It has been an interesting week for the bitcoin community as two new possible solutions to Bitcoin’s scalability challenge have been proposed and BTC-USD has been trending north back towards its all-time high.
The price of bitcoin received a boost and peaked at $1,200 the week beginning April 4 as optimism was also driven by Japanese retailers intentions to accept bitcoin payments since the cryptocurrency has been officially acknowledged by the Japanese regulator as a legal payment method.
This week’s review is compiled from contributions by Alexander Lielacher, Christoph Bergmann, Evan Sixtin, Jamie Holmes, Joseph Young, and Michael Scott.
To find a potential solution to Bitcoin’s scalability challenge, Bitcoin developer Sergio Lerner proposed a compromise, a 2MB hard fork with a SegWit soft fork. SegWit-2MB combines SegWit as it is today in Bitcoin 0.14+ with a 2MB block size hard-fork activated only if SegWit activates (95 percent of miners signaling) but at a fixed future date.
Lerner announced his SegWit-2MB proposal in the Bitcoin mailing list explicitly with the following preamble, “The sole objective of this proposal is to re-unite the Bitcoin community and avoid a cryptocurrency split. SegWit-2MB does not aim to be the best possible technical solution to solve Bitcoin technical limitations […] it is not a new solution, but it should be seen more as a least common denominator.”
After SegWit-2MB, Extension Blocks is the second proposal from the week beginning April 3 that aims to overcome the block size crisis. The proposition is backed by BitPay, Purse, and Lightning developer Joseph Pool. Chinese miners seem to like the idea, while some Bitcoin Core developers reacted slightly irritated but engaged in constructive criticism.
The idea puts the Extension Blocks at the end of regular blocks so that they are only visible for miners and nodes with upgraded clients. Like SegWit pushes the signatures in a separate block, Extension Blocks segregate as many transactions as needed outside the regular block with the size of 1MB. Nodes can, but are not required to accept, verify and relay the Extension Blocks. Extension Blocks use a less disruptive soft fork to increase capacity, while they enable a more flexible control of the extra size. Also, they eliminate the transaction malleability bug in transactions in the Extension Block. As a bonus, they prevent a possible attack on Lightning Network, as the detailed proposal on GitHub explains.
On April 6, Blockstream CTO and Bitcoin Core developer Greg Maxwell revealed on the Bitcoin development mailing list that a specific ASIC miner-manufacturer had been covertly using AsicBoost to increase its mining revenue by at least 30 percent; many sources have reported it is indeed Bitmain, perhaps explaining their inertia regarding SegWit.
AsicBoost is a patented method designed to reduce total cost per bitcoin mined by around 20 percent. However, AsicBoost capitalizes on a flaw in Bitcoin’s proof of work protocol. Specifically, as Bitcoin and security expert Andreas Antonopoulos explained, it is a method which produces imbalanced Merkle trees to obtain a 30 percent increase in revenue.
At the moment, Bitcoin Core developers unanimously agree that the only solution which can eliminate the centralization of mining caused by AsicBoost covert exploitation is SegWit. The community also believes that Bitmain and its CEO Jihan Wu are blocking SegWit intentionally in order to continue exploiting AsicBoost for increased miner revenue. However, an investigation is underway on a quest for any proof that the AsicBoost is being used on-chain.
Any developers (only) have some free time to help me hunt for on-chain evidence of ASICBoost usage? I've started ##asicboost on Freenode!
— Philip Daian (@phildaian) April 9, 2017
After Japan’s lawmakers have officially turned bitcoin into a legal payment method and have made the digital currency sales tax exempt, the price of bitcoin has rallied, and the demand for the cryptocurrency has surged in Japan. That has not gone unnoticed by Japanese retailers who are now rushing to implement bitcoin merchant payment systems.
According to Nikkei Asia Review, two large Japanese retailing groups, Bic Camera and Recruit Lifestyle, will soon accept bitcoin payments in their stores. Bic Camera is partnering up with Tokyo-based bitcoin exchange bitFlyer to run a trial to test bitFlyer’s bitcoin payment system at Bic Camera’s flagship store in Tokyo’s popular Yurakucho district as well as at Bicqlo Bic Camera, the hybrid store with Uniqlo in Shinjuku. While Recruit Lifestyle is partnering up with Tokyo-based bitcoin exchange Coincheck to offer the cryptocurrency as a payment method in all stores that have adopted the point-of-sale app AirRegi.
Dfinity is offering a new way to organize blockchain technology, eliminating the need or possibility of a hard fork, accomplished with something called a “Blockchain Nervous System.” “It is a platform managed by a decentralized intelligence integrated into its systems that can make arbitrary changes. This acts to mitigate misuse, protect users, fix problems, optimize network configuration and seamlessly upgrade its protocols.”
Essentially, Dfinity creates a decentralized cloud for smart contracts that aims for public governance without human intermediaries, enhanced performance and scaling, and integration of public and private networks.
On April 6, two cryptocurrency companies filed a California federal suit against Wells Fargo saying that the megabank is essentially preventing their customers from accessing their money, an estimated $180 million in deposits.
iFinex Inc. and Tether Ltd. allege that Wells Fargo recently prevented wire transfers from a number of Taiwanese banks relative to accounts containing their customer funds. This action on the part of Wells Fargo to block outgoing U.S. dollar transfers was made without notifying the two cryptocurrency companies. This action on the part of Wells Fargo is symbolic of the continued icy reception on the part of banks relative to bitcoin and other forms of cryptocurrency.
The Bank of Tokyo-Mitsubishi UFJ announced that together with six of its international banking peers it would launch a new cross-border money transfer service that runs on blockchain technology. Bank of Tokyo-Mitsubishi UFJ has joined the Ripple’s Global Payments Steering Group (GPSG), where it will collaborate with several banks to launch a new wire transfer service that uses Ripple’s distributed ledger technology by the end of 2017.
Chinese bitcoin exchanges such as OKCoin hinted their plans to add Ethereum support for local ether traders for over a year. CnLedger, a Chinese digital currency and blockchain research group, confirmed OKCoin’s short-term plan of adding support for ether trading with its local source. OKCoin representatives later confirmed their integration of Ethereum.
The Crypto Art Gallery, held April 9 in the UK’s second city, Manchester, was an intriguing intersection between the world of art and Bitcoin. A collection of artists’ work was on display with inspiration drawn from abstract art, cubism, and pop art. With cryptocurrency being an intangible asset, modern artists showcasing at events like the Crypto Art Gallery are an important force driving adoption, inspiration and an understanding amongst the general public.