When one is busy driving a technological and societal revolution forward, complying with complicated regulatory requirements is rarely a top priority. Yet, the reality is that at this stage the often ambigious and rapidly evolving regulatory landscape can have an outsized impact on the fate of cryptocurrency startups and on the adoption/integration into existing systems.
Epicenter Bitcoin Regulatory Correspondent and founder of COINsult Siân Jones joined us for an update on the state of Bitcoin regulation in a variety of jurisdiction.
– The recent statement by the UK’s treasury on digital currencies
– How the Isle of Man keeps pioneering a cryptocurrency-friendly environment
– The stance of the FATF (Financial Action Task Force) towards Bitcoin
– The insanity of the looming BitLicense rules and difficult-to-predict consequences they may have
Creating a new token and selling it to fund the development of software has become a preferred way of fundraising for cryptocurrency entrepreneurs. It’s a tempting tool, allowing startups to avoid traditional investors, build a community and allow anyone anywhere to own a stake in the project. For participants, there is the promise of big financial upside and being part of novel undertakings.
Lisa Cheng, whose consulting firm Vanbex has accompanied many crowdsales, joined us for a discussion of this revolutionary way to fund and monetize open source software.
Topics covered included:
– Why crowdfunding and cryptocurrency are a natural fit
– A brief history of crowdsales in the cryptocurrency space
– US securities law and the questionable legality of token sales
– The value of writing a solid white paper before launching a sale
– Elements of a successful coin launch
– The role of companies like Swarm and Koinify in conducting crowdsales
When spinning up a few hundred data-gathering Bitcoin nodes prevented some breadwallet users from transmitting bitcoin transaction, a minor panic quickly erupted about the Bitcoin compliance startup Chainalysis and their supposed sybil attack on the Bitcoin network.
Chainalysis CEO Michael Gronager joined us for a discussion of what happened and what role transaction monitoring will play in the future. We dove deep into the tension between the desires for user privacy and the requirements to achieve integration into existing financial services.
Topics covered included:
– How Chainalysis’ nodes caused problems for breadwallet
– What damage a large scale sybil attack could really do to Bitcoin
– The role transaction monitoring will play to achieve Bitcoin integration in existing systems
– Why transaction-related blockchain analysis does not threaten Bitcoin’s fungibility
– The best way users can protect their anonymity
Powering an estimated 5-10% of all Bitcoin transactions, Electrum is one of the leaders of the Bitcoin wallet space. The open-source walled was started in 2011 and played a key role in the development of the light-weight SPV wallets. Developer Thomas Voegtlin joined us for a discussion of Electrum, their recent 2.0 release and the rapidly evolving Bitcoin wallet space in general.
Topics covered included:
– The evolution of Bitcoin wallets and what motivated him to start Electrum
– Electrum 2.0 and its new features such as Multi-sig and hardware wallet support
– The security tradeoffs between using an SPV wallet versus a full node client
– How Bitcoin aliases could do away with Bitcoin addresses
Is Bitcoin secure from attacks that could destroy the currency? To a large part, this is determined by how expensive it is to carry out an attack and by the potential profits the attacker could generate. Ideally, an attack is so expensive to carry out that no profit-driven attacker would engage in it.
But in this episode, Brian argues that the cost of attacking Bitcoin will likely decrease in the future and the ability to short Bitcoin and thus benefit from an attack will increase dramatically. We take an in-depth look at the anatomy of such an attack including:
– How an attacker would need to go about shorting bitcoin
– How the kamikaze mining pool could be used to bribe miners to join the attacker
– Why all profit-driven miners will have an incentive to join the attack, whether or not they believe it will succeed
– Why the block halving in 2016 could be an exceptionally dangerous time for Bitcoin, since an attack would be cheap to execute and likely to succeed
– How a gradual decrease of the block reward, instead of the 4-year halving rhythm would reduce risk
What Bitcoin did for money, OpenBazaar is trying to achieve for commerce. Born as a fork of the Dark Market project, OpenBazaar aims to facilitate online trade by removing unneeded middlemen. Built as an open source protocol, users simply install the application on their computer to gain access to marketplaces available on the network. From the app, they may also place items or services for sale by creating “Ricardian contracts”, which get propagated to the network and made accessible to everyone to see. The protocol, which uses Bitcoin as a means of payments, utilises multi-signature transactions. This makes it possible for transacting parties to include third-party arbitrators, who may intervene in the event of a dispute. We talked to Brian Hoffman, the project’s Lead Developer, about this paradigm-shifting project and the potential it has to disrupt person-to-person marketplaces such as eBay. Currently in beta, OpenBazaar is due for a full release in Q1-Q2 of 2015.
