Category Archives: Ecoin

Decentralization

Bitcoin mining is decentralized banking.

In a centralized banking economy money is created by a central authority and distributed through banks and direct programs. In the Bitcoin decentralized banking economy anyone can create money directly without exchanging something like goods and services for money. 

When you make Bitcoins, you take Bitcoins.

Right now anyone with a few thousand dollars and a little bit of technical know-how can create Bitcoin by mining. The fundamental bargain is if you want to make Bitcoins by mining, you must also agree to process Bitcoin transactions.  The creation of the currency and the network to transact the currency are one in the same. Every computer that is mining Bitcoins is also handling Bitcoin transactions.  In a centralized banking economy, money transactions are primarily handled through 3rd party payment processors.

Every computer that is mining Bitcoins strengthens the Bitcoin community by  increasing demand for Bitcoin (by mining) and improving the efficiency and power of the exchange network (by handling transactions). When you dedicate your computer to mining you become a bank and payment processor in one.

 

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Patrick M. Byrne the CEO of Overstock and described “Scourge of Wall Street”recently posted a cover letter and Wired magazine article on the Overstock.com website.  The letter and article detail his struggles with Wall Street since Overstock went public in 2002, and why he is pro-Bitcoin.  Read the cover letter and Wired article here.

 

Look ma’ no data center. Somewhere in Northeast Washington a miner is making $8 million a month out of a warehouse.

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newyork-bitcoin

Tuesday, the New York State Department of Financial Services said it would be accepting and reviewing proposals and applications for New York State based virtual currency exchanges.

According to the order signed by New York’s Superintendent of Financial Services Benjamin Lawsky “Firms may immediately submit formal proposals and applications to operate virtual currency exchanges in order to help expedite the process of putting in place greater oversight for this industry.”

The Department also announced that it would propose regulatory guidance on virtual currencies “no later than the end of the second quarter.”  Read the Order here.

 

mtgox

Mt. Gox released an update via their website today that they are going to implement a 6-hour downtime on all Bitcoin deposits and internal Bitcoin transfers in order to implement their solution to the “transaction malleability” issue.  The downtime is scheduled for 6pm ~ 12am JST (February 15th)”.

The announcement states that Mt.Gox’s solution would resolve the issue short term while the Bitcoin Core Dev team and the Bitcoin Foundation work on the long term solution.  Read the release here.  As the traditional market price leader for Bitcoin.  The community is anxious to see if Mt. Gox’s Bitcoin price (now trading at about 60% of BTC-E) recovers once normal operations and Bitcoin withdrawing resumes.

bitcoin blockchain

The Bitcoin Blockchain is the shared ledger of all Bitcoin transactions. When you send Bitcoin what you are actually doing is updating your copy of the Blockchain with a new transaction and sharing your updated version with other computers on the Bitcoin network.  Each computer reviews the new entries in the Blockchain for accuracy.  As long as 51% of the copies of the Blockchain are legitimate, your copy will continue to be legitimate as long as your computer is not compromised.

The 51% attack

The Achilles heal of Bitcoin is the 51% attack. If nefarious Bitcoin miners control over 50% of the Blockchain they can in theory create an illegitimate copy of the Blockchain which will eventually be accepted as the real Blockchain by all the computers on the network.  Most of us have thought that as more computers mine Bitcoins, this becomes harder to accomplish. However mining pools can threaten this balance. A  mining pool is a collection of Bitcoin mining computers that act as one.  When a computer joins a mining pool, the computer gives its computing power to the pool in exchange for a proportional amount of the Bitcoins mined by the entire pool. The administrators of the pool can basically control what Bitcoins are granted to each computer and details of the Blockchain copy on that computer.

ASIC computers have changed the game

Over the last six months ASIC computers have come on the market and have dominated the mining of Bitcoins. Right now a relatively low percentage of the computers mining for Bitcoins are ASIC and they control a usually large percentage of the computing power mining Bitcoins. Recently a mining pool has become so powerful that it threatens to control over 50% of the computing power mining for Bitcoins.  If this does happen, the dreaded 51% attack can become a reality. At the time of this writing a mining pool called GHash.IO is controlling 42% of the Bitcoin mining network. Over the last 4 days this pool has gone from less than 38% of the mining capacity to 42% of the mining capacity.

