutionize finance, escrow, contracting, insurance, and trade in any venue.
August.2014 Page.57
Traditionally, escrow has been considered safe because there’s an arbitrating third party, with a duty of care to ensure the transaction is properly accounted for. However, this view changed when Mt. Gox made $365,000,000 worth of Bitcoin, held in their possession as the third party, disappear overnight.
The wallet includes “first ever” features, such as the capacity to execute derivative contracts. BitHalo also supports unbreakable anti-extortion smart contracts for real-world trading, transaction backing, and employment contracting—no longer requiring trust. This is because smart contracts are computer protocols that facilitate, verify, or enforce the negotiation or performance of a contract. With BitHalo, the buyer and seller both create a contract where the risk of default is higher than the reward. In this way, transactions build a solid bridge of trust to facilitate and speed up trades.
1PASSWORD Crypto Biz Magazine Page.58 September.2014
by SEAN COMEAU
1Password is published by Agilebits Inc., a privately held Canadian company. It was first released for Mac in 2006. A Windows version was released in 2010. iOS and Android versions are available, but there are no release notes for these versions on the company web site. 1Password is available for several platforms, but at a price. Each platform requires a separate license— except for the Android version, which is free. The Windows and OS X versions are $49.99 each. Family licenses are $69.99 for five users. A Mac-Windows bundle is available for $69.99, with a five-user family bundle for $99.99. Special pricing may be available on the Agilebits website. The iOS version can be downloaded from the Mac App Store for $8.99. One purchase covers all of the iOS devices you own. The Android version allows you to access logins created on the Windows or Mac version, but you can’t create new logins. The program can be downloaded on a trial basis and is limited to storing 20 logins.
PART 4
Cross-platform compatibility is also provided by the 1PasswordAnywhere feature. This can be done on any computer from which you access your 1Password vault. The vault would be on a USB drive or on a cloud service. Within the folder is an HTML file that can be opened to allow you to access your login information once unlocked. There are different feature pages for each version, leaving an impression that the versions may not be totally cross-compatible. New features are added to the Mac version first. The Mac version is currently 1Password 4, while the Windows version is still 1Password (1). The latest Mac version only supports OS X 10.8.4 and higher. Mac version 1Password 3 is available for older versions of OS X. Syncing between platforms is implied with Mac version 3, but is not listed as a feature. It’s explicitly listed as a feature for the Windows version, however. The Agilebits website has instructions for importing to Windows from iOS but strongly warns that data could be erased and should be backed up before attempting.
1Password works with many browsers, but differs slightly between platforms. The Windows version is tested as compatible with 32-bit Internet Explorer, 32-bit Firefox, Chrome, and Safari. The Mac version lists Safari, Chrome, Firefox, and Opera. The iOS version has its own browser (iOS Safari) and doesn’t list other browser compatibilities. The 1Password database is local only. Multidevice syncing would need to be done by manually syncing the files, or by using a cloud storage service. Use of the cloud storage would introduce potential vulnerabilities in security and privacy. That risk would need to be balanced against the need for, or convenience of, accessing the passwords from multiple devices, at multiple locations. In addition to login information, 1Password also stores a wide variety of personal data, including software licenses and even hunting licenses. It’s able to auto-fill some, but not all, of this data into online forms. Mac version 4 features the ability to have multiple vaults, and to share them with others. The file would have to be on a shared local network folder, or on a cloud storage service. Each vault is governed by its own master password, so they can be shared without revealing your password to your personal vault. Sharing is not mentioned in the online guides as a feature for Mac version 3, or the Windows version. The iOS4 guide has no mention of features beyond managing logins.
On Mac version 3, Chrome and Firefox detected two logins and saved them, and failed to detect one other. In Firefox, a small dialog pops up with
Agilebit’s stated goal is to rely on the open standards published by the professional cryptographic community for all of their encryption code. They use AES 256-bit encryption for Mac version 4 and AES 128-bit for Windows and Mac version 3. There is very little description of the iOS version in the online documents. PBKDF2 is used to derive encryption keys from the master password. These are well-known, proven algorithms. The amount of inactive time before closing, and the amount of time before clearing the clipboard can be specified in the preferences. There is nothing about two-factor authentication methods. The program can generate random, secure passwords for each website, and will give a strength indication for passwords that you create. Agilebits is reasonably good at providing information about the product, although it’s not organized well, and not easily found on the website. They also respond to postings in 3rd-party forums. In this particular response they do seem open about their processes. You’ll need to consider your needs carefully before purchasing this product. If you don’t need multi-platform, multi-browser functionality, this would likely work for you. The basic password features are compatible across multiple platforms and browsers, but you may not have access to all features, notably sharing, on all platforms, in all browsers… in all possible combinations. Sharing and syncing between devices will require some form of networking or online storage, introducing new security risks which must be managed.—S SEAN COMEAU is a computer security and cryptography enthusiast based in Vancouver, BC, Canada.
Crypto Biz Magazine
Both versions have a tab under options where browser extensions can be installed. In Windows, there is a button for each browser which opens the browser, and goes to the extensions page, ready to install. On Mac version 3, there was a single button that opened up the default browser for installation. The other browsers had to be taken manually to the downloads page, where links were available for the extensions for each browser. The Safari 5.1 extension could not be installed because the activation address in the extension was wrong.
We tested syncing with the Windows version, and the Mac version 3 through Dropbox. This worked as expected. A form of multiple vaults and sharing could be done with these versions by selecting different vault locations in the preferences, and unlocking with the password. You could only see one vault at a time with this technique.
August.2014 Page.59
The program can be downloaded from the Agilebits web site. The Windows version is a standard download and install. Mac version 3 downloads as a zip file instead of a DMG. Once the app is unzipped it must be moved manually into the Applications folder. The Windows installation was standard.
a Save button. In Chrome there is a browser bar with a Save button. The application was already open on the desktop so the browsers did not ask to unlock the vault. On the Windows version, Firefox and Chrome both detected the test logins we tried. We still had to unlock the vault in the browser, even though we had the application open on the desktop. In both versions, the vault showed a bar indicating password strength for the saved passwords.
Yes,
it’s that easy.
coinkite.com
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