Topics we discussed:
– History and current status of the project
– Mechanics of a simple transaction on OpenBazaar
– Ricardian contracts
– OpenBazaar’s proposed arbitration model
– Reputation and the important role it plays in peer-to-peer trading
– Business models that may be threatened by this technology
Levin Keller is known to many in Berlin as the man who warned everyone about the dark scenario where buying Bitcoins in Europe would be subject to VAT. As with the VAT issue, Levin was also concerned with the complexity of filing tax returns. For merchants and companies dealing in Bitcoin, keeping track of gains and losses makes proper accounting a messy ordeal.
His startup, Coyno, hopes to solve that by providing standalone, read-only bookkeeping for your existing wallets. Coyno allows you to import the public seed from your HD wallet and keeps track of transactions. The service, currently in beta, reads your wallets’ public addresses and stores bookkeeping information whenever a transaction occurs. By recording the exchange rate at the time of transaction, Coyno can generate reports of taxable events, allowing users to more easily file their taxes. By allowing Coyno to read all your wallets, it’s able to differentiate incoming and outgoing transaction from funds being moved within your organization, a feature lacking from other reporting tools.
Levin also talks about his journey of being incubated at the Axel Springer Plug and Play Accelerator in Berlin. He also weighs in on some of the challenges of building a Bitcoin startup and attracting investors in Europe.
Backbone to the financial system? Powering decentralized technology? The first true world currency? There is probably who hasn’t dreamt of a world ten years from now when Bitcoin would be all those things. The promise of cryptocurrencies are enormous, but will Bitcoin really emerge as the winner? And how can we reconcile this grand vision for Bitcoin with an ecosystem where projects launch new coins and blockchains every day?
The one project that rekindles those Bitcoin dreams and paints a potential path to Bitcoin’s ultimate success are sidechains. Developed by Adam Back, Greg Maxwell and several other Bitcoin core developers, sidechains aims to allow the permissionless, rapid innovation of alt chains, but using the established monetary base and network of Bitcoin.
It’s a complex project, but with Blockstream founders and sidechains visionaries Adam Back and Greg Maxwell we couldn’t have had better companions on our journey into understanding the coming Bitcoin-Sidechains-Macrocosm. Topics included:
– The motivation behind sidechains
– The concept of digital scarcity
– Concerns about the security of sidechains
– Different stages of sidechains from federated pegs to merged mining to block extension
Adam B. Levine, the “Spiritual Grandfather” of Epicenter Bitcoin and Editor-in-Chief of Let’s Talk Bitcoin, joins us to share is “crazy” passion for information and cryptocurrency. Never shy when it comes to talking about complicated subjects, Adam divulges his ideas about the next iteration of the experimental Let’s Talk Bitcoin Network and his newly launched standalone token vending machine, SwapBot. Adam also opens up about his role as the Chief Visionary Officer of CoinPowers and why it ultimately failed as a project. We also get Adam’s take on the future of crowdfunding and what role he sees himself playing within the crypto community moving forward.
We covered a many of topics on this episode:
- The integral part Adam played in the creation of Epicenter Bitcoin
- How the Let’s Talk Bitcoin podcast show and network were born
- The Tokenly Platform
- The recent discontinuation of certain LTB Network shows
- LTBCoin and the problems it aims to solve
- Tokens Vs. cryptocurrencies
- Content monetization and crowdfunding
When it comes to Bitcoin, Tim Swanson is known to many as the man who sees the glass half empty. Whether or not that’s true, it’s fair to say that Tim has critical opinions about Bitcoin and questions many of the assumptions held by those who wish to see it succeed. A researcher and educator, he is the author of several books including “Great Wall of Numbers: Business Opportunities and Challenges in China” and “Great Chain of Numbers: A Guide to Smart Contracts, Smart Property and Trustless Asset Management”. He also blogs about Bitcoin, economics and various other topics at OfNumbers.com. He currently serves as an advisor to Hyperledger and is Head of Business Development at Melotic.
We covered a lot of topics on this episode:
- True cost of Bitcoin transactions
- Bitcoin as a niche technology Vs.
- Consensus-as-a-service and semi-trusted networks
- Hyperledger, a decentralised ledger platform
- Melotic, a digital asset exchange
- Bitcoin’s adoption as a payment system
- Trusted transparency in mining