What can be done to protect the Network?

The short answer is no one is really sure yet. The good news is that the best minds in Bitcoins are discussing the issue now on Reddit.  Some of the most reliable miners are leaving GHash.IO for other pools to try and reduce the percentage of the network controlled by this dominate pool. Also, just because a mining pool can create a 51% attack does not mean that it is in the best interest of the pool to coordinate such an attack. In theory a 51% attack would cause a huge loss in confidence of Bitcoins, dropping the value and making their coins and computers less valuable. For now, I suggest everyone watch this chart closely, if it gets close to 50% consider moving at least some of your Bitcoins to Litecoins or Fiat.

 

Toronto-based KryptoKit announced Sunday that Erik Voorhees, Roger Ver and Vitalik Buterin are joining the company in ownership roles, though it declined to specify their equity shares. All three are prominent members of the Bitcoin community. Vitalik Buterin is a co-founded Bitcoin Magazine“Vitalik rounds out what is becoming a very diverse and capable team,” Steve Dakh, one of KryptoKit’s co-founders, said in a statement. “As one of the top developers in Bitcoin, he will be a huge asset as we continue to develop and perfect our backend and programming.” Erik Voorhees is a bonafide founded the Bitcoin gambling site, SatoshiDice and sold it last summer for 126,315 bitcoins, then worth $12.4 million and now worth over $1oo million based on Coinbase pricing. Ver and Voorhees will serve as advisors to the company.

Read more: http://www.entrepreneur.com/article/230664#ixzz2pfLANCxz

Bitcoin India

India joins China clamping down on Bitcoins.

Bitcoin is feeling the pinch in another BRIC.  BRIC is a common acronym used to refer to the emerging global markets of Brazil, Russia, India and China.  While Bitcoins have taken hold in Brazil and Russia, this is mot the case in the IC of BRIC. China and India have recently cracked down on the cyrpto-currency.  A few weeks ago China effectively stopped most finance companies in the mainland from dealing in Bitcoins.

This week, the Reserve Bank of India issued a public advisory detailing the risks of using Bitcoin and other digital currencies. India’s central bank statement claimed that Bitcoins have no intrinsic value  and “seems to be a matter of speculation.” 

Soon after, India’s biggest Bitcoin exchange BuySellBitCo.in suspended most buying and selling operations pending a clearer framework from the Indian regulators.  “We are suspending buy and sell operations until we can outline a clearer framework with which to work,” BuySellBitCo.in said on its website, adding that the move was a conservative move to protect the interest of Indian Bitcoin customers.  

The central bank stopped short of banning or explicitly curbing Bitcoin transactions.  However according to media reports, Indian officials raided the offices of buysellbitco.in and rbitco.in which were trading in Bitcoins for the last three months or so. The Bitcoin market in India is very small and unlike the recent move in China, the recent moves in India have had little or no impact on the larger Bitcoin market.

India might be important for Bitcoin in a few years, it has almost no impact in 2014. The statements from the Indian central bank sound like what everyone says about Bitcoin the first week they learn about it. “used for crime, no intrinsic value, no transparency” give them a few months to figure it out.

Dogocoin

What is Dogecoin

Dogecoin is an open source peer-to-peer cryptocurrency, favored by Shiba Inus worldwide. This Ecoin is gaining popularity quickly especially on popular forums like Reddit. It was born and made for the Internet and is based on a popular ‘doge’ internet phenomenon and memes often shared on 4chan and Reddit.  It is sometimes referred to as it the first currency to be based upon an Internet meme.

Dogecoin has a strong community.  Its light-hearted perspective and novelty factor are giving it strength as an Altcoin.  Dogecoin recently ascended over 300% in value.

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The Doge meme phenom seeded Dogecoin

Compared to other Altcoins, the resources for Dogecoin look and feel developed and refined.  The official blockchain referred to as the DogeChain is easy to read and elegantly presented.  Check out the big ol’ list of dogecoin resources for more examples.

Like Litecoin, Dogecoin uses scrypt in its proof-of-work algorithm and therefore can only currently be mined with GPU miners.  There will be a lot of Dogecoin produced (100 billion) from mining compared to 84 million minable Litecoins and 21 million minable Bitcoins.